Easterly Government Properties, Inc. (DEA) Earnings Call Transcript & Summary

[ Welcome ] to the 7:15 AM session at Citi's 2023 Global Property CEO Conference. I'm Michael Griffin with Citi Research, and we're pleased to have with us Easterly Government Properties and CEO, Bill Trimble. This session is for Citi clients only. If media or other individuals are online, please disconnect now. Disclosures are available on the webcast in the AV deck. [Operator Instructions] Bill, I'll turn it over you to introduce Easterly and members of the management team who are with you today provide any opening remarks, and then we'll get into Q&A.

Thanks, Griffin. Appreciate it. It's great to start off this one for conference at 7:15. It's a pleasure to be here. I'd like to introduce Meghan Baivier to my right, who's the CFO and CEO of Easterly Government Properties, and we have significant other members of our team here as well, and we're really excited for the week ahead. Certainly, I guess, goes without saying it has been a very interesting year in real estate. I think we're lucky that we are in a particular sector of the commercial real estate role that seemingly from an operations standpoint, is not as affected as the rest of the industry. However it doesn't mean if the tide hasn't been rushing out over the last year. So there've been lots of interesting current scenario. But having said that, I think we're in a terrific position, certainly from personnel, certainly from our balance sheet and absolutely from our portfolio where we're positioned to perform -- outperform emissions, [ emissions ] in the United States federal government. Nothing really has changed since we opened our first private equity fund back in 2011, and we're very excited about the future ahead. With that...

Outstanding. Well, let's dive in. Though I think you covered some of the topics there, but we're starting off each of these sessions with the same opening question. What are the top 3 reasons investors should buy your stock?

Well, I think one of the reasons that we are so excited to be is that we have nearly 7% of our leases were paid by the full faith and credit of the United States federal government, and that is unique. I think that puts us in a singular position to at least be able to accommodate over the next few years knowing that we're going to have business, and so I think that would certainly be number 1. Two, I think our 7% yield is incredibly attractive backed by those cash flows, that are not in doubt. And three, if you look at our position, we offer the only public REIT in the 100% government space. And also, I think when we look at any competitors that we have on the private sector, and those private funds, for the most part, are adhering to the bullseye best-of-class properties that we make our homework.

Let's expand on that a bit, because I know that there's been some comparisons with traditional office landlords. It doesn't really seem like a fair comparison just given your underlying property types and drivers. But why do you think now is a good time to invest in these GSA lease properties? Are there any potential impacts of the hybrid or remote work that could happen in your core businesses?

Well, we really have the opportunity back when we started back in 2010 and came up with this idea, and it's a wonderful thought when [indiscernible], I'm sure more [indiscernible] Head of the Public Building Service for the GSA for a number of years. So we actually really got concentrated in a subset of buildings that are going to do you well in times -- uptimes and downtimes, and it is absolutely correct. Basically, when we went into the pandemic, for the most part, all of our facilities were being occupied and used during that whole period of time. And if you look at drug labs, federal courts, FBI's, they really were not affected by the pandemic. The workers had to get there, they couldn't close the meth lab from their basement office, they couldn't investigate from the living room, and so we really understand what those build-to-suit properties would do in difficult times. We also introduced the sort of Level 4 security necessary. And I think you really have to step back and look at the federal government mission because even if you take -- we have one of the largest IRS service centers in the country out in Fresno, California, and they handle compliance, this is the place that no one in this room ever wants to get a letter from. And they cannot remove the files from that office, so we know one reason it's taking a long time to get your tax returns back. But the other is that there's a lot of security surrounding those, and so all those missions are going to continue no matter how much work from home we see in the future. I think another thing that has always been sort of interesting is where people put us and not get with everybody else in that where we fit, where we office or we net lease. Well, we're actually Easterly Government Properties, and we sort of have attributes of both. And I think, though, that if you're looking for an office investment because I say that is the majority of the type of buildings that we have, I think that we would certainly be one of the best opportunities within that sector going forward because I think we do have a fair amount of certainty as to what our tenant is going to be doing over the next 5, 10 and 15 years.

Got you. Let's just talk about 2023 for a minute. You came out with guidance a couple of weeks ago, implied about 10% decline in year-over-year FFL. It seems like similar to other REITs, you've been affected by the rise in interest rates, but I guess how should investors weigh those near-term headwinds to earnings versus the longer-term value proposition that Easterly provides?

