Government real estate owner Easterly Government Properties (DEA -3.40%) reported quarterly results that were roughly in line with expectations, but investors are still more focused on disappointing news the company released earlier in the month.

Shares of Easterly traded down 3% as of 2 p.m. ET on Tuesday.

Resetting expectations

As its name implies, Easterly is a real estate investment trust (REIT) that is focused on government properties. The company has been in the spotlight of late due to the efforts of the Department of Government Efficiency (DOGE) to cut federal spending, including real estate.

Earlier this month, the REIT said it was reducing its quarterly dividend by 32% and implementing a 1-for-2.5 reverse stock split. CEO Darrell Crate said the move would align the company's dividend payout ratio with industry peers, but some investors had been attracted to Easterly thanks to its relatively high dividend yield. Shares lost 15% of their value on the announcement.

On Tuesday, the company reported first-quarter funds from operations (FFO) of $0.73 per share on revenue of $78.7 million. The FFO number, which is a REIT equivalent for earnings, matched expectations, while revenue missed by $1.3 million.

Is Easterly a buy?

Easterly is in the investor penalty box following the early April announcement, but the latest results at least provide for some hope that the company remains on track. Crate continues to believe it can be a net beneficiary from DOGE, saying, "We have observed the U.S. government to be more receptive to cost saving efforts than in the past" and said Washington could be interested in partnering with private real estate owners instead of relying on government-owned buildings.

The potential is there, but after a tumultuous April, Easterly has become a "show me" stock. Investors without a significant appetite for risk might want to limit this one to the watch list for now.