Easterly Government Properties is already feeling the heat. Its stock is down 12% since the U.S. presidential election, as investors fear its business will take a big hit once the Department of Government Efficiency gets down to work. Trading under the stock symbol DEA, the company operates 100 government leases across the country, and 98% of its revenue comes from those buildings. DOGE, as the advisory council being led by entrepreneurs Elon Musk and Vivek Ramaswamy is more commonly known, aims to slash $500 billion dollars in federal spending. “People have to understand our properties serve parts of the government President Trump doesn’t want to cut,” said CEO Darrell Crate, in an interview with CNBC this week. “Our leases are in DEA and FDA drug labs, where we help analyze things like fentanyl before it is admitted into evidence in a court case. We have state-of-the-art Veterans Affairs medical facilities, FBI field offices, courthouses and Immigration and Customs Enforcement facilities.” The stock is being “unfairly punished,” he said. DEA mountain 2024-11-05 Easterly Government Properties which has highly exposed to government leases has seen shares drop since the election. Investors and some Wall Street analysts aren’t convinced. “The company does have mission-critical leases, but part of their real estate portfolio may fall into an area that gets cut,” John Kim, an analyst at BMO Capital Markets, told CNBC. “Yes, they have FBI offices, and I don’t think the [Federal Bureau of Investigation] is going to get shut down, but there may be changes.” Easterly pays a quarterly dividend of 27 cents per share, or a 9% yield as of Thursday’s market close. Kim, who has a sell rating on the stock, thinks that payout is too high and expects cutting back would be good for share prices. He said he has suggested it to the CEO, “but they don’t want to cut it.” Jonathan Hughes, an analyst Raymond James, agreed the dividend is problematic, but said concerns about the stock are “overblown.” There are a total of six analysts covering the company, according to FactSet. Two have a sell, two rate it a hold, and two have buy ratings. Crate said he agrees there’s government waste and wants to see it cleaned up. “We’re excited about DOGE. We were practicing it before it actually began,” he said, explaining that private-public cooperation helps the federal government by increasing quality and cutting costs. Musk and Ramaswamy have already made their case to members of Congress. They were on Capitol Hill on Dec. 6 and published an op-ed in the Wall Street Journal just before Thanksgiving laying out their plans. “DOGE has a historic opportunity for structural reductions in the federal government,” they wrote. “We are prepared for the onslaught from entrenched interests in Washington. We expect to prevail.” Crate admitted his company must be clearer about its mission and message. “We’re supporting the most important things the government is meant to provide,” he said. “We are an example of what is part of the solution to stop government waste.” Crate may have a sympathetic ear in the Trump administration, where he can make his case directly. His brother Bradley Crate was the treasurer of Trump’s campaign, and is now helping with the president-elect’s transition back to the White House. It doesn’t seem to be helping so far. The stock slid another 4% so far in December.
This real estate stock may have been unfairly hit by fears of DOGE’s spending cuts