Easterly to Pay $430M for US Government-Leased Portfolio

The REIT is set to purchase a multi-state portfolio encompassing 1.5 million square feet. The deal brings the company’s completed or pending acquisitions to $514.9 million since the beginning of 2018.
Department of Veterans Affairs Outpatient Facility, San Jose, Calif.

Easterly Government Properties has agreed to make its biggest acquisition so far this year—a 14-property portfolio in 11 states for $430 million. The company expects to close the acquisitions between July and December.

When combined with the pending purchase of a 90,085-square-foot Department of Veterans Affairs outpatient clinic in San Jose, Calif., and completed acquisition of a 56,753-square-foot VA facility in Golden, Colo., the REIT has announced deals totaling $514.9 million this year. The two VA purchases totaled $84.9 million.

The REIT is set to acquire a 1.5 million-square-foot portfolio that is 94 percent leased to the United States government and 99 percent leased overall from affiliates of an independent third party. The seller or sellers were not identified.

“This acquisition is expected to grow our portfolio by approximately 39 percent on a rentable square foot basis, while still maintaining the same high-quality standard of assets Easterly is known for,” William Trimble III, Easterly CEO, said in a prepared statement.

Shortly after Easterly announced its latest deal, it also released plans to begin a public offering of 15,500,000 shares of its common stock to help fund the portfolio acquisition. Citigroup, Jefferies and Wells Fargo Securities are acting as joint book-runners for the offering.

Portfolio particulars

The largest property is a 267,766-square-foot building in Buffalo, N.Y., that houses two federal agencies—the VA and Internal Revenue Service—and also has a National Labor Relations Board regional office. The U.S. government leases 94 percent of the fully-occupied building with a lease expected to expire in 2021.

The smallest property is a 9,800-square-foot build-to-suit facility in Bakersfield, Calif., that provides offices, holding cells and secured rooms for weapons and drug storage for the Drug Enforcement Administration. Built in 2000, it is leased through 2021.

The most unusual property is a historic courthouse in Charleston, S.C., that dates back to 1795. Known as the Josiah House, it is combined with two adjacent federally-owned buildings as part of the federal judicial complex in Charleston. It was fully renovated in 1999 when the annex was constructed.

The other properties in the portfolio are:

  • Chicago – a 239,331-square-foot building located next to Chicago O’Hare International Airport that houses the Federal Aviation Administration’s Great Lakes Regional Office and the U.S. Department of Agriculture.
  • Portland, Ore., – a Class A, 225,057-square-foot trophy asset that is fully leased with agencies including the USDA, U.S. Army Corps of Engineers, Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco and Firearms.
  • Parkersburg, W.V., – a 182,500-square-foot build-to-suit property that houses the U.S. Department of Treasury’s Bureau of Fiscal Services.
  • Charleston, W.V., – a 110,000-square-foot building occupied by the Social Security Administration’s Office of Hearings Operations.
  • Pittsburgh – a 100,054-square-foot facility that was built for the FBI in 2001 and a 33,425-square-foot building adjacent to the FBI field office that is occupied by the U.S. Immigration and Customs Enforcement.
  • College Park, Md., – an 80,677-square-foot office and laboratory occupied by the Food and Drug Administration’s Center for Food Safety and Applied Nutrition.
  • Clarksburg, W.V., – a 63,760-square-foot build-to-suit facility that houses several federal tenants including the FBI, DEA, SSA and Small Business Administration.
  • Sterling, Va., – a 49,692-square-foot build-to-suit facility that serves as a DEA testing and research laboratory.
  • Baton Rouge, La., – a 30,000-square-foot VA outpatient facility.
  • Dallas – a 27,200-square-foot SSA field office.

Previous Easterly deals

Earlier this year, Easterly acquired the rights to the redevelopment of a 210,373-square-foot industrial building in Tracy, Calif., to be leased to the Federal Emergency Management Agency. It is under construction and expected to be completed by the second half of this year. It will include office, warehouse and refrigerated storage space and help FEMA respond to disasters and support recovery efforts.

In September 2017, Easterly acquired a 169,542-square-foot building that serves as the Salt Lake City FBI field office. It’s located on a 7.5-acre campus near the Salt Lake City International Airport and also serves as a regional office for Utah, Montana and Idaho. That deal made Easterly the single largest private owner of FBI field offices in the U.S.

Image courtesy of Easterly Government Properties

Combined with two previously announced deals, this