First Quarter 2024 Highlights
- Net Income Attributable to Common Stockholders of
$1.22 Per Diluted Share for First
Quarter 2024 Compared to $1.02 Per
Diluted Share for First Quarter 2023
- Funds from Operations ("FFO") Excluding Gain on Involuntary
Conversion and Business Interruption Claims of $1.98 Per Share for First Quarter 2024 Compared
to $1.82 Per Share for First Quarter
2023, an Increase of 8.8%
- Same Property Net Operating Income for the Same Property
Pool Excluding Income From Lease Terminations Increased 4.9% on a
Straight-Line Basis and 7.7% on a Cash Basis for First Quarter 2024
Compared to the Same Period in 2023
- Operating Portfolio was 98.0% Leased and 97.7% Occupied as
of March 31, 2024; Average Occupancy
of Operating Portfolio was 97.5% for First Quarter 2024 as Compared
to 98.1% for First Quarter 2023
- Rental Rates on New and Renewal Leases Increased an Average
of 57.8% on a Straight-Line Basis
- Acquired One Operating Property Containing 231,000 Square
Feet for Approximately $55
Million
- Acquired 34.3 Acres of Development Land for Approximately
$3 Million
- Started Construction of Two Development Projects Totaling
388,000 Square Feet with Projected Total Costs of Approximately
$52 Million
- Transferred One Development Project, which Contains 133,000
Square Feet and is 100% Leased, to the Operating Portfolio
- Sold a Portfolio of Operating Properties in the Jackson, MS Market Totaling 159,000 Square
Feet for Approximately $14 Million
(Gains of $9 Million Not Included in
FFO)
JACKSON,
Miss., April 23, 2024 /PRNewswire/
-- EastGroup Properties, Inc. (NYSE: EGP) (the "Company",
"we", "us" or "EastGroup") announced today the results of its
operations for the three months ended March 31, 2024.
Commenting on EastGroup's performance,
Marshall Loeb, CEO, stated, "Our
strong performance continues as evidenced by FFO per share rising
8.8% for the quarter excluding an involuntary conversion in first
quarter 2023. The industrial market remained resilient, producing a
number of other strong metrics, such as our percent leased, same
store net operating income growth, and quarterly releasing spreads.
The continued economic uncertainty is creating several outcomes,
such as longer leasing deliberations among our customers and
multiple consecutive quarters of significantly declining market
construction starts. Long term, I remain bullish on the continuing
external secular trends which benefit our shallow bay, last mile
Sunbelt market portfolio."
EARNINGS PER SHARE
Three Months Ended March 31,
2024
On a diluted per share basis, earnings per common share
("EPS") were $1.22 for the three
months ended March 31, 2024, compared to $1.02 for the same period of 2023. The increase
in EPS was primarily due to the following:
- The Company's property net operating income ("PNOI") increased
by $13,293,000 ($0.28 per share) for the three months ended
March 31, 2024, as compared to the
same period of 2023.
- EastGroup recognized gains on sales of real estate investments
of $8,751,000 ($0.18 per share) during the three months ended
March 31, 2024, compared to
$4,809,000 ($0.11 per share) during the three months ended
March 31, 2023.
- Interest expense decreased by $2,964,000 ($0.06
per share) during the three months ended March 31, 2024, as compared to the same period of
2023.
The increase in EPS was partially offset by the following:
- Depreciation and amortization expense increased by $4,155,000 ($0.09
per share) during the three months ended March 31, 2024, as compared to the same period of
2023.
- Weighted average shares increased by 4,138,000 on a diluted
basis during the three months ended March
31, 2024, as compared to the same period of 2023.
FUNDS FROM OPERATIONS AND PROPERTY NET
OPERATING INCOME
Three Months Ended March 31,
2024
For the three months ended March 31, 2024, funds
from operations attributable to common stockholders ("FFO") were
$1.98 per share compared to
$1.84 per share during the same
period of 2023, an increase of 7.6%.
FFO Excluding Gain on Involuntary Conversion and
Business Interruption Claims was $1.98 per share for the three months ended
March 31, 2024 compared to $1.82
per share for the same period of 2023, an increase of 8.8%.
