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What changed in Easterly Government Properties, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Easterly Government Properties, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+270 added−298 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)

Top changes in Easterly Government Properties, Inc.'s 2023 10-K

270 paragraphs added · 298 removed · 232 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

35 edited+9 added−15 removed49 unchanged
Biggest changeGovernment tenant agencies and one operating property that was entirely leased to a private tenant. As of December 31, 2022, our operating properties were 99% leased. For purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition.
Biggest changeFor purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition. In addition, we wholly owned one property under development that we expect will encompass approximately 0.2 million leased square feet upon completion.
For further information on the composition of our tenant base, see Item 2, “Properties.” Insurance We carry comprehensive general liability coverage on all of our properties, with limits of liability customary within the industry to insure against liability claims and related defense costs.
For further information on the composition of our tenant base, see Item 2, “Properties.” 6 Insurance We carry comprehensive general liability coverage on all of our properties, with limits of liability customary within the industry to insure against liability claims and related defense costs.
Similarly, we are insured against the risk of direct physical damage in amounts necessary to reimburse us on a replacement-cost basis for costs incurred to repair or rebuild each property, including loss of 6 rental income during the reconstruction period.
Similarly, we are insured against the risk of direct physical damage in amounts necessary to reimburse us on a replacement-cost basis for costs incurred to repair or rebuild each property, including loss of rental income during the reconstruction period.
We work in close partnership with the U.S. Government tenant agencies to manage the construction of specialized, agency-specific design enhancements. These highly tailored build-outs substantially increase the likelihood of the tenant agency’s renewal and also typically generate a construction management fee paid by the tenant agency to us in the amount of approximately 13% of the actual cost of construction.
We work in close partnership with the U.S. Government tenant agencies to manage the construction of specialized, agency-specific design enhancements. These highly tailored build-outs substantially increase the likelihood of the tenant agency’s renewal and also typically generate a construction management fee paid by the tenant agency to us in the amount of approximately 12% of the actual cost of construction.
Government agencies in property development opportunities and provides us with superior property management and tenant service capabilities. • Access to Acquisition Opportunities with an Active Pipeline . Our senior management team has an extensive network of longstanding relationships with owners, specialized developers, leasing brokers, lenders and other participants in the U.S. Government-leased property market.
Government agencies in property development opportunities and provides us with superior property management and tenant service capabilities. • Access to Acquisition Opportunities with an Active Pipeline . Our senior management team has an extensive network of longstanding relationships with owners, specialized developers, leasing brokers, lenders and other participants in the government-leased property market.
We have a gift-matching program where Easterly will match each employee’s qualifying charitable contribution up to a certain amount each year. We also announced enhancements to our companywide volunteering program beginning in 2022. We believe these commitments mutually benefit our tenants, investors, employees, and local communities.
We have a gift-matching program where Easterly will match each employee’s qualifying charitable contribution up to a specified amount each year. We also announced enhancements to our companywide volunteering program beginning in 2022. We believe these commitments mutually benefit our tenants, investors, employees, and local communities.
We believe that the strong credit quality of our U.S. Government tenant base, our long-term leases, the likelihood of lease renewal and the high tenant recovery rate for our property-related operating expenses contribute to the stability of our operating cash flows and expected distributions. • Experienced and Aligned Management Team .
We believe that the strong credit quality of our government tenant base, our long-term leases, the likelihood of lease renewal and the high tenant recovery rate for our property-related operating expenses contribute to the stability of our operating cash flows and expected distributions. • Experienced and Aligned Management Team .
Government agency, are in excess of 40,000 rentable square feet with expansion potential, are in strategic locations to facilitate the tenant agency’s mission, include build-to-suit features and are focused on environmental sustainability. • Develop Build-to-Suit U.S. Government Properties. We target attractive opportunities to develop build-to-suit properties for use by certain U.S. Government agencies. As U.S.
Government agency, are in excess of 40,000 rentable square feet with expansion potential, are in strategic locations to facilitate the tenant agency’s mission, include build-to-suit features and are focused on environmental sustainability. • Develop Build-to-Suit U.S. Government Properties. We target attractive opportunities to develop build-to-suit properties for the benefit of certain U.S. Government agencies. As U.S.
Additionally, over 45% of our assets have achieved at least one sustainability related certification such as ENERGY STAR, LEED, or Green Globes. 7 Corporate Responsibility We are committed to volunteerism and philanthropy and strive to positively impact the communities in which we work and live.
Additionally, over 47% of our assets have achieved at least one sustainability related certification such as ENERGY STAR, LEED, or Green Globes. Corporate Responsibility We are committed to volunteerism and philanthropy and strive to positively impact the communities in which we work and live.
In order to qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the real estate qualification of sources of our income, the composition and values of our assets, the amounts we distribute to our stockholders and the diversity of ownership of our stock.
In order to qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the composition and values of our assets, the amounts we distribute to our stockholders and the diversity of ownership of our stock.
We are an internally managed real estate investment trust, or REIT, focused primarily on the acquisition, development and management of Class A commercial properties that are leased to U.S. Government agencies that serve essential functions. We generate substantially all of our revenue by leasing our properties to such agencies either directly or through the U.S.
We are an internally managed real estate investment trust, or REIT, focused primarily on the acquisition, development and management of Class A commercial properties that are leased to U.S. Government agencies that serve essential functions. We generate substantially all of our revenue by leasing our properties to such agencies either directly or through the U.S. General Services Administration (“GSA”).
Government requirements and the needs of tenant agencies. Since 1994, members of our senior management team have developed an average of approximately 49,200 square feet per year of U.S. Government-leased build-to-suit properties. We believe that our thorough understanding of the U.S. Government’s procurement processes and standards, our longstanding relationships with the GSA and other agencies of the U.S.
Government requirements and the needs of tenant agencies. Since 1994, members of our senior management team have developed an average of approximately 47,600 square feet per year of U.S. Government-leased build-to-suit properties. We believe that our thorough understanding of the U.S. Government’s procurement processes and standards, our longstanding relationships with the GSA and other agencies of the U.S.
Our senior management team has a proven track record of sourcing, acquiring, developing and managing properties leased to U.S. Government agencies. Collectively, our senior management team has been responsible for the acquisition of an aggregate of approximately 8.8 million square feet of U.S.
Our senior management team has a proven track record of sourcing, acquiring, developing and managing properties leased to government agencies. For example, our senior management team has collectively been responsible for the acquisition of an aggregate of approximately 9.0 million square feet of U.S.
We expect to bid for those property development opportunities published by the GSA or the relevant U.S. Government agency that suit our investment criteria. • Renew Existing Leases at Positive Spreads . We seek to renew leases at our U.S. Government-leased properties at positive spreads upon expiration. Upon lease renewal, U.S.
We expect to bid for those property development opportunities published by the GSA or the relevant U.S. Government agency, as well as seeking other potential development opportunities that suit our investment criteria. • Renew Existing Leases at Positive Spreads . We seek to renew leases at our U.S. Government-leased properties at positive spreads upon expiration. Upon lease renewal, U.S.
Our capital structure provides us with the resources, financial flexibility and the capacity to support the future growth of our business. Since our initial public offering, we have raised capital through four underwritten public offerings of our common stock and sales of our common stock under our at-the-market equity offering programs, which we refer to as our ATM Programs.
Our capital structure provides us with the resources, financial flexibility and the capacity to support the future growth of our business. Since our initial public offering, we have raised capital through four underwritten public offerings of our common stock and sales of our common stock under our at-the-market equity offering programs (“ATM Programs”).
Significant Tenants Substantially all of our rents come from U.S. Government tenant agencies. As of December 31, 2022, our U.S. Government tenant agencies accounted for 97.1% of our annualized lease income.
Significant Tenants Substantially all of our rents come from U.S. Government tenant agencies. As of December 31, 2023, our U.S. Government tenant agencies accounted for 97.3% of our annualized lease income.
When we acquire a 5 property, we review all property-level operating expenditures to determine whether and how the property can be managed more efficiently. Employees and Human Capital As of December 31, 2022, we had 54 employees, including 37 employees based in our corporate headquarters in Washington, D.C. and 17 employees based in other locations throughout the United States.
When we acquire a 5 property, we review all property-level operating expenditures to determine whether and how the property can be managed more efficiently. Employees and Human Capital As of December 31, 2023, we had 56 employees, including 38 employees based in our corporate headquarters in Washington, D.C. and 18 employees based in other locations throughout the United States.
As of December 31, 2022, the weighted average age of our wholly owned and unconsolidated operating properties was approximately 13.8 years based on the date the property was built or renovated-to-suit, where applicable, and the weighted average remaining lease term was approximately 10.3 years. • U.S. Government Tenant Base with Strong History of Renewal . Our leases with U.S.
As of December 31, 2023, the weighted average age of our wholly owned and unconsolidated operating properties was approximately 14.6 years based on the date the property was built or renovated-to-suit, where applicable, and the weighted average remaining lease term was approximately 10.5 years. • Primarily U.S. Government Tenant Base with Strong History of Renewal . Our leases with U.S.
As of December 31, 2022, we wholly owned 78 operating properties and eight operating properties through an unconsolidated joint venture (the “JV”) in the United States encompassing approximately 8.7 million leased square feet (8.2 million pro rata), including 85 operating properties that were leased primarily to U.S.
As of December 31, 2023, we wholly owned 81 operating properties and nine operating properties through an unconsolidated joint venture (the “JV”) in the United States encompassing approximately 8.8 million leased square feet (8.3 million pro rata), including 88 operating properties that were leased primarily to U.S.
Government agencies and that, in many cases, contain agency-specific design enhancements that allow each tenant agency to better satisfy its mission. We target for acquisition primarily major federal buildings of Class A construction that are less than 20 years old, or have undergone substantial renovation-to-suit for the tenant agency, are at least 85% leased to a single U.S.
We target for acquisition primarily major federal buildings of Class A construction that are less than 20 years old, or have undergone substantial renovation-to-suit for the tenant agency, are at least 85% leased to a single U.S.
Business & Growth Strategies Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation. We pursue the following strategies to achieve these goals: • Pursue Attractive Acquisition Opportunities. We seek to pursue strategic and disciplined acquisitions of properties that we believe are essential to the mission of select U.S.
Business & Growth Strategies Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation. We pursue the following strategies to achieve these goals: • Pursue Attractive Acquisition Opportunities.
We are the sole general partner of our operating partnership and owned approximately 88.2% of the aggregate limited partnership interests in our operating partnership, which we refer to herein as common units, as of December 31, 2022.
Our operating partnership holds substantially all of our assets and conducts substantially all of our business. We are the sole general partner of our operating partnership and owned approximately 93.8% of the aggregate limited partnership interests in our operating partnership, which we refer to herein as common units, as of December 31, 2023.
We encourage our employees to take advantage of various internal training opportunities, as well as those provided by outside service providers to the extent they are business related.
In support of this, we have implemented a remote working policy. • Employee Training and Professional Development . We encourage our employees to take advantage of various internal training opportunities, as well as those provided by outside service providers to the extent they are business related.
In addition, many of our employees hold professional licenses and we encourage them, and in many cases reimburse them, to attend ongoing continuing professional education such as is typically required of certified public accountants. We also provide all employees with biannual performance and career development reviews. • Employee Compensation and Benefits .
Many of our employees hold professional licenses and we encourage them, and in many cases reimburse them, to attend ongoing continuing professional education certifications such as is typically required of certified public accountants.
In 2022, we published our inaugural Environmental, Social, and Governance (“ESG”) report which included the announcement of our alignment with five United Nations Sustainable Development Goals as well as environmental and social goals. These goals aim to help reduce our greenhouse gas (“GHG”) emissions and address climate change performance.
In 2023, we published our second annual Environmental, Social, and Governance (“ESG”) report which included information on our progress towards meeting our previously announced environmental and social goals as well as an update to our alignment with five United Nations Sustainable Development Goals. These goals aim to help reduce our greenhouse gas emissions and address climate change performance.
As of December 31, 2022, we expect to receive aggregate net proceeds of approximately $92.5 million from the sale of an aggregate 4,259,000 shares of the Company's common stock that have not yet been settled, including 2,309,000 shares pursuant to the underwritten public offering of 6,300,000 shares of common stock offered on a forward basis in the third quarter of 2021, and from the sale of 1,950,000 shares under our ATM Programs, assuming these forward sales transactions are physically settled in full using a net weighted average combined initial forward sales price of $21.72 per share.
As of December 31, 2023, we expect to receive aggregate net proceeds of approximately $6.8 million from the sale of an aggregate 500,000 shares of the Company's common stock that have not yet been settled under our ATM Programs, assuming these forward sales transactions are physically settled in full using a net weighted average combined initial forward sales price of $13.52 per share.
As of December 31, 2022, we had total indebtedness of approximately $1.3 billion, including borrowings of approximately $65.5 million outstanding under our $450.0 million senior unsecured revolving credit facility and an additional $50.0 million of undrawn capacity under our 2018 term loan facility.
As of December 31, 2023, we also had the capacity to issue an additional $380.6 million under our ATM Programs. As of December 31, 2023, we had total indebtedness of approximately $1.3 billion, including borrowings of approximately $79.0 million outstanding under our $450.0 million senior unsecured revolving credit facility.
Environmental, Social and Corporate Governance We are committed to sustainability and continually seek to improve our environmental responsibility initiatives, efforts, programs and policies. We have an in-house team that meets regularly to identify, initiate, and monitor sustainable practices in all aspects of our business for the benefit of our tenants, shareholders, employees, and the community at large.
We have an in-house committee, comprised of employees and members of senior management, that meets regularly to identify, initiate, and monitor sustainable practices in all aspects of our business for the benefit of our tenants, shareholders, employees, and the community at large.
Corporate Headquarters Our principal executive offices are located at 2001 K Street NW, Suite 775 Washington, DC 20006, and our telephone number is 202-595-9500. Available Information Our website address is www.easterlyreit.com . Information on our website is not incorporated by reference herein and is not a part of this Annual Report on Form 10-K.
Available Information Our website address is www.easterlyreit.com . Information on our website is not incorporated by reference herein and is not a part of this Annual Report on Form 10-K.
General Services Administration, which we refer to herein as the GSA. Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation. We focus on acquiring, developing and managing U.S.
Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation. We focus primarily on acquiring, developing and managing U.S. Government-leased properties that are essential to supporting the mission of the tenant agency and strive to be a partner of choice for the U.S.
In order to comply with REIT requirements, we may need to forego otherwise attractive opportunities and limit our expansion opportunities and the manner in which we conduct our operations. See Item 1A. “Risk Factors.” Supplemental U.S.
In order to comply with REIT requirements, we may need to forego otherwise attractive opportunities and limit our expansion opportunities and the manner in which we conduct our operations. See Item 1A. “Risk Factors.” Corporate Headquarters Our principal executive offices are located at 2001 K Street NW, Suite 775 North, Washington, DC 20006, and our telephone number is 202-595-9500.
Government maintains “green lease” policies that include the “Promotion of Energy Efficiency and Use of Renewable Energy” as one of the factors it considers when leasing property. For the 2022 certification year, we had 15 ENERGY STAR certified buildings.
We believe the U.S. Government serves as the natural partner for our environmentally-friendly endeavors. The U.S. Government maintains “green lease” policies that include the “Promotion of Energy Efficiency and Use of Renewable Energy” as one of the many factors it considers when leasing property and we continue to partner with the GSA to promote sustainability.
While we believe our culture thrives on hard work, collaboration and teamwork, we also understand that the flexibility to work remotely, on occasion, can be valuable. In support of this, we have implemented a remote working policy. • Employee Training and Professional Development .
Fisher, Chair of the Nominating and Corporate Governance Committee. • Employee Retention . We value employee retention and actively seek to promote from within our company. While we believe our culture thrives on hard work, collaboration and teamwork, we also understand that the flexibility to work remotely, on occasion, can be valuable.
Additionally, during the fourth quarter of 2021, we formed the JV, in which we own a 53% interest, with a leading global investor to acquire a portfolio of properties. During the year ended December 31, 2022, we received net proceeds of $9.4 million through issuance of 434,925 shares of our common stock under our ATM Programs.
Additionally, during 2021, we formed the JV, in which we own a 53% interest, with a leading global investor to acquire a portfolio of properties.
As of December 31, 2022: o 35% and 26% of our employees were female and non-white, respectively; o two of our five named executive officers, including our Chief Financial Officer and Chief Operating Officer and our Chief Accounting Officer, were women, representing 40% of our named executive officer positions; and o two of the three standing committees of our board of directors were chaired by women, including Tara S.
Marino who the board of directors promoted to serve as our President and Chief Operating Officer and our Chief Financial Officer and Chief Accounting Officer, respectively, effective January 1, 2024; and o two of the three standing committees of our board of directors were chaired by women, including Tara S. Innes, Chair of the Audit Committee, and Cynthia A.
Removed
Government-leased properties that are essential to supporting the mission of the tenant agency and strive to be a partner of choice for the U.S. Government, working closely with the tenant agency to meet its needs and objectives.
Added
Government, working closely with the tenant agency to meet its needs and objectives. We may also consider other potential opportunities to add properties to our portfolio, including acquiring properties leased to state and local governments with strong creditworthiness and other opportunities that directly or indirectly support the mission of select government agencies.
Removed
In addition, we wholly owned one property under development that we expect will encompass approximately 0.2 million leased square feet upon completion. Our operating partnership holds substantially all of our assets and conducts substantially all of our business.
Added
Government tenant agencies, one operating property entirely leased to tenant agencies of a U.S. state government and one operating property that was entirely leased to a private tenant. As of December 31, 2023, our operating properties were 97% leased.
Removed
As of December 31, 2022, we also had the capacity to issue an additional $387.4 million under our ATM Programs.
Added
During the year ended December 31, 2023, we received net proceeds of $39.3 million through the issuance of 1,950,000 shares of our common stock under our ATM Programs and $46.8 million through the issuance of 2,309,000 shares in connection with our underwritten public offering during the third quarter of 2021.
Removed
Innes, Chair of the Audit Committee, and Cynthia A. Fisher, Chair of the Nominating and Corporate Governance Committee. • Employee Retention . We value employee retention and actively seek to promote from within our company.
Added
All shares were issued in settlement of previously entered into forward sale transactions in connection with the ATM Programs and the underwritten public offering.
Removed
Additionally, we developed an environmental management system to guide ESG decision making and brought in an ESG software provider to assist in aggregating and analyzing environmental data such as energy and water usage and GHG emissions. We believe the U.S. Government serves as the natural partner for our environmentally-friendly endeavors. Under the Energy Policy Act of 2005, the U.S.
Added
We seek to pursue strategic and disciplined acquisitions of properties that we believe are directly and indirectly essential to the mission of select government agencies and that, in many cases, contain agency-specific design enhancements that allow each tenant agency to better satisfy its mission.
Removed
Federal Income Tax Considerations The following discussion supplements and updates the disclosures under “Certain United States Federal Income Tax Considerations” in the prospectus dated February 25, 2021 contained in our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2021 (such disclosure, the “Base Disclosure”).
Added
As of December 31, 2023: o 41% and 32% of our employees were female and non-white, respectively; o two of our five named executive officers were women, including Meghan G. Baivier and Allison E.
Removed
Capitalized terms used in this section that are not otherwise defined shall have the same meaning as when used in the Base Disclosure. On December 29, 2022, the IRS promulgated final Treasury Regulations under Sections 897, 1441, 1445, and 1446 of the Code that were, in part, intended to coordinate various withholding regimes for non-U.S. stockholders.
