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Item 8. Financial Statements and Supplementary Data

2021-02-24 compared with 2020-02-25 · 239 added, 289 removed, 966 unchanged (35% of the section changed)

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This item is included in a separate section at the end of this report beginning on page F-1.

Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Evaluation of Disclosure Controls and Procedures

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Description of Securities of Easterly Government Properties, Inc.

(previously filed as Exhibit 4.2 to the Company’s Annual Report on Form 10-K on February 25, 2020 and incorporated herein by reference)

Amended and Restated Limited Partnership Agreement of Easterly Government Properties LP (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K on February 11, 2015 and incorporated herein by reference)

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2 to the Company’s Registration Statement on Form S-11 on January 30, 2015 and incorporated herein by reference)

Exhibit Description

Employment Agreement, by and among Easterly Government Properties Services LLC, Easterly Government Properties LP, Easterly Government Properties, Inc., and Meghan G.

Baivier, dated May 12, 2015 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on May 13, 2015 and incorporated herein by reference)

Exhibit Description

Form of Indemnification Agreement between Easterly Government Properties, Inc.

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February 24, 2021

INDEX TO FINANCIAL STATEMENTS

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

T he Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audits i n accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

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Purchase Price Accounting

As described in Notes 2 and 3 to the consolidated financial statements, during the year ended December 31, 2019, the Company acquired eight operating properties in asset acquisitions for an aggregate purchase price of $382.6 million.

As described in Notes 2 and 3 to the consolidated financial statements, during the year ended December 31, 2020, the Company acquired nine operating properties in asset acquisitions for an aggregate purchase price of $252.7 million.

When the Company acquires properties, management allocates the purchase price to numerous tangible and intangible components.

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and (v) allocation of the if-vacant value between land and building.

The principal considerations for our determination that performing procedures relating to purchase price accounting is a critical audit matter are (i) there was significant judgment and estimation by management when developing the purchase price allocation, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures to evaluate management’s estimates and significant assumptions, (ii) significant audit effort was necessary in evaluating significant assumptions, such as discount rates, capitalization rates, market rental rates, market land rates, leasing costs, tenant improvement costs, and the period of time that it would take to lease vacant space, (iii) significant auditor judgment was necessary in evaluating audit evidence related to such assumptions, and (iv) the audit effort included the involvement of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.

The principal considerations for our determination that performing procedures relating to purchase price accounting is a critical audit matter are (i) the significant judgment and estimation by management when developing the purchase price allocation, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures to evaluate management’s estimates and significant assumptions, (ii) significant audit effort was necessary in evaluating significant assumptions related to discount rates, capitalization rates, market rental rates, market land rates, leasing costs, tenant improvement costs, and the period of time that it would take to lease vacant space, (iii) significant auditor judgment was necessary in evaluating audit evidence related to such assumptions, and (iv) the audit effort included the involvement of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to purchase price accounting, including controls over the assumptions used such as discount rates, capitalization rates, market rental rates, market land rates, leasing costs, tenant improvement costs, and the period of time that it would take to lease vacant space to determine the fair value of the assets acquired and liabilities assumed and allocate the purchase price to the tangible and intangible components.

These procedures also included, among others, reading the purchase agreements for a sample of acquisitions and testing management’s process by evaluating the appropriateness of methods used to determine fair value of assets acquired and liabilities assumed, testing the significant inputs and evaluating the reasonableness of the significant assumptions utilized by management in developing the purchase price allocation, such as discount rates, capitalization rates, market rental rates, market land rates, leasing costs, tenant improvement costs, and the period of time that it would take to lease vacant space.

These procedures included testing the effectiveness of controls relating to purchase price accounting, including controls over the assumptions used related to discount rates, capitalization rates, market rental rates, market land rates, leasing costs, tenant improvement costs, and the period of time that it would take to lease vacant space to determine the fair value of the assets acquired and liabilities assumed and allocate the purchase price to the tangible and intangible components.

These procedures also included, among others, reading the purchase agreements for all acquisitions and testing management’s process by evaluating the appropriateness of methods used to determine fair value of assets acquired and liabilities assumed, testing the significant inputs and evaluating the reasonableness of the significant assumptions utilized by management in developing the purchase price allocation, related to discount rates, capitalization rates, market rental rates, market land rates, leasing costs, tenant improvement costs, and the period of time that it would take to lease vacant space.

Assessing the assumptions involved evaluating the consistency of the assumptions used with external market data and with evidence obtained in other areas of the audit.

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Interest rate swaps

Accounts payable and accrued liabilities

Accounts payable, accrued expenses and other liabilities

Total liabilities

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Cumulative dividends

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Total stockholders' equity

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Total expenses

Other expenses

Other income (expense)

Interest expense, net

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For the years ended December 31,

Other comprehensive income (loss):

Unrealized gain (loss) on interest rate swaps, net

Other comprehensive income (loss):

Other comprehensive loss:

Unrealized loss on interest rate swaps, net

Other comprehensive loss:

Comprehensive income

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Issuance of common stock, net

Unrealized gain on interest

Unrealized loss on interest

Allocation of NCI in

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Balance at December 31, 2018

Cumulative effect adjustment related

to adoption of Leases (Topic 842)

Stock based compensation

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to common stock

Contribution of Property for

Issuance of common stock, net

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Balance at December 31, 2019

Cumulative effect adjustment related

to adoption of Leases (Topic 842)

Stock based compensation

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to common stock

Contribution of Property for

Issuance of common stock, net

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Amortization of deferred financing costs

Amortization of lease inducements

(Gain) loss on the sale of operating property

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Accounts receivable

Deferred revenue

Deferred revenue associated with operating leases

Prepaid expenses and other assets

Accounts payable and accrued liabilities

Accounts payable, accrued expenses and other liabilities

Net cash provided by operating activities

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Issuance of notes payable

Borrowings on mortgage notes payable

Repayments of mortgage notes payable

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Deferred asset acquisition

Deferred offering accrued, not paid

Offering costs, accrued not paid

Unrealized gain (loss) on interest rate swaps, net

Unrealized loss on interest rate swaps, net

Debt assumed on acquisition of operating property

Properties acquired for common units

Contingent consideration accrued, not paid

Exchange of Common Units for Shares of Common Stock

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Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation.

As of December 31, 2019, we wholly owned 70 operating properties in the United States, including 68 operating properties that were leased primarily to U.S.

Government tenant agencies and two operating properties that were entirely leased to private tenants, encompassing approximately 6.5 million square feet (square feet unaudited herein and throughout the Notes) in the aggregate.

In addition, we wholly owned two properties under development that we expect will encompass approximately 0.2 million square feet upon completion.

We focus on acquiring, developing, and managing U.S.

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Government, working closely with the tenant agency to meet its needs and objectives.

As of December 31, 2020, we wholly owned 79 operating properties in the United States, encompassing approximately 7.3 million leased square feet (square feet unaudited herein and throughout the Notes) in the aggregate, including 77 operating properties that were leased primarily to U.S.

Government tenant agencies and two operating properties that were entirely leased to private tenants.

As of December 31, 2020, our operating properties were 99 % leased.

For purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition.

In addition, we wholly owned one property under development that we expect will encompass approximately 0.2 million leased square feet upon completion.

The Operating Partnership holds substantially all of our assets and conducts substantially all our business.

The Company is the sole general partner of the Operating Partnership.

The Company owned 88.6 % of the aggregate limited partnership interests in the Operating Partnership (“common units”) at December 31, 2019.

We believe that we have operated and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S.

The Company is the sole general partner of the Operating Partnership and owned approximately 88.8 % of the aggregate limited partnership interests in the Operating Partnership, which we refer to herein as common units, as of December 31, 2020.

We have elected to be taxed as a REIT and believe that we have operated and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S.

federal income tax purposes commencing with our taxable year ended December 31, 2015.

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Real property is recognized at cost less accumulated depreciation.

Acquisition costs related to business combinations, including third party transaction and direct internal costs are expensed as incurred.

Third party costs related to asset acquisitions are capitalized.

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(3) assumptions used in determining the in-place lease and if-vacant value including the rental rates, period of time that it would take to lease vacant space and estimated tenant improvement and leasing costs;

(4) renewal probabilities;

probabilities;

and (5) allocation of the if-vacant value between land and building.

A change in any of the above key assumptions can

materially change not only the presentation of acquired properties in our consolidated financial statements but also our reported results of operations.

