8-K
EASTGROUP PROPERTIES INC (EGP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 26, 2022
EASTGROUP PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
| Maryland | 1-07094 | 13-2711135 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157
(Address of Principal Executive Offices, including zip code)
(601) 354-3555
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.0001 par value per share | EGP | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1 of 2 Pages
ITEM 2.02 Results of Operations and Financial Condition
On April 26, 2022, EastGroup Properties, Inc. (the "Company") furnished the following documents: (i) a press release relating to its results of operations for the quarter ended March 31, 2022 and related matters; and (ii) quarterly supplemental financial information for the fiscal quarter ended March 31, 2022. A copy of the press release as well as a copy of the supplemental financial information are made available on the Company's website and are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.
The information furnished in this Item 2.02 and in the attached Exhibits 99.1 and 99.2 is deemed to be "furnished" and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated April 26, 2022. |
| 99.2 | Quarterly Supplemental Information for the Quarter Ended March 31, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 26, 2022
| EASTGROUP PROPERTIES, INC. |
|---|
| By: /s/ BRENT W. WOOD |
| Brent W. Wood<br>Executive Vice President, Chief Financial Officer and Treasurer |
2 of 2 Pages
Document
| Exhibit 99.1 | ||
|---|---|---|
| Contact: | ||
| --- | --- | --- |
| Marshall Loeb, President and CEO | ||
| Brent Wood, CFO | ||
| EastGroup Properties Announces | (601) 354-3555 | |
| First Quarter 2022 Results |
First Quarter 2022 Results
•Net Income Attributable to Common Stockholders of $1.54 Per Diluted Share for First Quarter 2022 Compared to $0.69 Per Diluted Share for First Quarter 2021 (Gains on Sales of Real Estate Investments Were $30 Million, or $0.73 Per Diluted Share, for First Quarter 2022; There Were No Sales in First Quarter 2021)
•Funds from Operations of $1.68 Per Share for First Quarter 2022 Compared to $1.45 Per Share for First Quarter 2021, an Increase of 15.9%
•Same Property Net Operating Income for the Same Property Pool Excluding Income From Lease Terminations Increased 8.5% on a Cash Basis and 7.4% on a Straight-Line Basis for First Quarter 2022 Compared to the Same Period in 2021
•The Operating Portfolio was 98.8% Leased and 97.9% Occupied as of March 31, 2022; Average Occupancy of the Operating Portfolio was 97.3% for First Quarter 2022
•Rental Rates on New and Renewal Leases Increased an Average of 33.5% on a Straight-Line Basis
•Acquired 516,000 Square Feet of Value-Add Properties for $54 Million
•Acquired 50 Acres of Development Land for $14 Million
•Started Construction of Six Development Projects Containing 953,000 Square Feet with Projected Total Costs of $104 Million
•Transferred Two 100% Leased Development and Value-Add Projects Totaling 675,000 Square Feet to the Operating Portfolio
•Development and Value-Add Program Consisted of 26 Projects in 14 Cities (4.7 Million Square Feet) at March 31, 2022 with a Projected Total Investment of $589 Million
•Sold Two Operating Properties Containing 245,000 Square Feet for $39 Million (Gains of $30 Million Not Included in FFO)
•Declared 169th Consecutive Quarterly Cash Dividend: $1.10 Per Share
•Closed $250 Million of Unsecured Debt During the Quarter with a Weighted Average Effective Fixed Interest Rate of 3.04%
•Refinanced a $100 Million Senior Unsecured Term Loan with Five Years Remaining, Reducing the Effective Fixed Interest Rate by 60 Basis Points to 1.80%
•Repaid a $75 Million Unsecured Term Loan During the Quarter with a Fixed Interest Rate of 3.03%
•Issued 385,538 Shares of Common Stock Pursuant to the Company’s Continuous Common Equity Offering Program at an Average Price of $194.53 Per Share for Aggregate Net Proceeds of $74 Million
JACKSON, MISSISSIPPI, April 26, 2022 - 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, 2022.
Commenting on EastGroup’s performance, Marshall Loeb, CEO, stated, “Our team and our portfolio came out of the gate with a very strong start to 2022. We continue to see strength in the industrial market and a favorable supply/demand balance in our markets. As a result, we remain bullish on the continued growth prospects for our shallow bay, last mile Sunbelt market portfolio.”
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 1
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (“EPS”) were $1.54 for the three months ended March 31, 2022, compared to $0.69 for the same period of 2021. The Company’s property net operating income (“PNOI”) increased by $11,860,000 ($0.29 per share) for the three months ended March 31, 2022, as compared to the same period of 2021. EastGroup recognized gains on sales of real estate investments of $30,352,000 ($0.73 per share) during the three months ended March 31, 2022; there were no sales during the same period of 2021. In addition, depreciation and amortization expense increased by $6,028,000 ($0.15 per share) during the three months ended March 31, 2022, as compared to the same period of 2021.
FUNDS FROM OPERATIONS AND PROPERTY NET OPERATING INCOME
For the three months ended March 31, 2022, funds from operations attributable to common stockholders (“FFO”) were $1.68 per share compared to $1.45 per share during the same period of 2021, an increase of 15.9%.
PNOI increased by $11,860,000, or 16.9%, during the three months ended March 31, 2022, compared to the same period of 2021. PNOI increased $5,548,000 from newly developed and value-add properties, $4,665,000 from same property operations (based on the same property pool), and $2,404,000 from 2021 acquisitions; PNOI decreased $692,000 from operating properties sold in 2021 and 2022.
The same property pool PNOI Excluding Income from Lease Terminations increased 7.4% on a straight-line basis for the three months ended March 31, 2022, compared to the same period of 2021; on a cash basis (excluding straight-line rent adjustments and amortization of above/below market rent intangibles), Same PNOI increased 8.5%.
On a straight-line basis, rental rates on new and renewal leases (5.4% of total square footage) increased an average of 33.5% during the three months ended March 31, 2022.
The same property pool for the three months ended March 31, 2022 includes properties which were included in the operating portfolio for the entire period from January 1, 2021 through March 31, 2022; this pool is comprised of properties containing 43,391,000 square feet.
FFO, 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 are presented in the attached schedule “Reconciliations of GAAP to Non-GAAP Measures.”
ACQUISITIONS AND DISPOSITIONS
During February, the Company acquired 50 acres of development land in Phoenix for $13,588,000. The land, known as Gateway Interchange Land, is located near the entrance to the Mesa Gateway Airport. The Company has future plans to construct seven buildings totaling approximately 650,000 square feet on this site. Subsequent to quarter-end, EastGroup closed on the acquisition of Mesa Gateway Commerce Park, near this development land in Mesa, for approximately $18,300,000. This recently constructed 147,000 square foot building is currently in the lease-up phase of the development and value-add portfolio.
In March, EastGroup purchased two business distribution buildings totaling 516,000 square feet for $54,462,000 in the North submarket of Houston. The buildings, known as Cypress Preserve 1 & 2, are currently 50% leased and are in the lease-up phase of the development and value-add portfolio. The properties are located in between two land parcels totaling 26 acres, which EastGroup acquired in April 2022 for approximately $7,800,000. These acquisitions will allow the Company to create and control a multi-building industrial project in a business park setting in this submarket of Houston.
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 2
Subsequent to quarter-end, the Company acquired Zephyr Distribution Center in the Hayward submarket within the San Francisco Bay area, near 13 other EastGroup owned properties totaling 943,000 square feet, which are currently 100% leased. The 82,000 square foot distribution building was acquired for $28,500,000, is currently 42% leased, and is in the lease-up phase of the development and value-add portfolio.
In January, the Company sold Metro Business Park, a five building, 189,000 square foot service center located in Phoenix, for $33,510,000. The sale generated a gain of $26,971,000, which is included in Gain on sales of real estate investments; this gain is excluded from FFO.
Additionally, in March, EastGroup sold Cypress Creek Business Park, a two building service center totaling 56,000 square feet in Fort Lauderdale, Florida. These properties, which were located on a ground lease, were sold for $5,600,000 and generated a gain of $3,381,000, which is included in Gain on sales of real estate investments; this gain is excluded from FFO.
DEVELOPMENT AND VALUE-ADD PROPERTIES
During the first quarter of 2022, EastGroup began construction of six new development projects in six different cities. The buildings will contain a total of 953,000 square feet and have projected total costs of $103,900,000.
