Easterly Government Properties is already feeling the heat. The company’s stock has fallen 12% since the U.S. presidential election, with investors worried that the company’s business could be hit hard if the Office of Government Efficiency takes off. The company, which trades under the stock symbol DEA, operates 100 government leases across the country and derives 98% of its revenue from those buildings. DOGE, known as an advisory board led by entrepreneurs Elon Musk and Vivek Ramaswamy, aims to cut federal spending by $500 billion. “People need to understand that our assets serve parts of the government that President Trump doesn’t want to cut,” CEO Darrell Crait said in an interview with CNBC this week. spoke. “We contract with DEA and FDA drug laboratories to help analyze things like fentanyl before it can be admitted into evidence in litigation. We work with state-of-the-art Veterans Affairs medical facilities, FBI field offices, courts, immigration authorities, and customs enforcement facilities.” DEA Mountain 2024-11-05 Easterly Government Properties, which has high exposure to government leases, has seen its stock price decline since the election. Investors and some Wall Street analysts aren’t convinced. “The company has mission-critical leases in place, but some of its real estate portfolio may be subject to reductions,” John Kim, an analyst at BMO Capital Markets, told CNBC. “Yes, we do have an FBI office and I don’t think the (Federal Bureau of Investigation) will be shut down, but that may change,” Easterly said at 27 cents a share as of Thursday’s market close. It pays a quarterly dividend, or a yield of 9%. Kim rates the stock a “sell,” but believes the dividend is too high and expects the stock price to benefit from a reduction in the dividend. He suggested it to the CEOs, but “they didn’t want to do it,” he said. Raymond James analyst Jonathan Hughes agreed that the dividend was problematic, but said concerns about the stock price were “overdone.” There are a total of six analysts covering the company, according to FactSet. 2 people have rated it a sell, 2 people have rated it a hold, and 2 people have rated it a buy. Crait said he agreed there was waste in government and wanted to see it cleaned up. “We’re excited about DOGE. We’ve been practicing it since before it actually started,” he said, explaining that public-private collaboration will help the federal government by improving quality and reducing costs. Musk and Ramaswamy have already made their case to members of Congress. They were at the Capitol on Dec. 6, and just before Thanksgiving they published an op-ed in the Wall Street Journal clarifying their plans. “DOGE has a historic opportunity to reduce the structure of the federal government,” they wrote. “We are prepared for an onslaught from entrenched interests in Washington, and we expect to prevail.” Kreit said his company needs to be more clear about its mission and message. I admitted that there was. “We are supporting the most important things that the government is planning to provide,” he said. “We are an example of a solution to stopping government waste.” Kreit has a sympathetic ear within the Trump administration and may be able to make his case directly. His brother, Bradley Crate, was Trump’s campaign finance director and is currently helping the president-elect return to the White House. It doesn’t seem to be helping so far. The stock price fell another 4% in December.
This real estate stock may have been unfairly hurt by concerns about DOGE spending cuts