A change in any of the above key assumptions can materially change not only the presentation of acquired properties in our consolidated financial statements but also our reported results of operations.

The allocation to different components affects the following:

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In capitalizing interest expense, if there is a specific borrowing for the property undergoing construction, development and redevelopment activities, we apply the interest rate of that borrowing to the average accumulated expenditures that do not exceed such borrowing;

for the portion of expenditures exceeding any such specific borrowing, we apply our weighted average interest rate on other borrowings to the expenditures.

for the portion of expenditures exceeding any such specific borrowing, we apply our weighted average interest rate on unsecured borrowings to the expenditures.

We continue to capitalize costs while construction, development or redevelopment activities are underway until the building is substantially complete and ready for its intended use, at which time rental income recognition can commence and rental operating costs, real estate taxes, insurance, and other subsequent carrying costs are expensed as incurred.

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We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value.

We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques.

In addition to consideration of

impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets.

We estimate fair value through an evaluation of recent financial

performance and projected discounted cash flows using standard industry valuation techniques.

In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets.

If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives.

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Restricted Cash

Restricted cash on the accompanying Consolidated Balance Sheets consists of amounts escrowed for future real estate taxes, insurance, capital expenditures and debt service, as required by certain of our mortgage debt agreements.

Rent Receivable and Accounts Receivable

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We recognize derivatives as assets or liabilities on the balance sheet at fair value.

We defer the effective portion of changes in fair value of the designated cash flow hedges to accumulated other comprehensive income (“AOCI”) or loss (“AOCL”) and reclassify such deferrals to interest expense as interest expense is recognized on the hedged forecasted transitions.

We recognize the ineffective

portion of the change in fair value of interest rate derivatives directly in interest expense.

We defer the effective portion of changes in fair value of the designated cash flow hedges to accumulated other comprehensive income (“AOCI”) or loss (“AOCL”) and reclassify

such deferrals to interest expense as interest expense is recognized on the hedged forecasted transitions.

We recognize the ineffective portion of the change in fair value of interest rate derivatives directly in interest expense.

When an interest rate swap designated as a cash flow hedge no longer qualifi es for hedge accounting, we recognize changes in fair value of the hedge previously deferred to AOCI or AOCL, along with any changes in fair value occurring thereafter, through earnings.

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Deferred Revenue

Deferred revenue consists primarily of lump sum reimbursements made by a tenant to the Company for landlord improvements in excess of a tenant improvement allowance.

Deferred revenue consists primarily of lump sum reimbursements made by tenants to the Company for landlord improvements in excess of a tenant improvement allowance.

Lump sum reimbursements are recorded as Deferred revenue on the Consolidated Balance Sheets and are amortized over the life of the lease through Rental income.

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Further, Rental income includes certain tenant reimbursement income (real estate taxes, operating expenses, utility usage, and other reimbursements), which are accrued as variable lease payments in the same periods as the related expenses are incurred in accordance with ASC 842 which the Company adopted on January 1, 2019.

Refer to the Recently Adopted Accounting Pronouncements for further discussion.

Tenant reimbursement income includes income from tenant construction projects.

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Book/Tax differences on stock based compensation

Book/Tax differences on development profit on lump sum payments

Book/Tax differences on gain on sale of rental property

Book/Tax differences on fee waiver income from seller

Book/Tax differences on lease inducement

Other book/tax differences, net

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All revenue has been generated and all tangible assets are held in the United States.

Reclassifications and New Accounting Standards

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Amounts previously classified as tenant reimbursements which qualified for the practical expedient and were determined to be lease components have been reclassified to rental income to conform with current period presentation.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, Leases, along with various subsequent ASUs, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors).

The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee.

This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

Leases with a term of 12 months or less will be accounted for in the same manner as the previous guidance for operating leases.

The Company adopted ASU 2016-02 on January 1, 2019 using the modified retrospective transition method such that we applied the standard as of the adoption date.

The Company adopted the new standard using the practical expedient package, which allowed the Company, as both the lessor and lessee, to not reassess 1) whether any expired or existing contracts are or contain leases;

2) the lease classification for any expired or existing leases;

and 3) initial direct costs for any existing leases.

Going forward under ASU 2016-02, it is required that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease.

Under ASU 2016-02, allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred within Corporate general and administrative expense on the Company's Consolidated Statements of Operations.

Additionally, in July 2018, the FASB issued ASU 2018-11, Target Improvements to Topic 842 Leases.

ASU 2018-11 provides lessors a practical expedient to not separate nonlease components from the associated lease component if the timing and pattern of transfer for the lease and nonlease components are the same and if the lease component, if accounted for separately, would be classified as an operating lease.

Lease components are elements of an arrangement that provide the customer with the right to use an identified asset.

Nonlease components are distinct elements of a contract that are not related to securing the use of the leased asset and revenue is recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts and Customers (“ASC 606”).

The Company assessed and concluded that the timing and pattern of transfer for nonlease components and the associated lease component are the same.

The Company determined that the predominant component was the lease component and as such the Company has made a policy election to account for and present the lease component and the nonlease component as a single component in the revenue section of the Consolidated Statements of Operations.

While application of the practical expedient did not result in a material change to the recognition of rental income, nonlease components included within Tenant reimbursement prior to the adoption of ASC Topic 842, Leases (“ASC 842”) are now included within Rental income on the Company's Consolidated Statements of Operations.

In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842):

Codification Improvements, which amended the transition guidance in ASC 842 to explicitly exempt entities from the interim disclosures required by ASC Topic ASC 205, Presentation of Financial Statements, related to changes in accounting principles.

The provision is applicable at the time that entities adopt ASC 842, however implementation of this update did not have a material impact on our consolidated financial statements.

The adoption of this standard also resulted in a cumulative effect adjustment of less than $ 0.1 million recorded as a decrease to Retained earnings as of January 1, 2019 in the accompanying Consolidated Statements of Equity.

The cumulative effect adjustment related to initial direct costs of leases where the Company is the lessor that, as of January 1, 2019, had not begun to amortize and therefore are no longer allowed to be capitalized under the new standard.

Additionally, as of January 1, 2019, the Company recognized an operating lease right-of-use asset and related operating lease liability of approximately $ 1.3 million on the accompanying Consolidated Balance Sheets, related to the leases where the Company is the lessee.

The lease liability associated with these leases is reflected on the Company’s Consolidated Balance Sheets within Accounts payable and accrued liabilities and the right-of-use asset is included within Prepaid expenses and other assets.

Associated lease expense will be recognized on a straight-line basis over the expected lease term based on the total lease payments and is included within Corporate general and administrative expense in the Company's Consolidated Statements of Operations .

On January 1, 2019, the Company adopted ASU 2017-12 (Topic 815), Derivatives and Hedging:

Targeted Improvements to Accounting for Hedging Activities.

The purpose of this updated guidance is to better align a company’s financial reporting for

hedging activities with the economic objectives of those activities.

The Company adopted this ASU using the modified retrospective method and the adoption did not have a material impact on our consolidated financial statements .

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The purpose of this updated guidance is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to (Topic 326), Financial Instruments – Credit Losses.

ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of ASC 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Costs,” which addresses financial assets measured at amortized cost basis, including net investments in leases arising from sales -type and direct financing leases.

Instead impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842.

Adoption of the standard is effective for the Company for reporting periods beginning after December 15, 2019 with early adoption permitted.

The Company will adopt ASU 2016-13 and ASU 2018-19 effective January 1, 2020 using the modified retrospective approach.

While the Company continues to assess all potential impacts of the standard, it does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In November 2018, the Financial Accounting Standards Board issued ASU 2018-19, Codification Improvements to (Topic 326), Financial Instruments – Credit Losses (“ASU 2018-19”).

ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Accounting Standards Codification (“ASC”) 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Costs,” which addresses financial assets measured at amortized cost basis, including net investments in leases arising from sales-type and direct financing leases.

Impairment of receivables arising from operating leases should be accounted for in accordance with ASC Topic 842, Leases (“ASC 842”).

We adopted ASU 2016-13 using the modified retrospective method and the adoption did not have a material impact on our consolidated financial statements.

On January 1, 2020, the Company adopted ASU 2020-04 (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

Unlike most other ASU’s, the guidance in ASU 2020-04 will generally no longer be available to apply after December 31, 2022.

As of January 1, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients was applied prospectively and preserves the presentation of our derivatives consistent with past presentation, therefore, the adoption did not have a material impact on our consolidated financial statements.

