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Get Rent Checks from the Government

Government Properties Income Trust (NYSE: GOV) is a real estate investment trust (REIT).  The Company was formed to invest in properties that are leased to government tenants.  The Company owns 29 properties, 25 of which are leased primarily to the United States Government and four of which are leased to the states of California, Maryland, Minnesota and South Carolina, respectively.  The Company is a wholly owned subsidiary of HRPT Properties Trust (HRPT).

As measured by square footage, the IRS is GOV’s biggest tenant.  The next-biggest tenant is U.S. Customs & Immigration. These two make up over 20% of GOV’s rental income. The next biggest in terms of rental income is the Department of Justice.

Government Properties announced that it priced a public offering of 7,500,000 common shares at a price to the public of $23.25 per share. GOV expects to use the net proceeds of this offering to repay amounts outstanding under its revolving credit facility and for general business purposes, including funding potential acquisitions.  Government Properties is currently trading at $22.25 or 4.5% below the share offering price.

Government Properties recently announced it has raised its regular quarterly common share distribution by $0.01 to $0.43per common share ($1.72 per share per year).  Government Properties has a current dividend yield of 7.73%.

Normalized FFO for the six months ended June 30, 2012 were $49.5 million, or $1.05 per share, compared to Normalized FFO for the six months ended June 30, 2011 of $40.5 million, or $1.00 per share.

Net income was $25.0 million, or $0.53 per share, for the six months ended June 30, 2012compared to $21.2 million, or $0.52 per share, for the same period last year.

Since its initial public offering in 2009, GOV has acquired nearly $1 billion of property, at an average cap rate of 8.7%.  Since April 1, 2012, GOV has acquired seven properties for an aggregate purchase price of$125.2 million.

Government Properties has an equity summary score of 8.3 out of 10 for a BULLISH outlook.  It has a 12-month price target of $26.50.

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