First Quarter 2023 Results
- Net Income Attributable to Common Stockholders of
$1.02 Per Diluted Share for First
Quarter 2023 Compared to $1.54 Per
Diluted Share for First Quarter 2022 (Gains on Sales of Real Estate
Investments Were $5 Million, or
$0.11 Per Diluted Share, for First
Quarter 2023; Gains on Sales of Real Estate Investments Were
$30 Million, or $0.73 Per Diluted Share, for First Quarter
2022)
- Funds from Operations ("FFO") of $1.84 Per Share for First Quarter 2023 Compared
to $1.68 Per Share for First Quarter
2022, an Increase of 9.5%
- FFO Excluding Gain on Casualties and Involuntary Conversion
($.02 Per Share in First Quarter
2023) of $1.82 Per Share Compared to
$1.68 Per Share for the Same Quarter
Last Year, an Increase of 8.3%
- Same Property Net Operating Income for the Same Property
Pool Excluding Income From Lease Terminations Increased 7.6% on a
Straight-Line Basis and 11.0% on a Cash Basis for First Quarter
2023 Compared to the Same Period in 2022
- Operating Portfolio was 98.7% Leased and 97.9% Occupied as
of March 31, 2023; Average Occupancy
of Operating Portfolio was 98.1% for First Quarter 2023 as Compared
to 97.3% for First Quarter 2022
- Rental Rates on New and Renewal Leases Increased an Average
of 48.5% on a Straight-Line Basis
- Started Construction of Four Development Projects Containing
1,033,000 Square Feet with Projected Total Costs of Approximately
$141 Million
- Transferred Three Development and Value-Add Projects
Totaling 716,000 Square Feet to the Operating Portfolio, Which Are
Collectively 100% Leased
- Development and Value-Add Program Consisted of 21 Projects
in 13 Cities (4.3 Million Square Feet) at March 31, 2023 with a Projected Total Investment
of Approximately $553
Million
- Sold One Operating Property Containing 125,000 Square Feet
for $10 Million (Gain of $5 Million Not Included in FFO)
- Declared 173rd Consecutive Quarterly Cash
Dividend: $1.25 Per Share
- Closed a $100 Million Senior
Unsecured Term Loan with a Seven-Year Term and a Total Effectively
Fixed Interest Rate of 5.27%
- Repaid a $65 Million Unsecured
Term Loan During the Quarter with a Total Effectively Fixed
Interest Rate of 2.31%
- Expanded the Borrowing Capacity of the Unsecured Bank Credit
Facilities from $475 Million to
$675 Million
- Sold 821,034 Shares of Common Stock Pursuant to the
Company's Continuous Common Equity Offering Program at a Weighted
Average Price of $163.51 Per Share
for Aggregate Net Proceeds of $133
Million
JACKSON,
Miss., April 25, 2023 /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, 2023.
Commenting on EastGroup's performance, Marshall Loeb, CEO, stated, "Our team's strong
performance continued into 2023 as evidenced by first quarter
growth in FFO per share of more than 9%. The day-to-day industrial
market remains solid as evidenced by a number of metrics, such as
our percent leased, percent occupied, quarterly releasing spreads
and same store net operating income growth. We're pleased with our
operational results, especially during a period of global economic
unease and capital markets dislocation. Until the economic climate
allows more clarity, we'll remain judicious with capital allocation
and incremental risk. This type of economic climate is one of the
primary reasons we lowered our overall leverage and floating rate
debt ratios the past few years. Longer term, I remain bullish on
the continued growth prospects for our shallow bay, last mile
Sunbelt market portfolio."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share ("EPS")
were $1.02 for the three months
ended March 31, 2023, compared to $1.54 for the same period of 2022. The Company's
property net operating income ("PNOI") increased by $15,894,000 ($0.36
per share) for the three months ended March 31, 2023, as
compared to the same period of 2022. The increase in PNOI for the
three months ended March 31, 2023, compared to the same
period of 2022 was offset by the following:
- EastGroup recognized gains on sales of real estate investments
of $4,809,000 ($0.11 per share) during the three months ended
March 31, 2023, compared to
$30,352,000 ($0.73 per share) for the three months ended
March 31, 2022.