Real Estate and Intangibles

During the year ended December 31, 2019, we acquired eight operating properties in asset acquisitions, consisting of the Final Closing Properties (as defined below), JSC – Suffolk, FBI – New Orleans, EPA – Lenexa, USCIS – Tustin, and VA – Northeast for an aggregate purchase price of $ 382.6 million.

During the year ended December 31, 2018, we acquired 15 operating properties in asset acquisitions, consisting of VA – Golden, VA – San Jose, the First Closing Properties (as defined below), the Second Closing Properties (as defined below), DEA – Upper Marlboro and TREAS – Birmingham for an aggregate purchase price of $ 412.0 million.

We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets and assumed liabilities as follows (amounts in thousands):

During the year ended December 31, 2020, we acquired nine operating properties in asset acquisitions, consisting of Tricare – Aurora, FBI/DEA – El Paso, VA – Mobile, VA – Chico, FBI – Mobile, VA – North Charleston, HRSA – Baton Rouge, DOI – Billings and JUD – Jackson for an aggregate purchase price of $ 252.7 million.

During the year ended December 31, 2019, we acquired eight operating properties in asset acquisitions, consisting of DEA - Sterling, FDA - College Park, Various GSA - Portland , JSC – Suffolk, FBI – New Orleans, EPA – Lenexa, USCIS – Tustin, and VA – Orange for an aggregate purchase price of $ 382.6 million.

We allocated the aggregate purchase price of these acquisitions based on the estimated fair values of the acquired assets and assumed liabilities as follows (amounts in thousands):

December 31, 2020

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Total intangible liabilities

Prepaid expenses and other assets

Accounts payable, accrued expenses and other liabilities

Contingent consideration

Purchase price

Mortgage note assumed

Net assets acquired

We did not assume any debt upon acquisition of these properties.

The intangible assets and liabilities of the acquired operating properties have an aggregate weighted average amortization period of 10.39 years and 8.28 years as of December 31, 2020 and 2019, respectively.

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During the year ended December 31, 2019, we included $ 22.5 million of revenues and $ 4.1 million of net income in our Consolidated Statement of Operations related to the operating properties acquired.

Additionally, we incurred $ 1.6 million of acquisition-related costs including $ 1.1 million of internal costs associated with the property acquisitions.

On June 15, 2018, we entered into a purchase and sale agreement to acquire a 1,479,762 -square foot portfolio of 14 properties (the “Portfolio Properties”) for an aggregate purchase price of approximately $ 430.0 million.

On September 13, 2018, we completed the acquisition of eight of the Portfolio Properties (the “First Closing Properties”), consisting of the following (listed by primary tenant agency, if applicable, and location):

Various GSA - Buffalo, NY, Various GSA - Chicago, IL, TREAS - Parkersburg, WV, SSA - Charleston, WV, FBI - Pittsburgh, PA, GSA - Clarksburg, WV, ICE - Pittsburgh, PA and SSA - Dallas, TX.

On October 16, 2018, we completed the acquisition of three additional Portfolio Properties (the “Second Closing Properties”) consisting of the following (listed by primary tenant agency and location):

JUD - Charleston, SC, VA - Baton Rouge, LA and DEA - Bakersfield, CA.

The Company completed the acquisition of the three remaining Portfolio Properties on January 31, 2019 (the “Final Closing Properties”).

The Final Closing Properties include the following (listed by primary tenant agency, if applicable, and location):

DEA - Sterling, VA, FDA - College Park, MD and Various GSA - Portland, OR.

Additionally, we incurred $ 1.7 million of acquisition-related costs primarily consisting of internal costs associated with the property acquisitions.

On November 24, 2020, we sold DEA – Otay to a third party.

Net proceeds from the sale of the operating property were approximately $ 3.5 million and we recognized the full loss on the sale of the operating property of approximately $ 4.0 million for the year ended December 31, 2020.

On May 8, 2019, the Company sold CBP – Chula Vista to a third party.

Net proceeds from the sale of the operating property were approximately $ 19.9 million and we recognized the full gain on the sale of the operating property of approximately $ 6.2 million for the year ended December 31, 2019.

On December 28, 2017, the Company sold 2650 SW 145 th Avenue - Parbel of Florida to a third party.

Net proceeds from the sale of the operating property were approximately $ 10.5 million and the Company recognized a loss on the sale of the operating property of approximately $ 0.3 million, mainly attributable to transaction costs, for the year ended December 31, 2017.

This disposition was accounted for under the full accrual method.

Development Placed in Service

On August 27, 2019, the FDA – Alameda development project was substantially completed and a 20 -year non-cancelable lease commenced with the GSA for the beneficial use of the Food and Drug Administration (“FDA”).

On October 1, 2018, the FEMA – Tracy development project was substantially completed and a 20 -year non-cancelable lease commenced with the GSA for the beneficial use of the Federal Emergency Management Agency (“FEMA”).

On September 25, 2020, the FDA – Lenexa development project was substantially completed and a 20 -year lease commenced with the GSA for the beneficial use of the Food and Drug Administration (“FDA”).

On August 27, 2019, the FDA – Alameda development project was substantially completed and a 20 -year non-cancelable lease commenced with the GSA for the beneficial use of the FDA.

Consolidated Real Estate and Intangibles

In addition to the operating property acquisitions, we acquired one property for development, FDA – Atlanta, during the year ended December 31, 2019.

In addition to the operating property acquisitions and development property placed in service, we acquired a 597,426 square foot parcel of land in Lincoln, Nebraska, which is adjacent to our USCIS – Lincoln facility, during the year ended December 31, 2020.

During the year ended December 31, 2019, we acquired one property for development, FDA – Atlanta.

Real estate and intangibles on our consolidated balance sheets consisted of the following (amounts in thousands):

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Above-market lease amortization reduces Rental income on our Consolidated Statements of Operations and below-market lease amortization increases Rental income on our Consolidated Statements of Operations.

The following table sets forth a summary of the Company’s outstanding indebtedness as of December 31, 2019 and December 31, 2018 (dollars in thousands):

At December 31, 2020 and December 31, 2019, our consolidated borrowings consisted of the following (dollars in thousands):

Principal Outstanding

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The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums.

The spread over the applicable rate for each of our revolving credit facility, our 2018 term loan facility and our 2016 term loan facility is based on the Company’s consolidated leverage ratio, as defined in the respective loan agreements.

Available capacity of $ 450.0 million and $ 315.2 million at December 31, 2019 and 2018, respectively, with an accordion feature that provides additional capacity of up to $ 250.0 million.

The spread over the applicable rate for each of the $ 450.0 million senior unsecured revolving credit facility (our “revolving credit facility”), the $ 150.0 million senior unsecured term loan facility (our “2018 term loan facility”) and the $ 100.0 million senior unsecured term loan facility (our “2016 term loan facility”) is based on the Company’s consolidated leverage ratio, as defined in the respective loan agreements.

Our revolving credit facility had available capacity of $ 370.7 million and $ 450.0 million at December 31, 2020 and 2019, respectively, with an accordion feature that permits us to request additional lender commitments for to $ 250.0 million of additional capacity, subject to the satisfaction of customary terms and conditions.

Our revolving credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee.

Entered into two interest rate swaps with an effective date of March 29, 2017 with an aggregate notional value of $ 100.0 million to effectively fix the interest rate at 2.67 % annually, based on the Company’s consolidated leverage ratio, as defined in the 2016 term loan facility agreement.

Entered into four interest rate swaps with an effective date of December 13, 2018 with an aggregate notional value of $ 150.0 million to effectively fix the interest rate at 3.96 % annually, based on the Company’s consolidated leverage ratio, as defined in the 2018 term loan facility agreement.

Effective interest rates are as follows:

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The Purchase Agreement and the 2019 senior unsecured notes also contains various covenants (including, among others, financial covenants with respect to debt service coverage, consolidated net worth, fixed charges and consolidated leverage and covenants relating to liens) and if the Operating Partnership or the Company breaches any of these covenants, the principal and accrued and unpaid interest and the make-whole amount on the outstanding 2019 senior unsecured notes will become due and payable at the option of the holders.

2018 Activity

On June 18, 2018, we entered into an amended and restated senior unsecured credit facility (our “amended senior unsecured credit facility”).