Sure, Griff. When we look at the year-over-year guidance and you look at the component pieces, really, the biggest driver of that is the -- what we think is temporary effect of the portfolio disposition that we undertook last year. And the upside of that is that we've really been able to position the balance sheet for 2024 and beyond. We've gotten a revolver down to a balance of roughly $65 million, a floating rate exposure of 6.5%. So we're really sort of concur down looking to ride through any volatility in the interest rate market and wait for the asset market to come back.

And maybe just on that, on external growth assumptions going forward. Just given where interest rates have moved, where cap rates have moved. I think, Bill, you talked on the call about acquisitions might looking attractive around 7% or so. But I guess, how are you conditioning yourself should capital markets condition return so you can execute on potential strategic acquisitions?

Well, maybe I'll start, and Meghan can fill in. I think that the one thing that we do have the luxury of in our space is knowing where every single building we're interested in purchasing resides and who owns it. So our acquisition team has been incredibly busy during this period of time going around and visiting folks, calling those names, making sure that we are front and centered. I think we're seeing a little bit right now, as you pointed out, a gap between what sellers are expecting and what we're willing to pay, and I think we probably willing to pay more than most, but we are prepared. I think that the fact is in the end, it is real estate, and so people might be pretty proud of their properties and they might think that their cap rates that were 150 basis points ago, but they've got other things as well. So we're ready to go there. We are paying attention, especially to any developers out there that might have something that might be compromised in. Sorry, Meghan, go ahead.

No. And in terms of ability to execute, we've got a revolver with $434 million available on it and just under -- right around $90 million of forward equity that we could settle, so we've got that at our fingertips. We're obviously very cognizant of waiting for this bid-ask spread and ensuring that we have an ability to fund just in time, but both of those -- access to both those will certainly -- there obviously be a first mover.

Bill, do you have a sense, could you quantify kind of what that spread is? I know if favoring is a number to write down in the note, do you have a sense of what...

I've got 2 of them about 2 basis points, but [indiscernible] ever change. No. But I think that the actual pricing should be sort of 6.75% to 7% on the properties that we call our bread and butter. And I think that we're probably -- the sellers are probably anywhere from 25 to 50 basis points below that. They were 150 basis points, they all come to the party, but we're spending a lot of energy to make sure that we're giving you some good ideas as to where they should trade.

And what kind of competitors or sellers or buyers are you seeing out there in the market? Is it private money, is it kind of -- if you could explain on that?

Yes. I think it certainly -- it's almost more fun talking about the potential buyers this time last year where you had NBA basketball players getting into the government space. That's not really happening this year anymore, so I'd say that the only folks that we're seeing right now are private equity players. One of them, I think, is remunerated in a different way than we are. So you're seeing a lot of acquisition disposition fees, et cetera, and they need to just scale. But other than that, I'd say there's a very quiet market right now. Not much at all going on.

Maybe expanding on that a bit, just for potential build-to-suit opportunities and how they might look in today's environment. I know you recently closed some of the assets in the VA joint venture. How important is it having that high-quality portfolio with a generally younger vintage?

I think it's incredibly good. And if you look at the VA as you mentioned -- if you look at the VA, it was an area that we had absolutely no interest in a decade ago. And given about 7 or 8 years ago, the agency has never been famous for being run particularly well. However, their mission is probably considered, in some ways, the third rail of government. There's nothing more important American people to Congress and the President than the Veterans Administration because it does have a big mission. And it is the largest health care system in the world, just to give you an idea. And so when they switched over to the new PAC compliant VA facilities, that was something that we could sink our teeth in knowing that would be -- something would be around this buildings for the next 40 or 50 years, so that made a lot of sense. We're also looking as we were in the middle of an FDA redevelopment down in Atlanta, Georgia. The new laboratories for the FDA are extremely important. The FDA is important, as we've seen over the last several years. And then if you look at another agency that we're looking at, we've been talking about, for about 8 years, another very poorly-run agency, but incredibly important to the FAA. And as they get into the next-gen with the air traffic control, that might perhaps be an interesting opportunity as well. But it's important to [ young ], it's important that mission is going to be set for the next half a century, and that's what we're looking for.

Can you just remind us maybe for the uninitiated, what [ PAC ] compliance means?