PNOI increased by $13,293,000, or 13.6%, during the three months
ended March 31, 2024 compared to the same period of 2023. PNOI
increased $5,516,000 from newly
developed and value-add properties, $4,843,000 from same property operations (based
on the same property pool) and $3,397,000 from 2023 and 2024 acquisitions, and
decreased $493,000 from operating
properties sold in 2023 and 2024.
Same PNOI Excluding Income from Lease
Terminations increased 4.9% on a straight-line basis for the three
months ended March 31, 2024 compared to the same period of
2023; on a cash basis (excluding straight-line rent adjustments and
amortization of above/below market rent intangibles), Same PNOI
increased 7.7%.
On a straight-line basis, rental rates on new and
renewal leases (representing 3.6% of our total square footage)
increased an average of 57.8% during the three months ended
March 31, 2024.
The same property pool for the three months ended
March 31, 2024 includes properties which were included in the
operating portfolio for the entire period from January 1, 2023 through March 31, 2024; this
pool is comprised of properties containing 51,668,000 square
feet.
FFO, FFO Excluding Gain on Involuntary Conversion
and Business Interruption Claims, PNOI and Same PNOI are non-GAAP
financial measures, which are defined
under Definitions later in this
release. Reconciliations of Net Income to PNOI and Same
PNOI, and Net Income Attributable to EastGroup Properties, Inc.
Common Stockholders to FFO and FFO Excluding Gain on Involuntary
Conversion and Business Interruption Claims are presented in the
attached schedule "Reconciliations of GAAP to Non-GAAP
Measures."
ACQUISITIONS AND DISPOSITIONS
In January 2024,
EastGroup acquired Spanish Ridge Industrial Park, which consists of
three recently developed business distribution buildings totaling
231,000 square feet, for $54,859,000.
The buildings are located in the Southwest submarket of
Las Vegas and are 100% leased.
This acquisition increased the Company's ownership in Las Vegas to approximately 1,395,000 square
feet, which is currently 95.3% leased.
Also in January, the Company acquired Brightstar
Land, a 34.3 acre parcel of development land in the I-20 West
submarket of Atlanta for
$3,302,000. This site will
accommodate the planned future development of two buildings
containing approximately 315,000 square feet.
During the three months ended March 31,
2024, EastGroup sold a portfolio of properties in the Jackson, MS market in an effort to recycle
capital into higher performing markets. The properties total
159,000 square feet and were sold for $14,050,000 resulting in gains of $8,751,000. These gains are included
in Gain on sales of real estate investments and
are excluded from FFO.
Also, during March
2024, the Company sold a small parcel of land in
San Francisco, which was obtained
during the acquisition of Tulloch Corporation during 2022 and is
located in a submarket which is not a target location for
EastGroup. The 3.9 acre parcel was sold for $4,000,000. A gain of $222,000 was generated, which is included
in Other on the Consolidated Statements of Income
and Comprehensive Income and is excluded from FFO.
EastGroup has entered into an agreement to
purchase a 275,000 square foot newly constructed industrial
property in Raleigh for
approximately $54,000,000. This
property, which is 100% leased, represents the Company's entry into
the Raleigh-Durham market, which
has been a target market for EastGroup for several years.
DEVELOPMENT AND VALUE-ADD PROPERTIES
During the first quarter of 2024, EastGroup began
construction of two new development projects in San Antonio and Tampa, which will contain a total of 388,000
square feet and have projected total costs of $52,100,000.
The development projects started during 2024 are
detailed in the table below:
Development Projects Started in
2024
|
|
Location
|
|
Size
|
|
Anticipated
Conversion Date
|
|
Projected
Total Costs
|
|
|
|
|
(Square feet)
|
|
|
|
(In thousands)
|
Northeast Trade Center
1
|
|
San Antonio,
TX
|
|
264,000
|
|
04/2025
|
|
$
|
32,100
|
Crossroads 1
|
|
Tampa, FL
|
|
124,000
|
|
10/2025
|
|
20,000
|
Total
Development Projects Started
|
|
|
|
388,000
|
|
|
|
$
|
52,100
|
At March 31, 2024, EastGroup's development
and value-add program consisted of 19 projects (4,332,000 square
feet) in 13 markets. The projects, which were collectively 29%
leased as of April 22, 2024, have a projected total cost of
$611,200,000, of which $203,816,000 remained to be funded as of
March 31, 2024.