Our amended senior unsecured credit facility increased the total borrowing capacity of our existing senior unsecured credit facility by $ 200.0 million for a total credit facility size of $ 600.0 million, consisting of two components:

(i) a $ 450.0 million senior unsecured revolving credit facility (the “revolving credit facility”), and (ii) a $ 150.0 million senior unsecured term loan facility (the “2018 term loan facility”).

The revolving credit facility also includes an accordion feature that will provide us with additional capacity, subject to the satisfaction of customary terms and conditions, of up to $ 250.0 million.

The Operating Partnership is the borrower, and we and certain of our subsidiaries that directly own certain of our properties are guarantors under our amended senior unsecured credit facility.

The revolving credit facility matures in four years and the 2018 term loan facility matures in five years .

In addition, the revolving credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee.

Our amended senior unsecured credit facility bears interest, at our option, either at:

• a Eurodollar rate equal to a periodic fixed rate equal to LIBOR plus, a margin ranging from 1.25 % to 1.80 % for advances under the revolving credit facility and a margin ranging from 1.20 % to 1.75 % for advances under the 2018 term loan facility ;

• a fluctuating rate equal to the sum of (a) the highest of (x) Citibank, N.A.’s base rate, (y) the federal funds effective rate plus 0.50 % and (z) the one-month Eurodollar rate plus 1.00 % plus (b) a margin ranging from 0.25 % to 0.80 % for advances under the revolving credit facility and a margin ranging from 0.20 % to 0.75 % for advances under the 2018 term loan facility , in each case with a margin based on our leverage ratio.

The 2018 term loan facility had a 364 -day delayed draw period and is prepayable without penalty for the entire term of the loan.

On September 10, 2018, we fully drew $ 150.0 million on the 2018 term loan facility.

On June 18, 2018, we entered into a second amendment to our existing $ 100.0 million senior unsecured term loan facility (the “2016 term loan facility”).

The second amendment amends certain covenants and other provisions in the 2016 term loan facility to conform to changes made to such covenants and other provisions in our amended senior unsecured credit facility.

On October 3, 2018, we entered into a third letter amendment (the “Third Amendment”) to the 2016 term loan facility.

The Third Amendment reduced the interest rate margin applicable to borrowings under the 2016 term loan facility and extended the maturity date by six months to March 29, 2024 .

Financial Covenant Considerations

The Company was in compliance with all financial and other covenants as of December 31, 2019 related to its revolving credit facility, 2016 term loan facility, 2018 term loan facility, notes payable and mortgage notes payable.

As of December 31, 2020, we were in compliance with all financial and other covenants related to our revolving credit facility, 2016 term loan facility, 2018 term loan facility, notes payable and mortgage notes payable.

Fair Value of Debt

As of December 31, 2019 and 2018, the carrying value of the revolving credit facility approximated fair value.

In determining the fair value we considered the short term maturity, variable interest rate and credit spreads.

As of December 31, 2020, the fair value of the revolving credit facility was determined by considering the short term maturity, variable interest rate and credit spreads.

We deem the fair value of the senior unsecured revolving credit facility as a Level 3 measurement.

As of December 31, 2019 and 2018, the carrying value of the 2016 term loan facility approximated fair value.

In determining the fair value we considered the variable interest rate and credit spreads.

At December 31, 2020, the carrying value of our revolving credit facility approximated fair value.

As of December 31, 2020 and 2019, the fair value of the 2016 term loan facility was determined by considering the variable interest rate and credit spreads.

We deem the fair value of the 2016 term loan facility as a Level 3 measurement.

As of December 31, 2019 and 2018, the carrying value of the 2018 term loan facility approximated fair value.

In determining the fair value we considered the variable interest rate and credit spreads.

At December 31, 2020 and 2019, the fair value of our 2016 term loan facility was $ 99.4 million and $ 100.0 million, respectively.

As of December 31, 2020 and 2019 , the fair value of the 2018 term loan facility was determined by considering the variable interest rate and credit spreads.

We deem the fair value of the 2018 term loan facility as a Level 3 measurement.

At December 31, 2020 and 2019, the fair value of our 2018 term loan facility was $ 149.2 million and $ 150.0 million, respectively.

As of December 31, 2020 and 2019, the fair value of our notes payable was determined by discounting future contractual principal and interest payments using prevailing market rates.

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Cash Flow Hedges of Interest Rate Risk

The effective portion of changes in the fair value of derivatives designated and qualified as cash flow hedges is recorded in accumulated other comprehensive income and will be reclassified to interest expense in the period that the hedged forecasted transactions affect earnings on the Company’s variable rate debt.

The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense.

For the year ended December 31, 2019 and 2018, the Company did not record any hedge ineffectiveness related to the hedged derivatives.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on the Company's variable rate debt.

The Company estimates that $ 1.5 million will be reclassified from accumulated other comprehensive income as a decrease to interest expense over the next 12 months.

The table below presents the effects of our interest rate derivatives on our consolidated statements of operations and comprehensive income (dollars in thousands):

The gains or losses on derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive income (loss) (“AOCI”) and will be reclassified to interest expense in the period that the hedged forecasted transactions affect earnings on the Company’s variable rate debt.

Amounts reported in AOCI related to derivatives designated as qualifying cash flow hedges will be reclassified to interest expense as interest payments are made on the Company's variable rate debt.

The Company estimates that $ 5.2 million will be reclassified from AOCI as an increase to interest expense over the next 12 months.

The table below presents the effects of our interest rate derivatives on our Consolidated Statements of Operations and Comprehensive Income (Loss) (dollars in thousands):

For the years ended December 31,

Unrealized gain (loss) recognized in AOCI

Unrealized loss recognized in AOCI

Gain (loss) reclassified from AOCI into interest expense

Credit-Risk Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.

As of December 31, 2019, the net fair value of derivatives in a liability position related to these agreements was $ 5.5 million.

As of December 31, 2019, the Company had not breached the provisions of these agreements and has not posted any collateral related to these agreements.

As of December 31, 2020, the net fair value of derivatives in a liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 13.2 million.

As of December 31, 2020, the Company had not breached these provisions of these agreements and had not posted any collateral related to

these agreements.

If the Company had breached any of the provisions of these agreements it would be required to settle its obligations under the agreements at their termination value of $ 13.2 million.

Fair Value Measurements

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The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets and accounts payable and accrued expenses are reasonable estimates of fair values because of the short maturities of these instruments.

For our disclosure of debt fair values in Note 4, we estimated the fair value of the 2016 and 2018 term loan facility based on the variable interest rate and credit spreads (categorized within Level 3 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy);

For our disclosure of debt fair values in Note 4, we estimated the fair value of our 2016 term loan facility and our 2018 term loan facility based on the variable interest rate and credit spreads (categorized within Level 3 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy);

the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments included scheduled principal and interest payments.

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2015 Equity Incentive Plan

Our board of directors adopted, and our sole stockholder approved, our 2015 Equity Incentive Plan, as amended (the “2015 Equity Incentive Plan”) under which we may grant cash and equity incentive awards to our executive officers, non-employee directors and eligible employees in order to attract, motivate and retain the talent for which we compete.

and eligible employees in order to attract, motivate and retain the talent for which we compete.

The 2015 Equity Incentive Plan is administered by the compensation committee of our board of directors and permits us to make grants of options, stock appreciation rights, restricted stock units, restricted stock, dividend equivalent rights, cash-based awards, performance-based awards and other equity-based awards, including LTIP units, or any combination of the foregoing.

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The shares of our common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2015 Equity Incentive Plan are added back to the shares available for issuance under the 2015 Equity Incentive Plan.

At the Company’s 2017 annual meeting of stockholders held on May 9, 2017, the Company’s

stockholders approved an amendment to the 2015 Equity Incentive Plan to increase the aggregate number of shares authorized for issuance under the 2015 Equity Incentive Plan by 3,000,000 shares to 5,273,959 shares of our common stock.

At the Company’s 2017 annual meeting of stockholders held on May 9, 2017, the Company’s stockholders approved an amendment to the 2015 Equity Incentive Plan to increase the aggregate number of shares authorized for issuance under the 2015 Equity Incentive Plan by 3,000,000 shares to 5,273,959 shares of our common stock.

The Company granted 891,000 LTIP units on May 6, 2015 and 40,000 LTIP units on February 26, 2016 to members of management as long-term incentive compensation under the 2015 Equity Incentive Plan subject to the Company achieving certain absolute and relative total shareholder returns through the performance period, which ended on December 31, 2017.

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Under the terms of the awards, earned awards vested 50 % on February 15, 2018 and 50 % on February 6, 2019, subject to the grantee’s continued employment.

