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Easterly Government (DEA) Announces Buyout in Council Bluffs

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Easterly Government Properties (DEA - Free Report) announced the acquisition of the 28,900-leased-square-foot U.S. District courthouse in Council Bluffs, Iowa. The move comes as part of the company’s acquisition efforts, and following this acquisition, Easterly owns, directly or through its previously announced joint venture (JV), 95 properties aggregating 9.1 million square feet.

Built in 2021, this build-to-suit facility, which is referred as JUD - Council Bluffs, is fully leased to the General Services Administration on behalf of the U.S. District Court. Particularly, the leasing is under a 20-year non-cancelable lease, which will expire in 2041. Also, there are two five-year renewal options, which, if exercised, will result in the extension of the lease until 2051. This ensures a steady stream of rental revenues for the long period.

Easterly Government Properties has been focused on strategic buyouts, and so far in the year, it has acquired six properties for a total pro rata contractual purchase price of roughly $179.1 million. These acquisitions were made either directly or through its previously announced JV. The acquisitions mark $107.7 million of the wholly owned acquisition target of $200 to $250 million and $71.4 million of the pro rata JV acquisition goal of $145 million.

With a focus on the acquisition, development and management of class A commercial properties that are leased to the U.S. Government, DEA is well-poised to experience a steady flow of rental revenues over the long term.

However, reflecting broader market concerns, shares of this Zacks Rank #3 (Hold) company have declined 3.3% quarter to date compared to the S&P 500’s increase of 9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

Some key picks from the REIT sector include Public Storage (PSA - Free Report) and Host Hotels & Resorts (HST - Free Report) .

Public Storage carries a Zacks Rank of 2 (Buy) at present. Public Storage’s long-term growth rate is projected at 7%. The Zacks Consensus Estimate for PSA’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past month.

The Zacks Consensus Estimate for Host Hotels & Resorts’ 2022 FFO per share has moved nearly 3.6% upward in the past month to $1.73. HST presently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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