DEA — Easterly Government Properties

Government-leased REIT. AGI Score 6/10. P/TB 0.77. 93 properties leased to US Government agencies. 8.1% dividend yield | Analysis date: 2026-03-13

Stock Price — DEA

Why are we looking at this?

AGI Score 6/10 — Physical Bottleneck. Easterly owns Class A commercial properties leased to US Government agencies through the GSA. 93 operating properties, 10.4M sq ft, average 9.5 years remaining lease term. Backed by the full faith and credit of the US Government. Trading at 0.77x book with an 8.1% dividend yield. The question: is this an undervalued infrastructure play with government-backed cash flows, or is DOGE/government downsizing a real risk?

$21.99

Stock Price

$1.14B

Market Cap

0.77x

Price / Book

$343M

Revenue

$12M

Net Income

$259M

Operating Cash Flow

$1.33B

Stockholders Equity

81.4x

P/E (GAAP, misleading)

8.13%

Dividend Yield

1. The Business

Easterly acquires, develops, and manages Class A properties for mission-critical US Government agencies. Only 55 employees — an extremely lean operation.

93 operating properties + 10 JV properties: 10.4M leased sq ft
Tenants: FBI, DEA, VA, USCIS, ICE, IRS, and other agencies that need secure, physical facilities
Average remaining lease: 9.5 years — long-duration, predictable revenue
Full faith and credit: US Government tenant — zero credit risk
88% government concentration: Stability but also concentration risk

2. Balance Sheet

As a REIT, total assets are primarily investment properties carried at depreciated cost. Stockholders equity of $1.33B backs $28.60/share book value vs $21.99 market price = 23% discount to book.

Key Metrics

OCF / Market Cap: $259M / $1.14B = 22.7% OCF yield. Very high.
FCF: ~$159M = 14% FCF yield.
Dividend: ~$83M/yr ($1.79/share). Well covered by $159M FCF (1.9x coverage).
GAAP P/E of 81x is misleading — REITs have high depreciation that reduces GAAP earnings but not cash flow. FFO-based P/E is much lower.

3. AGI Impact Analysis

AGI Score: 6/10 — Physical Bottleneck (Government)

Mission-critical agencies (FBI, DEA, VA) require secure physical facilities that cannot be virtualized. AGI may reduce some government office demand, but law enforcement, courts, and healthcare facilities need physical space. The real risk is DOGE-style government downsizing reducing headcount and space needs. Long-term leases (9.5yr avg) provide a buffer.

4. 10x Analysis (Backwards)

What price gives us 10x?

Current market cap: $1.14B. 10x = $11.4B. Not realistic for a small government REIT.

This is an income play, not a growth play. 8.1% dividend yield, well-covered. If you reinvest dividends, total return ~12-15%/yr from dividends + modest appreciation. Over 10 years, that's 3-4x.

Floor price: $16-18/share (0.55-0.65x book). With government-backed leases and 22% OCF yield, the downside is limited. The dividend would yield 10-11% at $16.

Entry zone: Below $18 this becomes very attractive on a risk-adjusted income basis.

5. Key Risks

DOGE / Government downsizing: If federal agencies reduce space, lease renewals at risk. This is the #1 current fear and likely why the stock is cheap.
88% government concentration: Single-tenant type risk. Policy shifts affect entire portfolio.
Interest rate sensitivity: Higher rates reduce REIT valuations and increase refinancing costs.
Low growth: Government leases have modest escalators. Revenue growth is limited.
Small company: Only 55 employees, $1.1B market cap. Limited liquidity.

6. Initial Assessment

Summary — WATCHLIST (Income Play)

DEA is a high-quality income vehicle. Government-backed leases, 8.1% yield, 22% OCF yield, 0.77x book. The DOGE/downsizing fear is real but likely overblown for mission-critical agencies (FBI, DEA can't work from home).

Not a 10x. A 3-4x total return over 10 years with high current income. Compelling below $18/share.

Floor price: $16-18. At that level, dividend yield exceeds 10% with government credit backing.

Data sources: SEC EDGAR XBRL, yfinance, 10-K filing, AGI scoring model. Analysis date: 2026-03-13.