In connection with the Company’s 2017 annual meeting of stockholders, we issued an aggregate of 15,220 shares of restricted common stock to our non-employee directors, which vested on May 7, 2018.

On January 4, 2018, the Company granted an aggregate of 173,381 performance-based LTIP units to members of management under the 2015 Equity Incentive Plan, subject to the Company achieving certain absolute and relative total shareholder returns through the performance period.

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The performance period of the second tranche of LTIP units ended on December 31, 2019 and the Company’s total shareholder return over the performance period was sufficient for the grantees to earn an aggregate of 122,159 LTIP units under the applicable awards.

Earned LTIP units vested 50 % on January 16, 2020 and 50 % will vest on January 4, 2021, subject to the grantee’s continued employment.

On April 3, 2018, the Company issued an aggregate of 2,236 shares of restricted common stock to certain employees pursuant to the 2015 Equity Incentive Plan.

The restricted common stock grants will vest upon the second anniversary of the grant date so long as the grantee remains an employee of the Company on such date.

In connection with our 2018 annual meeting of stockholders, we issued an aggregate of 19,092 shares of restricted common stock to our non-employee directors pursuant to the 2015 Equity Incentive Plan, which vested on May 7, 2019.

Earned LTIP units vested 50 % on January 16, 2020 and 50 % on January 4, 2021.

The performance period of the third tranche of LTIP units ended on December 31, 2020 and the Company’s total shareholder return over the performance period was sufficient for the grantees to earn an aggregate of 172,442 LTIP units under the applicable awards.

Earned LTIP units vest 50 % on January 19, 2021 and 50 % will vest on January 4, 2022, subject to the grantee’s continued employment.

On April 3, 2018, the Company issued an aggregate of 2,236 shares of restricted common stock to certain employees pursuant to the 2015 Equity Incentive Plan, which vested on April 3, 2020.

In connection with its 2018 annual meeting of stockholders, the Company issued an aggregate of 19,092 shares of restricted common stock to its non-employee directors pursuant to the 2015 Equity Incentive Plan, which vested on May 7, 2019.

On January 18, 2019, the Company granted an aggregate of 143,538 performance-based LTIP units to members of management pursuant to the 2015 Equity Incentive Plan, subject to the Company achieving certain absolute and relative total shareholder returns through the performance period.

The awards consist of two separate tranches of 45,238 LTIP units and 98,300 LTIP units with performance periods ending on December 31, 2020 and December 31, 2021, respectively.

Fifty percent of the LTIP units vest when earned following the end of the applicable performance period and fifty percent of the earned award is subject to an additional one year of vesting.

On January 18, 2019, the Company granted an aggregate of 54,041 shares of restricted common stock to members of management pursuant to the 2015 Equity Incentive Plan, of which an aggregate of 17,645 shares will vest on January 18, 2021 and an aggregate of 36,396 shares will vest on January 18, 2022.

Fifty percent of the LTIP units vest when earned following the end of the applicable performance period and fifty percent of the earned award is subject to an additional one

year of vesting.

The performance period of the first trading tranche of LTIP units ended on December 31, 2020 and the Company’s total shareholder return over the performance period was sufficient for the grantees to earn an aggregate of 98,776 LTIP units under the applicable awards.

Earned LTIP units vested 50 % on January 19, 2021 and 50 % will vest on January 2, 2022, subject to the grantee’s continued employment.

On January 18, 2019, the Company granted an aggregate of 54,041 shares of restricted common stock to members of management pursuant to the 2015 Equity Incentive Plan, of which an aggregate of 17,645 shares vested on January 18, 2021 and an aggregate of 36,396 shares will vest on January 18, 2022.

On March 11, 2019, the Company issued an aggregate of 3,080 shares of restricted common stock to certain employees pursuant to the 2015 Equity Incentive Plan.

The shares of restricted common stock will vest upon the second anniversary of the grant date so long as the grantee remains an employee of the Company on such date.

In connection with the Company’s 2019 annual meeting of stockholders, we issued an aggregate of 22,000 shares of restricted common stock to our non-employee directors pursuant to the 2015 Equity Incentive Plan.

The shares of restricted common stock will vest upon the earlier of the anniversary of the grant date or the next annual stockholder meeting.

In connection with its 2019 annual meeting of stockholders, the Company issued an aggregate of 22,000 shares of restricted common stock to its non-employee directors pursuant to the 2015 Equity Incentive Plan, which vested on May 13, 2020.

On June 13, 2019, the Company issued 10,840 shares of restricted common stock to a member of management pursuant to the 2015 Equity Incentive Plan.

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On December 19, 2019, the Company granted an aggregate of 99,803 LTIP units to certain members of management pursuant to the 2015 Equity Incentive Plan, which became fully vested upon grant and are subject to certain restrictions on transfer as set forth in the applicable award agreement for a period of three years beginning on the grant date.

On January 3, 2020, the Company granted an aggregate of 146,199 performance-based LTIP units to members of management pursuant to the 2015 Equity Incentive Plan, consisting of (i) 81,693 LTIP units that are subject to the Company achieving certain total shareholder return performance thresholds (on both an absolute and a relative basis) and (ii) 64,506 LTIP units that are subject to the Company achieving certain operational performance hurdles, in each case through a performance period ending on December 31, 2022.

Fifty percent of the LTIP units that are subject to the Company’s total shareholder return performance will vest when earned following the end of the performance period and 50 % of the earned award will vest on January 2, 2024, subject to the grantee’s continued employment and the other terms of the awards.

All of the LTIP units subject to the Company’s operational performance will vest when earned.

On January 3, 2020, the Company also granted an aggregate of 89,242 service-based LTIP units to members of management pursuant to the 2015 Equity Incentive Plan, which will vest on December 31, 2022, subject to the grantee’s continued employment and the other terms of the awards.

On March 23, 2020, the Company issued an aggregate of 2,905 shares of restricted common stock to certain employees pursuant to the 2015 Equity Incentive Plan.

The shares of restricted common stock will vest upon the second anniversary of the grant date so long as the grantee remains an employee of the Company on such date.

On May 11, 2020, i n connection with its 2020 annual meeting of stockholders, the Company issued an aggregate of 19,025 shares of restricted common stock to its non-employee directors pursuant to the 2015 Equity Incentive Plan.

The restricted common stock grants will vest upon the earlier of the anniversary of the date of the grant or the next annual stockholder meeting, so long as the grantee remains a director on such date.

A summary of our non-vested common share awards at December 31, 2020, 2019 and 2018 is as follows:

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We valued our non-vested restricted share awards at the grant date fair value, which was the market price of our common stock as of the applicable grant date.

For the LTIP unit awards granted, we used a Monte Carlo Simulation (risk-neutral approach) to determine the number of shares that may be issued pursuant to the award.

We valued our LTIP unit awards that are subject to the Company achieving certain operational performance conditions at the grant date fair value, which was the market price of our common stock as of the applicable grant date.

As of December 31, 2020, management considers it probable that the operational performance conditions on our 2020 grants will be achieved.

We valued our service-based LTIP unit awards at the grant date fair value, which was the market price of our common stock as of the applicable grant date, discounted by the risk related to the timing of book-up events.

For the LTIP unit awards granted that are subject to the Company achieving certain total shareholder return performance thresholds we used a Monte Carlo Simulation (risk-neutral approach) to determine the number of shares that may be issued pursuant to the award.

For LTIP units granted in 2018 we utilized a risk-free rate of 2.1 %, derived from the Treasury note yield as of the grant date.

Since the Company has a limited amount of operating history, the expected volatility assumption of 16.0 % was derived from the observed historical volatility of the common stock prices of a select group of peer companies within the REIT industry and the observed implied volatility on the Company’s stock options.

Since the Company had a limited amount of operating history, the expected volatility assumption of 16.0 % was derived from the observed historical volatility of the common stock prices of a select group of peer companies within the REIT industry and the observed implied volatility on the Company’s stock options.

Based on the selected dividend yields of guideline companies and expected dividend levels, we utilized an expected dividend yield of 5.0 %.

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Treasury securities for a three-year holding period as of the grant date.

Since the Company has a limited amount of operating history, the expected volatility assumption of 19.0 % was derived from the observed historical volatility of the common stock prices of a select group of peer companies within the REIT industry and the observed implied volatility on the Company’s stock options.