During the first quarter of 2024, EastGroup
transferred one project to the operating portfolio. The project,
known as Gateway 2, is located in Miami, contains 133,000 square feet and is
100% leased as of April 22, 2024.
The development and value-add properties
transferred to the operating portfolio during 2024 are detailed in
the table below:
Development and Value-Add
Properties Transferred to the
Operating Portfolio in 2024
|
|
Location
|
|
Size
|
|
Conversion
Date
|
|
Cumulative
Cost as of
3/31/24
|
|
Percent
Leased as
of 4/22/24
|
|
|
|
|
(Square feet)
|
|
|
|
(In thousands)
|
|
|
Gateway 2
|
|
Miami, FL
|
|
133,000
|
|
02/2024
|
|
$
|
22,228
|
|
|
100 %
|
Projected Stabilized Yield(1)
|
|
8.5 %
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Weighted average
yield based on projected stabilized annual property net operating
income on a straight-line basis at 100% occupancy divided by
projected total costs.
|
DIVIDENDS
EastGroup declared a cash dividend of
$1.27 per share in the first quarter
of 2024. The first quarter dividend, which was paid on April 15, 2024, was the Company's 177th
consecutive quarterly cash distribution to
shareholders. The Company has increased or maintained
its dividend for 31 consecutive years and has increased it 28 years
over that period, including increases in each of the last 12
years. The annualized dividend rate of $5.08 per share yielded 3.1% on the closing stock
price of $163.34 on April 22,
2024.
FINANCIAL STRENGTH AND FLEXIBILITY
EastGroup continues to maintain a strong and
flexible balance sheet. Debt-to-total market
capitalization was 16.3% at March 31, 2024. The
Company's interest and fixed charge coverage ratio was 10.43x for
the three months ended March 31, 2024. The Company's ratio of
debt to earnings before interest, taxes, depreciation and
amortization for real estate ("EBITDAre") was 3.99x for the three
months ended March 31, 2024. EBITDAre and the Company's
interest and fixed charge coverage ratio are non-GAAP financial
measures defined under Definitions later in this
release. Refer to the schedule "Reconciliations of GAAP to Non-GAAP
Measures" attached for the calculation of the Company's interest
and fixed charge coverage ratio, the debt to EBITDAre ratio, and
the reconciliation of Net Income to EBITDAre.
During the three months ended March 31,
2024, the Company entered into forward equity sales agreements with
respect to 286,671 shares of common stock with an initial weighted
average forward price of $181.95 per
share. The Company did not receive any proceeds from the sale of
common shares by the forward purchasers at the time it entered into
forward equity sale agreements.
During the first quarter, EastGroup settled
outstanding forward equity sale agreements that were previously
entered into under its continuous common equity offering program by
issuing 272,342 shares of common stock in exchange for net proceeds
of approximately $49,294,000.
Subsequent to quarter-end, the Company settled additional
outstanding forward equity sale agreements by issuing 133,699
shares of common stock in exchange for approximate net proceeds of
$24,496,000.
As of April 22,
2024, EastGroup has 286,671 shares of common stock available
for settlement prior to the expiration of the applicable settlement
period, ranging from February 2025
through April 2025, for approximate
net proceeds of $51,600,000, based on
a weighted average forward price of $180.00 per share.
During the three months ended March 31,
2024, the Company only utilized the forward component of its
continuous common equity program as noted above, and did not sell
any shares of its common stock directly through sales agents.
OUTLOOK FOR 2024
We estimate EPS for 2024 to be in the range of
$4.45 to $4.65 and FFO per share attributable to common
stockholders for 2024 to be in the range of $8.17 to $8.37. The
table below reconciles projected net income attributable to common
stockholders to projected FFO. The Company is providing a
projection of estimated net income attributable to common
stockholders solely to satisfy the disclosure requirements of the
U.S. Securities and Exchange Commission.
EastGroup's projections are based on management's
current beliefs and assumptions about our business, the industry
and the markets in which we operate; there are known and unknown
risks and uncertainties associated with these projections. We
assume no obligation to update publicly any forward-looking
statements, including our Outlook for 2024, whether as a result of
new information, future events or otherwise. Please refer to the
"Forward-Looking Statements" disclosures included in this earnings
release and "Risk Factors" disclosed in our annual and quarterly
reports filed with the Securities and Exchange Commission for more
information.
