Easterly Government Properties is already feeling the pinch. The company’s shares have fallen 12% since the U.S. presidential election as investors worry about a major hit to its business once the Department of Government Efficiency begins work. The company, which trades under the ticker DEA, operates 100 government rental projects across the country and generates 98% of its revenue from these buildings. DOGE, better known as the advisory board led by entrepreneurs Elon Musk and Vivek Ramaswamy, aims to cut $500 billion in federal spending. “People have to understand that our properties serve parts of the government that President Trump doesn’t want to cut,” CEO Darrell Crate told CNBC this week. “Our leased location is a DEA and FDA drug lab, where fentanyl is used. We are there to help analyze substances like fentanyl before the drugs are admitted into evidence in court cases. We have state-of-the-art VA medical facilities, FBI field offices, courts and Immigration and Customs Enforcement. facilities. The stock is being “unfairly punished,” he said. DEA mountain 2024-11-05 The share price of Easterly Government Properties, which is greatly affected by government leasing, has fallen since the election. Investors and some Wall Street analysts were unconvinced. “The company does have mission-critical leases, but that’s part of its real estate portfolio that may be cut,” BMO Capital Markets analyst John Kim told CNBC. “Yes, they have an FBI office, I don’t Think (FBI) will be closed, but that could change. Easterly pays a quarterly dividend of 27 cents per share, yielding 9% as of Thursday’s close. King has a sell rating on the stock, saying he believes the dividend is too high and expects a dividend cut to be beneficial to the stock price. He said he had made the recommendation to the CEO, “but they didn’t want to cut it.” Jonathan Hughes, an analyst at Raymond James, agreed there were problems with the dividend but said he was cautious about the stock. Concerns “are overblown.” The company has six analysts, according to FactSet. Two have assigned a sell rating, two have assigned a hold rating and two have assigned a buy rating to the stock. Clutter said he agrees that government waste exists and wants to see it cleaned up. “We’re excited about DOGE. We’re implementing it before it really starts,” he said, explaining that the public-private partnership helps the federal government by improving quality and cutting costs. Musk and Ramaswamy have 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 laying out their plans just before Thanksgiving. “The Governor faces a historic opportunity to make structural cuts to the federal government,” they wrote. “We are ready to respond to attacks by vested interests in Washington. We expect to win.” Clutter acknowledged that his company must be clearer about its mission and message. “We support the most important things that government should deliver,” he said. “An example of how we are part of the solution to stop government waste.” Clutter may have sympathy from the Trump administration, and he can make his case directly. His brother, Bradley Clutter, was the treasurer of the Trump campaign and is now helping the president-elect return to the White House. Doesn’t seem to help so far. The stock is down another 4% so far in December.
This real estate stock may have been unfairly hit on fears of DOGE cuts | Real Time Headlines
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