Well, that basically, it came as a manufacturing term out of Japan. And basically from where it fits into the VA space is that instead of just having everybody go down 1 hallway where you'd have the doctors and you have the patients and visitors, you actually have separate access points like federal courts do. They're being built now. So the doctors do not have to intermingle with the patients and nor with the visitors in different areas. And if you can imagine, if you've got, in some cases, 3 different ways to access various rooms, there's absolutely no way that you can retrofit an old facility to be able to come into compliance with packed. And so that's why -- and actually, there's been a couple of trades [indiscernible] that we've been asked, why didn't you buy these facilities in Florida? We're 1 of those 2 who was not PAC compliant. Therefore, we felt it was a risk and would be obsolete here at some point.

Maybe just touching on the federal agencies that you might view more favorably. I think you mentioned FBI, DEA, ICE. Like you said, you can't bring a meth lab home with you. Are there any particular agencies that you would look to expand your presence with, and on the flip side, are there any that maybe look to lighten your exposure to?

Yes. I think that we've always said, and I don't know if it's the proper term, but gun-toting agencies or mission-critical agencies or whether we have a Democrat or Republican in office that we all know it's a fundamental mission of the government. And so I just go back and say, yes, FBI, absolutely VA, FDA. We don't have much in the way of the United States Secret Service, but that would be something we'd be very interested in knowing. What we're -- what we're not interested in it doesn't mean we politically feel that they're unimportant agencies, but ones that basically do not require build-to-suit space or could be the victim of a political hatchet job on either side. So we love fish and wildlife as personally, but probably not the place that we're going to be putting a lot of our buildings into Department of Education, and also have -- can have issues with either party. So just think of those gun-toting agencies for the most part, and that's where we're going to stay.

Is there a worry that a split government or potential worries around the debt ceiling talk could negatively impact your industry and demand for your product?

I don't -- it is kabuki theater. But in the end, it is important when things get defunded, I think it's important to note that if you've got your calendar and they're looking for an exciting summer in Washington, we are funded right through the end of September in any case. And so that won't -- no matter what they throw at us during that period of time that will not be an issue. In the past, we have not seen anything. We've been moved aside from those debates within government, but it's obviously not healthy when you see the federal government reeling back and forth. But don't forget, these are 20, 30 year missions, and they're not shutting FBIs and having them not come in. It's not happening.

We had a question in from our live QA feed here. You've talked about your buy box of acquisitions meeting certain key criteria, yet some might argue that the portfolio sale you announced at the end of last year, you probably wouldn't fit. Some of these might have been in that buy-box strategy. Can you just expand on why the dispositions made sense at the time and expectation of allocating capital, that going forward?

Absolutely. And I think it's important to note that we do have about 3 dozen agencies that we really like. But it doesn't mean that there aren't buildings with a hierarchy of mission within those agencies that could be challenged at some point in the future. And so even though we have the youngest portfolio out there, about 14 years, and the average stay in these buildings is well over [ 40 ] years, some of the buildings that we moved on would be sort of in the second half of their life. I think some of those buildings also were what we consider remote locations. And just to give you an example, which -- they're going to be there forever, but I don't know if you've ever been to Sunburst, Montana. But if you try to get there, you started Salt Lake City from the East Coast, and then you fly 1.5 hours up to Great Falls. And then you drive 3 hours in the road about 90 miles an hour, there is a speed trap about halfway up, and you get to the border. That's how far this facility is. And from a standpoint of a company, a public company running it, it was just a challenge. And I think you'll see that, that sort of overlay in the buildings that we would have done, that it would have an asset management issue in the end. And something that maybe could be replaced sometime in the future or automated, and we just felt that we need to move on.

I'd also, Griff, with that portfolio, we're able to really, to your prior question, focus on those agencies, DEA, FBI, ICE where we have competitive advantage. We have a relationship within the agencies because we've got such a large portfolio.

Great. Maybe just switching to the -- operating the asset management platform. I know we haven't talked about that so far. You've noted that the marketer for GSA-leased properties, it remains pretty fragmented and you're 1 of the more notable players -- pretty much notable player in the space. I guess, what differentiates the Easterly strategy? And how do you expect to gain market share in the coming years?

Well, we're really the only aggregator of GSA-leased assets out there, I think, for the main part. And I think that if you look at the -- look at the way we set up our company in the different verticals, we've purposely put government experts in, commercial real estate experts in, finance experts in and that all are familiar with the government space. And I think that gives us a serious, serious leg up when we go out and look for properties when we operate these properties, and so it sets us up. I think, over the long term, we're having a unique ability to basically understand what the government is going to do for a long period of time going forward. And therefore, I think, give us a real leg up on the buy.