Added
Furthermore, we provide a professional development allowance to each of our employees on an annual basis for them to pursue development opportunities such as but not limited to conferences, workshops, webinar and education courses. We also provide all employees with biannual performance and career development reviews. • Employee Compensation and Benefits .
Removed
The new Treasury Regulations provide guidance regarding qualified foreign pension funds and are largely consistent with the previously issued proposed Treasury Regulations. Accordingly, the last two sentences of the first paragraph under the heading “Certain United States Federal Income Tax Considerations—Taxation of Stockholders and Potential Tax Consequences of Their Investment in Shares of Common Stock—Taxation of Non-U.S.
Added
Environmental, Social and Corporate Governance We are committed to sustainability and continually seek to improve our environmental responsibility initiatives, efforts, programs and policies.
Removed
Stockholders—Qualified Foreign Pension Funds” are hereby deleted and replaced with the following: Under Treasury Regulations, subject to the discussion below regarding “qualified holders,” a “qualified controlled entity” also is not generally treated as a foreign person for purposes of FIRPTA.
Added
In 2023, we were recognized as a Premier Member of the EPA’s ENERGY STAR Certification Nation as well as a Silver Level Green Lease Leader by the Department of Energy’s Better Building Alliance. For the 2023 certification year, we had 16 ENERGY STAR certified 7 buildings.
Removed
A qualified controlled entity generally includes a trust or corporation organized under the laws of a foreign country all of the interests of which are held by one or more qualified foreign pension funds either directly or indirectly through one or more qualified controlled entities.
Removed
Additionally, the following two paragraphs are added after the first paragraph under the heading “Certain United States Federal Income Tax Considerations—Taxation of Stockholders and Potential Tax Consequences of Their Investment in Shares of Common Stock—Taxation of Non-U.S.
Removed
Stockholders—Qualified Foreign Pension Funds”: Treasury Regulations further require that a qualified foreign pension fund or qualified controlled entity will not be exempt from FIRPTA with respect to dispositions of U.S. real property interests or REIT distributions attributable to the same unless the qualified foreign pension fund or qualified controlled entity is a “qualified holder.” To be a qualified holder, a qualified foreign pension fund or qualified controlled entity must satisfy one of two alternative tests at the time of the disposition of the U.S. real property interest or the REIT distribution.
Removed
Under the first test, a qualified foreign pension fund or qualified controlled entity is a qualified holder if it owned no U.S. real property interests as of the earliest date during an uninterrupted period ending on the date of the disposition or distribution 8 during which it qualified as a qualified foreign pension fund or qualified controlled entity.
Removed
Alternatively, if a qualified foreign pension fund or qualified controlled entity held U.S. real property interests as of the earliest date during the period described in the preceding sentence, it can be a qualified holder only if it satisfies certain testing period requirements.
Removed
Treasury Regulations also provide that a foreign partnership all of the interests of which are held by qualified holders, including through one or more partnerships, may certify its status as such and will not be treated as a foreign person for purposes of withholding under FIRPTA.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+9 added−13 removed281 unchanged
Biggest changeIn addition, the price of common stock may fluctuate significantly or decline in a high interest rate or volatile economic environment. If economic conditions deteriorate, the ability of lenders to fulfill their obligations under working capital or other credit facilities that we may have in the future may be adversely impacted.
Biggest changeIf economic conditions deteriorate, the ability of lenders to fulfill their obligations under working capital or other credit facilities that we may have in the future may be adversely impacted. 12 We may be unable to identify and successfully complete acquisitions and, even if acquisitions are identified and completed, completed acquisitions may not achieve the intended benefits or may disrupt our plans and operations.
These risks include: • the availability and pricing of financing on favorable terms or at all; • development costs that may be higher than anticipated; • cost overruns and untimely completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages); • the potential that we may expend funds on, and devote management time to projects that we do not complete; and • the inability to complete construction and leasing of a property on schedule, resulting in increased debt service expense and development and renovation costs.
These risks include: • the availability and pricing of financing on favorable terms or at all; • development costs that may be higher than anticipated; • cost overruns and untimely completion of construction (including risks beyond our control, such as weather, labor conditions or material shortages); • the potential that we may expend funds on, and devote management time to projects that we do not complete; and • the inability to complete construction and leasing of a property on schedule, resulting in increased debt service expense and development and renovation costs.
Our development activities may be subject to risks relating to various local, state and federal statutes, ordinances, rules and regulations concerning zoning, building design, construction and similar matters, including local regulations that impose restrictive zoning requirements.
Our development activities may be subject to risks relating to various local, state and federal statutes, ordinances, rules and regulations concerning zoning, building design, construction and similar matters, including local regulations that impose restrictive zoning requirements.
These assessments may have a direct impact on our earnings because recording an impairment charge results in an immediate negative adjustment to earnings. There can be no assurance that we will not take impairment charges in the future related to the impairment of our properties.
These assessments may have a direct impact on our earnings because recording an impairment charge results in an immediate negative adjustment to earnings. There can be no assurance that we will not take charges in the future related to the impairment of our properties.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • require us to dedicate a substantial portion of cash flow from operations to the payment of principal and interest on indebtedness, thereby reducing the funds available for other purposes; • make it more difficult for us to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; • force us to dispose of one or more of our properties, possibly on unfavorable terms (including the possible application of the 100% tax on income from “prohibited transactions”), or in violation of certain covenants to which we may be subject; • subject us to increased sensitivity to interest rate increases; • make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events; • limit our ability to withstand competitive pressures; • limit our ability to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • reduce our flexibility in planning for or responding to changing business, industry and economic conditions; or • place us at a competitive disadvantage to competitors that have relatively less debt than we have.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • require us to dedicate a substantial portion of cash flow from operations to the payment of principal and interest on indebtedness, thereby reducing the funds available for other purposes; • make it more difficult for us to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; 19 • force us to dispose of one or more of our properties, possibly on unfavorable terms (including the possible application of the 100% tax on income from “prohibited transactions”), or in violation of certain covenants to which we may be subject; • subject us to increased sensitivity to interest rate increases; • make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events; • limit our ability to withstand competitive pressures; • limit our ability to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • reduce our flexibility in planning for or responding to changing business, industry and economic conditions; or • place us at a competitive disadvantage to competitors that have relatively less debt than we have.
Our cash flow from operations may be insufficient to fund required distributions, for example, as a result of differences in timing between our cash flow, the receipt of income for GAAP purposes and the recognition of income for U.S. federal 26 income tax purposes, the effect of non-deductible capital expenditures, the effect of limitations on interest and net operating loss deductibility, the creation of reserves, payment of required debt service or amortization payments, or the need to make additional investments in qualifying real estate assets.
Our cash flow from operations may be insufficient to fund required distributions, for example, as a result of differences in timing between our cash flow, the receipt of income for GAAP purposes and the recognition of income for U.S. federal income tax purposes, the effect of non-deductible capital expenditures, the effect of limitations on interest and net operating loss deductibility, the creation of reserves, payment of required debt service or amortization payments, or the need to make additional investments in qualifying real estate assets.
Because these properties have been designed or physically modified to meet the needs of a particular tenant agency, if the current lease is terminated or not renewed, we 9 may be required to renovate the property at substantial costs, decrease the rent we intend to charge or provide other concessions in order to lease the property to another tenant, which could adversely affect our business, financial condition and results of operations.
Because these properties have been designed or physically modified to meet the needs of a particular tenant agency, if the current lease is terminated or not renewed, we may be required to renovate the property at substantial costs, decrease the rent we intend to charge or provide other concessions in order to lease the property to another tenant, which could adversely affect our business, financial condition and results of operations.
These provisions include: • redemption rights for holders of common units; 18 • a requirement that we may not be removed as the general partner of our operating partnership without our consent; • transfer restrictions on common units; and • our ability, as general partner, in some cases, to amend the partnership agreement and to cause the operating partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of the limited partners.
These provisions include: • redemption rights for holders of common units; • a requirement that we may not be removed as the general partner of our operating partnership without our consent; • transfer restrictions on common units; and • our ability, as general partner, in some cases, to amend the partnership agreement and to cause the operating partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of the limited partners.
In addition, a tenant that files for bankruptcy protection may terminate its lease with us under federal law, in which event we would have a general unsecured claim against such tenant that would likely be worth less than 13 the full amount owed to us for the remainder of the lease term, which could adversely affect our business, financial condition and results of operations.
In addition, a tenant that files for bankruptcy protection may terminate its lease with us under federal law, in which event we would have a general unsecured claim against such tenant that would likely be worth less than the full amount owed to us for the remainder of the lease term, which could adversely affect our business, financial condition and results of operations.
Although our board of 17 directors does not currently intend to do so, it could authorize us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or that our common stockholders otherwise believe to be in their best interests.
Although our board of directors does not currently intend to do so, it could authorize us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or that our common stockholders otherwise believe to be in their best interests.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and trading price of our common stock. The form, timing or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and trading price of our common stock. 22 The form, timing or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.
Unfavorable market conditions in the geographic markets in which we operate and unfavorable economic conditions in the United States and globally may significantly affect our occupancy levels, rental rates, rent collections, operating expenses, the market value of our assets and our ability to strategically acquire, dispose of, recapitalize or refinance our properties on economically favorable terms or at all.
Unfavorable market conditions in the geographic markets in which we operate and unfavorable economic conditions in the United States and globally may significantly affect our occupancy levels, rental rates, rent collections, operating expenses, the market value of our assets and our ability to strategically acquire, dispose of, recapitalize or refinance our properties on economically 9 favorable terms or at all.
In addition, rules impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are treated as not being conducted on an arm’s-length basis. We have jointly elected with three subsidiaries for such subsidiaries to be treated as TRSs for U.S. federal income tax purposes.
In addition, rules impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are 26 treated as not being conducted on an arm’s-length basis. We have jointly elected with three subsidiaries for such subsidiaries to be treated as TRSs for U.S. federal income tax purposes.
The loss of services of one or more of these members of our senior management team, or our inability to attract and retain highly qualified personnel, could have a material adverse effect on our business, financial condition and results of operations and weaken our relationships with lenders, business partners, industry participants, the GSA and U.S. Government agencies.
The loss of services of one or more of these members of our senior management team, or our inability to attract and retain highly qualified personnel, could have a material adverse effect on our business, financial 27 condition and results of operations and weaken our relationships with lenders, business partners, industry participants, the GSA and U.S. Government agencies.
Environmental laws also may create liens on contaminated sites in favor of the U.S. Government for damages 14 and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property may be used or how businesses may be operated on that property.
Environmental laws also may create liens on contaminated sites in favor of the U.S. Government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property may be used or how businesses may be operated on that property.
In addition, as a REIT, we will be subject to U.S. federal income tax to 16 the extent that we distribute less than 100% of our taxable income (including capital gains) and will be subject to a 4% nondeductible excise tax on the amount by which our distributions in any calendar year are less than a minimum amount specified by the Code.
In addition, as a REIT, we will be subject to U.S. federal income tax to the extent that we distribute less than 100% of our taxable income (including capital gains) and will be subject to a 4% nondeductible excise tax on the amount by which our distributions in any calendar year are less than a minimum amount specified by the Code.
This competition may affect our ability to attract and retain tenants, may reduce the rents we are able to charge and could have a material adverse effect on our business, financial condition and results of operations. We may be subject to increased costs of insurance and limitations on coverage, particularly regarding acts of terrorism.
This competition may affect our ability to attract and retain tenants, may reduce the rents we are able to charge and could have a material adverse effect on our business, financial condition and results of operations. 13 We may be subject to increased costs of insurance and limitations on coverage, particularly regarding acts of terrorism.
The expenditure of any sums in connection therewith will 12 reduce the cash available for distribution and may require us to fund deficits resulting from operating a property. No assurance can be given that we will have funds available to make such repairs or improvements.
The expenditure of any sums in connection therewith will reduce the cash available for distribution and may require us to fund deficits resulting from operating a property. No assurance can be given that we will have funds available to make such repairs or improvements.
As a result, certain of our other debt may cross-default, we may be forced to postpone capital expenditures necessary for the maintenance of our properties, we may have to dispose of one or more properties on terms that would otherwise be 20 unacceptable to us or we may be forced to allow the mortgage holder to foreclose on a property.
As a result, certain of our other debt may cross-default, we may be forced to postpone capital expenditures necessary for the maintenance of our properties, we may have to dispose of one or more properties on terms that would otherwise be unacceptable to us or we may be forced to allow the mortgage holder to foreclose on a property.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the distribution requirements applicable to REITs under the Code.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income 21 on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the distribution requirements applicable to REITs under the Code.
In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to make distributions necessary to meet the distribution requirements imposed on REITs under the Code. 22 Risks Related to Our Common Stock The market price and trading volume of our common stock may be volatile.
In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to make distributions necessary to meet the distribution requirements imposed on REITs under the Code. Risks Related to Our Common Stock The market price and trading volume of our common stock may be volatile.
Deficiencies, including any material weakness, in our internal controls over financial reporting which may occur in the future could result in misstatements of our results of operations that could require a restatement, failing to meet our public company reporting obligations and causing investors to lose confidence in our reported financial information.
Deficiencies, including any material weakness, in our internal controls over financial reporting which may occur in the future could result in misstatements of our results of operations that could require a restatement, failing to meet our public company 28 reporting obligations and causing investors to lose confidence in our reported financial information.
This section contains forward looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 1. Risks Related to our Business and Operations We depend on the U.S. Government and its agencies for substantially all of our revenues and any failure by the U.S.
This section contains forward looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 1. 8 Risks Related to our Business and Operations We depend on the U.S. Government and its agencies for substantially all of our revenues and any failure by the U.S.
Moreover, in order to qualify as a REIT, we must meet, on an ongoing basis, various tests regarding the nature and diversification of our assets and our income, the ownership of our outstanding stock, the absence of inherited retained earnings from non-REIT periods and the amount of our distributions.
Moreover, in order to qualify as a REIT, we must meet, on an ongoing basis, various tests regarding the nature and diversification of 23 our assets and our income, the ownership of our outstanding stock, the absence of inherited retained earnings from non-REIT periods and the amount of our distributions.
Government tenant agencies, the Department of Veteran Affairs (“VA”), Federal Bureau of Investigation (“FBI”), and Drug Enforcement Administration (“DEA”), accounted for an aggregate of approximately 47.2% of our total leased square feet and an aggregate of approximately 53.6% of our total annualized lease income. Each U.S.
Government tenant agencies, the Department of Veteran Affairs (“VA”), Federal Bureau of Investigation (“FBI”), and Drug Enforcement Administration (“DEA”), accounted for an aggregate of approximately 47.2% of our total leased square feet and an aggregate of approximately 53.2% of our total annualized lease income. Each U.S.
In addition, 23 repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of our share repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.
In addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of our share repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.
A material failure to comply with these laws could subject us to fines, penalties and damages, cause us to be in default of our leases and other contracts with the U.S. Government and bar us from entering into future leases and other contracts with the U.S. Government.
A material failure to comply with 14 these laws could subject us to fines, penalties and damages, cause us to be in default of our leases and other contracts with the U.S. Government and bar us from entering into future leases and other contracts with the U.S. Government.
Real estate investments are relatively illiquid, which may tend to limit our ability to react promptly to changes in economic or other market conditions. Our ability to dispose of assets in the future will depend on prevailing economic and market conditions.
Real estate investments are relatively illiquid and may limit our flexibility. Real estate investments are relatively illiquid, which may tend to limit our ability to react promptly to changes in economic or other market conditions. Our ability to dispose of assets in the future will depend on prevailing economic and market conditions.
Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired entities, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise.
Unknown or contingent liabilities might include liabilities for clean-up or 15 remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired entities, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise.
Some of our debt agreements contain certain cash flow sweep requirements and mandatory escrows, and our property mortgages generally require certain mandatory prepayments upon disposition of underlying collateral. Early repayment of certain mortgages may be subject to prepayment penalties.
Some of our debt agreements contain certain cash flow sweep requirements and mandatory escrows, 20 and our property mortgages generally require certain mandatory prepayments upon disposition of underlying collateral. Early repayment of certain mortgages may be subject to prepayment penalties.
As a result, the 24 amount available for distribution to holders of our common stock would be reduced for the year or years involved, and we would no longer be required to make distributions to our stockholders.
As a result, the amount available for distribution to holders of our common stock would be reduced for the year or years involved, and we would no longer be required to make distributions to our stockholders.
We believe our operating partnership qualifies and will continue to qualify as a partnership for U.S. federal income tax purposes. Assuming that it qualifies as a partnership for U.S. federal income tax purposes, our operating partnership itself will not be subject to U.S. federal income tax on its income.
We believe our operating partnership qualifies and will continue to qualify as a partnership for U.S. federal income tax purposes. Assuming that it qualifies as a partnership for U.S. federal income tax purposes, our operating partnership itself generally will not be subject to U.S. federal income tax on its income.
Based upon our investment objectives, we believe that overall, our properties should not be considered property held primarily for sale to customers in the ordinary course of business.
Based upon our investment objectives, we believe that overall, our 25 properties should not be considered property held primarily for sale to customers in the ordinary course of business.
These events could materially and adversely affect us, including our business, reputation, results of operations, financial condition or liquidity. Item 1B. Unresolve d Staff Comments None. 29
These events could materially and adversely affect us, including our business, reputation, results of operations, financial condition or liquidity. Item 1B. Unresolve d Staff Comments None.
Our ability to lease our properties at favorable rates may be adversely affected by increases in supply of office space and is dependent upon overall economic conditions, which are adversely affected by, among other things, job losses and unemployment levels, inflation, rising interest rates, recession, stock market volatility and uncertainty about the future.
Our ability to lease our properties at favorable rates may be adversely affected by increases in supply of office space and is dependent upon overall economic conditions, which are adversely affected by, among other things, job losses and unemployment levels, inflation, rising interest rates, recessions, stock market volatility and uncertainty about the future.
Increased economic uncertainty in the United States and abroad could lead to periods of economic slowdown or recession, continued inflation and higher interest rates or declining demand for real estate, and the occurrence of such events, or public perception that any of these events may occur, could result in a general decrease in rental rates.
Continued economic uncertainty in the United States and abroad could lead to sustained periods of economic slowdown or recession, continued inflation and higher interest rates or declining demand for real estate, and the occurrence of such events, or public perception that any of these events may occur, could result in a general decrease in rental rates.
Although we make efforts to maintain the security and integrity of our IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
Although we make efforts to maintain the security and integrity of our IT networks and related systems, and we have implemented various measures to manage the risk of a security breach, incident, compromise, or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
Government and its agencies to perform their obligations under their leases or renew their leases upon expiration could have a material adverse effect on our business, financial condition and results of operations. Substantially all of our current rents come from U.S. Government tenant agencies. As of December 31, 2022, our U.S.
Government and its agencies to perform their obligations under their leases or renew their leases upon expiration could have a material adverse effect on our business, financial condition and results of operations. Substantially all of our current rents come from U.S. Government tenant agencies. As of December 31, 2023, our U.S.
These two subsidiaries and any other TRSs that we form will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but is not required to be distributed to us unless necessary to maintain our REIT qualification.
These three subsidiaries and any other TRSs that we form will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but is not required to be distributed to us unless necessary to maintain our REIT qualification.
