Easterly Government Properties, Inc.

Greetings and welcome to Easterly Government Property's second quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms. Lindsay Winterhalter, Vice President of Investor Relations. Thank you. You may begin.

Good morning. Before the call begins, please note the use of forward-looking statements by the company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking. The company intends these forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Act reform of 1995 and is making this statement for the purpose of complying with those Safe Harbor provisions. Although the company believes that its plans, intentions, expectations, strategies, and prospects, as reflected in or suggested by those forward-looking statements, are reasonable, it can give no assurance that these plans, intentions, expectations, or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in Item 1A, Risk Factors, of its annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 25, 2020, and is making in its other SEC filings and risks and uncertainties related to the adverse impact of COVID-19 on the U.S. regional and global economies and the potential adverse impact on the financial condition and results of operation of the company. The company assumes no obligations to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, on this call, the company may refer to certain non-GAAP financial measures, such as funds from operation, funds from operations as adjusted, and cash available for distribution, You can find a tabular reconciliation of these non-GAAP financial measures to the most comparable current GAAP numbers in the company's earnings release and separate supplemental information package on the investor relations page of the company's website at ir.easterlyrate.com. I would now like to turn the conference call over to Daryl Crate, Chairman of Easterly Government Properties.

Thank you, Lindsay. Good morning, everyone, and thank you for joining us for this second quarter conference call. Today, in addition to Lindsay, I'm joined by Bill Trimble, the company's CEO, and Megan Bevere, the company's CFO and COO. Given these challenging times that seem to ever have an extending duration, I thought it would be helpful to describe our business in the context of COVID and highlight our areas of focus. We could not be more pleased with the government as our tenant. Our tenant credit quality is higher than any other REIT as rent dollars are being paid and our leases are backed by the full faith and credit of the United States government. While overall economic activity is uncertain, our business is not correlated with any economic segment. If anything, when there's economic uncertainty or societal unrest, that is the time government is in demand. The team's done an outstanding job extending the average maturity of the portfolio as the weighted average remaining lease term for the portfolio has grown by over 35% since the beginning of 2017. Growing duration while time is ticking away is value added for investors. In this environment, we are well positioned to grow through acquisitions. We continue to execute on our base case without question. We are evaluating several portfolios of high-quality, long-duration assets. In addition, we remain well positioned to purchase assets because we believe many owners may feel the need to generate some liquidity in their portfolios as the strains of COVID continue through the fall. Our development efforts continue to execute without delay, and we look forward to those projects going online over the next several years. All told, we have increased the total leases on Bill's desk from $1.4 billion to $1.8 billion, representing a 30% increase over the last 12 months, which continues to build the foundation of the firm. With one 10-year lease role, in this young portfolio with an average duration of 13.1 years, This could lead to an excess of $4 billion due to Easterly, again, based only upon the leases that we have today. We also continue to prepare our balance sheet for disciplined accretive growth, and we're building capacity. We have a clear view of our future earnings, which has caused us to positively revisit our guidance for 2020. As we look out over the next three years, we see a strong opportunity to continue to execute, as we have in the past, and continue to deliver steady growth with an opportunity to have some material upside surprises in acquisition and development growth along the way. With that, I'll turn the call over to Bill to discuss the specific activities that we're engaged in to achieve our strong results.