The development projects started during the first three months of 2022 are detailed in the table below:
| Development Projects Started in 2022 | Location | Size | Anticipated Conversion Date | Projected Total Costs | |
|---|---|---|---|---|---|
| (Square feet) | (In thousands) | ||||
| World Houston 47 | Houston, TX | 139,000 | 12/2022 | $ | 19,100 |
| Arlington Tech 3 | Fort Worth, TX | 77,000 | 10/2023 | 10,300 | |
| Horizon West 4 | Orlando, FL | 295,000 | 10/2023 | 28,700 | |
| SunCoast 11 | Fort Myers, FL | 79,000 | 10/2023 | 9,900 | |
| Hillside 1 | Greenville, SC | 122,000 | 12/2023 | 11,600 | |
| Steele Creek 11 & 12 | Charlotte, NC | 241,000 | 01/2024 | 24,300 | |
| Total Development Projects Started | 953,000 | $ | 103,900 |
At March 31, 2022, EastGroup’s development and value-add program consisted of 26 projects (4,699,000 square feet) in 14 cities. The projects, which were collectively 55% leased as of April 25, 2022, have a projected total cost of $588,700,000, of which $168,600,000 remained to be funded as of March 31, 2022.
During the first quarter of 2022, EastGroup transferred two projects to the operating portfolio (at the earlier of 90% occupancy or one year after completion/value-add acquisition date). The projects, which are located in Greenville and San Diego, contain 675,000 square feet and were collectively 100% leased as of April 25, 2022.
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 3
The development and value-add properties transferred to the operating portfolio during the first three months of 2022 are detailed in the table below:
| Development and Value-Add Properties Transferred to the Operating Portfolio in 2022 | Location | Size | Conversion Date | Cumulative Cost as of 3/31/22 | Percent Leased as of 4/25/22 | |
|---|---|---|---|---|---|---|
| (Square feet) | (In thousands) | |||||
| Access Point 1 (1) | Greenville, SC | 156,000 | 01/2022 | $ | 12,877 | 100% |
| Speed Distribution Center | San Diego, CA | 519,000 | 03/2022 | 72,948 | 100% | |
| Total Projects Transferred | 675,000 | $ | 85,825 | 100% | ||
| Projected Stabilized Yield (2) | 7.0% |
(1) This value-add project was acquired by EastGroup.
(2) Weighted average yield based on estimated annual property net operating income on a straight-line basis at 100% occupancy divided by
projected total costs.
Subsequent to quarter-end, EastGroup began construction of Horizon West 1 in Orlando, which will contain 97,000 square feet and has a projected total cost of $13,200,000.
DIVIDENDS
EastGroup declared a cash dividend of $1.10 per share in the first quarter of 2022. The first quarter dividend, which was paid on April 14, 2022, was the Company’s 169th consecutive quarterly cash distribution to shareholders. The Company has increased or maintained its dividend for 29 consecutive years and has increased it 26 years over that period, including increases in each of the last 10 years. The annualized dividend rate of $4.40 per share yielded 2.1% on the closing stock price of $205.84 on April 25, 2022.
FINANCIAL STRENGTH AND FLEXIBILITY
EastGroup continues to maintain a strong and flexible balance sheet. Debt-to-total market capitalization was 14.8% at March 31, 2022. For the first quarter of 2022, the Company’s interest and fixed charge coverage ratio was 9.58x and its ratio of debt to earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) was 4.71x. EBITDAre is a non-GAAP financial measure defined under Definitions later in this release. A reconciliation of Net Income to EBITDAre is presented in the attached schedule “Reconciliations of GAAP to Non-GAAP Measures.”
During the first quarter, EastGroup issued and sold 385,538 shares of common stock under its continuous common equity offering program at an average price of $194.53 per share, providing aggregate net proceeds to the Company of approximately $74,179,000.
In March 2022, the Company closed a $100,000,000 senior unsecured term loan with interest only payments, which bears interest at the annual rate of SOFR plus an applicable margin based on the Company’s senior unsecured long-term debt rating and consolidated leverage ratio. The loan has a maturity date of September 29, 2028, providing a 6.5 year term. The Company also entered into an interest rate swap agreement to convert the loan’s SOFR rate component to a fixed interest rate for the entire term of the loan, providing a total effective fixed interest rate of 3.06%.
Also during March 2022, the Company closed on the refinance of a $100,000,000 senior unsecured term loan with five years remaining. The maturity date remains March 25, 2027, which is unchanged from the original terms. The amended term loan provides for interest only payments currently at an interest rate of SOFR plus 85 basis points, based on the Company’s current credit ratings and consolidated leverage ratio, which is a 60 basis point reduction in the credit spread compared to the original term loan. The Company has an interest rate swap agreement which converts the loan’s SOFR rate component to a fixed interest rate for the entire term of the loan, providing a total effective fixed interest rate of 1.80%.
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 4
During the three months ended March 31, 2022, the Company and a group of lenders agreed to terms on the private placement of $150,000,000 of senior unsecured notes with a fixed interest rate of 3.03% and a 10-year term. The notes, dated February 3, 2022, were issued and sold on April 20, 2022 and require interest-only payments. The notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
In February 2022, EastGroup repaid a maturing $75 million senior unsecured term loan with an effective fixed interest rate of 3.03%.
OUTLOOK FOR 2022
We now estimate that EastGroup’s EPS for 2022 will be in the range of $3.72 to $3.84. Our estimated FFO per share attributable to common stockholders for 2022 is now estimated to be in the range of $6.69 to $6.81. 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 2022, 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.
| Low Range | High Range | ||||
|---|---|---|---|---|---|
| Q2 2022 | Y/E 2022 | Q2 2022 | Y/E 2022 | ||
| (In thousands, except per share data) | |||||
| Net income attributable to common stockholders | $ | 29,688 | 156,433 | 32,204 | 161,475 |
| Depreciation and amortization | 38,466 | 154,816 | 38,466 | 154,816 | |
| Gain on sales of real estate investments | — | (30,352) | — | (30,352) | |
| Funds from operations attributable to common stockholders | $ | 68,154 | 280,897 | 70,670 | 285,939 |
| Diluted shares | 41,935 | 42,018 | 41,935 | 42,018 | |
| Per share data (diluted): | |||||
| Net income attributable to common stockholders | $ | 0.71 | 3.72 | 0.77 | 3.84 |
| Funds from operations attributable to common stockholders | 1.63 | 6.69 | 1.69 | 6.81 |
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 5
The following assumptions were used for the mid-point:
| Metrics | Revised Guidance for Year 2022 | Initial Guidance for Year 2022 | Actual for Year 2021 |
|---|---|---|---|
| FFO per share | $6.69 - $6.81 | $6.56 - $6.70 | $6.09 |
| FFO per share increase over prior year | 10.8% | 8.9% | 13.2% |
| Same PNOI growth: cash basis(1) | 6.9% - 7.9%(2) | 5.1% - 6.1%(2) | 5.7% |
| Average month-end occupancy - operating portfolio | 97.0% - 98.0% | 96.5% - 97.5% | 97.1% |
| Lease termination fee income | $1.5 million | $1.1 million | $1.4 million |
| Recoveries (reserves) of uncollectible rent<br><br>(No identified bad debts for Q2-Q4) | ($1.0 million) | ($1.5 million) | $475,000 |
| Development starts: | |||
| Square feet | 3.0 million | 2.3 million | 2.8 million |
| Projected total investment | $300 million | $250 million | $341 million |
| Value-add property acquisitions (Projected total investment) | $125 million | $46 million | $178 million |
| Operating property acquisitions | $30 million | $30 million | $108 million |
| Operating property dispositions<br><br>(Potential gains on dispositions are not included in the projections) | $70 million | $70 million | $45 million |
| Unsecured debt closing in period | $400 million at 3.59% weighted<br>average interest rate | $375 million at 3.20% weighted<br>average interest rate | $175 million at 2.40% weighted<br>average interest rate |
| Common stock issuances | $250 million | $120 million | $274 million |
| General and administrative expense | $17.2 million | $18.3 million | $15.7 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 1/1/21 and are projected to be in the operating portfolio through 12/31/22; includes 43,273,000 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”) 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.
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
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 6
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. This ratio 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 updated earnings outlook for 2022 on Wednesday, April 27, 2022, at 11:00 a.m. Eastern Time. A live broadcast of the conference call is available by dialing 1-888-346-0688 (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 4, 2022. The telephone replay can be accessed by dialing 1-877-344-7529 (access code 4967448), 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.