Under current law, Section 1031 exchanges only apply to real property and do not apply to any 27 related personal property transferred with the real property.
Under current law, Section 1031 exchanges only apply to real property and do not apply to any related personal property transferred with the real property.
We are exposed to risks associated with property development and redevelopment, including new developments for anticipated tenant agencies and build-to-suit renovations for existing tenant agencies. As of December 31, 2022, we had one property under development. We intend to continue to engage in development and redevelopment activities with respect to our properties, including build-to-suit renovations for existing U.S.
We are exposed to risks associated with property development and redevelopment, including new developments for anticipated tenant agencies and build-to-suit renovations for existing tenant agencies. As of December 31, 2023, we had one property under development. We intend to continue to engage in development and redevelopment activities with respect to our properties, including build-to-suit renovations for existing U.S.
Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases, are designed to not be detected and, in fact, may not be detected.
Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches, incidents, and compromises evolve and generally are not recognized until launched against a target, and in some cases, are designed to not be detected and, in fact, may not be detected.
Government tenant agencies accounted for 97.1% of our annualized lease income. We expect that leases to agencies of the U.S. Government will continue to be the primary source of our revenues for the foreseeable future. Due to such concentration, any failure by the U.S.
Government tenant agencies accounted for 97.3% of our annualized lease income. We expect that leases to agencies of the U.S. Government will continue to be the primary source of our revenues for the foreseeable future. Due to such concentration, any failure by the U.S.
The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, which, in turn, may lead to increased costs to protect our network and systems.
The risk of a security breach, incident, compromise or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, which, in turn, may lead to increased costs to protect our network, data and systems.
The COVID-19 pandemic, or any future pandemic, epidemic or outbreak of any other highly infectious disease, may adversely affect our business, financial condition, results of operations and cash flows, and may have the effect of heightening many of the risks within this “Risk Factors” section. A U.S.
Any future pandemic, epidemic or outbreak of any highly infectious disease may adversely affect our business, financial condition, results of operations and cash flows, and may have the effect of heightening many of the risks within this “Risk Factors” section. A U.S.
Certain mortgages on our properties contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage. As of December 31, 2022, we had $240.6 million of combined United States property mortgages and other secured debt.
Certain mortgages on our properties contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage. As of December 31, 2023, we had $220.6 million of combined United States property mortgages and other secured debt.
Numerous treaties, laws and regulations have been enacted or proposed in an effort to regulate climate change, including regulations aimed at limiting 11 GHG emissions and the implementation of “green” building codes. These laws and regulations may require us to make improvements to our existing properties and result in increased operating costs.
Numerous treaties, laws and regulations have been enacted or proposed in an effort to regulate climate change, including regulations aimed at limiting greenhouse gas emissions and the implementation of “green” building codes. These laws and regulations may require us to make improvements to our existing properties and result in increased operating costs.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential tenant information, such as individually identifiable information relating to financial accounts.
We rely on commercially available systems, software, tools and monitoring and third-party providers to provide security for processing, transmitting and storing confidential tenant information, such as individually identifiable information relating to financial accounts.
COVID-19 or any future pandemic, epidemic or outbreak of any other highly infectious disease could have an adverse effect on our business, financial condition, results of operations and cash flows.
Any future pandemic, epidemic or outbreak of any highly infectious disease could have an adverse effect on our business, financial condition, results of operations and cash flows.
Tenants occupying approximately 7.8% of our leased square feet and contributing approximately 7.8% of our annualized lease income (in each case, as of December 31, 2022) currently have exercisable rights to terminate their leases before the stated soft-term of their lease expires. For fiscal policy reasons, security concerns or other reasons, some or all of our U.S.
Tenants occupying approximately 7.2% of our leased square feet and contributing approximately 6.9% of our annualized lease income (in each case, as of December 31, 2023) currently have exercisable rights to terminate their leases before the stated soft-term of their lease expires. For fiscal policy reasons, security concerns or other reasons, some or all of our U.S.
As of December 31, 2022, we had total indebtedness of approximately $1.3 billion, including approximately $65.5 million outstanding under our $450.0 million senior unsecured revolving credit facility, which we refer to as our revolving credit facility, $150.0 million outstanding under our $200.0 million senior unsecured term loan facility, which we refer to as our 2018 term loan facility, $100.0 million outstanding under our $100.0 million senior unsecured term loan facility, which we refer to as our 2016 term loan facility, $175.0 million of outstanding fixed rate, senior unsecured notes, which we refer to as our 2017 senior unsecured notes, $275.0 million of outstanding fixed rate, senior unsecured notes, which we refer to as our 2019 senior unsecured notes and $250.0 million of outstanding fixed rate, senior unsecured notes, which we refer to as our 2021 senior unsecured notes.
As of December 31, 2023, we had total indebtedness of approximately $1.3 billion, including approximately $79.0 million outstanding under our $450.0 million senior unsecured revolving credit facility, which we refer to as our revolving credit facility, $200.0 million outstanding under our $200.0 million senior unsecured term loan facility, which we refer to as our 2018 term loan facility, $100.0 million outstanding under our $100.0 million senior unsecured term loan facility, which we refer to as our 2016 term loan facility, $175.0 million of outstanding fixed rate, senior unsecured notes, which we refer to as our 2017 senior unsecured notes, $275.0 million of outstanding fixed rate, senior unsecured notes, which we refer to as our 2019 senior unsecured notes and $250.0 million of outstanding fixed rate, senior unsecured notes, which we refer to as our 2021 senior unsecured notes.
The COVID-19 pandemic, including the emergence of additional variants, has caused, and COVID-19 or any future pandemic, epidemic or outbreak of any other highly infectious disease may continue to cause, significant disruptions to the U.S. and global economy and has contributed, and may continue to contribute, to significant volatility and negative pressure in financial markets.
Any future pandemic, epidemic or outbreak of any highly infectious disease, including the emergence of additional COVID-19 variants, may cause significant disruptions to the U.S. and global economy and could contribute to significant volatility and negative pressure in financial markets.
As of December 31, 2022, we had six interest rate swaps in place with an aggregate notional value of $250.0 million to mitigate our exposure to fluctuations in short term interest rates and fix the interest rate on our 2016 term loan facility and 2018 term loan facility.
As of December 31, 2023, we had three interest rate swaps in place with an aggregate notional value of $300.0 million to mitigate our exposure to fluctuations in short term interest rates and fix the interest rate on our 2016 term loan facility and 2018 term loan facility.
We are subject to risks from natural disasters and climate change. Natural disasters and severe weather such as earthquakes, tornadoes, hurricanes, floods, or rising sea levels due to climate change may result in significant damage to our properties.
Natural disasters and severe weather such as earthquakes, tornadoes, hurricanes, floods, or rising sea levels due to climate change may result in significant damage to our properties.
As of December 31, 2022, we had $81.2 million of outstanding consolidated debt that, pursuant to the documentation governing such debt, bears interest at variable rates, and we expect that we may also borrow additional money at variable interest rates in the future.
As of December 31, 2023, we had $79.0 million of outstanding consolidated debt that, pursuant to the documentation governing such debt, bears interest at variable rates, and we expect that we may also borrow additional money at variable interest rates in the future.
As of December 31, 2022, we had total indebtedness of approximately $1.3 billion including approximately $65.5 million outstanding under our revolving credit facility, $250.0 million outstanding in the aggregate under our 2018 term loan facility and our 2016 term loan facility and $700.0 million in the aggregate under our 2017 senior unsecured notes, 2019 senior unsecured notes and 2021 senior unsecured notes.
As of December 31, 2023, we had total indebtedness of approximately $1.3 billion including approximately $79.0 million outstanding under our revolving credit facility, $300.0 million outstanding in the aggregate under our 2018 term loan facility and our 2016 term loan facility and $700.0 million in the aggregate under our 2017 senior unsecured notes, 2019 senior unsecured notes and 2021 senior unsecured notes.
Government workforce; and • economic conditions that could cause an increase in our operating expenses, such as increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site associates and routine maintenance. 10 Our properties are leased to a limited number of U.S.
Government workforce; and • economic conditions that could cause an increase in our operating expenses, such as inflation, increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site associates and routine maintenance.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures or to adequately address or mitigate any security breach, incident, or compromise, and thus it is impossible for us to entirely mitigate this risk.
Government tenant agencies, and a change to any of these agencies’ missions could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2022, three of our U.S.
Our properties are leased to a limited number of U.S. Government tenant agencies, and a change to any of these agencies’ missions could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2023, three of our U.S.
Factors that may affect our occupancy levels, our rental revenues, our net operating income, our Funds From Operations or the value of our properties include the following, among others: • downturns in global, national, regional and local economic conditions; • possible reduction of the U.S.
Factors that may affect our occupancy levels, our rental revenues, our net operating income, our Funds From Operations (“FFO”) or the value of our properties include the following, among others: • downturns in global, national, regional and local economic conditions, including as a result of elevated inflation and interest rates; • possible reduction of the U.S.
The extent to which the COVID-19 pandemic, or any future pandemic, epidemic or outbreak of any other highly infectious disease, impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, the emergence and characteristics of new variants, the actions taken to contain the pandemic or mitigate its impact, including the adoption, administration and effectiveness of available COVID-19 vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others.
The extent to which any future pandemic, epidemic or outbreak of any highly infectious disease impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.
As of December 31, 2022, leases representing approximately 18.4% of our total annualized lease income and approximately 19.7% of the square footage of the properties in our portfolio will expire by the end of 2025.
As of December 31, 2023, leases representing approximately 13.7% of our total annualized lease income and approximately 14.4% of the square footage of the properties in our portfolio will expire by the end of 2026.
Although the reduced U.S. federal income tax rate applicable to dividend income from regular corporate dividends does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates or are otherwise sensitive to these lower rates to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock. 25 A portion of our distributions may be treated as a return of capital for U.S. federal income tax purposes, which could reduce the basis of a stockholder’s investment in shares of our common stock and, if greater than such basis, may trigger taxable gain.
Although the reduced U.S. federal income tax rate applicable to dividend income from regular corporate dividends does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates or are otherwise sensitive to these lower rates to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.
We currently have a concentration of properties located in California and are exposed to changes in market conditions and natural disasters in this state. Seventeen of our properties are located in California, accounting for approximately 14.8% of our total leased square feet and approximately 19.9% of our total annualized lease income as of December 31, 2022.
We currently have a concentration of properties located in California and are exposed to changes in market conditions and natural disasters in this state. Eighteen of our properties are located in California, accounting for approximately 15.7% of our total leased square feet and approximately 20.2% of our total annualized lease income as of December 31, 2023.
Our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated.
Our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated. 18 In addition, our charter authorizes us, and our bylaws require us, to indemnify our directors for actions taken by them in those capacities to the maximum extent permitted by Maryland law.
As a result of this concentration, a material portion of our portfolio may be exposed to the effects of economic and real estate conditions in California markets, such as the supply of competing properties, general levels of employment and economic activity.
As a result of this concentration, a material portion of our portfolio may be exposed to the effects of economic and real estate conditions in California markets, such as the supply of competing properties, general levels of employment and economic activity. In addition, historically, California has been vulnerable 10 to natural disasters, such as earthquakes, wildfires, floods and mudslides.
In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, or adversely impact our ability to attract officers and directors. 28 We rely on information technology (“IT”) in our operations and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, or adversely impact our ability to attract officers and directors.
Government assigned contracting officer or through the Civilian Board of Directors of Contract Appeals and ultimately before the U.S. Court of Federal Claims. Furthermore, we may not be able to successfully appeal a condemnation proceeding brought by a U.S. Government tenant agency which could have a material adverse effect on our business, financial condition and results of operations.
Government assigned contracting officer or through the Civilian Board of Directors of Contract Appeals and ultimately before the U.S. Court of Federal Claims. Furthermore, we may not be able to successfully appeal a condemnation proceeding brought by a U.S.
Dividends payable by REITs generally do not qualify for reduced tax rates applicable to non-corporate taxpayers. The maximum U.S. federal income tax rate for certain qualified dividends payable to United States stockholders that are individuals, trusts and estates generally is currently 20%.
The maximum U.S. federal income tax rate for certain qualified dividends payable to United States stockholders that are individuals, trusts and estates generally is currently 20%. Dividends payable by REITs, however, are generally not eligible for the reduced rates and therefore are taxable as ordinary income when paid to such stockholders.
Nevertheless, the duties and obligations of the general partner of our operating partnership may come into conflict with the duties of our directors and officers to our company and our stockholders. 19 We do not own the Easterly name, but have entered into a license agreement with Easterly Capital, LLC ( “ Easterly Capital ” ) consenting to our use of the Easterly logo and name.
We do not own the Easterly name, but have entered into a license agreement with Easterly Capital, LLC ( “ Easterly Capital ” ) consenting to our use of the Easterly logo and name.
In addition, historically, California has been vulnerable to natural disasters and we are therefore susceptible to the risks of natural disasters, such as earthquakes, wildfires, floods and mudslides. To the extent that weak economic or real estate conditions or natural disasters affect California, our business, financial condition and results of operations could be negatively impacted.
To the extent that weak economic or real estate conditions or natural disasters affect California, our business, financial condition and results of operations could be negatively impacted. We are subject to risks from natural disasters and climate change.
Dividends payable by REITs, however, are generally not eligible for the reduced rates and therefore are taxable as ordinary income when paid to such stockholders. However, current law provides a deduction of 20% of a non-corporate taxpayer’s ordinary REIT dividends with such deduction scheduled to expire for taxable years beginning after December 31, 2025.
However, current law provides a deduction of 20% of a non-corporate taxpayer’s ordinary REIT dividends with such deduction scheduled to expire for taxable years beginning after December 31, 2025.
The impact of prolonged government shutdowns and budgetary reductions or impasses could have a material adverse effect on our business, financial condition and results of operations. Substantially all of our revenue is dependent on the receipt of rent payments from the GSA and U.S. Government tenant agencies.
Government tenant agency which could have a material adverse effect on our business, financial condition and results of operations. 11 The impact of prolonged government shutdowns and budgetary reductions or impasses could have a material adverse effect on our business, financial condition and results of operations.
We do not intend to issue stock to former stockholders of an Easterly Fund REIT if we believe it could cause us to be treated as its successor. Our charter contains ownership restrictions that will prevent any overlapping ownership that would cause us to be a successor of an Easterly Fund REIT, and we intend to enforce such provisions.
We do not intend to issue stock to former stockholders of an Easterly Fund REIT if we believe it could cause us to be treated as its successor.
On January 26, 2023, we paid off the full $15.7 million outstanding balance of the mortgage on DEA – Pleasanton. 21 Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate, which could adversely affect us.
Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate, which could adversely affect us.
Agreements for the acquisition of properties are subject to customary conditions to closing, including completion of due diligence investigations and other conditions that are not within our control that may not be satisfied. In this event, we may be unable to complete an acquisition after incurring certain acquisition-related costs.
We may be unable to acquire additional properties and grow our business and any acquisitions we make may prove unsuccessful. Agreements for the acquisition of properties are subject to customary conditions to closing, including completion of due diligence investigations and other conditions that are not within our control that may not be satisfied.
It is possible that our security measures will not be able to prevent the systems’ improper functioning, or the improper disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information.
It is possible that our security measures will not be able to prevent the systems’ improper functioning, or the improper disclosure of personally identifiable information such as in the event of cyber-attacks.
We believe our existing properties are in substantial compliance with the ADA and that we will not be required to make substantial capital 15 expenditures to address the requirements of the ADA.
We believe our existing properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, the obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.
We are subject to risks involved in real estate activity through joint ventures. We have acquired, are currently acquiring and may in the future acquire and own properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures.
We have acquired, are currently acquiring and may in the future acquire and own properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. Therefore, we may not be in a position to exercise sole decision-making authority regarding such joint venture or the properties held by such joint venture.
Therefore, although it may be in our stockholders’ best interests that we sell a contributed property, it may be economically prohibitive for us to do so because of these obligations. In the future, we and our operating partnership may enter into additional tax protection agreements which could further limit our flexibility to sell or otherwise dispose of our properties.
Therefore, although it may be in our stockholders’ best interests that we sell a contributed property, it may be economically prohibitive for us to do so because of these obligations.

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Item 2. Properties

Properties — owned and leased real estate

24 edited+2 added−4 removed3 unchanged
Biggest changeGovernment Leased Properties (Cont.) JUD - Del Rio Del Rio, TX C/O 2024 89,880 $ 2,827,811 0.9 % $ 31.46 FBI - Mobile Mobile, AL O 2029 76,112 2,788,528 0.9 % 36.64 ICE - Albuquerque Albuquerque, NM O 2027 71,100 2,788,114 0.9 % 39.21 JUD - El Centro El Centro, CA C/O 2034 43,345 2,765,592 0.9 % 63.80 DEA - Pleasanton Pleasanton, CA L 2035 42,480 2,726,465 0.9 % 64.18 DEA - Dallas Lab Dallas, TX L 2038 49,723 2,716,354 0.9 % 54.63 FBI - Albany Albany, NY O 2036 69,476 2,677,246 0.9 % 38.53 SSA - Charleston Charleston, WV O 2024 110,000 2,650,012 0.9 % 24.09 DEA - Sterling Sterling, VA L 2037 49,692 2,613,097 0.9 % 52.59 DEA - Upper Marlboro Upper Marlboro, MD L 2037 50,978 2,522,977 0.8 % 49.49 USAO - Louisville Louisville, KY O 2031 60,000 2,501,775 0.8 % 41.70 TREAS - Birmingham Birmingham, AL O 2029 83,676 2,484,965 0.8 % 29.70 NARA - Broomfield Broomfield, CO O/W 2032 161,730 2,359,069 0.8 % 14.59 JUD - Charleston Charleston, SC C/O 2040 52,339 2,337,677 0.8 % 44.66 Various GSA - Cleveland (6) Brooklyn Heights, OH O 2028 - 2040 61,384 2,256,794 0.7 % 36.77 CBP - Savannah Savannah, GA L 2033 35,000 2,234,261 0.7 % 63.84 DEA - Dallas Dallas, TX O 2041 71,827 2,215,883 0.7 % 30.85 NWS - Kansas City Kansas City, MO O 2033 94,378 2,114,494 0.7 % 22.40 JUD - Jackson Jackson, TN C/O 2023 73,397 2,065,187 0.7 % 28.14 DEA - Santa Ana Santa Ana, CA O 2024 39,905 1,943,792 0.6 % 48.71 DEA - North Highlands Sacramento, CA O 2033 37,975 1,896,685 0.6 % 49.95 NPS - Omaha Omaha, NE O 2024 62,772 1,844,989 0.6 % 29.39 VA - Golden Golden, CO O/W 2026 56,753 1,771,878 0.6 % 31.22 USCG - Martinsburg Martinsburg, WV O 2027 59,547 1,595,716 0.5 % 26.80 VA - Charleston North Charleston, SC W 2040 97,718 1,576,824 0.5 % 16.14 JUD - Aberdeen Aberdeen, MS C/O 2025 46,979 1,559,822 0.5 % 33.20 GSA - Clarksburg Clarksburg, WV O 2024 63,750 1,499,448 0.5 % 23.52 DEA - Birmingham Birmingham, AL O 2023 35,616 1,423,869 0.5 % 39.98 DEA - Albany Albany, NY O 2025 31,976 1,380,195 0.5 % 43.16 USAO - Springfield Springfield, IL O 2038 43,600 1,372,733 0.4 % 31.48 DEA - Riverside Riverside, CA O 2032 34,354 1,280,417 0.4 % 37.27 JUD - Council Bluffs Council Bluffs, IA C/O 2041 28,900 1,272,798 0.4 % 44.04 SSA - Dallas Dallas, TX O 2035 27,200 1,056,391 0.3 % 38.84 JUD - South Bend South Bend, IN C/O 2027 30,119 794,157 0.3 % 26.37 ICE - Louisville Louisville, KY O 2036 17,420 647,615 0.2 % 37.18 DEA - San Diego San Diego, CA W 2032 16,100 552,336 0.2 % 34.31 SSA - San Diego San Diego, CA O 2032 10,059 433,434 0.1 % 43.09 DEA - Bakersfield Bakersfield, CA O 2038 9,800 402,401 0.1 % 41.06 ICE - Otay San Diego, CA O 2027 7,434 256,782 0.1 % 34.54 Subtotal 7,639,583 $ 265,985,447 87.2 % $ 34.82 Wholly Owned Privately Leased Property 501 East Hunter Street - Lummus Corporation Lubbock, TX W/D 2028 70,078 401,112 0.1 % $ 5.72 Subtotal 70,078 $ 401,112 0.1 % $ 5.72 Wholly Owned Properties Total / Weighted Average 7,709,661 $ 266,386,559 87.3 % $ 34.55 32 Property Name Location Property Type (1) Tenant Lease Expiration Year (2) Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income Annualized Lease Income per Leased Square Foot Unconsolidated Real Estate Venture U.S.