And I guess to that end, can you just remind us the structure of these leases and the government tenants, and how they might differentiate from your traditional kind of office lease insulated maybe from inflationary effects? You've got a good slide in your deck to kind of highlight the structure of these. Kind of give us typical -- remind us about the average lease terms in terms of years, [ TIs], free rents, kind of how that procurement process works?

Yes, sure. So our restructure is what we call modified gross lease structure. We have OpEx bases and real estate tax bases that get set within the lease. OpEx base accretes with urban CPI every year, it's uncapped, and real estate taxes above and beyond the base share are passed through to the government. So what that does is really create sort of inflationary insurance around and operating income coming off of those assets. Out of the development box, typically, the assets are developed to 15 to 20-year leases. And then assets such as [ RS ] where mission is enduring, nobody at the GSA is looking to pick up that lease again in 5 years and renegotiate it. We'll be moving for 10 to 15-year terms. And when you look at our historical renewals, you can see we speak about assets as those which have renewed and the tenant improvement has already completed. The tenant improvement package, if you will, is selected by the government. It is not a -- there's not a market convention for what an FBI may need. It's whatever the FBI in that location has decided to request, and GSA is procuring for them. So we then look at other bucket, which is assets which have renewed, but for which the TI is not complete. And you might imagine that if it renews and the TI is complete, though there was little or it was a quick too many projects. So those 11 assets in our portfolio have renewed up 8%, with TI packages right around $18. But the 11 assets, which are still in our bull's eye and have yet to have the TI complete, we're expecting renewals up 26% with TI packages right around $35.

Is there anything different working with the different regions? The highlight on that 1 slide in our deck, the Region 1 versus Region 9. I know -- I'm from Georgia, and people from Georgia are different from people from New York, different from D.C., but it's probably a little more complicated than that.

Yes, the regions definitely have their own personalities. And back to Bill's point, we've put together a team that has grown relationships across the country in each of those regions where we ensure that internally, we have consistency across our portfolio, but most importantly, across the region. Some regions are ahead of the game. You'll see a procurement come out 2 years in advance. Some regions are undermanned, and you get right down to exploration and go into -- they need an extension to be able to prepare for a renewal process. So we see it all, the National Capital Region is generally the most sophisticated. We don't have many assets in that region. But it's the beauty of what we do, what we see across these regions.

Maybe just expanding on leasing there for a bit. Meghan, you touched on it a bit, but you've got about 300,000 square feet of leases expiring this year. Can you talk about expectations for renewals in those, and maybe more broadly, what are your expectations for leasing in general are for 2023?

Sure. So 2023 is really the concentration of 3 assets, what we call various GSA. In Chicago, our DA regional office in Birmingham, and we have a courthouse in Jackson, those are the 3 biggest next year. We feel very good about Birmingham and Jacksonville should look like, those assets when they are done. And Chicago, as you know, we bought that as part of the Saban portfolio. It's the gift that keeps giving. It's a wonderful purchase. We'll be expecting FAA to be in there for the medium term, certainly in the 2 to 4-year range.

Maybe just switching over to ESG initiatives, where we're asking the same question to every company at these panels. Just can you highlight any important ESG initiatives that Easterly is currently undertaking?

Yes. So at Easterly, we've really linked into our approach with ESG. In fact, the Director of ESG has joined us at the conference this year. Today, almost half of the Easterly portfolio has at least 1 green certification. And last year, we were very proud to have released our first ESG report. In that report, you'll see we set medium-term goals. First, we've committed to reduce energy use intensity 10% by 2030. We have committed to reduce water use intensity 5% by 2030. And then on the social side, we set goals to increase the [indiscernible] that are hiring practices and implement the DEI training across the company. We also have a goal to achieve 90% participation in employee charity giving or volunteerism by 2025. And while we recently implemented our first employee engagement survey at the end -- at the beginning of this year, rather, it is our goal to achieve 90% participation in that survey by 2025.

Very nice. Maybe just switching over to the balance sheet for a bit there, Meghan. Your leverage currently sitting at about 7x, net debt to EBITDA after the portfolio sale at the end of last year. I guess, what are your expectations about where this could trend and should opportunities arise, could you look to take leverage up higher?

