Michael Lewis: And then, I guess this is a follow-up to a follow-up. Just on the dividend, you talked about the predictability of cash flows in relation to the dividend policy. But obviously, when you set that dividend you didn’t predict obviously that you’d be material below your cash flow. You raised the dividend in 3Q 2021. You haven’t covered it since 3Q 2022. I get — the company is built for the stability and I know the dividend is a big piece of that. But I guess this goes back to kind of the other questions people ask. I get to answer this. It sounds like you’re willing to fund this for a material amount of time. Just confirming, I guess.
Darrell Crate: I mean the answer to that is yes. I mean, it’s not a — we don’t look at it as a material amount in the context of some of the opportunities that we’re seeing. And we’re aware, not blind to the issue or the dollars. But as we look out again with $6 billion of government money that’s going to as we release that, it feels like it there’s no uncertainty in the future. I think sometimes we debate maybe we should give guidance for the next five years, just sort of put it out there. And as we look at these development opportunities and some of what we see in the pipeline, we feel very good that we’re going to get to a place that covers the dividend and also continues to grow it.
Michael Lewis: Really appreciate it. Thank you.
Darrell Crate: And we really appreciate the question too. I mean, because it is something we are different than office and it is that predictability and stability. And we’re not just saying it, I mean, in that — if you look at the term of the leases and real dollars that are coming in, our business operates over years not quarters. And so — and we think the dividend is an important part of the story and we’re I don’t think we’re being dogged about it. I just think in the context of the business, the profile and the cash flows that we have over these coming years, we feel very comfortable where the dividend is.
Operator: Our next question is from Bill Crow of Raymond James.
Bill Crow: Darrell, given the question line, not only this quarter, but the past quarters, are you increasingly feeling like a little bit of around peg in a square hole from the REIT perspective? Is it the right strategy for this company to keep that REIT wrapper?
Darrell Crate: What was the last word you said Bill, I am sorry?
Bill Crow: I am just wondering about the longer term whether that REIT structure is the right place for Easterly?
Darrell Crate: But it’s — I think that again having the profile of the cash flows that we have, we’ve always expected there to be a little bit more appreciation because we are the most secure set of cash flows that of any of the REITs that are out there. And only but for maybe 10 days during COVID did we see the real premium of that certainty and stability. I think there are things that we can do on our cost of debt. I mean, you see the when we sit with the debt providers and we talk about our business, we’re strongly encouraged to put more leverage on the company or understand that that’s a capability. And we do have strength in that full faith and credit backing of some of our ramp profiles. So I think we can be clever on that front in finding some solutions where we can be very competitive relative to other REITs on our cost of debt.
I think that we also, as you know, putting 15% of our portfolio into state and local and government adjacent, we think it’s smart because we can find buildings with similar close credit rating, very high credit rating and with escalations. And we do think if we’re adding another 80 to 100 basis points in our core FFO that gets our cash flow profile more in line with the expectations of REITs broadly. I think it’s sometimes our point of view, I would sort of go out on a limb and say, I think if we ask our analysts to pick the stock that they want to hold for 20 years. I think lots of folks might pick us. But I think if you’re picking a stock for a quarter or for two quarters, we’re rarely going to be that darling. And so we’re mindful of the capital that we’re receiving, we’re mindful of what’s going on in the REIT space.
We do think modifying the cash flow stream in the core FFO. So it rhymes a little bit more with REITs and REIT expectations is certainly a strategic goal for the company. And if we can solve a little bit of the debt riddle, which I think we’re well underway in doing, we can get to a place where we’re delivering some really great risk adjusted returns for investors. And I look at the stock with a 9% dividend and I just think it’s a lot of value. And I’ve shown that with buying my own shares and I’ll continue to do that too.
Operator: Thank you. I would now like to turn the conference back to Darrell Crate, CEO of Easterly Government Properties for closing remarks.
Darrell Crate: Thank you everyone for joining the Easterly Government Properties fourth quarter 2023 conference call. I’d like to thank our investors and stakeholders for their continued support and trust in our company. We value your confidence and we’re committed to delivering sustained long-term success for you.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