Biggest changeGovernment Leased Properties (Cont.) DEA - Pleasanton Pleasanton, CA L 2035 42,480 $ 2,765,720 0.9 % $ 65.11 DEA - Upper Marlboro Upper Marlboro, MD L 2037 50,978 2,745,212 0.9 % 53.85 SSA - Charleston Charleston, WV O 2029 110,000 2,706,668 0.9 % 24.61 FBI - Albany Albany, NY O 2036 69,476 2,697,700 0.9 % 38.83 TREAS - Birmingham Birmingham, AL O 2029 83,676 2,613,424 0.8 % 31.23 USAO - Louisville Louisville, KY O 2031 60,000 2,539,045 0.8 % 42.32 JUD - Charleston Charleston, SC C/O 2040 52,339 2,522,970 0.8 % 48.20 JUD - Jackson Jackson, TN C/O 2043 75,043 2,386,456 0.8 % 31.80 NARA - Broomfield Broomfield, CO O/W 2032 161,730 2,373,591 0.7 % 14.68 CBP - Savannah Savannah, GA L 2033 35,000 2,267,962 0.7 % 64.80 Various GSA - Cleveland (6) Brooklyn Heights, OH O 2028 - 2040 61,384 2,262,036 0.7 % 36.85 DEA - Dallas Dallas, TX O 2041 71,827 2,251,355 0.7 % 31.34 NWS - Kansas City Kansas City, MO O 2033 94,378 2,143,349 0.7 % 22.71 GSA - Clarksburg Clarksburg, WV O 2039 63,750 2,094,870 0.7 % 32.86 DEA - Santa Ana Santa Ana, CA O 2029 39,905 2,002,191 0.6 % 50.17 NPS - Omaha Omaha, NE O 2029 62,772 1,954,754 0.6 % 31.14 DEA - North Highlands Sacramento, CA O 2033 37,975 1,914,312 0.6 % 50.41 VA - Golden Golden, CO O/W 2026 56,753 1,769,302 0.6 % 31.18 JUD - Newport News Newport News, VA C/O 2033 35,005 1,660,941 0.5 % 47.45 USCG - Martinsburg Martinsburg, WV O 2027 59,547 1,611,989 0.5 % 27.07 JUD - Aberdeen Aberdeen, MS C/O 2025 46,979 1,562,188 0.5 % 33.25 VA - Charleston (7) North Charleston, SC W 2024 / 2040 102,718 1,553,987 0.5 % 15.13 DHS - Atlanta (8) Atlanta, GA O 2031 - 2038 47,110 1,467,480 0.5 % 31.15 DEA - Albany Albany, NY O 2025 31,976 1,400,197 0.4 % 43.79 USAO - Springfield Springfield, IL O 2038 43,600 1,381,505 0.4 % 31.69 DEA - Riverside Riverside, CA O 2032 34,354 1,310,541 0.4 % 38.15 DEA - Birmingham Birmingham, AL O 2038 35,616 1,296,804 0.4 % 36.41 JUD - Council Bluffs Council Bluffs, IA C/O 2041 28,900 1,287,379 0.4 % 44.55 SSA - Dallas Dallas, TX O 2035 27,200 1,061,702 0.3 % 39.03 JUD - South Bend South Bend, IN C/O 2027 30,119 796,519 0.3 % 26.45 ICE - Louisville Louisville, KY O 2036 17,420 654,219 0.2 % 37.56 DEA - San Diego San Diego, CA W 2032 16,100 556,881 0.2 % 34.59 DEA - Bakersfield Bakersfield, CA O 2038 9,800 487,590 0.2 % 49.75 SSA - San Diego San Diego, CA O 2032 10,059 447,488 0.1 % 44.49 ICE - Otay San Diego, CA O 2027 7,434 259,066 0.1 % 34.85 Subtotal 7,618,634 $ 270,421,014 85.5 % $ 35.49 Wholly Owned State and Local Government Leased Property CA - Anaheim Anaheim, CA O 2033 / 2034 95,273 3,256,203 1.0 % $ 34.18 Subtotal 95,273 $ 3,256,203 1.0 % $ 34.18 Wholly Owned Privately Leased Property 501 East Hunter Street - Lummus Corporation Lubbock, TX W/D 2028 70,078 400,380 0.1 % $ 5.71 Subtotal 70,078 $ 400,380 0.1 % $ 5.71 Wholly Owned Properties Total / Weighted Average 7,783,985 274,077,597 86.6 % $ 35.21 32 Property Name Location Property Type (1) Tenant Lease Expiration Year (2) Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income Annualized Lease Income per Leased Square Foot Unconsolidated Real Estate Venture U.S.
We calculate annualized lease income as annualized contractual base rent for the last month in a specified period, plus the annualized straight line rent adjustments for the last month in such period and the annualized net expense reimbursements earned by us for the last month in such period. 30 The table set forth below shows information relating to the properties we owned, or in which we had an ownership interest, at December 31, 2022, and it includes properties held by our unconsolidated joint venture: Property Name Location Property Type (1) Tenant Lease Expiration Year (2) Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income Annualized Lease Income per Leased Square Foot Wholly Owned U.S.
We calculate annualized lease income as annualized contractual base rent for the last month in a specified period, plus the annualized straight line rent adjustments for the last month in such period and the annualized net expense reimbursements earned by us for the last month in such period. 30 The table set forth below shows information relating to the properties we owned, or in which we had an ownership interest, at December 31, 2023, and it includes properties held by our unconsolidated joint venture: Property Name Location Property Type (1) Tenant Lease Expiration Year (2) Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income Annualized Lease Income per Leased Square Foot Wholly Owned U.S.
While some of our leases are contractually subject to early termination, we do not believe that our tenant agencies are likely to terminate these leases early given the build-to-suit features at the properties subject to the leases, the average age of these properties based on the date the property was built or renovated-to-suit where applicable (approximately 18.7 years), the mission-critical focus of the properties subject to the leases and the current level of operations at such properties.
While some of our leases are contractually subject to early termination, we do not believe that our tenant agencies are likely to terminate these leases early given the build-to-suit features at the properties subject to the leases, the average age of these properties based on the date the property was built or renovated-to-suit where applicable (approximately 19.0 years), the mission-critical focus of the properties subject to the leases and the current level of operations at such properties.
The following table provides information about the tenants that leased our properties as of December 31, 2022, and includes tenants of properties held by our unconsolidated joint venture: Tenant (1) Weighted Average Remaining Lease Term (2) Leased Square Feet Percentage of Leased Square Feet Annualized Lease I ncome Percentage of Total Annualized Lease Income U.S.
The following table provides information about the tenants that leased our properties as of December 31, 2023, and includes tenants of properties held by our unconsolidated joint venture: Tenant (1) Weighted Average Remaining Lease Term (2) Leased Square Feet Percentage of Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income U.S.
Legal Proceedings We are not currently involved in any material litigation nor, to our knowledge, is any material litigation threatened against us. Item 4. Mine Saf ety Disclosure Not applicable. 38 PART II
Item 3. Legal Proceedings We are not currently involved in any material litigation nor, to our knowledge, is any material litigation threatened against us. Item 4. Mine Saf ety Disclosure Not applicable. 37 PART II
Item 2. Pr operties As of December 31, 2022, we wholly owned 78 operating properties and eight operating properties through an unconsolidated joint venture in the United States encompassing approximately 8.7 million leased square feet (8.2 million pro rata) that were leased primarily to U.S.
Item 2. Pr operties As of December 31, 2023, we wholly owned 81 operating properties and nine operating properties through an unconsolidated joint venture in the United States encompassing approximately 8.8 million leased square feet (8.3 million pro rata), including 88 operating properties that were leased to U.S.
Government tenants and one operating property with approximately 0.1 million leased square feet that was entirely leased to a private tenant. In addition, we wholly owned one property under development that we expect to encompass approximately 0.2 million leased square feet upon completion.
Government tenant agencies, one operating property entirely leased to tenant agencies of a U.S. state government and one operating property leased entirely to a private tenant. In addition, we wholly owned one property under development that we expect to encompass approximately 0.2 million leased square feet upon completion.
As of December 31, 2022, our operating properties were 99% leased with a weighted average annualized lease income per leased square foot of $35.28 ($34.96 pro rata) and a weighted average age of approximately 13.8 years based on the date the property was built or renovated-to-suit, where applicable.
As of December 31, 2023, our operating properties were 97% leased with a weighted average annualized lease income per leased square foot of $35.98 ($35.64 pro rata) and a weighted average age of approximately 14.6 years based on the date the property was built or renovated-to-suit, where applicable.
Our portfolio of operating properties has a stable tenant base that is diversified among U.S. Government agencies. Our U.S. Government tenant agencies include a number of the U.S. Government’s largest and most essential agencies. As of December 31, 36 2022 our operating properties were 99% leased by 53 tenants.
Government agencies. Our U.S. Government tenant agencies include a number of the U.S. Government’s largest and most essential agencies. As of December 31, 2023 our operating properties were 97% leased by 54 tenants.
Luke's Health System 4.0 32,043 0.4 % 902,083 0.3 % Providence Health & Services 2.7 21,643 0.2 % 725,510 0.2 % Lummus Corporation 5.6 70,078 0.8 % 401,112 0.1 % Subtotal 2.9 314,115 3.6 % $ 9,178,503 2.9 % Total / Weighted Average 10.3 8,661,450 100.0 % $ 305,567,857 100.0 % 37 (1) If a property is leased to multiple tenants the weighted average remaining lease term, leased square feet, annualized lease income and percentage of total annualized lease income have been allocated to the respective tenant agency.
Luke’s Health System 3.0 32,043 0.4 % 907,488 0.3 % Providence Health & Services 1.7 21,643 0.2 % 730,731 0.2 % Lummus Corporation 4.6 70,078 0.8 % 400,380 0.1 % Subtotal 3.4 240,544 2.8 % $ 4,993,472 1.5 % Total / Weighted Average 10.5 8,805,050 100.0 % $ 316,793,566 100.0 % (1) If a property is leased to multiple tenants the weighted average remaining lease term, leased square feet, annualized lease income and percentage of total annualized lease income have been allocated to the respective tenant agency.
Information about our development property as of December 31, 2022 is set forth in the table below: Property Name Location Tenant Property Type (1) Lease Term Estimated Leased Square Feet FDA - Atlanta Atlanta, GA Food and Drug Administration L 20-year 162,000 Total 162,000 (1) L=Laboratory. Item 3.
As of December 31, 2023, 11 leases occupying approximately 7.2% of our leased square feet and contributing approximately 6.9% of our annualized lease income have exercisable rights to terminate their leases before the stated term of their lease expires. 36 Information about our development property as of December 31, 2023 is set forth in the table below: Property Name Location Tenant Property Type (1) Lease Term Estimated Leased Square Feet FDA - Atlanta Atlanta, GA Food and Drug Administration L 20-year 162,000 Total 162,000 (1) L=Laboratory.
(2) The year of lease expiration does not include renewal options. (3) Private tenants occupy 174,908 leased square feet. (4) Private tenants occupy 43,453 leased square feet. (5) Private tenants occupy 14,274 leased square feet. (6) A private tenant occupies 11,402 leased square feet. (7) We own 53.0% of the property through an unconsolidated joint venture.
(2) The year of lease expiration does not include renewal options. (3) Private tenants occupy 100,081 leased square feet. (4) Private tenants occupy 36,610 leased square feet. (5) A state tenant occupies 14,274 leased square feet. (6) A private tenant occupies 11,402 leased square feet. (7) A private tenant occupies 5,000 leased square feet.
Government Leased Properties VA - Loma Linda Loma Linda, CA OC 2036 327,614 $ 16,592,051 5.5 % $ 50.65 USCIS - Kansas City (3) Lee's Summit, MO O/W 2023 - 2042 491,226 14,334,767 4.7 % 29.18 JSC - Suffolk Suffolk, VA O 2028 403,737 8,356,881 2.7 % 20.70 Various GSA - Portland (4) Portland, OR O 2023 - 2039 218,798 6,975,015 2.3 % 31.88 Various GSA - Chicago Des Plaines, IL O 2023 202,185 6,971,858 2.3 % 34.48 IRS - Fresno Fresno, CA O 2033 180,481 6,935,960 2.3 % 38.43 FBI - Salt Lake Salt Lake City, UT O 2032 169,542 6,898,069 2.3 % 40.69 Various GSA - Buffalo (5) Buffalo, NY O 2025 - 2039 273,678 6,721,099 2.2 % 24.56 VA - San Jose San Jose, CA OC 2038 90,085 5,745,548 1.9 % 63.78 EPA - Lenexa Lenexa, KS O 2027 169,585 5,684,120 1.9 % 33.52 PTO - Arlington Arlington, VA O 2035 190,546 5,281,243 1.7 % 27.72 FBI - San Antonio San Antonio, TX O 2025 148,584 5,232,467 1.7 % 35.22 FBI - Tampa Tampa, FL O 2040 138,000 5,103,406 1.7 % 36.98 FDA - Alameda Alameda, CA L 2039 69,624 4,840,289 1.6 % 69.52 FBI / DEA - El Paso El Paso, TX O/W 2028 203,683 4,647,158 1.5 % 22.82 FEMA - Tracy Tracy, CA W 2038 210,373 4,613,469 1.5 % 21.93 FBI - Omaha Omaha, NE O 2024 112,196 4,451,732 1.5 % 39.68 TREAS - Parkersburg Parkersburg, WV O 2041 182,500 4,302,091 1.4 % 23.57 EPA - Kansas City Kansas City, KS L 2042 71,979 4,146,134 1.4 % 57.60 VA - South Bend Mishakawa, IN OC 2032 86,363 4,110,592 1.3 % 47.60 FDA - Lenexa Lenexa, KS L 2040 59,690 4,091,806 1.3 % 68.55 FBI - Pittsburgh Pittsburgh, PA O 2027 100,054 3,981,726 1.3 % 39.80 USCIS - Lincoln Lincoln, NE O 2025 137,671 3,860,297 1.3 % 28.04 VA - Mobile Mobile, AL OC 2033 79,212 3,835,311 1.3 % 48.42 FBI - New Orleans New Orleans, LA O 2029 137,679 3,795,304 1.2 % 27.57 DOT - Lakewood Lakewood, CO O 2024 122,225 3,678,038 1.2 % 30.09 FBI - Knoxville Knoxville, TN O 2025 99,130 3,579,295 1.2 % 36.11 FBI - Birmingham Birmingham, AL O 2042 96,278 3,433,823 1.1 % 35.67 VA - Chico Chico, CA OC 2034 51,647 3,339,105 1.1 % 64.65 ICE - Charleston North Charleston, SC O 2027 65,124 3,304,896 1.1 % 50.75 FBI - Richmond Richmond, VA O 2041 96,607 3,252,340 1.1 % 33.67 USFS II - Albuquerque Albuquerque, NM O 2026 98,720 3,249,945 1.1 % 32.92 FBI - Little Rock Little Rock, AR O 2041 102,377 3,189,062 1.0 % 31.15 DEA - Vista Vista, CA L 2035 52,293 3,107,574 1.0 % 59.43 USCIS - Tustin Tustin, CA O 2034 66,818 3,102,375 1.0 % 46.43 USFS I - Albuquerque Albuquerque, NM O 2026 92,455 3,100,074 1.0 % 33.53 VA - Orange Orange, CT OC 2034 56,330 2,973,558 1.0 % 52.79 VA - Indianapolis Brownsburg, IN OC 2041 80,000 2,958,386 1.0 % 36.98 31 Property Name Location Property Type (1) Tenant Lease Expiration Year (2) Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income Annualized Lease Income per Leased Square Foot Wholly Owned U.S.