Yes. So we're committed to maintaining a strong BBB balance sheet. And given the [ less ] credit, we're very comfortable in U.S. government credit, we're very comfortable in that 6.5x to 7.5x leverage range. We're obviously right in the middle of that. That would be our working expectation going forward. As we look to the -- again, going back, we look at the capital stack, we've got access to equity and debt today and a combination of factors that we should be able to maintain that leverage going forward into the year and into next as well.

And then just kind of on that, you highlighted the foreign equity proceeds that you might have to be able to deploy shares of trading currently at a slight discount now relative to historical premium. I guess, how does this factor into your capital allocation decisions for the year ahead?

Yes. So obviously, I think NAV is a fluid concept today, again. And what we talked about in the bid-ask spread in the market, so sort of intrinsic private values, but we're committed to doing accretive deals at Easterly. Always have been, always will. There are times when we certainly could buy assets to hit acquisition goals or drive accretion, but we're committed to staying in that bull's eye, sticking to the assets that are within our addressable market and always doing accretive deals.

In [indiscernible] general opinions.

Yes. Still accretive. [indiscernible]. That's a great question. Yes. Our leases don't have escalators necessarily. It's not the typical GSA lease. So it's instilled and it's not.

I guess to that end, I'd be curious to get your's thoughts. How should we and investors, and in your opinion, view NAV as a valuation metric? I feel like particularly maybe for the traditional office landlords, there's such a big disconnect on a premium or a notable discount basis. Like how useful, and in your opinion, do you think it is for valuing some of these companies?

I think it's a time right now that our choices in the disposition, we're very much about ensuring that we are doing, making an accretive moves. So that was obviously cash flow on a temporary basis dilutive, but we think very NAV accretive. As we see interest rates in this sort of new world that we're in, settle out, I think the cap rates will settle out in the private market as well. But we're still in the middle of that today, in the market.

Do you have a sense for kind of what your underwriting expectations are for this year from a macro perspective? Are you -- is your thought that higher for longer, or that the Feds is going to end up cutting rates in the back half of the year? I guess, any macro commentary would be helpful.

Yes. So I think we should look at what we've done back in February, in February 3rd week, we put forward starting swaps on our 2 term loans, which in total by June of this year should be roughly $300 million on our balance sheet. Those swaps will start $200 million of them in June and $100 million in September and [indiscernible] for 18 to 21 months. Obviously, that was a -- we feel a very fortuitous move, and we really wanted to kind of lock and load over that next 18 to 24-month period.

Can you remind us what the cost of those swaps were?

Sure. [indiscernible] little bit just under 4%. [indiscernible].

I know you touched on it a little bit earlier, Bill, but I'm just curious why you think Easterly necessarily shouldn't be categorized as either an office REIT or a net lease REIT? I mean it seems like it's kind of a hybrid, its own animal, so to speak. But can you maybe just expand on that and maybe the differentiation there?

Thanks, Griff. I know you and I have actually chatted about this for the last several months. I think we're definitely a hybrid. If you look at our sort of characteristics that would go of net lease, you've got the credit quality, obviously, you've got renewal probability, which is extremely strong, 95% to 100%. We've got long lease terms for the most part within our area, and then you've got an incredible stability of cash flow, so I think that fits into the net lease category. You do have some big differences, which is we're operating under a modified gross lease, so that's different than you're going to see there. We're paying for the things that need to be done with the road for HVAC and so forth over the long term. And our office type is predominantly -- excuse me, our type is predominantly office, however, we certainly have a unique spin to that. And so I think that with emissions that can't be done from home. So you've got some other attributes that would sort of fit in more with, I'd say, a mandatory office environment. So I think we're somewhere in between. And that I think it's -- sometimes it's difficult, but I think right now, we're in a bigger place to be. Sorry, go ahead, sir.

[indiscernible].

So I'll touch on process second, but in terms of economic outcomes, what you have is this grand moment, right? [indiscernible] has generally been flat for 15 to 20 years. We're really engaging in a replacement cost conversation. The FBI cannot move across the street, the courthouse cannot move into that vacant office building down the road, right? They would have to have a new asset constructed for them. And so we are essentially able, in Easterly, to slide in short of replacement costs, but look to get those spreads kind of in the high teens to low 20s on those mission-critical assets as [indiscernible] cumulative inflation right over the period of the lease. From a process perspective, the -- I would say there's a variety, but the typical is that it is a public process where the lease requirement is published by the government and respondents are allowed to make their asset available. They put out square footage requirements, delineated area requirements and so forth. Occasionally, they will. The GSA will get approval to negotiate with us one-on-one to assets. So it looks a bit like an open public process, but it's not. And so it is a fairly open market competitive outcome.