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 7
COMPANY INFORMATION
EastGroup Properties, Inc. (NYSE: EGP), a S&P Mid-Cap 400 company, 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 15,000 to 70,000 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 52.4 million square feet. EastGroup Properties, Inc. press releases are available on the Company’s website at www.eastgroup.net.
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,” or “plans” and variations of such words or 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. 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;
•the duration and extent of the impact of the coronavirus (“COVID-19”) pandemic, including any COVID-19 variants or the efficacy or availability of COVID-19 vaccines, on our business operations or the business operations of our tenants (including their ability to timely make rent payments) and the economy generally;
•disruption in supply and delivery chains;
•construction costs could increase as a result of inflation impacting the costs to develop properties;
•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;
•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 significant uncertainty as to the conditions under which current or potential tenants will be able to operate physical locations in the future;
•potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws or REIT or corporate income tax laws, and potential increases in real property tax rates;
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 8
•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 outbreak of COVID-19;
•the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;
•credit risk in the event of non-performance by the counterparties to our interest rate swaps;
•the discontinuation of London Interbank Offered Rate;
•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;
•the consequences of future terrorist attacks or civil unrest; 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 and in its subsequent Quarterly Reports on Form 10-Q.
The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net
Page 9
| EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES | |||
|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | |||
| (UNAUDITED) | |||
| Three Months Ended | |||
| March 31, | |||
| 2022 | 2021 | ||
| REVENUES | |||
| Income from real estate operations | $ | 112,952 | 97,917 |
| Other revenue | 22 | 14 | |
| 112,974 | 97,931 | ||
| EXPENSES | |||
| Expenses from real estate operations | 31,064 | 27,820 | |
| Depreciation and amortization | 36,341 | 30,313 | |
| General and administrative | 4,310 | 4,036 | |
| Indirect leasing costs | 175 | 330 | |
| 71,890 | 62,499 | ||
| OTHER INCOME (EXPENSE) | |||
| Interest expense | (8,110) | (8,276) | |
| Gain on sales of real estate investments | 30,352 | — | |
| Other | 278 | 201 | |
| NET INCOME | 63,604 | 27,357 | |
| Net income attributable to noncontrolling interest in joint ventures | (24) | (18) | |
| NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | 63,580 | 27,339 | |
| Other comprehensive income - interest rate swaps | 15,828 | 8,214 | |
| TOTAL COMPREHENSIVE INCOME | $ | 79,408 | 35,553 |
| BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||
| Net income attributable to common stockholders | $ | 1.54 | 0.69 |
| Weighted average shares outstanding | 41,246 | 39,673 | |
| DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||
| Net income attributable to common stockholders | $ | 1.54 | 0.69 |
| Weighted average shares outstanding | 41,359 | 39,765 | |
| EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES | |||
| --- | --- | --- | |
| RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES | |||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | |||
| (UNAUDITED) | |||
| 2021 | |||
| NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | 63,580 | 27,339 | |
| Depreciation and amortization | 30,313 | ||
| Company’s share of depreciation from unconsolidated investment | 34 | ||
| Depreciation and amortization from noncontrolling interest | — | ||
| Gain on sales of real estate investments | — | ||
| FUNDS FROM OPERATIONS (“FFO”) ATTRIBUTABLE TO COMMON STOCKHOLDERS | 69,597 | 57,686 | |
| NET INCOME | 63,604 | 27,357 | |
| Interest expense (1) | 8,276 | ||
| Depreciation and amortization | 30,313 | ||
| Company’s share of depreciation from unconsolidated investment | 34 | ||
| EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) | 65,980 | ||
| Gain on sales of real estate investments | — | ||
| EBITDA FOR REAL ESTATE (“EBITDAre”) | 77,734 | 65,980 | |
| Debt | 1,464,516 | 1,286,063 | |
| Debt-to-EBITDAre ratio | 4.87 | ||
| DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||
| Net income attributable to common stockholders | 1.54 | 0.69 | |
| FFO attributable to common stockholders | 1.68 | 1.45 | |
| Weighted average shares outstanding for EPS and FFO purposes | 39,765 | ||
| (1) Net of capitalized interest of 2,244 and 2,237 for the three months ended March 31, 2022 and 2021, respectively. |
All values are in US Dollars.
| EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES | ||
|---|---|---|
| RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Continued) | ||
| (IN THOUSANDS) | ||
| (UNAUDITED) | ||
| 2021 | ||
| NET INCOME | 63,604 | 27,357 |
| Gain on sales of real estate investments | — | |
| Interest income | (1) | |
| Other revenue | (14) | |
| Indirect leasing costs | 330 | |
| Depreciation and amortization | 30,313 | |
| Company’s share of depreciation from unconsolidated investment | 34 | |
| Interest expense (1) | 8,276 | |
| General and administrative expense (2) | 4,036 | |
| Noncontrolling interest in PNOI of consolidated joint ventures | (15) | |
| PROPERTY NET OPERATING INCOME (“PNOI”) | 70,316 | |
| PNOI from 2021 acquisitions | — | |
| PNOI from 2021 and 2022 development and value-add properties | (1,332) | |
| PNOI from 2021 and 2022 operating property dispositions | (700) | |
| Other PNOI | (54) | |
| SAME PNOI (Straight-Line Basis) | 68,230 | |
| Net lease termination fee income from same properties | (576) | |
| SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS (Straight-Line Basis) | 67,654 | |
| Straight-line rent adjustments for same properties | (1,451) | |
| Acquired leases - market rent adjustment amortization for same properties | (192) | |
| SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS (Cash Basis) | 71,639 | 66,011 |
| (1) Net of capitalized interest of 2,244 and 2,237 for the three months ended March 31, 2022 and 2021, respectively. | ||
| (2) Net of capitalized development costs of 2,469 and 1,689 for the three months ended March 31, 2022 and 2021, respectively. |
All values are in US Dollars.
supplementalinformation_
2022 FIRST QUARTER Conference Call 888-346-0688 | ID – EastGroup April 27, 2022 11:00 a.m. Eastern Time webcast available at EastGroup.net Supplemental Information 400 W. Parkway Place, Suite 100, Ridgeland, MS 39157 | TEL: 601-354-3555 | FAX: 601-352-1441 | EastGroup.net March 31, 2022
Page 2 of 24 Table of Contents Financial Information: Consolidated Balance Sheets ..................................................................................... 3 Consolidated Statements of Income and Comprehensive Income ............................ 4 Reconciliations of GAAP to Non-GAAP Measures .................................................. 5 Consolidated Statements of Cash Flows.................................................................... 7 Same Property Portfolio Analysis ............................................................................. 8 Additional Financial Information .............................................................................. 9 Financial Statistics ..................................................................................................... 10 Capital Deployment: Development and Value-Add Properties Summary .................................................. 11 Development and Value-Add Properties Transferred to Real Estate Properties ....... 12 Acquisitions and Dispositions ................................................................................... 13 Real Estate Improvements and Leasing Costs ........................................................... 14 Property Information: Leasing Statistics and Occupancy Summary ............................................................. 15 Core Market Operating Statistics............................................................................... 16 Lease Expiration Summary ........................................................................................ 17 Top 10 Customers by Annualized Base Rent ............................................................ 18 Capitalization: Debt and Equity Market Capitalization ..................................................................... 19 Continuous Common Equity Program....................................................................... 20 Debt-to-EBITDAre Ratios ......................................................................................... 21 Other Information: Outlook for 2022 ........................................................................................................ 22 Glossary of REIT Terms ............................................................................................ 23 FORWARD-LOOKING STATEMENTS The statements and certain other information contained herein, 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” or “plans” and variations of such words or 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 current views of EastGroup Properties, Inc. (the “Company” or “EastGroup”) 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. 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; the duration and extent of the impact of the coronavirus (“COVID-19”) pandemic, including any COVID-19 variants or the efficacy or availability of COVID-19 vaccines, on our business operations or the business operations of our tenants (including their ability to timely make rent payments) and the economy generally; disruption in supply and delivery chains; construction costs could increase as a result of inflation impacting the cost to develop properties; 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; 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 significant uncertainty as to the conditions under which current or potential tenants will be able to operate physical locations in the future; potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws or REIT or corporate income tax laws, and potential increases in real property tax rates; 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 outbreak of COVID-19; the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates; credit risk in the event of non-performance by the counterparties to our interest rate swaps; the discontinuation of London Interbank Offered Rate; 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; the consequences of future terrorist attacks or civil unrest; 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 Annual Report on Form 10-K for the year ended December 31, 2021, and in its subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation to update publicly any forward-looking statements, including its Outlook for 2022, whether as a result of new information, future events or otherwise.