Government Leased Properties VA - Loma Linda Loma Linda, CA OC 2036 327,614 $ 16,656,342 5.2 % $ 50.84 USCIS - Kansas City (3) Lee's Summit, MO O/W 2024 - 2042 416,399 10,282,368 3.2 % 24.69 JSC - Suffolk Suffolk, VA O 2028 403,737 8,427,298 2.7 % 20.87 Various GSA - Chicago Des Plaines, IL O 2026 188,768 7,765,015 2.5 % 41.14 FBI - Salt Lake Salt Lake City, UT O 2032 169,542 6,953,528 2.2 % 41.01 IRS - Fresno Fresno, CA O 2033 180,481 6,908,070 2.2 % 38.28 Various GSA - Portland (4) Portland, OR O 2024 - 2039 205,478 6,855,312 2.2 % 33.36 Various GSA - Buffalo (5) Buffalo, NY O 2025 - 2039 273,678 6,822,162 2.2 % 24.93 VA - San Jose San Jose, CA OC 2038 90,085 5,770,504 1.8 % 64.06 EPA - Lenexa Lenexa, KS O 2027 169,585 5,732,732 1.8 % 33.80 FBI - Tampa Tampa, FL O 2040 138,000 5,313,544 1.7 % 38.50 FBI - San Antonio San Antonio, TX O 2025 148,584 5,208,055 1.6 % 35.05 PTO - Arlington Arlington, VA O 2035 190,546 5,028,972 1.6 % 26.39 FDA - Alameda Alameda, CA L 2039 69,624 4,898,064 1.5 % 70.35 FBI / DEA - El Paso El Paso, TX O/W 2028 203,683 4,653,875 1.5 % 22.85 FEMA - Tracy Tracy, CA W 2038 210,373 4,650,064 1.5 % 22.10 FBI - Omaha Omaha, NE O 2024 112,196 4,435,691 1.4 % 39.54 TREAS - Parkersburg Parkersburg, WV O 2041 182,500 4,355,673 1.4 % 23.87 FDA - Lenexa Lenexa, KS L 2040 59,690 4,254,683 1.3 % 71.28 DOT - Lakewood Lakewood, CO O 2039 122,225 4,154,365 1.3 % 33.99 VA - South Bend Mishakawa, IN OC 2032 86,363 4,068,428 1.3 % 47.11 FBI - Pittsburgh Pittsburgh, PA O 2027 100,054 4,037,239 1.3 % 40.35 FBI - New Orleans New Orleans, LA O 2029 137,679 3,970,218 1.3 % 28.84 USCIS - Lincoln Lincoln, NE O 2025 137,671 3,937,828 1.2 % 28.60 JUD - Del Rio Del Rio, TX C/O 2041 89,880 3,822,377 1.2 % 42.53 VA - Mobile Mobile, AL OC 2033 79,212 3,676,952 1.2 % 46.42 FBI - Knoxville Knoxville, TN O 2025 99,130 3,607,505 1.1 % 36.39 EPA - Kansas City Kansas City, KS L 2043 55,833 3,497,886 1.1 % 62.65 FBI - Birmingham Birmingham, AL O 2042 96,278 3,474,546 1.1 % 36.09 ICE - Charleston North Charleston, SC O 2027 65,124 3,343,735 1.1 % 51.34 USFS II - Albuquerque Albuquerque, NM O 2026 98,720 3,340,675 1.1 % 33.84 VA - Chico Chico, CA OC 2034 51,647 3,324,046 1.0 % 64.36 FBI - Richmond Richmond, VA O 2041 96,607 3,307,199 1.0 % 34.23 FBI - Little Rock Little Rock, AR O 2041 102,377 3,217,259 1.0 % 31.43 DEA - Sterling Sterling, VA L 2038 57,692 3,209,041 1.0 % 55.62 USFS I - Albuquerque Albuquerque, NM O 2026 92,455 3,194,580 1.0 % 34.55 USCIS - Tustin Tustin, CA O 2034 66,818 3,159,364 1.0 % 47.28 DEA - Vista Vista, CA L 2035 52,293 3,130,467 1.0 % 59.86 VA - Orange Orange, CT OC 2034 56,330 2,990,034 0.9 % 53.08 VA - Indianapolis Brownsburg, IN OC 2041 80,000 2,954,619 0.9 % 36.93 FBI - Mobile Mobile, AL O 2029 76,112 2,826,776 0.9 % 37.14 ICE - Albuquerque Albuquerque, NM O 2027 71,100 2,822,205 0.9 % 39.69 JUD - El Centro El Centro, CA C/O 2034 43,345 2,800,983 0.9 % 64.62 DEA - Dallas Lab Dallas, TX L 2038 49,723 2,773,342 0.9 % 55.78 31 Property Name Location Property Type (1) Tenant Lease Expiration Year (2) Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income Annualized Lease Income per Leased Square Foot Wholly Owned U.S.
(8) Asset is subject to a ground lease where we are the lessee. 33 Our assets are located throughout the United States.
(8) A private tenant occupies 17,373 leased square feet. (9) We own 53.0% of the property through an unconsolidated joint venture. (10) Asset is subject to a ground lease where we are the lessee. 33 Our assets are located throughout the United States.
Joint Staff Command ("JSC") 5.4 403,737 4.7 % 8,356,881 2.7 % Internal Revenue Service ("IRS") 10.6 233,334 2.7 % 8,016,379 2.6 % Immigration and Customs Enforcement ("ICE") 6.0 183,894 2.1 % 7,797,270 2.6 % Bureau of the Fiscal Service ("BFS") 14.7 266,176 3.1 % 6,787,056 2.2 % Federal Aviation Administration ("FAA") 0.8 194,540 2.2 % 6,701,596 2.2 % U.S.
Joint Staff Command (“JSC”) 4.4 403,737 4.6 % 8,427,298 2.7 % Internal Revenue Service (“IRS”) 9.6 233,334 2.7 % 7,998,696 2.5 % Immigration and Customs Enforcement (“ICE”) 5.0 183,894 2.1 % 7,871,695 2.5 % Federal Aviation Administration (“FAA”) 2.8 188,768 2.1 % 7,765,015 2.5 % Bureau of the Fiscal Service (“BFS”) 13.7 266,176 3.0 % 6,969,097 2.2 % U.S.
Government Leased Properties VA - Phoenix (7) Phoenix, AZ OC 2042 257,294 $ 10,537,038 3.4 % $ 40.95 VA - San Antonio (7) San Antonio, TX OC 2041 226,148 9,203,929 3.0 % 40.70 VA - Chattanooga (7) Chattanooga, TN OC 2035 94,566 4,202,264 1.4 % 44.44 VA - Lubbock (7) (8) Lubbock, TX OC 2040 120,916 4,008,161 1.3 % 33.15 VA - Marietta (7) Marietta, GA OC 2041 76,882 3,913,617 1.3 % 50.90 VA - Birmingham (7) Irondale, AL OC 2041 77,128 3,154,679 1.0 % 40.90 VA - Columbus (7) Columbus, GA OC 2042 67,793 2,863,407 0.9 % 42.24 VA - Lenexa (7) Lenexa, KS OC 2041 31,062 1,298,203 0.4 % 41.79 Subtotal 951,789 $ 39,181,298 12.7 % $ 41.17 Total / Weighted Average 8,661,450 $ 305,567,857 100.0 % $ 35.28 Total / Weighted Average at Easterly's Share 8,214,108 $ 287,152,647 $ 34.96 (1) OC=Outpatient Clinic; O=Office; C=Courthouse; L=Laboratory; W=Warehouse; D=Distribution.
Government Leased Properties VA - Phoenix (9) Phoenix, AZ OC 2042 257,294 $ 10,678,873 3.4 % $ 41.50 VA - San Antonio (9) San Antonio, TX OC 2041 226,148 9,185,752 2.9 % 40.62 VA - Chattanooga (9) Chattanooga, TN OC 2035 94,566 4,355,633 1.4 % 46.06 VA - Lubbock (9)(10) Lubbock, TX OC 2040 120,916 4,206,784 1.3 % 34.79 VA - Marietta (9) Marietta, GA OC 2041 76,882 3,955,701 1.2 % 51.45 VA - Birmingham (9) Irondale, AL OC 2041 77,128 3,175,571 1.0 % 41.17 VA - Corpus Christi (9) Corpus Christi, TX OC 2042 69,276 2,938,590 0.9 % 42.42 VA - Columbus (9) Columbus, GA OC 2042 67,793 2,909,443 0.9 % 42.92 VA - Lenexa (9) Lenexa, KS OC 2041 31,062 1,309,622 0.4 % 42.16 1,021,065 $ 42,715,969 13.4 % $ 41.83 Total / Weighted Average 8,805,050 $ 316,793,566 100.0 % $ 35.98 Total / Weighted Average at Easterly's Share 8,325,148 $ 296,717,063 $ 35.64 (1) OC=Outpatient Clinic; O=Office; C=Courthouse; L=Laboratory; W=Warehouse; D=Distribution.
The following table sets forth the geographic diversification of our operating properties, by market, based on the GSA’s definition of regions, as of December 31, 2022, and it includes properties held by our unconsolidated joint venture: 34 Location Market Number of Properties Number of Leases Leased Square Feet Percentage of Total Leased Square Feet Percent Leased Annualized Lease Income Percentage of Total Annualized Lease Income State California Pacific Rim 17 17 1,290,387 14.8 % 97 % $ 60,534,275 19.9 % Texas (1) Greater Southwest 9 11 1,008,039 11.6 % 100 % 32,309,266 10.6 % Virginia National Capital 4 4 740,582 8.6 % 100 % 19,503,561 6.4 % Alabama Southeast Sunbelt 6 6 448,022 5.2 % 100 % 17,121,175 5.6 % Missouri The Heartland 2 8 585,604 6.8 % 100 % 16,449,261 5.4 % Kansas The Heartland 4 4 332,316 3.8 % 100 % 15,220,263 5.0 % New York Northeast & Caribbean 3 8 375,130 4.3 % 100 % 10,778,540 3.5 % Arizona Pacific Rim 1 1 257,294 3.0 % 100 % 10,537,038 3.4 % Nebraska The Heartland 3 3 312,639 3.6 % 100 % 10,157,018 3.3 % West Virginia Mid-Atlantic 4 4 415,797 4.8 % 100 % 10,047,267 3.3 % Tennessee Southeast Sunbelt 3 3 267,093 3.1 % 100 % 9,846,746 3.2 % New Mexico Greater Southwest 3 3 262,275 3.0 % 100 % 9,138,133 3.0 % Georgia Southeast Sunbelt 3 3 179,675 2.1 % 100 % 9,011,285 2.9 % Illinois Great Lakes 2 4 245,785 2.8 % 89 % 8,344,591 2.7 % Indiana Great Lakes 3 3 196,482 2.3 % 100 % 7,863,135 2.6 % Colorado Rocky Mountain 3 3 340,708 3.9 % 100 % 7,808,985 2.6 % South Carolina Southeast Sunbelt 3 3 215,181 2.5 % 91 % 7,219,397 2.4 % Oregon Northwest Arctic 1 17 218,798 2.5 % 98 % 6,975,015 2.3 % Utah Rocky Mountain 1 1 169,542 2.0 % 100 % 6,898,069 2.3 % Florida Southeast Sunbelt 1 1 138,000 1.6 % 100 % 5,103,406 1.7 % Pennsylvania Mid-Atlantic 1 1 100,054 1.2 % 100 % 3,981,726 1.3 % Louisiana Greater Southwest 1 1 137,679 1.6 % 100 % 3,795,304 1.2 % Arkansas Greater Southwest 1 1 102,377 1.2 % 100 % 3,189,062 1.0 % Kentucky Southeast Sunbelt 2 2 77,420 0.9 % 100 % 3,149,390 1.0 % Connecticut New England 1 1 56,330 0.7 % 100 % 2,973,558 1.0 % Maryland National Capital 1 1 50,978 0.6 % 100 % 2,522,977 0.8 % Ohio Great Lakes 1 3 61,384 0.7 % 100 % 2,256,794 0.7 % Mississippi Southeast Sunbelt 1 1 46,979 0.5 % 100 % 1,559,822 0.5 % Iowa The Heartland 1 1 28,900 0.3 % 100 % 1,272,798 0.4 % Total / Weighted Average 86 119 8,661,450 100.0 % 99 % $ 305,567,857 100.0 % 35 Market Pacific Rim 18 18 1,547,681 18.0 % 97 % 71,071,313 23.4 % Southeast Sunbelt 19 19 1,372,370 15.8 % 98 % 53,011,221 17.3 % Greater Southwest (1) 14 16 1,510,370 17.4 % 100 % 48,431,765 15.8 % The Heartland 10 16 1,259,459 14.5 % 100 % 43,099,340 14.1 % National Capital 5 5 791,560 9.1 % 100 % 22,026,538 7.2 % Great Lakes 6 10 503,651 5.8 % 94 % 18,464,520 6.0 % Rocky Mountain 4 4 510,250 5.9 % 100 % 14,707,054 4.8 % Mid-Atlantic 5 5 515,851 6.0 % 100 % 14,028,993 4.6 % Northeast & Caribbean 3 8 375,130 4.3 % 100 % 10,778,540 3.5 % Northwest Arctic 1 17 218,798 2.5 % 98 % 6,975,015 2.3 % New England 1 1 56,330 0.7 % 100 % 2,973,558 1.0 % Total / Weighted Average 86 119 8,661,450 100.0 % 99 % $ 305,567,857 100.0 % (1) One property entirely leased to a private tenant is located in the Greater Southwest region.
The following table sets forth the geographic diversification of our operating properties, by market, based on the GSA’s definition of regions, as of December 31, 2023, and it includes properties held by our unconsolidated joint venture: Location Market Number of Properties Number of Leases Leased Square Feet Percentage of Total Leased Square Feet Percent Leased Annualized Lease Income Percentage of Total Annualized Lease Income State California Pacific Rim 18 22 1,385,660 15.7 % 97 % $ 64,297,896 20.2 % Texas (1) Greater Southwest 10 12 1,077,315 12.2 % 100 % 36,502,212 11.5 % Virginia National Capital 5 5 783,587 8.9 % 100 % 21,633,451 6.8 % Alabama Southeast Sunbelt 6 6 448,022 5.1 % 100 % 17,064,073 5.4 % Kansas The Heartland 4 4 316,170 3.6 % 95 % 14,794,923 4.7 % Missouri The Heartland 2 7 510,777 5.8 % 86 % 12,425,717 3.9 % New York Northeast & Caribbean 3 8 375,130 4.3 % 100 % 10,920,059 3.4 % West Virginia Mid-Atlantic 4 4 415,797 4.7 % 100 % 10,769,200 3.4 % Arizona Pacific Rim 1 1 257,294 2.9 % 100 % 10,678,873 3.4 % Georgia Southeast Sunbelt 4 5 226,785 2.6 % 100 % 10,600,586 3.3 % Tennessee Southeast Sunbelt 3 3 268,739 3.1 % 100 % 10,349,594 3.3 % Nebraska The Heartland 3 3 312,639 3.6 % 100 % 10,328,273 3.3 % New Mexico Greater Southwest 3 3 262,275 3.0 % 100 % 9,357,460 3.0 % Illinois Great Lakes 2 2 232,368 2.6 % 84 % 9,146,520 2.9 % Colorado Rocky Mountain 3 3 340,708 3.9 % 100 % 8,297,258 2.6 % Indiana Great Lakes 3 3 196,482 2.2 % 100 % 7,819,566 2.5 % South Carolina Southeast Sunbelt 3 4 220,181 2.5 % 91 % 7,420,692 2.3 % Utah Rocky Mountain 1 1 169,542 1.9 % 100 % 6,953,528 2.2 % Oregon Northwest Arctic 1 15 205,478 2.3 % 92 % 6,855,312 2.2 % Florida Southeast Sunbelt 1 1 138,000 1.6 % 100 % 5,313,544 1.7 % Pennsylvania Mid-Atlantic 1 1 100,054 1.1 % 100 % 4,037,239 1.3 % Louisiana Greater Southwest 1 1 137,679 1.6 % 100 % 3,970,218 1.3 % Arkansas Greater Southwest 1 1 102,377 1.2 % 100 % 3,217,259 1.0 % Kentucky Southeast Sunbelt 2 2 77,420 0.9 % 100 % 3,193,264 1.0 % Connecticut New England 1 1 56,330 0.6 % 100 % 2,990,034 0.9 % Maryland National Capital 1 1 50,978 0.6 % 100 % 2,745,212 0.9 % Ohio Great Lakes 1 3 61,384 0.7 % 100 % 2,262,036 0.7 % Mississippi Southeast Sunbelt 1 1 46,979 0.5 % 100 % 1,562,188 0.5 % Iowa The Heartland 1 1 28,900 0.3 % 100 % 1,287,379 0.4 % Total / Weighted Average 90 124 8,805,050 100.0 % 97 % $ 316,793,566 100.0 % Market Pacific Rim 19 23 1,642,954 18.6 % 97 % 74,976,769 23.7 % Southeast Sunbelt 20 22 1,426,126 16.2 % 99 % 55,503,941 17.5 % Greater Southwest (1) 15 17 1,579,646 17.9 % 100 % 53,047,149 16.7 % The Heartland 10 15 1,168,486 13.3 % 92 % 38,836,292 12.3 % National Capital 6 6 834,565 9.5 % 100 % 24,378,663 7.7 % Great Lakes 6 8 490,234 5.6 % 92 % 19,228,122 6.1 % Rocky Mountain 4 4 510,250 5.8 % 100 % 15,250,786 4.8 % Mid-Atlantic 5 5 515,851 5.9 % 100 % 14,806,439 4.7 % Northeast & Caribbean 3 8 375,130 4.3 % 100 % 10,920,059 3.4 % Northwest Arctic 1 15 205,478 2.3 % 92 % 6,855,312 2.2 % New England 1 1 56,330 0.6 % 100 % 2,990,034 0.9 % Total / Weighted Average 90 124 8,805,050 100.0 % 97 % $ 316,793,566 100.0 % (1) One property entirely leased to a private tenant is located in the Greater Southwest region. 34 Our portfolio of operating properties has a stable tenant base that is diversified among U.S.
Forest Service ("USFS") 3.4 191,175 2.2 % 6,350,019 2.1 % Patent and Trademark Office ("PTO") 12.0 190,546 2.2 % 5,281,243 1.7 % Social Security Administration ("SSA") 3.7 189,276 2.2 % 5,128,113 1.7 % Federal Emergency Management Agency ("FEMA") 15.8 210,373 2.4 % 4,613,469 1.5 % U.S.
Forest Service (“USFS”) 2.4 191,175 2.2 % 6,535,255 2.1 % Social Security Administration (“SSA”) 8.9 189,276 2.1 % 5,596,570 1.8 % Patent and Trademark Office (“PTO”) 11.0 190,546 2.2 % 5,028,972 1.6 % Federal Emergency Management Agency (“FEMA”) 14.8 210,373 2.4 % 4,650,064 1.5 % Department of Transportation (“DOT”) 14.8 129,659 1.5 % 4,413,431 1.4 % U.S.
The following table sets forth a schedule of lease expirations for leases in place as of December 31, 2022, and includes leases in place for properties held by our unconsolidated joint venture: Year of Lease Expiration (1) Number of Leases Expiring Square Footage Expiring Percentage of Portfolio Square Footage Expiring Annualized Lease Income Expiring Percentage of Total Annualized Lease Income Expiring Annualized Lease Income per Leased Square Foot Expiring 2023 11 437,753 5.1 % $ 16,001,505 5.2 % $ 36.55 2024 9 635,595 7.3 % 19,783,120 6.5 % 31.13 2025 15 631,326 7.3 % 20,516,084 6.7 % 32.50 2026 5 294,245 3.4 % 9,412,881 3.1 % 31.99 2027 9 506,510 5.8 % 18,533,023 6.1 % 36.59 2028 9 768,201 8.9 % 16,449,742 5.4 % 21.41 2029 3 297,467 3.4 % 9,068,797 3.0 % 30.49 2030 0 — 0.0 % — 0.0 % — 2031 2 100,502 1.2 % 4,038,397 1.3 % 40.18 2032 7 531,001 6.1 % 16,714,336 5.5 % 31.48 Thereafter 49 4,458,850 51.5 % 175,049,972 57.2 % 39.26 Total / Weighted Average 119 8,661,450 100.0 % $ 305,567,857.00 100.0 % $ 35.28 (1) The year of lease expirations is pursuant to current contract terms.
The following table sets forth a schedule of lease expirations for leases in place as of December 31, 2023, and includes leases in place for properties held by our unconsolidated joint venture: Year of Lease Expiration (1) Number of Leases Expiring Square Footage Expiring Percentage of Portfolio Square Footage Expiring Annualized Lease Income Expiring Percentage of Total Annualized Lease Income Expiring Annualized Lease Income per Leased Square Foot Expiring 2024 4 155,176 1.8 % $ 5,504,512 1.7 % $ 35.47 2025 14 629,156 7.1 % 20,639,041 6.5 % 32.80 2026 6 483,013 5.5 % 17,370,921 5.5 % 35.96 2027 9 506,510 5.8 % 18,731,963 5.9 % 36.98 2028 11 802,397 9.1 % 17,491,834 5.5 % 21.80 2029 6 510,144 5.8 % 16,074,031 5.1 % 31.51 2030 1 1,536 0.0 % 58,893 0.0 % 38.34 2031 3 117,875 1.3 % 4,613,758 1.5 % 39.14 2032 7 531,001 6.0 % 16,801,083 5.3 % 31.64 2033 9 522,122 5.9 % 20,815,244 6.6 % 39.87 Thereafter 54 4,546,120 51.7 % 178,692,286 56.4 % 39.31 Total / Weighted Average 124 8,805,050 100.0 % $ 316,793,566 100.0 % $ 35.98 (1) The year of lease expirations is pursuant to current contract terms.