- Interest expense increased by $4,915,000 ($0.11
per share) during the three months ended March 31, 2023, as compared to the same period of
2022.
- Depreciation and amortization expense increased by $4,673,000 ($0.11
per share) during the three months ended March 31, 2023, as compared to the same period of
2022.
FUNDS FROM OPERATIONS AND PROPERTY NET OPERATING
INCOME
For the three months ended March 31, 2023, funds from
operations attributable to common stockholders ("FFO") were
$1.84 per share compared to
$1.68 per share during the same
period of 2022, an increase of 9.5%.
FFO Excluding Gain on Casualties and Involuntary Conversion was
$1.82 per share for the three months
ended March 31, 2023; no Gain on Casualties and Involuntary
Conversion was recognized in the same period of 2022.
PNOI increased by $15,894,000, or
19.3%, during the three months ended March 31, 2023, compared
to the same period of 2022. PNOI increased $7,695,000 from newly developed and value-add
properties, $4,628,000 from same
property operations (based on the same property pool), and
$4,039,000 from 2022 acquisitions;
PNOI decreased $367,000 from
operating properties sold in 2022 and 2023.
Same PNOI Excluding Income from Lease Terminations increased
7.6% on a straight-line basis for the three months ended
March 31, 2023, compared to the same period of 2022; on a
cash basis (excluding straight-line rent adjustments and
amortization of above/below market rent intangibles), Same PNOI
increased 11.0%.
On a straight-line basis, rental rates on new and renewal leases
(3.2% of total square footage) increased an average of 48.5% during
the three months ended March 31, 2023.
The same property pool for the three months ended March 31,
2023 includes properties which were included in the operating
portfolio for the entire period from January
1, 2022 through March 31, 2023; this pool is comprised
of properties containing 46,514,000 square feet.
FFO, FFO Excluding Gain on Casualties and Involuntary
Conversion, 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 Casualties and
Involuntary Conversion are presented in the attached schedule
"Reconciliations of GAAP to Non-GAAP Measures."
ACQUISITIONS AND DISPOSITIONS
In March, EastGroup sold World Houston 23, a 125,000 square foot
building in Houston, for
$9,600,000. The Company recognized a
gain on the sale of $4,809,000, which
is included in Gain on sales of real estate investments; this gain
is excluded from FFO.
Also during the three months ended March 31, 2023, the
Company sold a 2.0 acre parcel of land in Forth Worth, Texas for $1,550,000. A gain of $81,000 was recognized and is included
in Other on the Consolidated Statements of Income
and Comprehensive Income.
Subsequent to March 31, 2023, the Company closed on the
acquisition of 58.8 acres of development land in the East submarket
of Tampa, known by the Company as
Lakeside Station Land, for approximately $6,600,000. This site will accommodate the future
development of two buildings containing approximately 450,000
square feet.
Also in April, the Company closed on the acquisition of 48.9
acres of development land in San
Antonio's Northeast Submarket for approximately $6,100,000. This site will accommodate the future
development of five buildings containing approximately 675,000
square feet. This development will expand the Company's 1,442,000
square feet of operating properties in this submarket which are
currently 100% leased.
Also subsequent to quarter-end in April, EastGroup acquired
Craig Corporate Center, a 155,000 square foot building, for
approximately $34,200,000. The
property is located in the North submarket of Las Vegas and is 100% leased. This acquisition
increased the Company's ownership in Las
Vegas to approximately 910,000 square feet, which is 100%
leased.
DEVELOPMENT AND VALUE-ADD PROPERTIES
During the first quarter of 2023, EastGroup began construction
of four new development projects in four cities, which will contain
a total of 1,033,000 square feet and have projected total costs of
$141,100,000.