The following table
presents the guidance range for 2024:
|
|
|
|
|
|
|
|
|
|
|
|
Low Range
|
|
High Range
|
|
|
Q2 2024
|
|
Y/E 2024
|
|
Q2 2024
|
|
Y/E 2024
|
|
|
(In thousands, except per share
data)
|
Net income attributable
to common stockholders
|
|
$
|
49,773
|
|
|
216,899
|
|
|
53,641
|
|
|
226,638
|
|
Depreciation and
amortization
|
|
46,540
|
|
|
189,671
|
|
|
46,540
|
|
|
189,671
|
|
Gain on sales of real
estate investments and non-operating real estate
|
|
—
|
|
|
(8,973)
|
|
|
—
|
|
|
(8,973)
|
|
Funds from operations
attributable to common stockholders*
|
|
$
|
96,313
|
|
|
397,597
|
|
|
100,181
|
|
|
407,336
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - Diluted
|
|
48,342
|
|
|
48,695
|
|
|
48,342
|
|
|
48,695
|
|
Per share data
(diluted):
|
|
|
|
|
|
|
|
|
Net
income attributable to common stockholders
|
|
$
|
1.03
|
|
|
4.45
|
|
|
1.11
|
|
|
4.65
|
|
Funds
from operations attributable to common stockholders
|
|
1.99
|
|
|
8.17
|
|
|
2.07
|
|
|
8.37
|
|
|
*This is a non-GAAP
financial measure. Please refer to Definitions.
|
The following
assumptions were used for the mid-point:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metrics
|
|
Revised Guidance
for Year 2024
|
|
Initial Guidance for
Year 2024
|
|
Actual for Year
2023
|
FFO per
share
|
|
$8.17 -
$8.37
|
|
$8.17 -
$8.37
|
|
$7.79
|
FFO per share increase
over prior year
|
|
6.2 %
|
|
6.2 %
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share increase
over prior year excluding
gain on
involuntary conversion and business
interruption
claims
|
|
7.4 %
|
|
7.4 %
|
|
10.0 %
|
Same PNOI growth: cash
basis(1)
|
|
5.5% -
6.5%(2)
|
|
5.5% -
6.5%(2)
|
|
8.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average month-end
occupancy - operating portfolio
|
|
96.5% -
97.5%
|
|
96.5% -
97.5%
|
|
98.0 %
|
Lease termination fee
income
|
|
$830,000
|
|
$750,000
|
|
$1.0
million
|
Reserves of
uncollectible rent
(Currently no identified bad debt for
Q2-Q4)
|
|
$2.5
million
|
|
$2.0
million
|
|
$1.5
million
|
Development
starts:
|
|
|
|
|
|
|
Square feet
|
|
1.9
million
|
|
2.1
million
|
|
2.4
million
|
Projected total
investment
|
|
$260
million
|
|
$300
million
|
|
$363
million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating property
acquisitions
|
|
$160
million
|
|
$130
million
|
|
$165
million
|
Operating property
dispositions
(Potential gains
on dispositions are not included in the projections)
|
|
$15
million
|
|
$35
million
|
|
$38
million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
proceeds
|
|
$490
million
|
|
$465
million
|
|
$799
million
|
General and
administrative expense
|
|
$20.8
million
|
|
$19.9
million
|
|
$16.8
million
|
|
|
(1)
|
Excludes
straight-line rent adjustments, amortization of market rent
intangibles for acquired leases and income from lease
terminations.
|
(2)
|
Includes properties
which have been in the operating portfolio since 1/1/23 and are
projected to be in the operating portfolio through 12/31/24;
includes 51,668,000 square feet.
|
DEFINITIONS
The Company's chief decision makers use two
primary measures of operating results in making decisions: (1)
funds from operations attributable to common stockholders ("FFO"),
including FFO as adjusted as described below, and (2) property net
operating income ("PNOI"), as defined below.
FFO is computed in accordance with standards
established by the National Association of Real Estate Investment
Trusts, Inc. ("Nareit"). Nareit's guidance allows preparers
an option as it pertains to whether gains or losses on sale, or
impairment charges, on real estate assets incidental to a real
estate investment trust's ("REIT's") business are excluded from the
calculation of FFO. EastGroup has made the election to exclude
activity related to such assets that are incidental to our
business. FFO is calculated as net income (loss) attributable to
common stockholders computed in accordance with U.S. generally
accepted accounting principles ("GAAP"), excluding gains and losses
from sales of real estate property (including other assets
incidental to the Company's business) and impairment losses,
adjusted for real estate related depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint
ventures.