Page 3 of 24 Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) March 31, 2022 December 31, 2021 ASSETS Real estate properties 3,637,496$ 3,546,711 Development and value-add properties 549,584 504,614 4,187,080 4,051,325 Less accumulated depreciation (1,061,190) (1,035,617) 3,125,890 3,015,708 Real estate assets held for sale - 5,695 Unconsolidated investment 7,598 7,320 Cash 5,718 4,393 Other assets 205,529 182,220 TOTAL ASSETS 3,344,735$ 3,215,336 LIABILITIES AND EQUITY LIABILITIES Unsecured bank credit facilities, net of debt issuance costs 195,317$ 207,066 Unsecured debt, net of debt issuance costs 1,267,084 1,242,570 Secured debt, net of debt issuance costs 2,115 2,142 Accounts payable and accrued expenses 126,708 109,760 Other liabilities 79,122 82,338 Total Liabilities 1,670,346 1,643,876 EQUITY Stockholders' Equity: Common shares; $0.0001 par value; 70,000,000 shares authorized; 41,680,414 shares issued and outstanding at March 31, 2022 and 41,268,846 at December 31, 2021 4 4 Excess shares; $0.0001 par value; 30,000,000 shares authorized; no shares issued - - Additional paid-in capital 1,956,328 1,886,820 Distributions in excess of earnings (300,429) (318,056) Accumulated other comprehensive income 17,130 1,302 Total Stockholders' Equity 1,673,033 1,570,070 Noncontrolling interest in joint ventures 1,356 1,390 Total Equity 1,674,389 1,571,460 TOTAL LIABILITIES AND EQUITY 3,344,735$ 3,215,336
Page 4 of 24 Consolidated Statements of Income and Comprehensive Income (In thousands, except per share data) (Unaudited) 2022 2021 REVENUES Income from real estate operations 112,952$ 97,917 Other revenue 22 14 112,974 97,931 EXPENSES Expenses from real estate operations 31,064 27,820 Depreciation and amortization 36,341 30,313 General and administrative 4,310 4,036 Indirect leasing costs 175 330 71,890 62,499 OTHER INCOME (EXPENSE) Interest expense (8,110) (8,276) Gain on sales of real estate investments 30,352 - Other 278 201 NET INCOME 63,604 27,357 Net income attributable to noncontrolling interest in joint ventures (24) (18) NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS 63,580 27,339 Other comprehensive income - interest rate swaps 15,828 8,214 TOTAL COMPREHENSIVE INCOME 79,408$ 35,553 BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS Net income attributable to common stockholders 1.54$ 0.69 Weighted average shares outstanding 41,246 39,673 DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS Net income attributable to common stockholders 1.54$ 0.69 Weighted average shares outstanding 41,359 39,765 March 31, Three Months Ended
Page 5 of 24 Reconciliations of GAAP to Non-GAAP Measures (In thousands, except per share data) (Unaudited) 2022 2021 NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS 63,580$ 27,339 Depreciation and amortization 36,341 30,313 Company's share of depreciation from unconsolidated investment 31 34 Depreciation and amortization from noncontrolling interest (3) - Gain on sales of real estate investments (30,352) - FUNDS FROM OPERATIONS ("FFO") ATTRIBUTABLE TO COMMON STOCKHOLDERS 69,597$ 57,686 NET INCOME 63,604$ 27,357 Interest expense (1) 8,110 8,276 Depreciation and amortization 36,341 30,313 Company's share of depreciation from unconsolidated investment 31 34 EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") 108,086 65,980 Gain on sales of real estate investments (30,352) - EBITDA FOR REAL ESTATE ("EBITDAre") 77,734$ 65,980 DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS Net income attributable to common stockholders 1.54$ 0.69 FFO attributable to common stockholders 1.68$ 1.45 Weighted average shares outstanding for EPS and FFO purposes 41,359 39,765 (1) Net of capitalized interest of $2,244 and $2,237 for the three months ended March 31, 2022 and 2021, respectively. Three Months Ended March 31,
Page 6 of 24 Reconciliations of GAAP to Non-GAAP Measures (Continued) (In thousands) (Unaudited) 2022 2021 NET INCOME 63,604$ 27,357 Gain on sales of real estate investments (30,352) - Interest income - (1) Other revenue (22) (14) Indirect leasing costs 175 330 Depreciation and amortization 36,341 30,313 Company's share of depreciation from unconsolidated investment 31 34 Interest expense (1) 8,110 8,276 General and administrative expense (2) 4,310 4,036 Noncontrolling interest in PNOI of consolidated joint ventures (21) (15) PROPERTY NET OPERATING INCOME ("PNOI") 82,176 70,316 PNOI from 2021 acquisitions (2,404) - PNOI from 2021 and 2022 development and value-add properties (6,880) (1,332) PNOI from 2021 and 2022 operating property dispositions (8) (700) Other PNOI 11 (54) SAME PNOI (Straight-Line Basis) 72,895 68,230 Net lease termination fee income from same properties (227) (576) SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS (Straight-Line Basis) 72,668 67,654 Straight-line rent adjustments for same properties (912) (1,451) Acquired leases — market rent adjustment amortization for same properties (117) (192) SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS (Cash Basis) 71,639$ 66,011 March 31, (1) Net of capitalized interest of $2,244 and $2,237 for the three months ended March 31, 2022 and 2021, respectively. (2) Net of capitalized development costs of $2,469 and $1,689 for the three months ended March 31, 2022 and 2021, respectively. Three Months Ended
Page 7 of 24 Consolidated Statements of Cash Flows (In thousands) (Unaudited) P 2022 2021 OPERATING ACTIVITIES Net income 63,604$ 27,357 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 36,341 30,313 Stock-based compensation expense 1,903 1,597 Gain on sales of real estate investments (30,352) - Changes in operating assets and liabilities: Accrued income and other assets 1,372 577 Accounts payable, accrued expenses and prepaid rent 9,380 18,842 Other 16 136 NET CASH PROVIDED BY OPERATING ACTIVITIES 82,264 78,822 INVESTING ACTIVITIES Development and value-add properties (127,112) (47,539) Real estate improvements (9,840) (9,128) Net proceeds from sales of real estate investments 38,133 - Leasing commissions (9,344) (6,687) Changes in accrued development costs 4,494 870 Changes in other assets and other liabilities (10,476) (1,435) NET CASH USED IN INVESTING ACTIVITIES (114,145) (63,919) FINANCING ACTIVITIES Proceeds from unsecured bank credit facilities 217,290 96,798 Repayments on unsecured bank credit facilities (229,187) (129,480) Proceeds from unsecured debt 100,000 50,000 Repayments on unsecured debt (75,000) - Repayments on secured debt (23) (42,263) Debt issuance costs (648) (223) Distributions paid to stockholders (not including dividends accrued) (46,033) (31,863) Proceeds from common stock offerings 74,179 46,427 Other (7,372) (4,252) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 33,206 (14,856) INCREASE IN CASH AND CASH EQUIVALENTS 1,325 47 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,393 21 CASH AND CASH EQUIVALENTS AT END OF PERIOD 5,718$ 68 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized of $2,244 and $2,237 for 2022 and 2021, respectively 5,476$ 6,503 Cash paid for operating lease liabilities 515 375 NON-CASH OPERATING ACTIVITY Operating lease liabilities arising from obtaining right of use assets -$ 348 Three Months Ended March 31,