Since the Company had a limited amount of operating history, the expected volatility assumption of 19.0 % was derived from the observed historical volatility of the common stock prices of a select group of peer companies within the REIT industry and the observed implied volatility on the Company’s stock options.

Based on the selected dividend yields of guideline companies and expected dividend levels, we utilized an expected dividend yield of 5.6 %.

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Based on the selected dividend yields of guideline companies and expected dividend levels, we utilized an expected dividend yield of 4.9 %.

For LTIP units granted in January 2 020 we utilized a risk-free rate of 1.70 %, derived from the yield of zero-coupon U.S.

Treasury securities for a three-year holding period as of the grant date.

The expected volatility assumption of 16.0 % was derived from the Company’s observed historical volatility equal to the three-year performance period.

Based on the Company’s historical annualized quarterly dividend yields and current dividend yield , we utilized an expected dividend yield of 4.8 %

No additional shares of common stock or options were issued under the 2015 Equity Incentive Plan as of December 31, 2020.

Underwritten Public Offering of Common Stock

On March 27, 2017, we completed an underwritten public offering of an aggregate of 4,945,000 shares of common stock, including 645,000 shares sold pursuant the underwriters’ exercise in full of their option to purchase additional shares.

The shares were offered on a forward basis in connection with certain forward sales agreements entered into with certain financial institutions, acting as forward purchasers.

Pursuant to the forward sales agreements, the forward purchasers borrowed and the forward sellers, acting as agents for the forward purchasers, sold an aggregate of 4,945,000 shares in the public offering.

On September 11, 2017, the Company physically settled the forward sales agreements by issuing an aggregate of 4,945,000 shares of common stock in exchange for approximately $ 92.7 million.

The Company accounted for the forward share agreements as equity.

Offering of Common Stock on a Forward Basis

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September 27, 2018

November 2, 2017

October 29, 2018

December 13, 2018

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June 27, 2019

August 1, 2018

July 31, 2019

September 12, 2019

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October 30, 2019

December 13, 2018

November 13, 2019

December 27, 2019

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March 26, 2020

June 10, 2019

April 29, 2020

June 25, 2020

July 29, 2020

September 12, 2019

August 13, 2020

September 11, 2020

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Prior to the end of the performance period as set forth in the applicable LTIP unit award, holders of performance-based LTIP units are entitled to receive dividends per LTIP unit equal to 10 % of the dividend paid per common unit of our operating partnership.

After the end of the performance period, the number of LTIP units, both vested and unvested, that LTIP award recipients have earned, if any, are entitled to receive dividends in an amount per LTIP unit equal to dividends, both regular and special, payable per common unit of our operating partnership.

unit of our operating partnership.

Holders of LTIP units that are not subject to the attainment of performance goals are entitled to receive dividends per LTIP unit equal to 100 % of the dividend paid per common unit beginning on the grant date.

On March 3, 2017, we entered into separate equity distribution agreements with each of Citigroup Global Markets Inc., BTIG, LLC, Jefferies LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC and SunTrust Robinson Humphrey, Inc., pursuant to which we could issue and sell shares of our common stock having an aggregate offering price of up to $ 100.0 million from time to time, which we refer to herein as the “2017 ATM Program”, in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act.

As of December 31, 2019, there were no shares remaining available for sale under the 2017 ATM Program.

On March 4, 2019, we entered into separate equity distribution agreements with each of Citigroup Global Markets Inc., BMO Capital Markets Corp., BTIG, LLC, Capital One Securities, Inc., Jefferies LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc.

and Wells Fargo Securities, LLC (collectively, the “Sales Agents”) pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $ 200.0 million from time to time (the “March 2019 ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act.

Under the March 2019 ATM Program, we may also enter into one or more forward transactions (each, a “forward sale transaction”) under separate master forward sale confirmations and related supplemental confirmations with each of Citibank, N.A., Bank of Montreal, Jefferies LLC, Raymond James & Associates, Inc., Royal Bank of Canada and Wells Fargo Bank, National Association (collectively, the “Forward Counterparties”) for the sale of shares of our common stock on a forward basis.

On December 20, 2019, we entered into separate new equity distribution agreements with each of the Sales Agents pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $ 300.0 million from time to time (the “December 2019 ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act.

Under the December 2019 ATM Program, we may also enter into one or more forward transactions under separate master forward sale confirmations and related supplemental confirmations with each of the Forward Counterparties for the sale of shares of our common stock on a forward basis.

No sales of shares of our common stock were made under the December 2019 ATM Program during the year ended December 31, 2019.

The following table sets forth certain information with respect to sales made under the 2017 ATM Program and the March 2019 ATM Program as of December 31, 2019 (amounts in thousands except share amounts):

2017 ATM Program

On each of March 4, 2019 and December 20, 2019, the Company entered into separate equity distribution agreements with each of Citigroup Global Markets Inc., BMO Capital Markets Corp., BTIG, LLC, Capital One Securities, Inc., Jefferies LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc.

and Wells Fargo Securities, LLC pursuant to which it may issue and sell shares of its common stock having an aggregate offering price of up to $ 200.0 million and $ 300.0 million, respectively, from time to time (the “ATM Programs”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).

The ATM Programs implemented on March 4, 2019 and December 20, 2019 are referred to as the “March 2019 ATM Program” and “December 2019 ATM Program” respectively.

Under each of the ATM Programs, the Company may also enter into one or more forward transactions (each, a “forward sale transaction”) under separate master forward sale confirmations and related supplemental confirmations with each of Citibank, N.A., Bank of Montreal, Jefferies LLC, Raymond James & Associates, Inc., Royal Bank of Canada and Wells Fargo Bank, National Association for the sale of shares of its common stock on a forward basis.

The following table sets forth certain information with respect issuances, including in settlement of forward sales transactions, made under each of the ATM Programs as of December 31, 2020 (amounts in thousands except share amounts):

March 2019 ATM Program

December 2019 ATM Program

For the Three Months Ended:

Number of Shares Sold

Number of Shares Sold (1)

Number of Shares Issued (1)

Net Proceeds (1)

Number of Shares Issued (1)

Net Proceeds (1)

March 31, 2020

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December 31, 2020

During the year ended December 31, 2019, we entered into and fully settled forward sale transactions under the March 2019 ATM Program by selling and issuing an aggregate of 1,825,712 shares of our common stock in exchange for net proceeds to us of approximately $ 35.2 million, after deducting offering costs .

As of December 31, 2019, we had entered into forward sales transactions under the March 2019 ATM Program for the sale of an additional 2,878,703 shares of our common stock that had not yet been settled.

Subject to our right to elect net share settlement, we expect to physically settle the forward sales transactions no later than December 9, 2020 .

Assuming the forward sales transactions are physically settled in full utilizing a weighted average initial forward sales price of $ 22.56 per share, we expect to receive net proceeds of approximately $ 64.9 million, after deducting offering costs, subject to adjustments in accordance with the applicable forward sale transaction.

Includes shares issued by the Company, including in settlement of forward sales transactions.

Additionally, as of December 31, 2020, we had entered into forward sales transactions under the March 2019 ATM Program and December 2019 ATM Program for the sale of an additional 3,747,232 shares of our common stock that had not yet been settled.

Subject to our right to elect net share settlement, we expect to physically settle the forward sales transactions by the maturity dates set forth in each applicable forward sale transaction placement notice, which dates range from April 2021 to September 2021.

Assuming the forward sales transactions are physically settled in full utilizing a net weighted average initial forward sales price of $ 25.96 per share, we expect to receive net proceeds of approximately $ 97.3 million, after deducting offering costs, subject to adjustments in accordance with the applicable forward sale transaction.

The Company accounted for the forward sale agreements as equity.

We have used the proceeds from such sales for general corporate purposes.

As of December 31, 2019, we had approximately $ 103.9 million and $ 300.0 million of gross sales of our common stock available under the March 2019 ATM Program and the December 2019 ATM Program, respectively.

We have used the net proceeds received from such sales for general corporate purposes.

As of December 31, 2020, we had approximately $ 140.6 million of gross sales of our common stock available under the December 2019 ATM Program and no remaining availability under the March 2019 ATM Program.

Contribution of Property for Common Units

On October 4, 2017, the Company acquired FEMA – Tracy for which it paid as partial consideration 575,707 common units.

The issuance of the common units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended.

On March 26, 2020, the Company acquired FBI / DEA – El Paso for which it paid, as partial consideration, 870,730 common units.

The issuance of the common units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act.