Army Corps of Engineers ("ACOE") 2.1 39,320 0.5 % 1,124,336 0.4 % Small Business Administration ("SBA") 14.8 44,753 0.5 % 983,872 0.3 % Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") 3.4 21,342 0.2 % 767,026 0.3 % Federal Energy Regulatory Commission ("FERC") 16.6 6,214 0.1 % 245,540 0.1 % Bureau of Indian Affairs ("BIA") 0.6 6,477 0.1 % 228,756 0.1 % Department of Energy ("DOE") 0.3 4,846 0.1 % 119,820 0.0 % U.S.
Army Corps of Engineers (“ACOE”) 1.1 39,320 0.4 % 1,146,042 0.4 % Small Business Administration (“SBA”) 15.6 44,753 0.5 % 1,040,562 0.3 % Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) 9.2 23,775 0.3 % 743,335 0.2 % Federal Energy Regulatory Commission (“FERC”) 15.6 6,214 0.1 % 246,845 0.1 % Department of Energy (“DOE”) 9.3 4,846 0.1 % 187,782 0.1 % U.S.
Marshals Service ("USMS") 4.1 1,054 0.0 % 49,346 0.0 % Department of Labor ("DOL") 1.1 1,004 0.0 % 23,611 0.0 % U.S.
Marshals Service (“USMS”) 3.1 1,054 0.0 % 50,101 0.0 % Department of Labor (“DOL”) 15.1 1,004 0.0 % 32,987 0.0 % U.S.
Government Department of Veteran Affairs ("VA") 15.6 1,988,755 23.0 % $ 84,704,970 27.8 % Federal Bureau of Investigation ("FBI") 9.4 1,501,720 17.3 % 52,066,475 17.1 % Drug Enforcement Administration ("DEA") 10.6 601,497 6.9 % 26,689,390 8.7 % U.S. Citizenship and Immigration Services ("USCIS") 13.8 520,807 6.0 % 14,682,944 4.8 % Judiciary of the U.S.
Government Department of Veteran Affairs (“VA”) 14.7 2,058,031 23.3 % $ 88,091,238 27.7 % Federal Bureau of Investigation (“FBI”) 8.4 1,501,720 17.0 % 52,774,609 16.7 % Drug Enforcement Administration (“DEA”) 10.8 607,064 6.9 % 27,846,156 8.8 % Judiciary of the U.S. (“JUD”) 13.4 401,610 4.6 % 16,839,813 5.3 % U.S.
Attorney Office ("USAO") 11.0 110,008 1.3 % 4,025,218 1.3 % Department of Transportation ("DOT") 1.6 129,659 1.5 % 3,934,820 1.3 % National Archives and Records Administration ("NARA") 9.4 161,730 1.9 % 2,359,069 0.8 % Customs and Border Protection ("CBP") 10.5 35,000 0.4 % 2,234,261 0.7 % U.S.
Attorney Office (“USAO”) 10.9 110,008 1.2 % 4,131,106 1.3 % Customs and Border Protection (“CBP”) 11.7 64,737 0.7 % 3,199,589 1.0 % National Archives and Records Administration (“NARA”) 8.4 161,730 1.8 % 2,373,591 0.7 % National Weather Service (“NWS”) 10.0 94,378 1.1 % 2,143,349 0.7 % National Park Service (“NPS”) 5.5 62,772 0.7 % 1,954,754 0.6 % U.S.
Coast Guard ("USCG") 5.0 59,547 0.7 % 1,595,716 0.5 % National Oceanic and Atmospheric Administration ("NOAA") 5.1 33,403 0.4 % 1,252,916 0.4 % U.S.
Department of Agriculture (“USDA”) 4.1 60,257 0.7 % 1,907,054 0.6 % General Services Administration - Other 1.7 55,807 0.6 % 1,798,673 0.6 % U.S. Coast Guard (“USCG”) 4.0 59,547 0.7 % 1,611,989 0.5 % National Oceanic and Atmospheric Administration (“NOAA”) 7.7 33,403 0.4 % 1,421,067 0.4 % U.S.
Removed
("JUD") 6.5 364,959 4.2 % 13,623,044 4.5 % Environmental Protection Agency ("EPA") 9.4 241,564 2.8 % 9,830,254 3.2 % Food and Drug Administration ("FDA") 17.2 129,314 1.5 % 8,932,095 2.9 % U.S.
Added
Citizenship and Immigration Services (“USCIS”) 12.8 520,807 5.9 % 14,955,067 4.7 % Environmental Protection Agency (“EPA”) 7.7 225,418 2.6 % 9,230,618 2.9 % Food and Drug Administration (“FDA”) 16.2 129,314 1.5 % 9,152,747 2.9 % U.S.
Removed
Department of Agriculture ("USDA") 4.6 67,902 0.8 % 2,142,687 0.7 % National Weather Service ("NWS") 11.0 94,378 1.1 % 2,114,494 0.7 % National Park Service ("NPS") 1.5 62,772 0.7 % 1,844,989 0.6 % General Services Administration - Other 2.7 55,807 0.6 % 1,771,041 0.6 % U.S.
Added
Probation Office (“USPO”) 15.1 452 0.0 % 14,863 0.0 % Subtotal 10.7 8,454,959 96.0 % $ 308,150,030 97.3 % 35 Tenant (1) Weighted Average Remaining Lease Term (2) Leased Square Feet Percentage of Leased Square Feet Annualized Lease Income Percentage of Total Annualized Lease Income State and Local Government Tenants State of California Employee Development Department 9.9 65,133 0.7 % $ 2,140,000 0.7 % State of California Department of Industrial Relations 9.8 30,140 0.3 % 1,116,203 0.4 % New York State Court of Claims 2.8 14,274 0.2 % 393,861 0.1 % Subtotal 9.0 109,547 1.2 % $ 3,650,064 1.2 % Private Tenants Other Private Tenants 4.0 77,090 0.9 % 2,022,945 0.6 % CVS Health 1.4 39,690 0.5 % 931,928 0.3 % St.
Removed
Probation Office ("USPO") 1.1 452 0.0 % 10,638 0.0 % Subtotal 10.6 8,347,335 96.4 % $ 296,389,354 97.1 % Private Tenants ExamOne 0.7 52,015 0.6 % 3,757,924 1.2 % Other Private Tenants 2.4 78,012 0.9 % 2,019,858 0.7 % CVS Health 1.8 60,324 0.7 % 1,372,016 0.4 % St.
Removed
As of December 31, 2022, 21 leases occupying approximately 7.8% of our leased square feet and contributing approximately 7.8% of our annualized lease income have exercisable rights to terminate their leases before the stated term of their lease expires.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed5 unchanged
Biggest changeThe information in this paragraph and the following performance graph are deemed to be furnished, not filed. 39 Recent Sales of Unregistered Securities None. Recent Purchases of Equity Securities None. Item 6. Reserved Not applicable.
Biggest changeThe information in this paragraph and the following performance graph are deemed to be furnished, not filed. 38 Recent Sales of Unregistered Securities None. Recent Purchases of Equity Securities None. Item 6. Reserved
The graph covers the period from December 31, 2017 through December 31, 2022 and assumes that $100 was invested in our common stock and in each index on December 31, 2017 and that all dividends were reinvested.
The graph covers the period from December 31, 2018 through December 31, 2023 and assumes that $100 was invested in our common stock and in each index on December 31, 2018 and that all dividends were reinvested.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Shares of our common stock are traded on the New York Stock Exchange under the symbol “DEA”. We had 25 stockholders of record of our common stock as of February 21, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Shares of our common stock are traded on the New York Stock Exchange under the symbol “DEA”. We had 26 stockholders of record of our common stock as of February 20, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+18 added−32 removed39 unchanged
Biggest changeFor the years ended December 31, (Amounts in thousands) 2022 2021 Change Revenues Rental income $ 284,488 $ 267,389 $ 17,099 Tenant reimbursements 5,920 5,187 733 Asset management income 1,409 136 1,273 Other income 1,789 2,148 (359 ) Total revenues 293,606 274,860 18,746 Expenses Property operating 66,781 56,693 10,088 Real estate taxes 30,900 30,429 471 Depreciation and amortization 98,254 91,266 6,988 Acquisition costs 1,370 1,939 (569 ) Corporate general and administrative 24,785 23,522 1,263 Total expenses 222,090 203,849 18,241 Other income (expense) Income from unconsolidated real estate venture 3,374 271 3,103 Interest expense, net (47,378 ) (38,632 ) (8,746 ) Gain on the sale of operating properties 13,590 1,307 12,283 Impairment loss (5,540 ) — (5,540 ) Net income $ 35,562 $ 33,957 $ 1,605 Revenues Total revenues increased $18.7 million to $293.6 million for the year ended December 31, 2022 compared to $274.9 million for the year ended December 31, 2021.
Biggest changeFor the years ended December 31, (Amounts in thousands) 2023 2022 Change Revenues Rental income $ 273,906 $ 284,488 $ (10,582 ) Tenant reimbursements 8,908 5,920 2,988 Asset management income 2,110 1,409 701 Other income 2,303 1,789 514 Total revenues 287,227 293,606 (6,379 ) Expenses Property operating 71,964 66,781 5,183 Real estate taxes 30,461 30,900 (439 ) Depreciation and amortization 91,292 98,254 (6,962 ) Acquisition costs 1,661 1,370 291 Corporate general and administrative 27,118 24,785 2,333 Total expenses 222,496 222,090 406 Other income (expense) Income from unconsolidated real estate venture 5,498 3,374 2,124 Interest expense, net (49,169 ) (47,378 ) (1,791 ) Gain on the sale of operating properties — 13,590 (13,590 ) Impairment loss — (5,540 ) 5,540 Net income $ 21,060 $ 35,562 $ (14,502 ) Revenues Total revenues decreased $6.4 million to $287.2 million for the year ended December 31, 2023 compared to $293.6 million for the year ended December 31, 2022. 40 The $10.6 million decrease in Rental income is primarily attributable to the disposal of ten operating properties during the year ended December 31, 2022 offset by an increase in revenues from the three operating properties acquired since December 31, 2022 and a full period of operations from the three operating properties acquired during the year ended December 31, 2022.
It is possible that it would be necessary to utilize cash reserves, liquidate assets at unfavorable prices or incur 48 additional indebtedness in order to make required distributions. It is also possible that our board of directors could decide to make required distributions in part by using shares of our common stock.
It is possible that it would be necessary to utilize cash reserves, liquidate assets at unfavorable prices or incur additional indebtedness in order to make required distributions. It is also possible that our board of directors could decide to make required distributions in part by using shares of our common stock.
Our primary expected sources of capital are as follows: • cash and cash equivalents; • operating cash flow; • distribution of cash flows from the JV; 43 • available borrowings under our revolving credit facility; • issuance of long-term debt; • issuance of equity, including under our ATM Programs (as described below); and • asset sales.
Our primary expected sources of capital are as follows: • cash and cash equivalents; • operating cash flow; • distribution of cash flows from the JV; • available borrowings under our revolving credit facility; • issuance of long-term debt; • issuance of equity, including under our ATM Programs (as described below); and • asset sales.
General Services Administration, which we refer to herein as the GSA. Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation. We focus on acquiring, developing and managing U.S.
General Services Administration, which we refer to herein as the GSA. Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation. We focus primarily on acquiring, developing and managing U.S.
As a result, our future cash flow and results of operations may be adversely affected and losses could be incurred if revenues decrease in the future. 51 Cost of Funds and Interest Rates We expect future changes in interest rates will impact our overall performance.
As a result, our future cash flow and results of operations may be adversely affected and losses could be incurred if revenues decrease in the future. Cost of Funds and Interest Rates We expect future changes in interest rates will impact our overall performance.
Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion of our results of operations and financial condition in conjunction with the audited consolidated financial statements and related notes thereto as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 and the sections entitled “Risk Factors,” “Forward Looking Statements,” “Business,” and “Properties” contained elsewhere in this Annual Report on Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion of our results of operations and financial condition in conjunction with the audited consolidated financial statements and related notes thereto as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 and the sections entitled “Risk Factors,” “Forward Looking Statements,” “Business,” and “Properties” contained elsewhere in this Annual Report on Form 10-K.
Our short-term liquidity requirements consist primarily of funds to pay for the following: • development and redevelopment activities, including major redevelopment, renovation or expansion programs at individual properties; • property acquisitions under contract, including our JV share of the remaining Portfolio Acquisition properties; • tenant improvements allowances and leasing costs; • recurring maintenance and capital expenditures; • debt repayment requirements; • corporate and administrative costs; • interest payments on our outstanding indebtedness; • interest swap payments; • distribution payments; and • repurchases of common stock under our share repurchase program.
Our short-term liquidity requirements consist primarily of funds to pay for the following: • development and redevelopment activities, including major redevelopment, renovation or expansion programs at FDA – Atlanta and other individual properties; • property acquisitions under contract, including our JV share of the remaining Portfolio Acquisition properties; • tenant improvements allowances and leasing costs; • recurring maintenance and capital expenditures; • debt repayment requirements; • corporate and administrative costs; • interest payments on our outstanding indebtedness; • interest swap payments; • distribution payments; and • repurchases of common stock under our share repurchase program.
Impairment loss In the third quarter of 2022, we recognized an impairment loss totaling approximately $5.5 million for our ICE – Otay property and reduced its carrying value to its estimated fair value, which declined due to the changes in expected cash flows related to the existing tenant's lease expiration in 2022.
Impairment loss In the third quarter of 2022, we recognized an impairment loss totaling approximately $5.5 million for our ICE – Otay property and reduced its carrying value to its estimated fair value, which declined due to the changes in expected cash flows related to the 41 tenant's lease expiration in 2022.
The remeasurement resulted in an impairment loss of $5.5 million, which is included in "Impairment loss" in our Consolidated Statements of Operations. As of December 31, 2021, no impairment related to our long-lived assets was identified. Impairment of Unconsolidated Real Estate Venture We account for our investment in the unconsolidated real estate venture under the equity method.
The remeasurement resulted in an impairment loss of $5.5 million, which is included in "Impairment loss" in our Consolidated Statements of Operations. As of December 31, 2023, no impairment related to our long-lived assets was identified. Impairment of Unconsolidated Real Estate Venture We account for our investment in the unconsolidated real estate venture under the equity method.
Our process for determining the allocation to these components requires many estimates and assumptions, including the following: (1) determination of market land, rental, discount and capitalization rates; (2) estimation of leasing and tenant improvement costs associated with the remaining term of acquired leases; (3) assumptions used in determining the in-place lease and if-vacant value including the rental rates, period of time that it would take to lease vacant space and estimated tenant improvement and leasing costs; (4) renewal probabilities; and (5) allocation of the if-vacant value between land and building.
Our process for determining the allocation to these components requires many estimates and assumptions, including the following: (1) determination of market land, rental, discount and capitalization rates; (2) estimation of leasing and tenant improvement costs associated with the remaining term of acquired leases; (3) assumptions used in determining the in-place lease and if-vacant value including the rental rates, period of time that it would take to lease vacant space and estimated tenant improvement and leasing costs; and (4) allocation of the if-vacant value between land and building.
Although we may seek to cost-effectively manage our exposure to future rate increases through such means, a portion of our overall debt may at various times float at then current rates. Development Activities As of December 31, 2022, we had one property under development.
Although we may seek to cost-effectively manage our exposure to future rate increases through such means, a portion of our overall debt may at various times float at then current rates. Development Activities As of December 31, 2023, we had one property under development.
W e present FFO because we consider it an important supplemental measure of our operating performance, and we believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting results.
We present FFO because we consider it an important supplemental measure of our operating performance, and we believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting results.
No sales of shares of our common stock were made under the 2021 ATM Program during the year ended December 31, 2022 . We used the net proceeds received from such sales for general corporate purposes.
No sales of shares of our common stock were made under the 2021 ATM Program during the year ended December 31, 2023 . We used the net proceeds received from such sales for general corporate purposes.
In addition, we present FFO, as Adjusted for certain other adjustments that we believe enhance the comparability of our FFO across periods and to the FFO reported by other publicly traded REITs. FFO is a supplemental performance measure that is commonly used in the real estate industry to assist investors and analysts in comparing results of REITs.
In addition, we present Core FFO for certain other adjustments that we believe enhance the comparability of our FFO across periods and to the FFO reported by other publicly traded REITs. FFO is a supplemental performance measure that is commonly used in the real estate industry to assist investors and analysts in comparing results of REITs.
During the year ended December 31, 2022 and 2021, no other-than-temporary impairment related to our unconsolidated real estate venture was identified.
During the year ended December 31, 2023 and 2022, no other-than-temporary impairment related to our unconsolidated real estate venture was identified.
A change in any of the above key assumptions can materially change not only the presentation of acquired properties in our consolidated financial statements but also our reported results of operations. We completed acquisitions of three wholly owned properties for an aggregate purchase price of $108.1 million during the year ended December 31, 2022.
A change in any of the above key assumptions can materially change not only the presentation of acquired properties in our consolidated financial statements but also our reported results of operations. We completed acquisitions of three wholly owned properties for an aggregate purchase price of $63.1 million during the year ended December 31, 2023.
Comparison of Results of Operations for the Years Ended December 31, 2021 and December 31, 2020 Information pertaining to fiscal year 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021 on page 37 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations”, which was filed with the Securities and Exchange Commission, or SEC, on February 28, 2022.
Comparison of Results of Operations for the Years Ended December 31, 2022 and December 31, 2021 Information pertaining to fiscal year 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 42 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which was filed with the Securities and Exchange Commission, or SEC, on February 28, 2023.
The Forward Sales Agreements are subject to early termination or settlement under certain circumstances. 44 ATM Programs We entered into separate equity distribution agreements on each of December 20, 2019 (the “2019 ATM Program”) and June 22, 2021 (the “2021 ATM Program” and, together with the 2019 ATM Program, the “ATM Programs”) with various financial institutions pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $300.0 million under each ATM Program from time to time in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act.
ATM Programs We entered into separate equity distribution agreements on each of December 20, 2019 (the “2019 ATM Program”) and June 22, 2021 (the “2021 ATM Program” and, together with the 2019 ATM Program, the “ATM Programs”) with various financial institutions pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $300.0 million under each ATM Program from time to time in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act.
Unconsolidated Real Estate Venture We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures. As of December 31, 2022, our investment in the JV was $271.6 million.
Unconsolidated Real Estate Venture We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures. As of December 31, 2023, our investment in the JV was $284.5 million.
The $0.7 million increase in Tenant reimbursements is primarily attributable to an increase in tenant project reimbursements.
The $3.0 million increase in Tenant reimbursements is primarily attributable to an increase in tenant project reimbursements.
Additionally, the $7.0 million increase in Depreciation and amortization is primarily attributable to the three operating properties acquired since December 31, 2021, as well as a full period of operations from the eight operating properties acquired during the year ended December 31, 2021, offset by a decrease in amortization related to fully amortized lease intangibles.
Additionally, the $7.0 million decrease in Depreciation and amortization is primarily attributable to the disposal of ten operating properties during the year ended December 31, 2022 and a decrease in amortization related to fully amortized lease intangibles, offset by three operating properties acquired since December 31, 2022, as well as a full period of operations from the three operating properties acquired during the year ended December 31, 2022.