Page 8 of 24 Same Property Portfolio Analysis (In thousands) (Unaudited) 2022 2021 % Change Same Property Portfolio (1) Square feet as of period end 43,391 43,391 Average occupancy 97.8% 97.1% 0.7% Occupancy as of period end 97.9% 97.3% 0.6% Same Property Portfolio Analysis (Cash Basis) (1) Income from real estate operations 100,042$ 93,622 6.9% Less cash received for lease terminations (227) (673) Income excluding lease termination income 99,815 92,949 7.4% Expenses from real estate operations (28,176) (26,938) 4.6% PNOI excluding income from lease terminations 71,639$ 66,011 8.5% Same Property Portfolio Analysis (Straight-Line Basis) (1) Income from real estate operations 101,071$ 95,168 6.2% Less cash received for lease terminations (227) (673) Add straight-line rent write-offs for lease terminations - 97 Income excluding lease termination income 100,844 94,592 6.6% Expenses from real estate operations (28,176) (26,938) 4.6% PNOI excluding income from lease terminations 72,668$ 67,654 7.4% (1) Includes properties which were included in the operating portfolio for the entire period of 1/1/21 through 3/31/22. March 31, Three Months Ended
Page 9 of 24 Additional Financial Information (In thousands) (Unaudited) 2022 2021 SELECTED INCOME STATEMENT INFORMATION Straight-line rent income adjustment 2,440$ 1,867 Recoveries of uncollectible straight-line rent 29 200 Net straight-line rent adjustment 2,469 2,067 Cash received for lease terminations 1,394 673 Less straight-line rent write-offs - (97) Net lease termination fee income 1,394 576 Recoveries (reserves) of uncollectible cash rent 77 (122) Stock-based compensation expense (1,903) (1,597) Debt issuance costs amortization (310) (341) Indirect leasing costs (175) (330) Acquired leases - market rent adjustment amortization 845 229 2022 2021 WEIGHTED AVERAGE COMMON SHARES Weighted average common shares 41,246 39,673 BASIC SHARES FOR EARNINGS PER SHARE ("EPS") 41,246 39,673 Potential common shares: Unvested restricted stock 113 92 DILUTED SHARES FOR EPS AND FFO 41,359 39,765 March 31, Three Months Ended Three Months Ended March 31, (Items below represent increases or (decreases) in FFO)
Page 10 of 24 Financial Statistics ($ in thousands, except per share data) (Unaudited) Quarter Ended 3/31/2022 2021 2020 2019 2018 ASSETS/MARKET CAPITALIZATION Assets 3,344,735$ 3,215,336 2,720,803 2,546,078 2,131,705 Equity Market Capitalization 8,472,795 9,403,107 5,477,783 5,164,306 3,348,269 Total Market Capitalization (Debt and Equity) (1) 9,942,236 10,859,473 6,791,879 6,350,438 4,458,037 Shares Outstanding - Common 41,680,414 41,268,846 39,676,828 38,925,953 36,501,356 Price per share 203.28$ 227.85 138.06 132.67 91.73 FFO CHANGE FFO per diluted share (2) 1.68$ 6.09 5.38 4.98 4.66 Change compared to same period prior year 15.9% 13.2% 8.0% 6.9% 9.6% COMMON DIVIDEND PAYOUT RATIO Dividend distribution 1.10$ 3.58 3.08 2.94 2.72 FFO per diluted share (2) 1.68 6.09 5.38 4.98 4.66 Dividend payout ratio 65% 59% 57% 59% 58% COMMON DIVIDEND YIELD Dividend distribution 1.10$ 3.58 3.08 2.94 2.72 Price per share 203.28 227.85 138.06 132.67 91.73 Dividend yield 2.16% 1.57% 2.23% 2.22% 2.97% FFO MULTIPLE FFO per diluted share (2) 1.68$ 6.09 5.38 4.98 4.66 Price per share 203.28 227.85 138.06 132.67 91.73 Multiple 30.25 37.41 25.66 26.64 19.68 INTEREST & FIXED CHARGE COVERAGE RATIO EBITDAre 77,734$ 278,959 245,669 221,517 200,788 Interest expense 8,110 32,945 33,927 34,463 35,106 Interest and fixed charge coverage ratio 9.58 8.47 7.24 6.43 5.72 DEBT-TO-EBITDAre RATIO Debt 1,464,516$ 1,451,778 1,310,895 1,182,602 1,105,787 EBITDAre 77,734 278,959 245,669 221,517 200,788 Debt-to-EBITDAre ratio 4.71 5.20 5.34 5.34 5.51 Adjusted debt-to-pro forma EBITDAre ratio 3.41 3.83 4.43 3.92 4.73 DEBT-TO-TOTAL MARKET CAPITALIZATION (1) 14.8% 13.4% 19.3% 18.7% 24.9% ISSUER RATINGS (3) Issuer Rating Outlook Moody's Investors Service Baa2 Stable (1) Before deducting unamortized debt issuance costs. (3) A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. (2) In connection with the Company's adoption of the Nareit Funds from Operations White Paper - 2018 Restatement, the Company now excludes from FFO the gains and losses on sales of non-operating real estate and assets incidental to the Company's business and therefore, adjusted the prior years' results to conform to the updated definition of FFO. Years Ended
Page 11 of 24 Development and Value-Add Properties Summary ($ in thousands) (Unaudited) Anticipated 1st Qtr Cumulative Projected Conversion % Leased Square Feet (SF) 2022 at 3/31/22 Total Costs Date (1) 4/25/22 Lease-up Access Point 2 (2) Greenville, SC 159,000 63$ 11,694 13,400 05/22 100% Grand Oaks 75 3 Tampa. FL 136,000 363 10,555 12,700 06/22 100% Siempre Viva 3-6 (2) San Diego, CA 547,000 26 132,714 135,600 06/22 91% Horizon West 2 & 3 Orlando, FL 210,000 1,034 18,224 21,400 09/22 76% Cypress Preserve 1 & 2 (2) Houston, TX 516,000 53,409 53,409 57,800 03/23 50% Total Lease-up 1,568,000 54,895 226,596 240,900 77% Wgt Avg % Lease-Up: Projected Stabilized Yield (3) 5.5% Under Construction CreekView 9 & 10 Dallas, TX 145,000 1,881 13,217 17,200 07/22 100% SunCoast 12 Fort Myers, FL 79,000 1,319 5,497 9,300 07/22 100% Gateway 3 Miami, FL 133,000 2,768 15,934 19,400 08/22 100% Steele Creek 8 Charlotte, NC 72,000 3,169 5,897 8,400 08/22 100% Ridgeview 3 San Antonio, TX 88,000 1,354 7,158 9,700 10/22 100% World Houston 47 Houston, TX 139,000 5,901 5,901 19,100 12/22 100% Basswood 1 & 2 Fort Worth, TX 237,000 2,580 17,809 22,900 01/23 100% Tri-County Crossing 5 San Antonio, TX 105,000 1,931 7,531 10,300 04/23 28% Americas Ten 2 El Paso, TX 168,000 3,366 12,466 