Management attributes consistent 2% to 3% core FFO per share growth to a repeatable strategy focused on high-credit government-adjacent tenancy and disciplined capital allocation.
The portfolio maintains high durability because assets are purpose-built for mission-critical functions like law enforcement and public health, which remain essential regardless of political or economic cycles.
Strategic diversification into state-level partnerships, such as the recent Virginia acquisition, is driven by credit quality comparable to federal tenants and the benefit of contractual rent escalations.
Management views the private sector’s role as essential for modernizing government infrastructure, allowing agencies to focus on mission execution rather than the complexities of real estate ownership.
Operational performance remains strong with occupancy at 97% and weighted average lease terms of approximately 10 years, reinforcing the stability of the tenant base.
The company is actively transitioning toward a more conventional leverage profile with a medium-term target of approximately 6.0x to lower funding costs and improve investment-grade positioning.
Full-year 2026 core FFO guidance of $3.05 to $3.12 assumes approximately 3% growth, supported by the FDA Atlanta delivery and successful lease renewals.
Guidance methodology incorporates $50 million to $100 million in gross development-related investment and $50 million in wholly owned acquisitions for 2026.
Management expects cash leverage to trend below 7.5x as remaining lump-sum reimbursements from the FDA Atlanta project are received in the coming months.
The acquisition strategy targets a pipeline of approximately $1 billion, focusing on assets that provide a return spread of at least 100 basis points over the weighted average cost of capital.
Future growth is predicated on shifting focus toward 2027 renewals, with management noting that most 2026 renewals are already completed.
Completed a $44.5 million acquisition of a three-asset Virginia portfolio at an 11% cash cap rate, driven by a motivated seller and the company’s ability to execute an all-cash bid.
The FDA Atlanta facility was formally delivered in December 2025, with $138.1 million in reimbursements received by year-end and an additional $15.6 million expected in early 2026.
Three major development projects in Florida, Arizona, and Oregon totaling 200,000 square feet are progressing toward deliveries in 2026 and 2027.
Management addressed federal budget volatility and ‘DOGE’ initiatives, characterizing them as potential tailwinds that favor efficient public-private partnerships over government ownership.