On November 9, 2018, the Company acquired TREAS – Birmingham for which it paid 271,918 common units.

The issuance of the common units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended .

The issuance of common units was effected in reliance upon an exemption from the registration provided by Section 4(a)(2) under the Securities Act.

Earnings Per Share

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Diluted EPS is computed after adjusting the basic EPS computation for the effect of dilutive common equivalent shares outstanding during the periods presented.

Unvested restricted shares and LTIP units are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per share.

The following table sets forth the computation of the Company’s basic and diluted earnings per share of common stock for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands, except per share amounts):

Unvested restricted shares of common stock and unvested LTIP units are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per share.

The following table sets forth the computation of the Company’s basic and diluted earnings per share of common stock for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands, except per share amounts):

For the years ended December 31,

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Denominator for diluted EPS

During the year ended December 31, 2018, there were approximately 173,381 unvested performance-based LTIP units that were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period.

During the year ended December 31, 2019, there were approximately 2,878,703 shares of unsettled forward sale transactions that were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period.

During the years ended December 31, 2020 and December 31, 2018, there were approximately 74,481 and 173,381 unvested performance-based LTIP units, respectively, that were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period.

During the years ended December 31, 2020 and 2019, there were approximately 2,397,232 and 2,878,703 shares, respectively, of underlying unsettled forward sales transactions that were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period .

The Company leases commercial space to the U.S.

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Certain lease agreements include variable lease payments that, in the future, will vary based on changes in inflationary measures, real estate tax rates, usage, or share of expenditures of the leased premises .

As discussed above in Note 2, the Company elected a practical expedient to not separate nonlease components from the associated lease component if the time and pattern of transfer for the lease and nonlease components are the same and if the lease component, if accounted for separately, would be classified as an operating lease.

On September 25, 2020, the FDA – Lenexa development project was substantially completed and a 20 -year lease commenced with the GSA for the beneficial use of the FDA.

Upon completion and their acceptance of work, the U.S.

Government was obligated to pay a $ 41.7 million lump sum reimbursement to the Company for landlord improvements in excess of the U.S.

Government’s tenant improvement allowance.

The Company recorded the payment as Deferred revenue on the Consolidated Balance Sheet and began amortizing the amount over the life of the lease through Rental income.

On August 27, 2019, the FDA – Alameda development project was substantially completed and a 20 -year non-cancelable lease commenced with the GSA for the beneficial use of the FDA.

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Government’s tenant improvement allowance.

The Company recorded the payment as Deferred revenue on the Consolidated Balance Sheet and began amortizing the amount over the life of the lease through Rental income.

The following table summarizes the maturity of fixed lease payments under the Company’s leases as of December 31, 2019 (amounts in thousands):

The Company recorded the payment as Deferred revenue on the Consolidated Balance Sheets and began amortizing the amount over the life of the lease through Rental income.

The following table summarizes the maturity of fixed lease payments under the Company’s leases as of December 31, 2020 (dollars in thousands):

Payments due by period

Fixed lease payments

Prior to the adoption of ASC 842 on January 1, 2019, the Company’s leases associated with its operating properties fell under the guidance of ASC Topic ASC 840, Leases (“ASC 840”).

As of December 31, 2018, the future non-cancelable minimum contractual rent payments on our operating properties were as follows (amounts in thousands):

Payments due by period

Operating Leases

Minimum lease payments

Information about our leases for development properties as of December 31, 2019 is set forth in the table below:

Information about our leases for our development property as of December 31, 2020 is set forth in the table below:

Property Name

Estimated Rentable

Estimated Leased

FDA - Atlanta

Food and Drug Administration

(1) L=Laboratory

(2) The 20 -year lease term includes a firm term of 15 years and a soft term of five years .

In October 2015, we entered into a sublease agreement for office space in Washington, D.C.

with a commencement date of March 2016 and expiration date of June 2021 .

We also lease office space in San Diego, CA under an operating lease that commenced February 2015 and expires in April 2022 .

Neither of the leases contain extension options, however they do include variable lease payments that, in the future, will vary based on changes in real estate tax rates, usage, or share of expenditures of the leased premises.

The Company has elected not to separate lease and nonlease components for both corporate office leases.

As of December 31, 2019, the unamortized balance associated with the Company’s right-of-use operating lease asset and operating lease liability for the Company’s two office leases was $ 0.8 million.

with a commencement date of March 2016 and an expiration date of June 2021 .

We also lease office space in San Diego, CA under an operating lease that commenced in February 2015 and expires in April 2022 .

In August 2020, we entered into a lease agreement for office space in Washington, D.C.

to replace our existing lease that expires in June 2021.

This lease has a commencement date of July 2021 and expiration date of August 2026 .

Neither of the commenced leases contain extension options, however they do include variable lease payments that, in the future, will vary based on changes in real estate tax rates, usage, or share of expenditures of the leased premises.

The Company has elected not to separate lease and nonlease components for both commenced corporate office leases.

As of December 31, 2020, the unamortized balance associated with the Company’s right-of-use operating lease asset and operating lease liability for the Company’s two commenced office leases was $ 0.4 million.

The Company used its incremental borrowing rate, which was arrived at utilizing prevailing market rates and the spread on the revolving credit facility, in order to determine the net present value of the minimum lease payments.

The following table provides quantitative information for the Company’s operating leases for the year ended December 31, 2019 (amounts in thousands):

The following table provides quantitative information for the Company’s commenced operating leases for the year ended December 31, 2020 and 2019 (dollars in thousands):

For the year ended December 31,

Operating leases costs

Other Information

Weighted average remaining lease terms (in years)

Weighted average remaining lease term (in years)

Weighted average discount rate

In addition, the maturity of fixed lease payments under the Company’s corporate office leases as of December 31, 2019 is summarized in the table below (amounts in thousands):

In addition, the maturity of fixed lease payments under the Company’s commenced corporate office leases as of December 31, 2020 is summarized in the table below (dollars in thousands):

Payments due by period

Fixed lease payments

Prior to the adoption of ASC 842 on January 1, 2019, the Company’s corporate office leases fell under the guidance of ASC 840.

As of December 31, 2018, the future minimum rental payments under the Company’s corporate office leases were as follows (amounts in thousands):

Payments due by period

Corporate office leases

Minimum lease payments

The table below sets forth revenue from tenant construction projects disaggregated by tenant agency for the years ended December 31, 2020, 2019, and 2018 (in thousands).

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For the year ended December 31,

Food and Drug Administration ("FDA")

For the year ended December 31,

Federal Bureau of Investigation ("FBI")

Department of Veteran Affairs ("VA")

Citizenship and Immigration Services ("USCIS")

Social Security Administration ("SSA")

Department of Transportation ("DOT")

Environmental Protection Agency ("EPA")

Federal Emergency Management Agency ("FEMA")

Drug Enforcement Administration ("DEA")

Small Business Administration ("SBA")

Food and Drug Administration ("FDA")

Immigration and Customs Enforcement ("ICE")

National Park Service ("NPS")

Joint Staff Command ("JSC")

Internal Revenue Service ("IRS")

Military Entrance Processing Command ("MEPCOM")

Bureau of the Fiscal Service ("BFS")

General Services Administration - Other

Customs and Border Protection ("CBP")

Social Security Administration ("SSA")

The Judiciary of the U.S.

Government ("JUD")

Environmental Protection Agency ("EPA")

Department of Transportation ("DOT")

Patent and Trademark Office ("PTO")

Citizenship and Immigration Services ("USCIS")

Drug Enforcement Administration ("DEA")

Small Business Administration ("SBA")

Department of Labor ("DOL")

Customs and Border Protection ("CBP")

Coast Guard ("USCG")

Internal Revenue Service ("IRS")

Forest Service ("USFS")

Bonneville Power Administration ("BPA")

National Park Service ("NPS")

National Labor Relations Board ("NLRB")

The balance in Accounts receivable related to tenant construction projects was $ 4.3 million and $ 2.4 million as of December 31, 2019 and December 31, 2018, respectively.

The balance in Accounts receivable related to tenant construction projects and the associated project management income was $ 3.0 million and $ 4.3 million, as of December 31, 2020 and 2019, respectively.

The duration of the majority of tenant construction project reimbursement arrangements are less than a year and payment is typically due once a project is complete and work has been accepted by the tenant.

There were no projects ongoing as of December 31, 2020 or as of December 31, 2019 with a duration of greater than one year.

