Easterly Government Properties, Inc.

Greetings. Welcome to the Easterly Government Properties Third Quarter 2022 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 this conference is being recorded. I will now turn the conference over to your host, Lindsay Winterhalter. You may begin.

Good morning. Before the call begins, please note that certain statements made during this conference call may include statements that are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes that its expectations as reflected in any forward-looking statements are reasonable, it can give no assurance that these expectations 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 the company's most recent Form 10-K and Form 10-Q filed with the SEC and in its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements. Additionally, on this conference call, the company may refer to certain non-GAAP financial measures, such as funds from operations, 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.easterlyrete.com. I'd now like to turn the conference call over to Darrell Crate, Chairman of Easterly Government Properties.

Great job. Thanks, 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. During the quarter, we entered a new phase in the real estate market. Rates are rising quickly. How fast is uncertain. The transaction market has slowed, and there's a gap between buyer and seller expectations. Cap rates are readjusting. Of course, none of this will adversely impact our tenant credit quality, our occupancy, or our dividend. Having rent that is backed by the full faith and credit of the U.S. government, coupled with managing the portfolio for consistency and stability, should reduce uncertainty for our investors, particularly during uncertain times. So that leads me to the front-footed question. How can we use this period to enhance our portfolio and add value for our shareholders? First, we are enhancing the institutional quality of our portfolio by disposing of a set of assets that are either in remote locations or with agencies where we do not see an ability to build a defined edge in serving our agency client. These are fine agencies, but at this time, we believe concentrating on what we know best will enhance our ability to add value. Second, we're using the proceeds from the disposition to pay down most of our outstanding floating rate debt. We have been disciplined about terming out our liabilities to match our assets, and that favors us in these times of interest rate uncertainty. Third, we're maintaining meaningful liquidity in order to purchase assets that may be owned by landlords experiencing some financial distress. We have found ourselves at a disadvantage relative to developers over the last several years. They have bid projects assuming an exit with ever lower cap rates. That worked for them longer than we imagined. That is over. Liquidity will start to dry up. Some will need a partner to complete their projects. I will not mention specifics, but we will be ready should this opportunity present itself And lastly, we're actively bidding on transactions in a way that reflects the new cap rate environment. I don't imagine it will get much done in the next quarter or two, but I do imagine the market will reprice and we will find ourselves with our liquidity ready to acquire additional accretive quality assets. So we're pleased with how our portfolio is positioned as we look forward, and we will continue to execute our business strategy with the intent to deliver safety and stability to our investors. The goal is to deliver an attractive risk-adjusted return to our shareholders that's backed by tenants that represent the full faith and credit of the United States government. And with that, I'll turn the call over to Bill to give you insights into the third quarter activities.