14,100 05/23 100% Grand West Crossing 1 Houston, TX 121,000 3,366 12,235 15,700 05/23 0% 45 Crossing Austin, TX 177,000 3,811 20,871 26,200 06/23 83% Grand Oaks 75 4 Tampa. FL 185,000 5,407 11,785 17,900 06/23 0% Tri-County Crossing 6 San Antonio, TX 124,000 2,814 6,596 9,900 06/23 72% LakePort 4 & 5 Dallas, TX 177,000 2,495 10,433 22,400 08/23 0% McKinney 3 & 4 Dallas, TX 212,000 5,191 15,629 26,300 08/23 0% Arlington Tech 3 Fort Worth, TX 77,000 2,939 2,939 10,300 10/23 0% Horizon West 4 Orlando, FL 295,000 10,599 10,599 28,700 10/23 0% I-20 West Business Center Atlanta, GA 155,000 1,429 4,393 14,200 10/23 0% SunCoast 11 Fort Myers, FL 79,000 2,658 2,658 9,900 10/23 0% Hillside 1 Greenville, SC 122,000 815 815 11,600 12/23 0% Steele Creek 11 & 12 Charlotte, NC 241,000 3,141 3,141 24,300 01/24 26% Total Under Construction 3,131,000 68,934 193,504 347,800 44% Wgt Avg % Under Construction: Projected Stabilized Yield (3) 6.7% 55% Wgt Avg % Development: Projected Stabilized Yield (3) 6.8% Value-Add: Projected Stabilized Yield (3) 4.7% Prospective Development Acres Projected SF Phoenix, AZ 50 655,000 14,511 14,511 Fort Myers, FL (4) 36 464,000 (701) 7,597 Miami, FL 17 243,000 1,002 15,333 Orlando, FL (4) 83 983,000 (5,923) 20,315 Tampa, FL 2 32,000 - 825 Atlanta, GA 64 580,000 257 5,315 Jackson, MS 3 28,000 - 706 Charlotte, NC (4) 158 1,146,000 (2,564) 12,540 Greenville, SC (4) 38 278,000 (548) 1,188 Austin, TX 22 274,000 907 7,338 Dallas, TX 26 172,000 108 8,506 Fort Worth, TX (4) 44 575,000 (1,760) 13,567 Houston, TX (4) 84 1,154,000 (3,821) 21,012 San Antonio, TX 6 55,000 13 731 Total Prospective Development 633 6,639,000 1,481 129,484 Total Development and Value-Add Properties 633 11,338,000 125,310$ 549,584 (1) Development properties will transfer to the operating portfolio at the earlier of 90% occupancy or one year after shell completion. Value-add properties will transfer at the earlier of 90% occupancy or one year after acquisition. (2) These value-add projects were acquired by EastGroup. (3) Weighted average yield based on estimated annual property net operating income on a straight-line basis at 100% occupancy divided by projected total costs. (4) Negative amounts represent land inventory costs transferred to Under Construction. Costs Incurred
Page 12 of 24 Development and Value-Add Properties Transferred to Real Estate Properties ($ in thousands) (Unaudited) 1st Qtr Cumulative Conversion % Leased Square Feet (SF) 2022 at 3/31/22 Date 4/25/22 1st Quarter Access Point 1 (1) Greenville, SC 156,000 355$ 12,877 01/22 100% Speed Distribution Center San Diego, CA 519,000 5,130 72,948 03/22 100% 675,000 5,485$ 85,825 Projected Stabilized Yield (2) 7.0% 100% Wgt Avg % (1) This value-add project was acquired by EastGroup. (2) Weighted average yield based on estimated annual property net operating income on a straight-line basis at 100% occupancy divided by projected total costs. Costs Incurred
Page 13 of 24 Acquisitions and Dispositions Through March 31, 2022 ($ in thousands) (Unaudited) Date Property Name Location Size Purchase Price (1) 1st Quarter 02/14/22 Gateway Interchange Land Phoenix, AZ 50.2 Acres 13,588$ 03/28/22 Cypress Preserve 1 & 2 Houston, TX 516,000 SF 54,462 (2) 516,000 SF Total Acquisitions 50.2 Acres 68,050$ Date Property Name Location Size Gross Sales Price 1st Quarter 01/06/22 Metro Business Park Phoenix, AZ 189,000 SF 33,510$ 26,971 (3) 03/31/22 Cypress Creek Business Park Fort Lauderdale, FL 56,000 SF 5,600 3,381 (3) Total Dispositions 245,000 SF 39,110$ 30,352 (3) Included in Gain on sales of real estate investments on the Consolidated Statements of Income and Comprehensive Income; not included in FFO. DISPOSITIONS ACQUISITIONS (2) Value-add property acquisition; included in Development and value-add properties on the Consolidated Balance Sheets. (1) Represents acquisition price plus closing costs. Realized Gain
Page 14 of 24 Real Estate Improvements and Leasing Costs (In thousands) (Unaudited) REAL ESTATE IMPROVEMENTS 2022 2021 Upgrade on acquisitions 278$ 45 Tenant improvements: New tenants 3,456 2,642 Renewal tenants 710 677 Other: Building improvements 2,569 1,783 Roofs 1,151 3,015 Parking lots 236 262 Other 326 161 TOTAL REAL ESTATE IMPROVEMENTS (1) 8,726$ 8,585 CAPITALIZED LEASING COSTS (Principally Commissions) Development and value-add 4,286$ 2,828 New tenants 3,586 4,347 Renewal tenants 3,401 1,954 TOTAL CAPITALIZED LEASING COSTS (2)(3) 11,273$ 9,129 (1) Reconciliation of Total Real Estate Improvements to Real Estate Improvements on the Consolidated Statements of Cash Flows: 2022 2021 Total Real Estate Improvements 8,726$ 8,585 Change in real estate property payables (192) 292 Change in construction in progress 1,306 251 9,840$ 9,128 (2) Included in Other Assets on the Consolidated Balance Sheets. (3) Reconciliation of Total Capitalized Leasing Costs to Leasing Commissions on the Consolidated Statements of Cash Flows: 2022 2021 Total Capitalized Leasing Costs 11,273$ 9,129 Change in leasing commissions payables (1,929) (2,442) 9,344$ 6,687 Three Months Ended March 31, Three Months Ended Three Months Ended March 31, Leasing Commissions on the Consolidated Statements of Cash Flows March 31, Real Estate Improvements on the Consolidated Statements of Cash Flows
Page 15 of 24 Leasing Statistics and Occupancy Summary (Unaudited) Three Months Ended Number of Square Feet Weighted Rental Change Rental Change PSF Tenant PSF Leasing PSF Total March 31, 2022 Leases Signed Signed Average Term Straight-Line Basis Cash Basis Improvement (1) Commission (1) Leasing Cost (1) (In Thousands) (In Years) New Leases (2) 46 1,099 5.6 36.7% 27.1% 4.17$ 3.27$ 7.44$ Renewal Leases 60 1,454 4.8 30.8% 16.3% 0.90 2.32 3.22 Total/Weighted Average 106 2,553 5.1 33.5% 21.1% 2.31$ 2.73$ 5.04$ Per Year 0.45$ 0.54$ 0.99$ Weighted Average Retention (3) 64.9% 03/31/22 12/31/21 09/30/21 06/30/21 03/31/21 Percentage Leased 98.8% 98.7% 98.8% 98.3% 98.3% Percentage Occupied 97.9% 97.4% 97.6% 96.8% 97.2% (1) Per square foot (PSF) amounts represent total amounts for the life of the lease, except as noted for the Per Year amounts. (2) Does not include leases with terms less than 12 months and leases for first generation space on properties acquired or developed by EastGroup. (3) Calculated as square feet of renewal leases signed during the quarter / square feet of leases expiring during the quarter (not including early terminations or bankruptcies).