During the twelve months ended December 31, 2019 and 2018, the Company also recognized $ 1.0 million and $ 0.2 million, respectively, in parking garage income generated from the operations of a parking garage situated on both the Various GSA – Buffalo and Various GSA - Portland properties acquired during the twelve months ended December 31, 2019 and December 31, 2018, respectively.

The monthly and transient daily parking revenue falls within the scope of ASC 606 and is accounted for at the point in time when control of the goods or services transfers to the customer and the Company’s performance obligation is satisfied.

As of December 31, 2019 there was $ 0.1 million in Accounts receivable attributable to parking garage income and less than $ 0.1 million in Accounts receivable attributable to parking garage income as of December 31, 2018.

Additionally, the Company also earns credits on its utility bills at certain properties for the use of energy efficient building materials, which also falls within the scope of ASC 606.

The pattern of recognition for the credits is in line with the recognition of the associated utility expense.

The Company recognized $ 0.1 million in energy credit income during the twelve months ended December 31, 2019 and less than $ 0.1 million during the twelve months ended December 31, 2018.

There were no contract assets or liabilities as of December 31, 2019 or as of December 31, 2018.

During the years ended December 31, 2020, 2019, and 2018, the Company also recognized $ 0.6 million, $ 1.0 million, and $ 0.2 million, respectively, in parking garage income generated from the operations of a parking garages situated on both the Various GSA – Buffalo property and on the Various GSA - Portland property.

The monthly and transient daily parking revenue falls within the scope of Revenue from Contracts with Customers (“ASC 606”) and is accounted for at the point in time when control of the goods or services transfers to the customer and the Company’s performance obligation is satisfied.

As of December 31, 2020 and 2019, there was less than $ 0.1 million in Accounts receivable attributable to parking garage income.

During the year ended December 31, 2020, the Company recognized $ 0.7 million in income for providing COVID-19 related cleaning services to certain tenants.

The income falls within the scope of ASC 606 and is recognized over time as the performance obligation is satisfied.

The balance in Accounts receivable related to these services was $ 0.3 million as of December 31, 2020.

There was no associated Accounts receivable as of December 31, 2019.

There were no contract assets or liabilities as of December 31, 2020 and 2019.

Commitments and Contingencies

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The Company also agreed in the tax protection agreement with the contributor to use the “traditional method” of making allocations under Section 704(c) of the Code for the four-year period.

In connection with our acquisition of a property in 2020, we entered into a tax protection agreement, under which we agreed to indemnify the contributors for any taxes incurred as a result of a taxable sale of such property for a period of four years.

The Company also agreed in the tax protection agreement with the contributors to use the “traditional method” of making allocations under Section 704(c) of the Code for the four-year period.

c) Letters of Credit

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As stated in Note 1 above, the Company leases commercial space to the U.S.

Government through the GSA or other federal agencies or nongovernmental tenants.

At December 31, 2019, the GSA and other federal agency accounted for approximately 98.3 % of rental income and non-governmental tenants accounted for the remaining approximately 1.7 %.

At December 31, 2018, the GSA and other federal agency accounted for approximately 98.8 % of rental income and non-governmental tenants accounted for the remaining approximately 1.2 %.

At December 31, 2019, 18 of our 70 operating properties were located in California, accounting for approximately 20.5 % of our total rentable square feet and approximately 26.9 % of our total annualized lease income.

Government or nongovernmental tenants.

At December 31, 2020, the U.S.

Government accounted for approximately 98.5 % of our total annualized leased income and non-governmental tenants accounted for the remaining approximately 1.5 %.

At December 31, 2019, U.S.

Government accounted for approximately 98.3 % of our total annualized leased income and non-governmental tenants accounted for the remaining approximately 1.7 %.

At December 31, 2020, 18 of our 79 operating properties were located in California, accounting for approximately 18.5 % of our total leased square feet and approximately 24.8 % of our total annualized lease income.

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Related Party

For each of the years ended December 31, 2019, 2018 and 2017 we were responsible for reimbursing certain entities controlled by our Chairman $ 0.1 million for a portion of rent and office expense at their Beverly, MA office and for the services of certain employees.

For each of the years ended December 31, 2020, 2019 and 2018, the Company was responsible for reimbursing certain entities controlled by our Chairman $ 0.1 million for certain costs they paid on our behalf.

Additionally, during each of the years ended December 31, 2020, 2019 and 2018, certain entities controlled by our Vice Chairman were responsible for reimbursing us $ 0.1 million for certain costs that we paid on their behalf.

As of December 31, 2020 and 2019, Accounts Payable, accrued expenses and other liabilities included less than $ 0.1 million owed to entities controlled by our Chairman and Accounts receivable included less than $ 0.1 million due from entities controlled by our Vice Chairman.

Subsequent Events

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On January 4, 2021, the Company granted an aggregate of 164,178 performance-based LTIP units to members of management pursuant to the 2015 Equity Incentive Plan, consisting of (i) 82,070 LTIP units that are subject to the Company achieving certain total shareholder return performance thresholds (on both an absolute and relative basis) and (ii) 82,108 LTIP units that are subject to the Company achieving certain operational performance hurdles, in each case through a performance period ending on December 31, 2023.

All of the LTIP units subject to the Company’s operational performance will vest when earned.

On January 7, 2020, the Company acquired a 116,500 square foot Defense Health Agency (DHA) Facility in Aurora, CO.

The building was originally constructed in 1998 and fully renovated in 2018.

The facility is 87 % leased to the GSA for the beneficial use of the DHA through April 2034 under a 15 year lease.

Subsequent to December 31, 2019, we issued and sold an aggregate of 200,000 shares of our common stock under the March 2019 ATM Program, generating net proceeds of $ 4.8 million, after deducting underwriting discounts, commissions and offering costs.

Selected Quarterly Financial Data (unaudited)

The following is a summary of our unaudited quarterly results of operations for 2019 (amounts in thousands, except per share amounts):

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total revenues

Net income (loss) available to Easterly Government Properties, Inc.

per share (basic)

Net income (loss) available to Easterly Government Properties, Inc.

per share (diluted)

The following is a summary of our unaudited quarterly results of operations for 2018 (amounts in thousands, except per share amounts):

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total revenues

Net income available to Easterly Government Properties, Inc.

per share (basic)

Net income available to Easterly Government Properties, Inc.

per share (diluted)

The performance-based LTIP units will vest when earned following the end of the performance period on December 31, 2023.

On January 4, 2021, the Company also granted an aggregate of 113,703 service-based LTIP units to members of management pursuant to the 2015 Equity Incentive Plan, which will vest on December 31, 2023.

The LTIP units are subject to the grantee's continued employment and the other terms of the awards.

Subsequent to December 31, 2020, the Company entered into forward sales transactions under the December 2019 ATM

Program for the sale of an additional 359,289 shares of its common stock that have not yet been settled.

Subject to its right to elect

net share settlement, the Company expects to physically settle the forward sales transactions no later than February 2022 .

Assuming the forward sales transactions are physically settled in full utilizing a net weighted average initial forward sales price of $ 22.59 per

share, the Company expects to receive net proceeds of approximately $ 8.1 million, after deducting offering costs, subject to

adjustments in accordance with the applicable forward sale transaction.

Easterly Government Properties, Inc.

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Baton Rouge, LA

Birmingham, AL

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Kansas City, KS

Little Rock, AR

Loma Linda, CA

Martinsburg, WV

Mission Viejo, CA

New Orleans, LA

North Charleston, SC

Easterly Government Properties, Inc.

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Original Construction Date(s)

Little Rock, AR

Loma Linda, CA

Martinsburg, WV

Mission Viejo, CA

New Orleans, LA

North Charleston, SC

Parkersburg, WV

Pittsburgh, PA

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San Diego, CA

Santa Ana, CA

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South Bend, IN

Easterly Government Properties, Inc.

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2020

(Amounts in thousands)

Initial Cost to Company

Cost amount carried at Close of Period

Encumbrances (2)

Buildings and Improvements

Capitalized Subsequent to Acquisition

Buildings and Improvements

Accumulated Depreciation (4)

Original Construction Date(s)

Upper Marlboro, MD

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The aggregate cost and accumulated depreciation for tax purposes was approximately $ 2,360.7 million and $ 275.2 million, respectively.

Easterly Government Properties, Inc.

Schedule III - Real Estate and Accumulated Depreciation

December 31, 2019

(Amounts in thousands)

Analysis of the carrying amount of real estate properties and accumulated depreciation:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data