As of December 31, 2022, we were in compliance with all applicable financial covenants.
As of December 31, 2023, we were in compliance with all applicable financial covenants.
On December 28, 2021, we issued 3,991,000 shares of our common stock for net proceeds of $85.0 million, which shares were issued in partial settlement of the Forward Sales Agreements entered into in connection with the underwritten public offering. No shares were issued during the year ended December 31, 2022.
On December 28, 2021, we issued 3,991,000 shares of our common stock for net proceeds of $85.0 million, which shares were issued in partial settlement of the Forward Sales Agreements entered into in connection with the underwritten public offering.
(2) Our revolving credit facility had available capacity of $384.4 million at December 31, 2022, with an accordion feature that permits us to request additional lender commitments for up to $250.0 million of additional capacity, subject to the satisfaction of customary terms and conditions.
(2) Our revolving credit facility had available capacity of $370.9 million at December 31, 2023, with an accordion feature that permits us to request additional lender commitments for up to $250.0 million of additional capacity, subject to the satisfaction of customary terms and conditions.
Triggering events or impairment indicators for our unconsolidated real estate venture include, recurring operating losses of an investee, absence of an ability to recover the carrying amount of the investee, the ability of an investee to sustain an earnings capacity and a carrying amount that exceeds the fair value of the investment.
Triggering events or impairment indicators for our unconsolidated real estate venture include, recurring operating losses of an investee, absence of an ability to recover the carrying amount of the investee, the ability of an investee to sustain an earnings capacity, a carrying amount that exceeds the fair value of the investment and that decline in fair value is other-than-temporary.
Liquidity and Capital Resources We anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months for all anticipated uses, including all scheduled principal and interest payments on our outstanding indebtedness, current and anticipated tenant improvements, planned and possible acquisitions of properties, including the remaining Portfolio Acquisition properties through the JV, stockholder distributions to maintain our qualification as a REIT and other capital obligations associated with conducting our business.
Liquidity and Capital Resources We anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months for all anticipated uses, including all scheduled principal and interest payments on our outstanding indebtedness, current and anticipated tenant improvements, development activities at FDA – Atlanta, planned and possible acquisitions of properties, including the final VA Portfolio property through the JV, stockholder distributions to maintain our qualification as a REIT and other capital obligations associated with conducting our business.
A summary of dividends declared by the board of directors per share of common stock and per common unit of our operating partnership at the date of record is as follows: Quarter Declaration Date Record Date Pay Date Dividend Q1 2022 April 27, 2022 May 13, 2022 May 25, 2022 0.265 Q2 2022 July 27, 2022 August 11, 2022 August 23, 2022 0.265 Q3 2022 October 26, 2022 November 11, 2022 November 23, 2022 0.265 Q4 2022 February 22, 2023 March 9, 2023 March 21, 2023 0.265 We use long-term investment partnership units in our operating partnership, which we refer to herein as LTIP units, as a form of performance-based award and service-based award for annual long-term incentive equity compensation.
A summary of dividends declared by the board of directors per share of common stock and per common unit of our operating partnership at the date of record is as follows: Quarter Declaration Date Record Date Pay Date Dividend Q1 2023 April 26, 2023 May 11, 2023 May 23, 2023 0.265 Q2 2023 August 2, 2023 August 17, 2023 August 29, 2023 0.265 Q3 2023 October 26, 2023 November 9, 2023 November 21, 2023 0.265 Q4 2023 February 21, 2024 March 6, 2024 March 18, 2024 0.265 46 We use long-term investment partnership units in our operating partnership, which we refer to herein as LTIP units, as a form of performance-based award and service-based award for annual long-term incentive equity compensation.
Assuming the forward sales transactions are physically settled in full utilizing a net weighted average initial forward sales price of $21.82 per share, we expect to receive net proceeds of approximately $42.6 million, after deducting offering costs, subject to adjustments in accordance with the applicable forward sale transaction. We accounted for the forward sale transactions as equity.
Assuming the forward sales transaction is physically settled in full utilizing a net weighted average initial forward sales price of $13.52 per share, we expect to receive net proceeds of approximately $6.8 million, after deducting offering costs, subject to adjustments in accordance with the applicable forward sale transaction. We accounted for the forward sale transactions as equity.
The $3.1 million increase in Income from unconsolidated real estate venture is attributable to our pro rata share of operations from the four operating properties acquired by the JV since December 31, 2021 and a full period of operations from the four operating properties acquired by the JV during the year ended December 31, 2021.
Income from unconsolidated real estate venture The $2.1 million increase in Income from unconsolidated real estate venture is primarily attributable to our pro rata share of operations from the one operating property acquired by the JV since December 31, 2022 and a full period of operations from the four operating properties acquired by the JV during the year ended December 31, 2022.
Investing Activities We used $69.1 million and $363.0 million in cash for investing activities during the years ended December 31, 2022 and 2021, respectively.
Investing Activities We used $127.0 million and $69.1 million in cash for investing activities during the years ended December 31, 2023 and 2022, respectively.
The $1.3 million increase in Asset management income is attributable to the fee earned by us for asset management of the JV from the four properties acquired since December 31, 2021 and a full period of operations from the four properties acquired during the year ended December 31, 2021.
The $0.7 million increase in Asset management income is attributable to the fee earned by us for asset management of the JV from the one property acquired since December 31, 2022 and a full period of operations from the four properties acquired during the year ended December 31, 2022.
Additionally, as of December 31, 2022 we had entered into forward sales transactions under the 2019 ATM Program for the sale of an additional 1,950,000 shares of our common stock that have not yet been settled.
Additionally, as of December 31, 2023, we had entered into a forward sales transaction under the 2019 ATM Program for the sale of an additional 500,000 shares of our common stock that have not yet been settled.
As of December 31, 2022, we wholly owned 78 operating properties and eight operating properties through an unconsolidated joint venture (the “JV”) in the United States encompassing approximately 8.7 million leased square feet (8.2 million pro rata), including 85 operating properties that were leased primarily to U.S.
As of December 31, 2023, we wholly owned 81 operating properties and nine operating properties through an unconsolidated joint venture (the “JV”) in the United States encompassing approximately 8.8 million leased square feet (8.3 million pro rata), including 88 operating properties that were leased primarily to U.S.
The following table sets forth certain information with respect to issuances under the 2019 ATM Program in each fiscal quarter for the year ended December 31, 2022 (amounts in thousands except share amounts): ATM Program For the Three Months Ended: Number of Shares Issued (1) Net Proceeds (1) March 31, 2022 434,925 $ 9,409 June 30, 2022 — — September 30, 2022 — — December 31, 2022 — — Total 434,925 $ 9,409 (1) Shares issued by us, which were all issued in settlement of forward sales transactions.
The following table sets forth certain information with respect to issuances under the 2019 ATM Program in each fiscal quarter for the year ended December 31, 2023 (amounts in thousands except share amounts): 2019 ATM Program For the Three Months Ended: Number of Shares Issued (1) Net Proceeds (1) March 31, 2023 250,000 $ 5,562 June 30, 2023 — — September 30, 2023 1,700,000 33,717 December 31, 2023 — — Total 1,950,000 $ 39,279 (1) Shares issued by us, which were all issued in settlement of forward sales transactions.
As of December 31, 2022, the carrying amount of our investment in our unconsolidated real estate venture was $271.6 million, or approximately 9.6% of our total assets. As of December 31, 2021, the carrying amount of our investment in our unconsolidated real estate venture was $131.8 million, or approximately 4.7% of our total assets.
As of December 31, 2023, the carrying amount of our investment in our unconsolidated real estate venture was $284.5 million, or approximately 9.9% of our total assets. As of December 31, 2022, the carrying amount of our investment in our unconsolidated real estate venture was $271.6 million, or approximately 9.6% of our total assets.
Net cash provided by operating activities for the year ended December 31, 2021 included $116.4 million in net cash from rental activities net of expenses and $2.0 million related to the changes in tenant accounts receivables, prepaid expense and other assets, deferred revenue associated with operating leases, principal payments on operating lease obligations and accounts payable, accrued expenses and other liabilities.
Net cash provided by operating activities for the year ended December 31, 2023 included $101.7 million in net cash from rental activities net of expenses, distributions from investment in unconsolidated real estate venture of $10.2 million and $2.6 million related to the changes in tenant accounts receivables, prepaid expense and other assets, deferred revenue associated with operating leases, principal payments on operating lease obligations and accounts payable, accrued expenses and other liabilities.
The summary below describes our use of FFO and FFO, as Adjusted, provides information regarding why we believe these measures are meaningful supplemental measures of our performance and reconciles these measures from net income (loss), presented in accordance with GAAP. Funds From Operations and Funds From Operations, as Adjusted FFO is a supplemental measure of our performance.
Non-GAAP Financial Measures We use and present FFO and Core FFO as supplemental measures of our performance. The summary below describes our use of FFO and Core FFO and provides information regarding why we believe these measures are meaningful supplemental measures of our performance and reconciles these measures from net income, presented in accordance with GAAP.
As of December 31, 2022, we committed capital, net of return of over committed capital, to the JV totaling $274.1 million and have a remaining capital commitment of $64.2 million. None of the properties owned by the JV are encumbered by mortgage indebtedness.
As of December 31, 2023, we committed capital, net of return of over committed capital, to the JV totaling $291.7 million and have a remaining capital commitment of $46.6 million. None of the properties owned by the JV are encumbered by mortgage indebtedness.
(6) Entered into four interest rate swaps with an effective date of December 13, 2018 with an aggregate notional value of $150.0 million to effectively fix the interest rate at 3.98% annually, based on our consolidated leverage ratio, as defined in our 2018 term loan facility agreement.
(6) Entered into two interest rate swaps with an effective date of June 23, 2023 with an aggregate notional value of $200.0 million to effectively fix the interest rate at 5.39% annually, based on our consolidated leverage ratio, as defined in our 2018 term loan facility agreement.
We present FFO calculated in accordance with the current National Association of Real Estate Investment Trusts, or Nareit, definition set forth in the Nareit FFO White Paper – Restatement 2018. FFO includes the REIT’s share of FFO generated by unconsolidated affiliates.
Funds From Operations and Core Funds From Operations FFO is a supplemental measure of our performance. We present FFO calculated in accordance with the current National Association of Real Estate Investment Trusts (“Nareit”) definition set forth in the Nareit FFO White Paper – Restatement 2018. FFO includes the REIT’s share of FFO generated by unconsolidated affiliates.
We are the sole general partner of our operating partnership and owned approximately 88.3% of the aggregate limited partnership interests in our operating partnership, which we refer to herein as common units, as of December 31, 2022.
Our operating partnership holds substantially all of our assets and conducts substantially all of our business. We are the sole general partner of our operating partnership and owned approximately 93.8% of the aggregate limited partnership interests in our operating partnership, which we refer to herein as common units, as of December 31, 2023.
Subject to our right to elect net share settlement, we expect to physically settle the forward sales transactions by the maturity dates set forth in each applicable forward sale transaction placement notice, which dates range from June 2023 to January 2024.
Subject to our right to elect net share settlement, we expect to physically settle the forward sales transaction by December 2024, the maturity date, as set forth in the applicable forward sale transaction placement notice.
At December 31, 2022, we had approximately $17.3 million available in cash and cash equivalents and there was approximately $384.4 million available under our revolving credit facility.
At December 31, 2023, we had approximately $21.9 million available in cash and cash equivalents and there was approximately $370.9 million available under our revolving credit facility.
Our assessment resulted in the remeasurement of ICE – Otay in the third quarter of 2022, which was written down to its estimated fair value and was classified as Level 3 in the fair value hierarchy.
On a quarterly basis, we assess the recoverability of the carrying amount of our real estate and related intangibles. Our assessment resulted in the remeasurement of ICE – Otay in the third quarter of 2022, which was written down to its estimated fair value and was classified as Level 3 in the fair value hierarchy.
Inflation Substantially all of our leases provide for operating expense escalation. We believe inflationary increases in expenses may be at least partially offset by the contractual expense escalations described above. We do not believe inflation has had a material impact on our historical financial position or results of operations.
Inflation Substantially all of our leases provide for operating expense escalation. We believe inflationary increases in expenses may be at least partially offset by the contractual expense escalations described above.
The $10.1 million increase in Property operating expenses is primarily attributable to an increase in property operating expenses associated with the three operating properties acquired since December 31, 2021 and a full period of operations from the eight operating properties acquired during the year ended December 31, 2021, offset by a decrease in expense attributable to the disposal of ten operating properties since December 31, 2021 and the disposal of two operating properties during the year ended December 31, 2021. 42 The $0.5 million increase in Real estate taxes is also primarily attributable to the three operating properties acquired since December 31, 2021 as well as a full period of operations from the eight operating properties acquired during the year ended December 31, 2021.
The $0.4 million decrease in Real estate taxes is also primarily attributable to the disposal of ten operating properties during the year ended December 31, 2022, offset by the three operating properties acquired since December 31, 2022 as well as a full period of operations from the three operating properties acquired during the year ended December 31, 2022.
The $0.4 million decrease in Other income is primarily attributable to a decrease in parking and interest income. Expenses Total expenses increased by $18.2 million to $222.1 million for the year ended December 31, 2022 compared to $203.8 million for the year ended December 31, 2021.
The $0.5 million increase in Other income is primarily attributable to an increase in interest income. Expenses Total expenses increased by $0.4 million to $222.5 million for the year ended December 31, 2023 compared to $222.1 million for the year ended December 31, 2022.
The LIBOR-transition amendments replaced the LIBOR-based floating interest rate option with a term SOFR-based floating interest rate option as a benchmark rate for borrowings denominated in U.S. dollars for all purposes under our revolving credit facility, our 2018 term loan facility and our 2016 term loan facility, including a credit spread adjustment of 0.10%.
These amendments added a daily simple SOFR-based option to the term SOFR-based floating interest rate option as a benchmark rate for borrowings denominated in U.S. dollars for all purposes under the credit and term loan agreements, including, in each case, a credit spread adjustment of 0.10%.
Net cash used in financing activities for the year ended December 31, 2022 included $109.2 million in dividends, $10.9 million in mortgage debt repayment, and $0.1 million in payment of deferred offering costs offset by $51.0 million in net draws under the revolving credit facility and $9.5 million in gross proceeds from issuance of shares of our common stock.
Net cash generated in financing activities for the year ended December 31, 2023 included $112.4 million in dividends, $20.0 million in mortgage debt repayment and $0.4 million in payment of deferred offering costs offset by $86.5 million in gross proceeds from issuance of shares of our common stock, $50.0 million delayed draw on our 2018 term loan and $13.5 million in net draws under the revolving credit facility.
Share Repurchase Program On April 28, 2022, our board of directors authorized a share repurchase program whereby we may repurchase up to 4,538,994 shares of our common stock, or approximately 5% of our outstanding shares as of the authorization date.
As of December 31, 2023 , we had approximately $300.0 million of gross sales of our common stock available under the 2021 ATM Program and $80.6 million of gross sales of our common stock available under the 2019 ATM Program. 43 Share Repurchase Program On April 28, 2022, our board of directors authorized a share repurchase program whereby we may repurchase up to 4,538,994 shares of our common stock, or approximately 5% of our outstanding shares as of the authorization date.
The issuance of common units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act. 45 Debt Indebtedness Outstanding The following table sets forth certain information with respect to our outstanding indebtedness as of December 31, 2022 (dollars in thousands): Principal Outstanding Interest Current Loan December 31, 2022 Rate (1) Maturity Revolving credit facility: Revolving credit facility (2) $ 65,500 S + 145bps July 2025 (3) Total revolving credit facility 65,500 Term loan facilities: 2016 term loan facility 100,000 2.82% (5) March 2024 2018 term loan facility (4) 150,000 3.98% (6) July 2026 Total term loan facilities 250,000 Less: Total unamortized deferred financing fees (1,028 ) Total term loan facilities, net 248,972 Notes payable: 2017 series A senior notes 95,000 4.05% May 2027 2017 series B senior notes 50,000 4.15% May 2029 2017 series C senior notes 30,000 4.30% May 2032 2019 series A senior notes 85,000 3.73% September 2029 2019 series B senior notes 100,000 3.83% September 2031 2019 series C senior notes 90,000 3.98% September 2034 2021 series A senior notes 50,000 2.62% October 2028 2021 series B senior notes 200,000 2.89% October 2030 Total notes payable 700,000 Less: Total unamortized deferred financing fees (3,948 ) Total notes payable, net 696,052 Mortgage notes payable: DEA - Pleasanton 15,700 L + 150bps (7)(8) October 2023 VA - Golden 8,644 5.00% (7) April 2024 USFS II - Albuquerque 13,438 4.46% (7) July 2026 ICE - Charleston 13,441 4.21% (7) January 2027 VA - Loma Linda 127,500 3.59% (7) July 2027 CBP - Savannah 10,389 3.40% (7) July 2033 USCIS - Kansas City 51,500 3.68% (7) August 2024 Total mortgage notes payable 240,612 Less: Total unamortized deferred financing fees (1,405 ) Less: Total unamortized premium/discount 1,640 Total mortgage notes payable, net 240,847 Total debt $ 1,251,371 (1) At December 31, 2022 the one-month SOFR (“S”) was 4.36% and the one-month LIBOR ("L") was 4.39%.
Debt Indebtedness Outstanding The following table sets forth certain information with respect to our outstanding indebtedness as of December 31, 2023 (dollars in thousands): Principal Outstanding Interest Current Loan December 31, 2023 Rate (1) Maturity Revolving credit facility: Revolving credit facility (2) $ 79,000 S + 135bps July 2025 (3) Total revolving credit facility 79,000 Term loan facilities: 2016 term loan facility 100,000 5.05 (4) March 2024 (5) 2018 term loan facility 200,000 5.39 (6) July 2026 Total term loan facilities 300,000 Less: Total unamortized deferred financing fees (892 ) Total term loan facilities, net 299,108 Notes payable: 2017 series A senior notes 95,000 4.05% May 2027 2017 series B senior notes 50,000 4.15% May 2029 2017 series C senior notes 30,000 4.30% May 2032 2019 series A senior notes 85,000 3.73% September 2029 2019 series B senior notes 100,000 3.83% September 2031 2019 series C senior notes 90,000 3.98% September 2034 2021 series A senior notes 50,000 2.62% October 2028 2021 series B senior notes 200,000 2.89% October 2030 Total notes payable 700,000 Less: Total unamortized deferred financing fees (3,468 ) Total notes payable, net 696,532 Mortgage notes payable: VA - Golden 8,447 5.00% (7) April 2024 USFS II - Albuquerque 11,603 4.46% (7) July 2026 ICE - Charleston 11,998 4.21% (7) January 2027 VA - Loma Linda 127,500 3.59% (7) July 2027 CBP - Savannah 9,549 3.40% (7) July 2033 USCIS - Kansas City 51,500 3.68% (7) August 2024 Total mortgage notes payable 220,597 Less: Total unamortized deferred financing fees (944 ) Less: Total unamortized premium/discount 542 Total mortgage notes payable, net 220,195 Total debt $ 1,294,835 (1) At December 31, 2023, the USD SOFR with a five day lookback (“S”) was 5.31%.