Page 16 of 24 Core Market Operating Statistics March 31, 2022 (Unaudited) Total % of Total Square Feet Annualized % % Straight-Line Cash Straight-Line Cash of Properties Base Rent (1) Leased Occupied 2022 (2) 2023 Basis Basis (4) Basis Basis (4) Florida Tampa 4,212,000 7.8% 97.9% 93.7% 370,000 845,000 1.6% 2.8% 37.4% 18.4% Orlando 3,685,000 7.8% 97.9% 97.9% 477,000 510,000 4.8% 6.2% 39.6% 20.4% Jacksonville 2,273,000 3.8% 100.0% 100.0% 567,000 414,000 9.3% 7.1% 22.8% 11.4% Miami/Fort Lauderdale 1,601,000 3.8% 100.0% 99.0% 57,000 233,000 7.9% 9.7% 50.3% 42.2% Fort Myers 626,000 1.6% 100.0% 100.0% 63,000 105,000 -0.8% 0.9% 18.4% 5.0% 12,397,000 24.8% 98.7% 97.1% 1,534,000 2,107,000 4.5% 5.4% 38.8% 21.0% Texas Houston 6,134,000 11.8% 95.6% 95.3% 665,000 897,000 -2.6% -4.4% 23.6% 5.6% Dallas 4,717,000 9.3% 99.6% 98.9% 219,000 645,000 7.4% 10.9% 16.1% 32.5% San Antonio 4,093,000 8.5% 99.4% 97.6% 274,000 677,000 3.3% 3.2% 21.7% 11.7% Austin 1,146,000 3.1% 100.0% 99.1% 107,000 188,000 1.5% 1.7% 95.0% 70.0% El Paso 957,000 1.5% 100.0% 100.0% 88,000 144,000 3.9% 4.6% 53.3% 36.6% Fort Worth 794,000 1.6% 100.0% 100.0% 41,000 129,000 28.5% 44.7% N/A N/A 17,841,000 35.8% 98.2% 97.5% 1,394,000 2,680,000 3.0% 3.5% 26.2% 20.7% California Los Angeles (5) 2,484,000 8.1% 100.0% 100.0% 68,000 177,000 19.8% 24.8% 19.8% 8.9% San Francisco 1,045,000 3.3% 100.0% 100.0% 37,000 - 22.2% 38.9% 80.3% 51.5% San Diego (5) 1,386,000 4.7% 100.0% 100.0% - 142,000 60.6% 39.9% N/A N/A Fresno 398,000 0.6% 96.4% 96.4% 136,000 59,000 18.5% 16.1% N/A N/A 5,313,000 16.7% 99.7% 99.7% 241,000 378,000 27.3% 30.4% 54.5% 33.3% Arizona Phoenix 2,851,000 5.9% 100.0% 100.0% 93,000 429,000 6.1% 6.5% 26.3% 14.8% Tucson 848,000 1.6% 100.0% 99.4% - 83,000 6.5% 26.0% 18.7% 11.6% 3,699,000 7.5% 100.0% 99.9% 93,000 512,000 6.2% 10.6% 26.0% 14.7% Other Core Charlotte 3,569,000 5.9% 100.0% 96.8% 436,000 717,000 2.8% 0.3% 23.9% 6.9% Atlanta 1,312,000 2.4% 100.0% 100.0% 41,000 30,000 6.7% 27.2% 26.2% 19.2% Denver 886,000 2.2% 96.6% 95.1% 113,000 69,000 4.9% 4.6% 17.6% 7.6% Las Vegas 754,000 2.0% 100.0% 100.0% 47,000 182,000 25.3% 21.9% 70.1% 45.8% 6,521,000 12.5% 99.5% 97.6% 637,000 998,000 7.1% 7.8% 33.9% 17.6% Total Core Markets 45,771,000 97.3% 98.9% 97.8% 3,899,000 6,675,000 7.6% 8.7% 33.5% 21.1% Total Other Markets 1,604,000 2.7% 98.5% 98.5% 125,000 179,000 0.8% 2.9% 24.7% 16.5% Total Operating Properties 47,375,000 100.0% 98.8% 97.9% 4,024,000 6,854,000 7.4% 8.5% 33.5% 21.1% (1) Based on the Annualized Base Rent as of the reporting period for occupied square feet (without S/L Rent). (2) Square Feet expiring during the remainder of the year, including month-to-month leases. (3) Does not include leases with terms less than 12 months and leases for first generation space on properties acquired or developed by EastGroup. (4) Excludes straight-line rent adjustments and amortization of above/below market rent intangibles. (5) Includes the Company's share of its less-than-wholly-owned real estate investments. in Square Feet QTR QTRLease Expirations (excluding income from lease terminations) Same Property PNOI Change New and Renewal Leases (3) Rental Change
Page 17 of 24 Lease Expiration Summary Total Square Feet of Operating Properties Based On Leases Signed Through March 31, 2022 ($ in thousands) (Unaudited) Annualized Current % of Total Base Rent of Base Rent of Square Footage of % of Leases Expiring Leases Expiring LEASE EXPIRATION Leases Expiring Total SF (without S/L Rent) (without S/L Rent) Vacancy 552,000 1.2% -$ 0.0% 2022 - remainder of year (1) 4,024,000 8.4% 26,681 8.3% 2023 6,854,000 14.5% 45,788 14.1% 2024 7,622,000 16.1% 52,171 16.1% 2025 6,653,000 14.0% 47,275 14.6% 2026 7,732,000 16.3% 56,647 17.5% 2027 5,685,000 12.0% 39,186 12.1% 2028 2,460,000 5.2% 17,424 5.4% 2029 2,267,000 4.8% 11,781 3.6% 2030 600,000 1.3% 4,850 1.5% 2031 and beyond 2,926,000 6.2% 21,935 6.8% TOTAL 47,375,000 100.0% 323,738$ 100.0% (1) Includes month-to-month leases.
Page 18 of 24 Top 10 Customers by Annualized Base Rent As of March 31, 2022 (Unaudited) % of Total # of % of Total Annualized Customer Leases Location Portfolio Base Rent (1) 1 Amazon 2 San Diego, CA 710,000 1 San Antonio, TX 57,000 1 Tucson, AZ 10,000 1.6% 2.4% 2 REPET, Inc. 1 Los Angeles, CA 300,000 0.6% 1.0% 3 Starship Logistics LLC 1 Los Angeles, CA 262,000 0.6% 1.0% 4 FedEx Corp. 1 Dallas, TX 157,000 1 Fort Myers, FL 63,000 1 San Diego, CA 51,000 1 Fort Lauderdale, FL 50,000 1 Jackson, MS 6,000 0.7% 0.8% 5 The Chamberlain Group 2 Tucson, AZ 350,000 1 Charlotte, NC 11,000 0.8% 0.8% 6 Consolidated Electrical Distributors 2 San Antonio, TX 97,000 1 San Francisco, CA 84,000 2 Orlando, FL 78,000 1 Charlotte, NC 28,000 0.6% 0.7% 7 Novolex Holdings, LLC 1 Los Angeles, CA 286,000 0.6% 0.7% 8 Essendant Co. 1 Orlando, FL 404,000 0.9% 0.7% 9 Mattress Firm 1 Houston, TX 202,000 1 Tampa, FL 109,000 1 Jacksonville, FL 49,000 1 Fort Myers, FL 25,000 0.8% 0.7% 10 Oceaneering International, Inc. 3 Orlando, FL 259,000 0.5% 0.6% 29 3,648,000 7.7% 9.4% (1) Calculation: Customer Annualized Base Rent as of 3/31/22 (without S/L Rent) / Total Annualized Base Rent (without S/L Rent). Leased Total SF
Page 19 of 24 Debt and Equity Market Capitalization March 31, 2022 ($ in thousands, except per share data) (Unaudited) Remainder of 2022 2023 2024 2025 2026 2027 and Beyond Total Average Years to Maturity Unsecured debt (fixed rate) (1) -$ 115,000 120,000 145,000 140,000 750,000 1,270,000 5.8 Weighted average interest rate - 2.96% 3.47% 3.12% 2.57% 3.00% 3.01% Secured debt (fixed rate) 87 119 122 128 1,672 - 2,128 4.0 Weighted average interest rate 3.85% 3.85% 3.85% 3.85% 3.85% - 3.85% Total unsecured debt and secured debt 87$ 115,119 120,122 145,128 141,672 750,000 1,272,128 5.8 Weighted average interest rate 3.85% 2.96% 3.47% 3.12% 2.58% 3.00% 3.01% Unsecured debt and secured debt (fixed rate) 1,272,128$ Unsecured bank credit facilities (variable rate) $50MM Line - 1.227% - matures 7/30/2025 14,313 $425MM Line - 1.168% - matures 7/30/2025 183,000 Total carrying amount of debt 1,469,441$ Total unamortized debt issuance costs (4,925) Total debt, net of unamortized debt issuance costs 1,464,516$ Equity market capitalization Shares outstanding - common 41,680,414 Price per share at quarter end 203.28$ Total equity market capitalization 8,472,795$ Total market capitalization (debt and equity) (2) 9,942,236$ Total debt / total market capitalization (2) 14.8% (1) These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps. (2) Before deducting unamortized debt issuance costs.
Page 20 of 24 Continuous Common Equity Program Through March 31, 2022 ($ in thousands, except per share data) (Unaudited) Shares Issued and Sold (1) Average Sales Price (Per Share) Gross Proceeds Offering-Related Fees and Expenses Net Proceeds 1st Quarter 385,538 194.53$ 75,000$ (821)$ 74,179$ (1) As of April 26, 2022, the Company had common shares with an aggregate gross sales price of $306.9 million authorized and remaining for issuance under its continuous common equity program.
