Covered — leveraged, single-mission tenant base. A quarterly payer at $0.32 a share, $1.28 annualised, raised from $0.305 in March 2026 and declared August 13, 2026 for payment October 15, 2026. Coverage is real on the cash line: second-quarter 2026 FFO per share, as adjusted for comparability, was $0.71 against the $0.32 dividend, and the company's own AFFO payout ratio for the quarter was 53.3% — roughly half the cash flow paid out, with the rest retained. Same-property cash NOI rose 7.4% in the quarter, and the Defense/IT portfolio — 202 properties, 23.3 million square feet — was 96.4% leased at June 30, 2026. What keeps this a warning rather than a clean pass is leverage at 6.0× net debt to in-place adjusted EBITDA, up from 5.9× a year earlier, and a tenant base concentrated on the U.S. Government and its defense contractors. For a REIT, the House reads AFFO payout — never the EPS payout, which depreciation makes meaningless.
Key risk: Defense concentration plus leverage — tenants are the U.S. Government and defense contractors around its installations, so a defense-budget or procurement shift hits this portfolio directly, and at 6.0× net debt to EBITDA there is less room than at lower-levered peers if NOI slips.
Changes if: The AFFO payout pushes past about 65%, leverage rises past 6.0×, or Defense/IT leasing falls below its 96.4% level at June 30, 2026. The cushion and the lease rate are the verdict.
- ✓AFFO coverage check: 53.3% of AFFO paid out in the second quarter of 2026 — the $0.32 quarterly dividend against $0.71 of FFO per share, as adjusted for comparability — leaves a real cushion for a REIT, and the dividend was raised from $0.305 in March 2026.
- ✓Growth check: Same-property cash NOI rose 7.4% in the second quarter of 2026, the company raised the midpoint of 2026 FFO guidance to $2.78 a share (about 2.2% growth for the year), and the Defense/IT portfolio was 96.4% leased across 202 properties and 23.3 million square feet at June 30, 2026.
- !Leverage check: 6.0× net debt to in-place adjusted EBITDA at June 30, 2026, up from 5.9× a year earlier, is the heaviest leverage among the House's covered REITs — coverage is comfortable, but the balance sheet is not light, and fixed-charge coverage of 4.4× is what stands between NOI and the dividend.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.