Easterly Government Properties, Inc.

Greetings. Welcome to the Easily Government Properties third quarter 2021 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. Please note that this conference is being recorded. I will now turn the conference over to your host, Lindsay Winterhalter, Vice President of Investor Relations. Please go ahead.

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 this annual report on Form 10-K for the year ended December 31st, 2020, filed with the SEC on February 24th, 2021, and in its other SEC filings, including its Form 10-Q, which we expect will be filed later today, 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 conference call, the company may refer to certain non-GAAP financial measures, such as 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 earning release and separate supplemental information package on the investor relations page of the company's website at ir.easterlyrete.com. I would now like to turn the conference call over to Darrell Crate, Chairman of Easterly Government Properties.

Thank you, Lindsay. Good morning, everyone, and thank you for joining us for this third quarter conference call. Today, in addition to Lindsay, I'm also joined by Bill Trimble, the company's CEO, and Megan Bevere, the company's CFO and COO. I could not be more pleased with our business progress during the third quarter. We were able to develop all stages of the acquisition pipeline, including identification, negotiation of terms, diligence, and closing. With this morning's announcement, we have exceeded our goal of 300 million in acquisitions for 2021, And as you saw in the release, we increased our guidance for acquisitions to 350 million. This is our second increase to this metric during 2021. And all told, this represents a 75% increase on our original acquisition volume target from one year ago. In addition, we are very well positioned to achieve our acquisition target range of 200 to 300 million for 2022. In addition, We materially improved our competitive position and expanded our executable addressable market or bullseye over the medium term with the announcement of the portfolio purchase side by side with an outstanding joint venture partner. As you may recall, years ago there was a sizable building we were bidding on that was squarely within our bullseye. And while we were highly competitive as a bidder, we lost the auction. Why? We were not able to match the price given the cost of our capital and our speed to close given our scale relative to our competitors. Unequivocally, the building we lost is one that we should have owned. We also realized that there was a universal several billion dollars worth of buildings that could trade over the next 15 years where we could find ourselves at a similar disadvantage. It was clear to us that we needed to solve this issue. We began an effort to find a set of investors who would see value in the enduring nature of our leases, as they are backed by the full faith and credit of the United States government, have a life with several renewals that can reach or exceed 50 years, on sites that will generally see economic development over the coming decades. The ultimate in sleep well at night real estate, or as Bill says, real estate without the drama. We spoke with both domestic and global insurance companies, pension funds, and sovereign wealth funds. What we learned is that the audience that most values our assets are folks who are also responsible for purchasing U.S. Treasury securities, and they see their real estate holdings as part of an expansive global investment effort. While we join our public company shareholders on these calls quarter after quarter and discuss the significant 500-plus basis point premium we offer relative to Treasuries, we came to realize that the public REIT investor's first instinct is not to approach the valuation of our assets with this risk premium in mind. The result of our conversation was to narrow our interactions to several large global organizations that invested with a broader scope of risk and asset types. Ultimately, we found a partner with whom we believe we can creatively and decisively work to harvest the most value and own the sizable assets in the United States' least market, while simultaneously serving the needs of our public REIT investors. This enabled us to deliver the portfolio transaction that we announced two weeks ago, which is an accretive transaction as measured by both FFO and CAD for our shareholders while being competitive in the marketplace for the highest quality assets. It's important to note that the universe of global investors see value in these assets at a sub-five cap rate. While the purchase of this VA portfolio is an attractive addition to our existing assets as measured by duration, quality, scale, and diversification, It more importantly illustrates the model by which we can transact within our total addressable market and positions us at a competitive advantage for the largest pristine assets in our target universe. I compliment the whole organization and our board for their efforts over the last couple years as we work to solve this challenge, and I'm very excited about the expanded capabilities that this new relationship brings to our enterprise. With that, I'll turn the call over to Bill to further describe the activities of the quarter.