The development projects started during 2023 are detailed in the
table below:
Development Projects Started in
2023
|
|
Location
|
|
Size
|
|
Anticipated
Conversion Date
|
|
Projected Total
Costs
|
|
|
|
|
(Square feet)
|
|
|
|
(In thousands)
|
Horizon West
10
|
|
Orlando, FL
|
|
357,000
|
|
|
10/2024
|
|
$
|
44,600
|
|
Riverside 1 &
2
|
|
Atlanta, GA
|
|
284,000
|
|
|
12/2024
|
|
33,700
|
|
Eisenhauer Point
10-12
|
|
San Antonio,
TX
|
|
223,000
|
|
|
01/2025
|
|
29,400
|
|
Gateway South Dade 1
& 2
|
|
Miami, FL
|
|
169,000
|
|
|
02/2025
|
|
33,400
|
|
Total
Development Projects Started
|
|
|
|
1,033,000
|
|
|
|
|
$
|
141,100
|
|
At March 31, 2023, EastGroup's development and value-add
program consisted of 21 projects (4,298,000 square feet) in 13
cities. The projects, which were collectively 38% leased as of
April 24, 2023, have a projected total cost of $553,100,000, of which $231,924,000 remained to be funded as of
March 31, 2023.
During the first quarter of 2023, EastGroup transferred three
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 Fort
Myers and Houston, contain
716,000 square feet and were collectively 100% leased as of
April 24, 2023.
The development and value-add properties transferred to the
operating portfolio during the first three months of 2023 are
detailed in the table below:
Development and Value-Add
Properties
Transferred to the Operating Portfolio in
2023
|
|
Location
|
|
Size
|
|
Conversion
Date
|
|
Cumulative Cost
as of 3/31/23
|
|
Percent
Leased as
of
4/24/23
|
|
|
|
|
(Square feet)
|
|
|
|
(In thousands)
|
|
|
Grand West Crossing
1
|
|
Houston, TX
|
|
121,000
|
|
|
02/2023
|
|
$
|
13,204
|
|
|
100 %
|
SunCoast 11
|
|
Fort Myers,
FL
|
|
79,000
|
|
|
02/2023
|
|
9,766
|
|
|
100 %
|
Cypress Preserve 1
& 2(1)
|
|
Houston, TX
|
|
516,000
|
|
|
03/2023
|
|
54,128
|
|
|
100 %
|
Total
Projects Transferred
|
|
|
|
716,000
|
|
|
|
|
$
|
77,098
|
|
|
100 %
|
|
|
|
|
|
|
|
|
|
|
|
Projected Stabilized
Yield (2)
|
|
5.8 %
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents value-add
acquisition.
|
(2)
|
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 $1.25 per share in the first quarter of 2023. The
first quarter dividend, which was paid on April 14, 2023, was the Company's
173rd consecutive quarterly cash distribution to
shareholders. The Company has increased or maintained
its dividend for 30 consecutive years and has increased it 27 years
over that period, including increases in each of the last 11
years. The annualized dividend rate of $5.00 per share yielded 3.0% on the closing stock
price of $166.26 on April 24,
2023.
FINANCIAL STRENGTH AND FLEXIBILITY
EastGroup continues to maintain a strong and flexible balance
sheet. Debt-to-total market capitalization was 19.8% at
March 31, 2023. For the first quarter of 2023, the
Company's interest and fixed charge coverage ratio was 7.21x and
its ratio of debt to earnings before interest, taxes, depreciation
and amortization for real estate ("EBITDAre") was 4.79x. EBITDAre
and the Company's interest and fixed charge coverage ratio are
non-GAAP financial measures defined
under Definitions later in this release.
Reconciliations of Net Income to EBITDAre and the Company's
interest and fixed charge coverage ratio are presented in the
attached schedule "Reconciliations of GAAP to Non-GAAP
Measures."