Page 21 of 24 Debt-to-EBITDAre Ratios ($ in thousands) (Unaudited) Quarter Ended Years Ended December 31, March 31, 2022 2021 2020 2019 2018 EBITDAre 77,734$ 278,959$ 245,669 221,517 200,788 Debt 1,464,516 1,451,778 1,310,895 1,182,602 1,105,787 DEBT-TO-EBITDAre RATIO 4.71 5.20 5.34 5.34 5.51 EBITDAre 77,734$ 278,959$ 245,669 221,517 200,788 Adjust for acquisitions as if owned for entire period - 4,213 1,906 5,590 1,909 Adjust for development and value-add properties in lease-up or under construction (1,173) (700) (1,327) (2,072) (304) Adjust for properties sold during the period (7) (1,517) (1,081) (3,812) (474) Pro Forma EBITDAre 76,554$ 280,955$ 245,167 221,223 201,919 Debt 1,464,516$ 1,451,778$ 1,310,895 1,182,602 1,105,787 Subtract development and value-add properties in lease-up or under construction (420,100) (376,611) (225,964) (315,794) (149,860) Adjusted Debt 1,044,416$ 1,075,167$ 1,084,931 866,808 955,927 ADJUSTED DEBT-TO-PRO FORMA EBITDAre RATIO 3.41 3.83 4.43 3.92 4.73
Page 22 of 24 Outlook for 2022 (Unaudited) Q2 2022 Y/E 2022 Q2 2022 Y/E 2022 Net income attributable to common stockholders 29,688$ 156,433 32,204 161,475 Depreciation and amortization 38,466 154,816 38,466 154,816 Gain on sales of real estate investments - (30,352) - (30,352) Funds from operations attributable to common stockholders 68,154$ 280,897 70,670 285,939 Diluted shares 41,935 42,018 41,935 42,018 Per share data (diluted): Net income attributable to common stockholders 0.71$ 3.72 0.77 3.84 Funds from operations attributable to common stockholders 1.63 6.69 1.69 6.81 The following assumptions were used for the mid-point: Metrics FFO per share $6.69 - $6.81 $6.56 - $6.70 $6.09 FFO per share increase over prior year 10.8% 8.9% 13.2% Same PNOI growth: cash basis (1) 6.9% - 7.9%(2) 5.1% - 6.1%(2) 5.7% Average month-end occupancy - operating portfolio 97.0% - 98.0% 96.5% - 97.5% 97.1% Lease termination fee income $1.5 million $1.1 million $1.4 million Recoveries (reserves) of uncollectible rent (No identified bad debts for Q2-Q4) ($1.0 million) ($1.5 million) $475,000 Development starts: Square feet 3.0 million 2.3 million 2.8 million Projected total investment $300 million $250 million $341 million Value-add property acquisitions (Projected total investment) $125 million $46 million $178 million Operating property acquisitions $30 million $30 million $108 million Operating property dispositions (Potential gains on dispositions are not included in the projections) $70 million $70 million $45 million Unsecured debt closing in period $400 million at 3.59% weighted average interest rate $375 million at 3.20% weighted average interest rate $175 million at 2.40% weighted average interest rate Common stock issuances $250 million $120 million $274 million General and administrative expense $17.2 million $18.3 million $15.7 million Low Range High Range (In thousands, except per share data) Revised Guidance for Year 2022 Initial Guidance for Year 2022 Actual for Year 2021 (2) Includes properties which have been in the operating portfolio since 1/1/21 and are projected to be in the operating portfolio through 12/31/22; includes 43,273,000 square feet. (1) Excludes straight-line rent adjustments, amortization of market rent intangibles for acquired leases, and income from lease terminations.
Page 23 of 24 Glossary of REIT Terms Listed below are definitions of commonly used real estate investment trust (“REIT”) industry terms. For additional information on REITs, please see the National Association of Real Estate Investment Trusts (“Nareit”) web site at www.reit.com. Adjusted Debt-to-Pro Forma EBITDAre Ratio: A ratio calculated by dividing a company’s adjusted debt by its pro forma EBITDAre. Debt is adjusted by subtracting the cost of development and value-add properties in lease-up or under construction. EBITDAre is further adjusted by adding an estimate of NOI for significant acquisitions as if the acquired properties were owned for the entire period, and by subtracting NOI from development and value-add properties in lease-up or under construction and from properties sold during the period. The Adjusted Debt-to-Pro Forma EBITDAre Ratio is a non-GAAP financial measure used to analyze the Company’s financial condition and operating performance relative to its leverage, on an adjusted basis, so as to normalize and annualize property changes during the period. Cash Basis: The Company adjusts its GAAP reporting to exclude straight-line rent adjustments and amortization of market rent intangibles for acquired leases. The 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. Debt-to-EBITDAre Ratio: A ratio calculated by dividing a company’s debt by its EBITDAre; this non-GAAP measure is used to analyze the Company’s financial condition and operating performance relative to its leverage. Debt-to-Total Market Capitalization Ratio: A ratio calculated by dividing a company’s debt by the total amount of a company’s equity (at market value) and debt. Earnings Before Interest Taxes Depreciation and Amortization for Real Estate (“EBITDAre”): In accordance with standards established by Nareit, EBITDAre is computed as Earnings, defined as Net Income, excluding gains or losses from sales of real estate investments and non-operating real estate, plus interest, taxes, 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. Funds From Operations (“FFO”): FFO is the most commonly accepted reporting measure of a REIT’s operating performance, and the Company computes FFO in accordance with standards established by Nareit in the Nareit Funds from Operations White Paper — 2018 Restatement. It is equal to a REIT’s net income (loss) attributable to common stockholders computed in accordance with 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 is a non-GAAP financial measure used to evaluate the performance of the Company’s investments in real estate assets and its operating results. FFO Excluding Gain on Casualties and Involuntary Conversion: A reporting measure calculated as FFO (as defined above), adjusted to exclude gain on casualties and involuntary conversion. The Company believes that the exclusion of gain on casualties and involuntary conversion presents a more meaningful comparison of operating performance. Industrial Properties: Generally consisting of four concrete walls tilted up on a slab of concrete. An internal office component is then added. Business uses include warehousing, distribution, light manufacturing and assembly, research and development, showroom, office, or a combination of some or all of the aforementioned. Leases Expiring and Renewal Leases Signed of Expiring Square Feet: Includes renewals during the period with terms commencing during the period and after the end of the period. Operating Land: Land with no buildings or improvements that generates income from leases with tenants; included in Real estate properties on the Consolidated Balance Sheets. Operating Properties: Stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio; included in Real estate properties on the Consolidated Balance Sheets. Percentage Leased: The percentage of total leasable square footage for which there is a signed lease, including month-to-month leases, as of the close of the reporting period. Space is considered leased upon execution of the lease.
Page 24 of 24 Glossary of REIT Terms (Continued) Percentage Occupied: The percentage of total leasable square footage for which the lease term has commenced as of the close of the reporting period. Property Net Operating Income (“PNOI”): 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. PNOI is a non-GAAP, property-level supplemental measure of performance used to evaluate the performance of the Company’s investments in real estate assets and its operating results. Real Estate Investment Trust: A company that owns and, in most cases, operates income-producing real estate such as apartments, shopping centers, offices, hotels and warehouses. Some REITs also engage in financing real estate. The shares of most REITs are freely traded, usually on a major stock exchange. To qualify as a REIT, a company must distribute at least 90 percent of its taxable income to its stockholders annually. A company that qualifies as a REIT is permitted to deduct dividends paid to its stockholders from its corporate taxable income. As a result, most REITs remit at least 100 percent of their taxable income to their stockholders and therefore owe no corporate federal income tax. Taxes are paid by stockholders on the dividends received. Most states honor this federal treatment and also do not require REITs to pay state income tax. Rental changes on new and renewal leases: Rental changes are calculated as the difference, weighted by square feet, of the annualized base rent due the first month of the new lease’s term and the annualized base rent of the rent due the last month of the former lease’s term. If free rent is given, then the first positive full rent value is used. Rental amounts exclude base stop amounts, holdover rent, and premium or discounted rent amounts. This calculation excludes leases with terms less than 12 months and leases for first generation space on properties acquired or developed by EastGroup. Same Properties: Operating properties owned during the entire current and prior year reporting periods. Properties developed or acquired are excluded 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 excluded. The Same Property Pool includes properties which were included in the operating portfolio for the entire period from January 1, 2021 through March 31, 2022. Same Property Net Operating Income (“Same PNOI”): 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, for the same properties owned by the Company during the entire current and prior year reporting periods. Same PNOI is a non-GAAP, 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. Same PNOI Excluding Income from Lease Terminations: Same PNOI (as defined above), adjusted to exclude income from lease terminations. 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 the straight-line basis. The cash basis excludes adjustments for straight-line rent and amortization of market rent intangibles for acquired leases; the 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. Straight-Lining: The process of averaging the customer’s rent payments over the life of the lease. GAAP requires real estate companies to “straight-line” rents. Total Return: A stock’s dividend income plus capital appreciation/depreciation over a specified period as a percentage of the stock price at the beginning of the period. Value-Add Properties: Properties that are either acquired but not stabilized or can be converted to a higher and better use. Acquired properties meeting either of the following two conditions are considered value-add properties: (1) Less than 75% occupied as of the acquisition date (or will be less than 75% occupied within one year of acquisition date based on near term lease roll), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.