Potential New REIT Completes IPO
- Feb 13, 2015
Roughly six weeks after filing a registration for its proposed initial public offering of shares of common stock, Easterly Government Properties Inc. has completed its IPO with gross proceeds totaling $207 million.
Easterly had offered 13.8 million shares at $15.00 per share, with Citigroup, Raymond James and RBC Capital Markets acting as joint bookrunners. The company, which plans to qualify as a REIT, will utilize the proceeds predominantly for the repayment of indebtedness and certain fees and expenses, as well as for general corporate purposes.
The government is not a bad tenant. The U.S. General Services Administration is the largest public real estate organization in the U.S.–overseeing a portfolio of 1,500 government-owned buildings encompassing more than 350 million square feet–and is tasked with securing space on behalf of federal agencies through the construction and leasing of properties. Presently the GSA occupies space under 8,100 leases.
Easterly enters the world of public REITs with a fully leased portfolio of 29 assets, 26 of which total 1.8 million square feet and are leased primarily by the GSA. The group of office, industrial, laboratory and courthouse properties was created through contributions from Easterly Partners and Western Devcon when, as noted on Easterly’s website, the two companies “seeing the wealth of opportunities in the GSA-leased space,” joined forces to form the REIT in 2014.
Among the REIT’s long list of government tenants are the Drug Enforcement Agency and the Federal Bureau of Investigation, to name just a couple. Properties in the portfolio include Randolph Square in Arlington, Va., a 190,000-square-foot building occupied by the U.S. Patent and Trademark Office. Easterly Partners acquired the nine-story Class A tower, located at 2800 S. Randolph St., from Invesco Real Estate in early 2014 for $56.3 million. The two-building 190,000-square-foot office complex on Masthead St. in New Mexico is also part of the group of assets contributed by Easterly Partners. Occupied in its entirety by the U.S. Forest Services, the complex had been owned by Titan Development until Easterly Partners purchased it in 2011.
The group of office, industrial, laboratory and courthouse properties was created through contributions from Easterly Partners and Western Devcon when, as noted on Easterly’s website, the two companies “seeing the wealth of opportunities in the GSA-leased space,” joined forces to form the REIT in 2014.
All the world loves a solid net-lease tenant, so Easterly certainly has competition in the bid for government-occupied properties. According to commercial real estate services firm Colliers International’s 2014 list of the top GSA property owners, Government Properties Income Trust leads the pack with nearly 6.2 million square feet of GSA-leased space, and HPI closes the ranking in the number 10 spot with approximately 1.6 million square feet.