FFO Excluding Gain on Involuntary Conversion and
Business Interruption Claims is calculated as FFO (as defined
above), adjusted to exclude gains on involuntary conversion and
business interruption claims. The Company believes that this
exclusion presents a more meaningful comparison of operating
performance across periods.
PNOI is defined as Income from real
estate operations less Expenses from real estate
operations (including market-based internal management fee
expense) plus the Company's share of income and property operating
expenses from its less-than-wholly-owned real estate investments.
EastGroup sometimes refers to PNOI from Same Properties as "Same
PNOI" in this press release and the accompanying reconciliation;
the Company also presents Same PNOI Excluding Income from Lease
Terminations. The Company presents Same PNOI and Same PNOI
Excluding Income from Lease Terminations as a property-level
supplemental measure of performance used to evaluate the
performance of the Company's investments in real estate assets and
its operating results on a same property basis. The Company
believes it is useful to evaluate Same PNOI Excluding Income from
Lease Terminations on both a straight-line and cash basis. The
straight-line basis is calculated by averaging the customers' rent
payments over the lives of the leases; GAAP requires the
recognition of rental income on a straight-line basis. The cash
basis excludes adjustments for straight-line rent and amortization
of market rent intangibles for acquired leases; cash basis is an
indicator of the rents charged to customers by the Company during
the periods presented and is useful in analyzing the embedded rent
growth in the Company's portfolio. "Same Properties" is defined as
operating properties owned during the entire current period and
prior year reporting period. Operating properties are stabilized
real estate properties (land including building and improvements)
that make up the Company's operating portfolio. Properties
developed or acquired are excluded from the same property pool
until held in the operating portfolio for both the current and
prior year reporting periods. Properties sold during the current or
prior year reporting periods are also excluded.
FFO and PNOI are supplemental industry reporting
measurements used to evaluate the performance of the Company's
investments in real estate assets and its operating results. The
Company believes that the exclusion of depreciation and
amortization in the industry's calculations of PNOI and FFO
provides supplemental indicators of the properties' performance
since real estate values have historically risen or fallen with
market conditions. PNOI and FFO as calculated by the
Company may not be comparable to similarly titled but differently
calculated measures for other REITs. Investors should be
aware that items excluded from or added back to FFO are significant
components in understanding and assessing the Company's financial
performance.
The Company's chief decision makers also use
Earnings Before Interest, Taxes, Depreciation and Amortization for
Real Estate ("EBITDAre") in making decisions. EBITDAre is computed
in accordance with standards established by Nareit and defined as
Net Income, adjusted for gains and losses from sales of real estate
investments, non-operating real estate and other assets incidental
to the Company's business, interest expense, income tax expense,
depreciation and amortization. EBITDAre is a non-GAAP financial
measure used to measure the Company's operating performance and its
ability to meet interest payment obligations and pay quarterly
stock dividends on an unleveraged basis.
EastGroup's chief decision makers also use its
Debt-to-EBITDAre ratio, a non-GAAP financial measure calculated by
dividing the Company's debt by its EBITDAre, in analyzing the
financial condition and operating performance of the Company
relative to its leverage.
The Company's interest and fixed charge coverage
ratio is a non-GAAP financial measure calculated by dividing the
Company's EBITDAre by its interest expense. We believe this ratio
is useful to investors because it provides a basis for analysis of
the Company's leverage, operating performance and its ability to
service the interest payments due on its debt.
CONFERENCE CALL
EastGroup will host a conference call and webcast
to discuss the results of its first quarter, review the Company's
current operations, and present its revised earnings outlook for
2024 on Wednesday, April 24, 2024, at
11:00 a.m. Eastern Time. A
live broadcast of the conference call is available by dialing
1-800-836-8184 (conference ID: EastGroup) or by webcast through a
link on the Company's website at www.eastgroup.net. If
you are unable to listen to the live conference call, a telephone
and webcast replay will be available until Wednesday, May 1, 2024. The telephone
replay can be accessed by dialing 1-888-660-6345 (access code
35571#), and the webcast replay can be accessed through a link on
the Company's website at www.eastgroup.net.