Cash Flow Comparison of Cash Flow for the Years Ended December 31, 2022 and December 31, 2021 The following table sets forth a summary of cash flows for our company for the years ended December 31, 2022 and 2021: For the years ended December 31, 2022 2021 Change (Amounts in thousands) Net cash provided by (used in): Operating activities $ 125,941 $ 118,344 $ 7,597 Investing activities (69,103 ) (363,042 ) 293,939 Financing activities (59,707 ) 250,172 (309,879 ) Operating Activities We generated $125.9 million and $118.3 million of cash from operating activities during the years ended December 31, 2022 and 2021, respectively.
Cash Flow Comparison of Cash Flow for the Years Ended December 31, 2023 and December 31, 2022 The following table sets forth a summary of cash flows for our company for the years ended December 31, 2023 and 2022: For the years ended December 31, 2023 2022 Change (Amounts in thousands) Net cash provided by (used in): Operating activities $ 114,479 $ 125,941 $ (11,462 ) Investing activities (127,008 ) (69,103 ) (57,905 ) Financing activities 17,194 (59,707 ) 76,901 Operating Activities We generated $114.5 million and $125.9 million of cash from operating activities during the years ended December 31, 2023 and 2022, respectively.
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying amount of the investment for our share of the earnings or losses, distributions received, and other-than-temporary impairments.
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying amount of the investment for our share of the earnings or losses, distributions received, and other-than-temporary impairments. 51 Our unconsolidated real estate venture is evaluated for impairment when conditions exist that may indicate that the decrease in the carrying amount of our investment has occurred and is other than temporary.
The spread over the applicable rate for each of our revolving credit facility, our 2018 term loan facility and our 2016 term loan facility (each as defined below) is based on our consolidated leverage ratio, as set forth in the respective loan agreements.
The spread over the applicable rate for each of our $450.0 million senior unsecured revolving credit facility (our “revolving credit facility”), our $200.0 million senior unsecured term loan facility (as amended, our “2018 term loan 44 facility”) and our $100.0 million senior unsecured term loan facility (our “2016 term loan facility”) is based on our consolidated leverage ratio, as set forth in the respective loan agreements.
Investment in unconsolidated real estate venture On October 13, 2021, we formed the JV with a global investor to fund the acquisition of a portfolio of ten properties anticipated to encompass 1,214,165 leased square feet (the “Portfolio Acquisition”). We own a 53.0% interest in the JV, subject to preferred allocations as provided in the JV agreement.
Investment in unconsolidated real estate venture On October 13, 2021, we formed the JV with a global investor to fund the acquisition of a portfolio of ten properties anticipated to encompass 1,214,165 leased square feet (the “VA Portfolio”) that would be 100% leased to the Veterans Affairs (“VA”).
(4) Our 2018 term loan facility has undrawn capacity up to $50.0 million of which is available during a delayed draw period. 46 (5) Entered into two interest rate swaps with an effective date of March 29, 2017 with an aggregate notional value of $100.0 million to effectively fix the interest rate at 2.82% annually, based on our consolidated leverage ratio, as defined in our 2016 term loan facility agreement.
(4) Entered into one interest rate swap with an effective date of September 29, 2023 with a notional value of $100.0 million to effectively fix the interest rate at 5.05% annually, based on our consolidated leverage ratio, as defined in our 2016 term loan facility agreement.
The outpatient facility is leased to the VA and has a lease expiration of January 2042. On November 22, 2022, the JV acquired a 257,294 square foot VA outpatient facility located in Phoenix, Arizona. The building is a build-to-suit property that was completed during 2022.
The building is a build-to-suit property that was completed during 2022. The outpatient facility is leased to the VA and has a lease expiration of November 2042. The facility is the ninth of ten properties to be acquired in the previously announced the VA Portfolio.
We transitioned the four interest rate swaps from LIBOR to SOFR effective December 23, 2022. (7) Effective interest rates are as follows: DEA – Pleasanton 1.80%, VA – Golden 5.03%, USFS II – Albuquerque 3.92%, ICE – Charleston 3.93%, VA – Loma Linda 3.78%, CBP – Savannah 4.12%, USCIS – Kansas City 2.05%.
(7) Effective interest rates are as follows: VA – Golden 5.03%, USFS II – Albuquerque 3.92%, ICE – Charleston 3.93%, VA – Loma Linda 3.78%, CBP – Savannah 4.12%, USCIS – Kansas City 2.05%. On January 26, 2023, we used $15.7 million of available cash to extinguish the mortgage note obligation on DEA – Pleasanton.
ICE – Otay is a 47,919 rentable square foot office building located in San Diego, California.
ICE – Otay is a 47,919 rentable square foot office building located in San Diego, California. No impairment charges were incurred during the year ended December 31, 2023.
(8) On January 26, 2023, we used $15.7 million of available cash to extinguish the $15.7 million mortgage note obligation on DEA – Pleasanton. On February 3, 2023, we entered three SOFR-based interest rate swaps each with a notional value of $100.0 million that were designated as cash flow hedges of interest rate risk.
On February 3, 2023, we entered into three SOFR-based interest rate swaps each with a notional value of $100.0 million that were designated as cash flow hedges of interest rate risk. Two of the interest rate swaps, with an aggregate notional value of $200.0 million, became effective in June 2023.
Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base these estimates, judgments, and assumptions on historical experience, current trends, and various other factors that we believe to be reasonable under the circumstances.
We base these estimates, judgments, and assumptions on historical experience, current trends, and various other factors that we believe to be reasonable under the circumstances.
We expect the JV to close on the two remaining properties in the Portfolio Acquisition during 2023. 41 Results of Operations Comparison of Results of Operations for the Years Ended December 31, 2022 and December 31, 2021 The financial information presented below summarizes the results of operations of our company for the years ended December 31, 2022 and 2021.
We anticipate the JV will acquire the tenth and final property in the VA Portfolio in 2024. Results of Operations Comparison of Results of Operations for the Years Ended December 31, 2023 and December 31, 2022 The financial information presented below summarizes the results of operations of our company for the years ended December 31, 2023 and 2022.
The following table sets forth a reconciliation of our net income to FFO and FFO, as Adjusted for the years ended December 31, 2022, 2021, and 2020 (dollars in thousands): For the years ended December 31, 2022 2021 2020 Net income $ 35,562 $ 33,957 $ 13,528 Depreciation of real estate assets 97,262 91,189 93,803 (Gain) loss on the sale of operating properties (13,590 ) (1,307 ) 3,995 Impairment loss 5,540 — — Unconsolidated real estate venture allocated share of above adjustments 4,937 362 — FFO 129,711 124,201 111,326 Adjustments to FFO: Loss on extinguishment of debt 20 — — Depreciation of non-real estate assets 992 77 — Acquisition costs 1,370 1,939 2,087 Straight-line rent and other non-cash adjustments (410 ) (4,417 ) (3,432 ) Amortization of deferred revenue (5,797 ) (5,616 ) (3,528 ) Non-cash interest expense 934 1,369 1,441 Non-cash compensation 6,536 5,050 4,093 Amortization of above-/below-market leases (3,105 ) (4,589 ) (5,894 ) Unconsolidated real estate venture allocated share of above adjustments (1,323 ) (54 ) — FFO, as Adjusted $ 128,928 $ 117,960 $ 106,093 Factors That May Influence Future Results of Operations Revenue Our revenues primarily arise from the rental of space to tenants in our properties and tenant reimbursements, which include reimbursement for operating expenses, which are determined by the base year operating expenses and are subject to reimbursement in subsequent years based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers.
Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations and cash flows. 48 The following table sets forth a reconciliation of our net income to FFO and Core FFO for the years ended December 31, 2023, 2022, and 2021 (dollars in thousands): For the years ended December 31, 2023 2022 2021 Net income $ 21,060 $ 35,562 $ 33,957 Depreciation of real estate assets 90,288 97,262 91,189 Gain on sale of operating property — (13,590 ) (1,307 ) Impairment loss — 5,540 — Unconsolidated real estate venture allocated share of above adjustments 7,639 4,937 362 FFO 118,987 129,711 124,201 Adjustments to FFO: Loss on extinguishment of debt 14 20 — Natural disaster event expense, net of recovery 69 96 154 Depreciation of non-real estate assets 1,003 992 77 Unconsolidated real estate venture allocated share of above adjustments 66 66 — Core FFO $ 120,139 $ 130,885 $ 124,432 49 Factors That May Influence Future Results of Operations Revenue Our revenues primarily arise from the rental of space to tenants in our properties and tenant reimbursements, which include reimbursement for operating expenses, which are determined by the base year operating expenses and are subject to reimbursement in subsequent years based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers.
Comparison of Cash Flow for the Years Ended December 31, 2021 and December 31, 2020 Information pertaining to fiscal year 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021 on page 46 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which was filed with SEC on February 28, 2022.
Net cash used by financing activities for the year ended December 31, 2022 included $109.2 million in dividends, $10.9 million in mortgage debt repayment, and $0.1 million in payment of deferred offering costs offset by $51.0 million in net draws under the revolving credit facility and $9.5 million in gross proceeds from issuance of shares of our common stock. 47 Comparison of Cash Flow for the Years Ended December 31, 2022 and December 31, 2021 Information pertaining to fiscal year 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 49 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which was filed with SEC on February 28, 2023.
Net cash used in investing activities for the year ended December 31, 2021 primarily included $214.7 million in real estate acquisitions, $131.6 million in investment in unconsolidated real estate venture, $17.9 million in additions to operating properties and $6.2 million in additions to development properties, offset by $7.3 million in proceeds from sale of operating properties, net. 49 Financing Activities We used $59.7 million and generated $250.2 million in cash from financing activities during the years ended December 31, 2022 and 2021, respectively.
Net cash used in investing activities for the year ended December 31, 2023 primarily included $63.4 million in real estate acquisitions and deposits, $28.1 million in additions to operating properties, $17.8 million in additions to development properties and $17.7 million in investment in unconsolidated real estate venture, offset by $0.1 million in distributions from investment in unconsolidated real estate venture.
Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long-lived assets.
In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long-lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives.
FFO and FFO, as Adjusted are presented as supplemental financial measures and do not fully represent our operating performance. Other REITs may use different methodologies for calculating FFO and FFO, as Adjusted or use other definitions of FFO and FFO, as Adjusted and, accordingly, our presentation of these measures may not be comparable to other REITs.
Other REITs may use different methodologies for calculating FFO and Core FFO or use other definitions of FFO and Core FFO and, accordingly, our presentation of these measures may not be comparable to other REITs. Neither FFO nor Core FFO is intended to be a measure of cash flow or liquidity.
Gain on the sale of operating properties in 2022 of $13.6 million was due to the sale of the Portfolio Disposition Properties in the fourth quarter of 2022.
Gain on the sale of operating properties In the fourth quarter of 2022, we recognized a Gain on the sale of operating properties totaling $13.6 million which was attributable to the disposition of a portfolio of ten properties. No dispositions were made during the year ended December 31, 2023.
As of the date of this filing, there were no known commitments or events that would have a material impact on our liquidity.
As of the date of this filing, there were no known commitments or events that would have a material impact on our liquidity. 42 Equity Shelf Registration Statement on Form S-3 We expect to file an automatic universal shelf registration statement on Form S-3 with the SEC following the filing of this Annual Report on Form 10-K.
However, there can be no assurance that we will be able to complete any such offerings of securities in the future. Offering of Common Stock on a Forward Basis On August 11, 2021, we and the operating partnership completed an underwritten public offering of 6,300,000 shares of common stock offered on a forward basis.
Offering of Common Stock on a Forward Basis On August 11, 2021, we completed an underwritten public offering of 6,300,000 shares of common stock offered on a forward basis.
On November 23, 2022, we entered into a second amendment to our second amended and restated senior credit agreement and on November 29, 2022, we entered into a fifth amendment to our senior unsecured term loan agreement (together, the “LIBOR-transition amendments”).
On May 30, 2023, we entered into the third amendment to our second amended and restated credit agreement, dated as of July 23, 2021, and into the sixth amendment to our senior unsecured term loan agreement, dated as of September 29, 2016.
No repurchases of shares of our common stock were made under the share repurchase program during the year ended December 31, 2022 . Contribution of Property for Common Units On May 10, 2022, we acquired NARA – Broomfield for which we issued, as partial consideration, 827,791 common units.
No repurchases of shares of our common stock were made under the share repurchase program during the year ended December 31, 2023 .
Government tenant agencies and one operating property that was entirely leased to a private tenant. As of December 31, 2022, our operating properties were 99% leased. For purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition.
For purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition. In addition, we wholly owned one property under development that we expect will encompass approximately 0.2 million leased square feet upon completion.
We adjust FFO to present FFO, as Adjusted as an alternative measure of our operating performance, which, when applicable, excludes the impact of losses on extinguishment of debt, depreciation of non-real estate assets, acquisition costs, straight-line rent and other non-cash adjustments, amortization of deferred revenue (which results from landlord assets funded by tenants), non-cash interest expense, non-cash compensation, amortization of above-/below-market leases, and the unconsolidated real estate venture’s allocated share of these adjustments.
We adjust FFO to present Core FFO as an alternative measure of our operating performance, which, when applicable, excludes items which we believe are not representative of ongoing operating results, such as liability management related costs (including losses on extinguishment of debt and modification costs), catastrophic event charges, depreciation of non-real estate assets, and the unconsolidated real estate venture’s allocated share of these adjustments.
Material Cash Commitments The following table shows our material cash commitments as of December 31, 2022 : Payments due by period Total 2023 2024 2025 2026 2027 Thereafter Mortgage principal and interest $ 271,310 $ 29,144 $ 71,511 $ 10,319 $ 15,470 $ 138,367 $ 6,499 Revolving credit facility principal and interest 77,312 4,611 4,611 68,090 — — — Term loan facilities principal and interest 275,087 8,889 106,746 6,052 153,400 — — Senior unsecured notes payable principal and interest 891,406 24,885 24,885 24,885 24,885 117,579 674,287 Development property obligations (1) 3,978 2,541 1,437 — — — — Total $ 1,519,093 $ 70,070 $ 209,190 $ 109,346 $ 193,755 $ 255,946 $ 680,786 (1) Due to the long-term nature of certain construction and development contracts included in this line, the amounts reported in the table represent our estimate of the timing for the related obligations being paid .
Material Cash Commitments The following table shows our material cash commitments as of December 31, 2023 : Payments due by period Total 2024 2025 2026 2027 2028 Thereafter Mortgage principal and interest $ 242,166 $ 71,511 $ 10,319 $ 15,470 $ 138,367 $ 1,169 $ 5,330 Revolving credit facility principal and interest 88,435 6,041 82,394 — — — — Term loan facilities principal and interest 328,893 112,033 10,795 206,065 — — — Senior unsecured notes payable principal and interest 866,521 24,885 24,885 24,885 117,579 70,759 603,528 Development property obligations (1) 162,040 85,605 58,071 18,364 — — — Total $ 1,688,055 $ 300,075 $ 186,464 $ 264,784 $ 255,946 $ 71,928 $ 608,858 (1) Due to the long-term nature of certain construction and development contracts included in this line, the amounts reported in the table represent our estimate of the timing for the related obligations being paid .
If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine whether an asset may be impaired. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques.
Impairment of Long-Lived Assets We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long-lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine whether an asset may be impaired.
The chart below details our debt capital structure as of December 31, 2022 (dollars in thousands): Debt Capital Structure December 31, 2022 Total principal outstanding $ 1,256,112 Weighted average maturity 5.6 years Weighted average interest rate 3.7 % % Variable debt 6.5 % % Fixed debt (1) 93.5 % % Secured debt 19.0 % (1) Our 2016 term loan facility and 2018 term loan facility are swapped to be fixed and as such are included as fixed rate debt in the table above Senior Unsecured Credit Facility and 2016 Term Loan Facility We are parties to a second amended and restated senior credit agreement, which provides for a senior unsecured credit facility with a total borrowing capacity of $650.0 million, consisting of two components: (i) a $450.0 million revolving credit facility, which we refer to as the revolving credit facility, and (ii) a $200.0 million term loan facility, which we refer to as the 2018 term loan facility, up to $50.0 million of which will be available for a delayed draw period.
The chart below details our debt capital structure as of December 31, 2023 (dollars in thousands): 45 Debt Capital Structure December 31, 2023 Total principal outstanding $ 1,299,597 Weighted average maturity 4.6 years Weighted average interest rate 4.2 % % Variable debt 6.1 % % Fixed debt (1) 93.9 % % Secured debt 17.1 % (1) Our 2016 term loan facility and 2018 term loan facility are swapped to be fixed and as such are included as fixed rate debt in the table above.
These interest rate swaps will become effective as our existing swaps mature in June and September 2023 and will mature in 2024 and 2025. Our revolving credit facility, term loan facilities, notes payable, and mortgage notes payable are subject to ongoing compliance with a number of financial and other covenants.
See Note 5 to the Consolidated Financial Statements for additional information on our revolving credit facility, our 2018 term loan facility and our 2016 term loan facility. Our revolving credit facility, term loan facilities, notes payable, and mortgage notes payable are subject to ongoing compliance with a number of financial and other covenants.
These transactions were accounted for as asset acquisitions, and the purchase price of each was allocated based on the relative fair value of the asset acquired and liabilities assumed. 52 Impairment of Long-Lived Assets We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long-lived assets.
We completed acquisitions of three wholly owned properties for an aggregate purchase price of $108.1 million during the year ended December 31, 2022. These transactions were accounted for as asset acquisitions, and the purchase price of each was allocated based on the relative fair value of the asset acquired and liabilities assumed.
The facility is leased to the GSA for beneficial use of the FBI with a lease expiration of November 2040. On August 23, 2022, we acquired a 28,900 leased square foot Judiciary of the U.S. District ("JUD") courthouse in Council Bluffs, Iowa. The building is a build-to-suit facility completed in 2021.
Government (“JUD”) courthouse in Newport News, Virginia. The building is a build-to-suit courthouse completed in 2008. The facility is leased to the GSA for beneficial use of JUD with a lease expiration of July 2033.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−2 removed3 unchanged
Biggest changeIf market rates of interest on our variable rate debt fluctuate by 25 basis points, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows, by $0.2 million annually. 53 We expect that all LIBOR settings relevant to us will cease to be published or will no longer be representative after June 30, 2023.
Biggest changeIf market rates of interest on our variable rate debt fluctuate by 25 basis points, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows, by $0.2 million annually. Item 8. Financial Statement s and Supplementary Data This item is included in a separate section at the end of this report beginning on page F-1.
Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure None.
Item 9. Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure None.
As of December 31, 2022, $1.2 billion, or 93.5% of our debt, excluding unamortized premiums and discounts, had fixed interest rates and $81.2 million, or 6.5%, had variable interest rates.
As of December 31, 2023, $1.2 billion, or 93.9% of our debt, excluding unamortized premiums and discounts, had fixed interest rates and $79.0 million, or 6.1%, had variable interest rates based on SOFR.
Removed
As of December 31, 2022, each of the agreements governing our variable rate debt, with the exception of the mortgage loan on DEA – Pleasanton have been transitioned to SOFR. The loan on DEA – Pleasanton provides for the replacement of LIBOR if it becomes unavailable during the term of its agreement.
Removed
On January 26, 2023, we paid off the full $15.7 million outstanding balance of the mortgage loan on DEA – Pleasanton. Item 8. Financial Statement s and Supplementary Data This item is included in a separate section at the end of this report beginning on page F-1. Item 9.

Other DEA 10-K year-over-year comparisons