[indiscernible].

I'd say that's a great question because I think we've only had 1 since 2010, and that was a property down on the border in South of San Diego. Basically, they decided that they wanted to have more space which is, by the way, the end way that we always look at the most. The building was part of a portfolio that we bought. We never -- I never liked that building, but in any case, it became evident that they needed more mission space than they had. Interestingly, I think without building the location, we still have it in such a good spot. I wouldn't be surprised to see some other government agency take it over, but it's very rare that those things happen.

[Operator Instructions] Never mind. Go ahead.

[indiscernible]

We've got 12 out of the 56, yes. They're pretty amazing facilities. You're safe when you're in 1.

Yes, very safe. Yes.

I guess, shifting back to maybe kind of broader thoughts, Bill, on what you're doing with your day to day. Can you give the 1 thing that you're spending sort of most of your time on these days?

Absolutely. I think we're talking to, as I mentioned, to the owners' of these buildings, but specifically the developers out there right now that have projects underway that they got going in a very, very different world and environment several years ago. And so as I said, I think at the Nareit in November, we are seriously focused on looking at helping some of these people out that might be a drift, unable to complete the projects, surprised at how much TIs cost today and time lines that are difficult. They have leases with the United States federal government and may not be able to perform, so I think we're a wonderful avenue for at least getting into the next stage of their life.

Have these typically been cost overruns, the developers kind of got over their skis initially in a lower interest rate environment, now can't get financed?

Absolutely. Some of these folks are bidding things at the time at 6 caps or just slightly over a 6 cap and thinking they had a profit in there as well, and I think where we are today. So -- and we've still got to perform for the government, so there's an opportunity there.

I'd be curious just to get your thoughts on maybe the broader office market in general. I know it's not really necessarily in your wheelhouse, but I think there's some worry that if these office valuations declined markedly. There could be knock-on effects for municipalities, public services. I think we've seen it in New York and D.C. where groups of landlords have come together and just worried about the implications for office valuation on kind of the broader ecosystem. So I'd be curious if you have any thoughts there?

Well, Meghan and I sit looking over in Washington and West End, right next to central business district, and I can see a lot of see-throughs all of this. But I think and may be I'm not being an expert in that particular space. I think we're seeing productivity not as good as we all thought it was going to be. And I think certainly the sense that we're getting and from the federal government who is finally getting people back to work, maybe it is not going to be as bad as we all thought at some point because I think you're seeing players at some point having more power, certainly if we head towards a recession. And I think with work from home, we have a little but, but I don't think any of us in this room believe certainly, in some of the missions that are being conducted, that things can actually get them more efficiently from a collaborative office space.

And end to that. Bill, just saw one more. Just back to the ESG thing for a second, you have one tenant in essence.

Yes.

Is it possible, or could you see a risk that some sweeping agenda comes over, some administration that says every building we lease going forward has to have X in it? And you have to retrofit or you have to make more green or you have to do something that adds to the cost structure of the business in a way that makes this less attractive?

I knew you are here for a purpose [indiscernible] and I appreciate it, which is guess [indiscernible] in the world, the United States federal government will pay for those TIs if they put a sweeping mandate in. So from their standpoint, it's actually an opportunity for us. Having said that, they all are constrained. And so they're very quick to tell you what they're going to do and what they'd like to have, and it's surely wonderful win over of things that are going to be wonderful for everyone. But at the same time, they're really out to trying to watch the bottom line in these days. The good news is, and our portfolio is the best one out there from the government space. And so we're very attentive to it, and so I think we're in a great position. So I think we got it covered under either base.

Real quick to end the session, got my 3 rapid fire questions. Best real estate decision today, buy, sell, develop, redevelop or pause?

I'll say just briefly here is to pause, but I think we'll see at the end of the tunnel.

Same-store growth expectations for 2024?

1% to 2%.

More, fewer or the same government net leased office?

Whatever we [indiscernible] easier from us.

There we go. Thank you so much.