SUPPLEMENTAL INFORMATION
Supplemental financial information is available
under Quarterly Results in the Investor Relations section of the
Company's website at www.eastgroup.net or upon request by calling
the Company at 601-354-3555.
COMPANY INFORMATION
EastGroup Properties, Inc. (NYSE: EGP), a member
of the S&P Mid-Cap 400 and Russell 1000 Indexes, is a
self-administered equity real estate investment trust focused on
the development, acquisition and operation of industrial properties
in major Sunbelt markets throughout the
United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The
Company's goal is to maximize shareholder value by being a leading
provider in its markets of functional, flexible and quality
business distribution space for location sensitive customers
(primarily in the 20,000 to 100,000 square foot
range). The Company's strategy for growth is based on
ownership of premier distribution facilities generally clustered
near major transportation features in supply-constrained
submarkets. The Company's portfolio, including
development projects and value-add acquisitions in lease-up and
under construction, currently includes approximately 59.7 million
square feet. EastGroup Properties, Inc. press releases
are available on the Company's website at www.eastgroup.net.
The Company announces information about the
Company and its business to investors and the public using the
Company's website (eastgroup.net), including the investor relations
website (investor.eastgroup.net), filings with the Securities and
Exchange Commission, press releases, public conference calls, and
webcasts. The Company also uses social media to communicate with
its investors and the public. While not all the information that
the Company posts to the Company's website or on the Company's
social media channels is of a material nature, some information
could be deemed to be material. Therefore, the Company encourages
investors, the media, and others interested in the Company to
review the information that it posts on the social media channels,
including Facebook (facebook.com/eastgroupproperties), X
(twitter.com/eastgroupprop), and LinkedIn
(linkedin.com/company/eastgroup-properties-inc). The list of social
media channels that the company uses may be updated on its investor
relations website from time to time. The information contained on,
or that may be accessed through, our website or any of our social
media channels is not incorporated by reference into, and is not a
part of, this document.
FORWARD-LOOKING STATEMENTS
The statements and certain other information
contained in this press release, which can be identified by the use
of forward-looking terminology such as "may," "will," "seek,"
"expects," "anticipates," "believes," "targets," "intends,"
"should," "estimates," "could," "continue," "assume," "projects,"
"goals," "plans" or variations of such words and similar
expressions or the negative of such words, constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to the
safe harbors created thereby. These forward-looking statements
reflect the Company's current views about its plans, intentions,
expectations, strategies and prospects, which are based on the
information currently available to the Company and on assumptions
it has made. For instance, the amount, timing and frequency of
future dividends is subject to authorization by the Company's Board
of Directors and will be based upon a variety of factors. Although
the Company believes that its plans, intentions, expectations,
strategies and prospects as reflected in or suggested by those
forward-looking statements are reasonable, the Company can give no
assurance that such plans, intentions, expectations or strategies
will be attained or achieved. Furthermore, these forward-looking
statements should be considered as subject to the many risks and
uncertainties that exist in the Company's operations and business
environment. Such risks and uncertainties could cause actual
results to differ materially from those projected. These
uncertainties include, but are not limited to:
- international, national, regional and local economic
conditions;
- disruption in supply and delivery chains;
- construction costs could increase as a result of inflation
impacting the costs to develop properties;
- the competitive environment in which the Company operates;
- fluctuations of occupancy or rental rates;
- potential defaults (including bankruptcies or insolvency) on or
non-renewal of leases by tenants, or our ability to lease space at
current or anticipated rents, particularly in light of the impacts
of inflation;
- potential changes in the law or governmental regulations and
interpretations of those laws and regulations, including changes in
real estate laws, REIT or corporate income tax laws, potential
changes in zoning laws, or increases in real property tax rates,
and any related increased cost of compliance;
- our ability to maintain our qualification as a REIT;
- acquisition and development risks, including failure of such
acquisitions and development projects to perform in accordance with
projections;
- natural disasters such as fires, floods, tornadoes, hurricanes
and earthquakes;
- pandemics, epidemics or other public health emergencies, such
as the coronavirus pandemic;
- availability of financing and capital, increase in interest
rates, and ability to raise equity capital on attractive
terms;
- financing risks, including the risks that our cash flows from
operations may be insufficient to meet required payments of
principal and interest, and we may be unable to refinance our
existing debt upon maturity or obtain new financing on attractive
terms or at all;
- our ability to retain our credit agency ratings;
- our ability to comply with applicable financial covenants;
- credit risk in the event of non-performance by the
counterparties to our interest rate swaps;
- how and when pending forward equity sales may settle;
- lack of or insufficient amounts of insurance;
- litigation, including costs associated with prosecuting or
defending claims and any adverse outcomes;
- our ability to attract and retain key personnel;
- risks related to the failure, inadequacy or interruption of our
data security systems and processes;
- potentially catastrophic events such as acts of war, civil
unrest and terrorism; and
- environmental liabilities, including costs, fines or penalties
that may be incurred due to necessary remediation of contamination
of properties presently owned or previously owned by us.
All forward-looking statements should be read in
light of the risks identified in Part I, Item 1A. Risk Factors
within the Company's most recent Annual Report on Form 10-K, as
such factors may be updated from time to time in the Company's
periodic filings and current reports filed with the SEC.
The Company assumes no obligation to update
publicly any forward-looking statements, including its Outlook for
2024, whether as a result of new information, future events or
otherwise.
EASTGROUP PROPERTIES, INC. AND
SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
|
(UNAUDITED)
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
REVENUES
|
|
|
|
|
Income from real estate
operations
|
|
$
|
154,074
|
|
|
133,964
|
|
Other
revenue
|
|
150
|
|
|
1,061
|
|
|
|
154,224
|
|
|
135,025
|
|
EXPENSES
|
|
|
|
|
Expenses from real
estate operations
|
|
43,003
|
|
|
36,186
|
|
Depreciation and
amortization
|
|
45,169
|
|
|
41,014
|
|
General and
administrative
|
|
6,681
|
|
|
5,204
|
|
Indirect leasing
costs
|
|
177
|
|
|
140
|
|
|
|
95,030
|
|
|
82,544
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Interest
expense
|
|
(10,061)
|
|
|
(13,025)
|
|
Gain on sales of real
estate investments
|
|
8,751
|
|
|
4,809
|
|
Other
|
|
774
|
|
|
439
|
|
NET INCOME
|
|
58,658
|
|
|
44,704
|
|
Net income attributable
to noncontrolling interest in joint ventures
|
|
(14)
|
|
|
(14)
|
|
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
|
|
58,644
|
|
|
44,690
|
|
Other comprehensive
income (loss) — interest rate swaps
|
|
5,894
|
|
|
(10,262)
|
|
TOTAL COMPREHENSIVE INCOME
|
|
$
|
64,538
|
|
|
34,428
|
|
|
|
|
|
|
BASIC PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
|
1.23
|
|
|
1.02
|
|
Weighted average shares
outstanding — Basic
|
|
47,860
|
|
|
43,751
|
|
DILUTED PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
|
1.22
|
|
|
1.02
|
|
Weighted average shares
outstanding — Diluted
|
|
47,961
|
|
|
43,823
|
|
EASTGROUP PROPERTIES, INC. AND
SUBSIDIARIES
|
RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
|
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
|
|
$
|
58,644
|
|
|
44,690
|
|
Depreciation and
amortization
|
|
45,169
|
|
|
41,014
|
|
Company's share of
depreciation from unconsolidated investment
|
|
31
|
|
|
31
|
|
Depreciation and
amortization from noncontrolling interest
|
|
(1)
|
|
|
(1)
|
|
Gain on sales of real
estate investments
|
|
(8,751)
|
|
|
(4,809)
|
|
Gain on sales of
non-operating real estate
|
|
(222)
|
|
|
(81)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS FROM OPERATIONS ("FFO") ATTRIBUTABLE TO COMMON
STOCKHOLDERS*
|
|
94,870
|
|
|
80,844
|
|
Gain on involuntary
conversion and business interruption claims
|
|
—
|
|
|
(1,027)
|
|
FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS - EXCLUDING
GAIN ON INVOLUNTARY CONVERSION AND BUSINESS INTERRUPTION
CLAIMS*
|
|
$
|
94,870
|
|
|
79,817
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
58,658
|
|
|
44,704
|
|
Interest
expense (1)
|
|
10,061
|
|
|
13,025
|
|
Depreciation and
amortization
|
|
45,169
|
|
|
41,014
|
|
Company's share of
depreciation from unconsolidated investment
|
|
31
|
|
|
31
|
|
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA")
|
|
113,919
|
|
|
98,774
|
|
Gain on sales of real
estate investments
|
|
(8,751)
|
|
|
(4,809)
|
|
Gain on sales of
non-operating real estate
|
|
(222)
|
|
|
(81)
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA FOR REAL ESTATE
("EBITDAre")*
|
|
$
|
104,946
|
|
|
93,884
|
|
|
|
|
|
|
Debt
|
|
$
|
1,675,292
|
|
|
1,797,595
|
|
Debt-to-EBITDAre ratio*
|
|
3.99
|
|
|
4.79
|
|
|
|
|
|
|
EBITDAre*
|
|
$
|
104,946
|
|
|
93,884
|
|
Interest
expense (1)
|
|
10,061
|
|
|
13,025
|
|
Interest and fixed charge coverage
ratio*
|
|
10.43
|
|
|
7.21
|
|
|
|
|
|
|
DILUTED PER COMMON SHARE DATA FOR EASTGROUP
PROPERTIES, INC. COMMON STOCKHOLDERS
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
|
1.22
|
|
|
1.02
|
|
FFO attributable to
common stockholders*
|
|
$
|
1.98
|
|
|
1.84
|
|
FFO attributable to
common stockholders - excluding gain on involuntary conversion and
business interruption claims*
|
|
$
|
1.98
|
|
|
1.82
|
|
Weighted average shares
outstanding for EPS and FFO purposes - Diluted
|
|
47,961
|
|
|
43,823
|
|
|
|
|
|
|
|
(1) Net of capitalized interest of $4,853 and
$3,735 for the three months ended March 31, 2024 and 2023,
respectively.
|
*This is a non-GAAP financial measure. Please refer to
Definitions.
|
|
|
|
|
|
EASTGROUP PROPERTIES, INC. AND
SUBSIDIARIES
|
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
(Continued)
|
(IN THOUSANDS)
|
(UNAUDITED)
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
|
|
|
|
|
NET INCOME
|
|
$
|
58,658
|
|
|
44,704
|
|
Gain on sales of real
estate investments
|
|
(8,751)
|
|
|
(4,809)
|
|
Gain on sales of
non-operating real estate
|
|
(222)
|
|
|
(81)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
(275)
|
|
|
(81)
|
|
Other
revenue
|
|
(150)
|
|
|
(1,061)
|
|
Indirect leasing
costs
|
|
177
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
45,169
|
|
|
41,014
|
|
Company's share of
depreciation from unconsolidated investment
|
|
31
|
|
|
31
|
|
Interest
expense (1)
|
|
10,061
|
|
|
13,025
|
|
General and
administrative expense (2)
|
|
6,681
|
|
|
5,204
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest
in PNOI of consolidated joint ventures
|
|
(16)
|
|
|
(16)
|
|
PROPERTY NET OPERATING INCOME
("PNOI")*
|
|
111,363
|
|
|
98,070
|
|
PNOI from 2023 and 2024
acquisitions
|
|
(3,397)
|
|
|
—
|
|
PNOI from 2023 and 2024
development and value-add properties
|
|
(6,555)
|
|
|
(1,039)
|
|
PNOI from 2023 and 2024
operating property dispositions
|
|
(177)
|
|
|
(670)
|
|
Other PNOI
|
|
81
|
|
|
111
|
|
SAME PNOI (Straight-Line
Basis)*
|
|
101,315
|
|
|
96,472
|
|
Lease termination fee
income from same properties
|
|
(147)
|
|
|
(55)
|
|
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS
(Straight-Line Basis)*
|
|
101,168
|
|
|
96,417
|
|
Straight-line rent
adjustments for same properties
|
|
(423)
|
|
|
(2,766)
|
|
Acquired leases -
market rent adjustment amortization for same properties
|
|
(409)
|
|
|
(520)
|
|
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS
(Cash Basis)*
|
|
$
|
100,336
|
|
|
93,131
|
|
|
(1) Net of capitalized interest of $4,853 and
$3,735 for the three months ended March 31, 2024 and 2023,
respectively.
|
(2) Net of capitalized development costs of $2,223
and $2,455 for the three months ended March 31, 2024 and 2023,
respectively.
|
*This is a non-GAAP financial measure. Please refer to
Definitions.
|
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SOURCE EastGroup Properties