During the first quarter, EastGroup issued and sold, and
subsequently settled the issuance of, 652,909 shares of common
stock under its continuous common equity offering program at a
weighted average price of $163.55 per
share, providing aggregate net proceeds to the Company of
approximately $105,321,000. In
addition, on March 30 and
March 31, 2023, the Company sold
168,125 shares of common stock at a weighted average price of
$163.35. These shares were deemed to
be issued and outstanding upon settlement in April 2023.
EastGroup and a group of banks agreed to expand the capacity on
its unsecured bank credit facilities from $475,000,000 to $675,000,000 effective January 2023. In conjunction with the amendment,
LIBOR was replaced by SOFR as the benchmark interest rate. There
were no other material changes, and the maturity date remains
July 30, 2025.
Also in January 2023, the Company
closed a $100,000,000 senior
unsecured term loan with a seven-year term and interest only
payments, which bears interest at the annual rate of SOFR plus an
applicable margin (1.35% as of March 31, 2023) based on the
Company's senior unsecured long-term debt rating. 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 effectively fixed interest rate of
5.27%.
On March 31, 2023, EastGroup
repaid a $65,000,000 senior unsecured
term loan with a total effectively fixed interest rate of 2.31%.
The loan, which was scheduled to mature on April 1, 2023, was repaid with no penalty.
OUTLOOK FOR 2023
EPS for 2023 is now estimated to be in the range of $3.73 to $3.85. FFO per share attributable to
common stockholders for 2023 is now estimated to be in the range of
$7.49 to $7.61. 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 2023, 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 2023
|
|
Y/E 2023
|
|
Q2 2023
|
|
Y/E 2023
|
|
|
(In thousands, except per share
data)
|
Net income attributable
to common stockholders
|
|
$
|
39,074
|
|
|
165,698
|
|
|
41,742
|
|
|
171,030
|
|
Depreciation and
amortization
|
|
42,301
|
|
|
172,118
|
|
|
42,301
|
|
|
172,118
|
|
Gain on sales of real
estate investments and non-operating real estate
|
|
—
|
|
|
(4,890)
|
|
|
—
|
|
|
(4,890)
|
|
Funds from operations
attributable to common stockholders*
|
|
$
|
81,375
|
|
|
332,926
|
|
|
84,043
|
|
|
338,258
|
|
|
|
|
|
|
|
|
|
|
Diluted
shares
|
|
44,474
|
|
|
44,428
|
|
|
44,474
|
|
|
44,428
|
|
Per share data
(diluted):
|
|
|
|
|
|
|
|
|
Net
income attributable to common stockholders
|
|
$
|
0.88
|
|
|
3.73
|
|
|
0.94
|
|
|
3.85
|
|
Funds
from operations attributable to common stockholders
|
|
1.83
|
|
|
7.49
|
|
|
1.89
|
|
|
7.61
|
|
|
*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 2023
|
|
Initial Guidance for
Year 2023
|
|
Actual for Year 2022
|
FFO per
share
|
|
$7.49 -
$7.61
|
|
$7.30 -
$7.50
|
|
$7.00
|
FFO per share increase
over prior year
|
|
7.9 %
|
|
5.7 %
|
|
14.9 %
|
Same PNOI growth: cash
basis(1)
|
|
6.5% -
7.5%(2)
|
|
5.5% -
6.5%(2)
|
|
8.9 %
|
Average month-end
occupancy - operating portfolio
|
|
97.2% -
98.2%
|
|
96.7% -
97.7%
|
|
98.0 %
|
Lease termination fee
income
|
|
$425,000
|
|
$1.0
million
|
|
$2.7
million
|
Reserves of
uncollectible rent
(Currently no identified bad debt for
Q2-Q4)
|
|
$1.9
million
|
|
$2.0
million
|
|
$138,000
|
Development
starts:
|
|
|
|
|
|
|
Square feet
|
|
2.6
million
|
|
2.7
million
|
|
2.7
million
|
Projected total
investment
|
|
$340
million
|
|
$330
million
|
|
$329
million
|
Value-add property
acquisitions (Projected total
investment)
|
|
none
|
|
none
|
|
$135
million
|
Operating property
acquisitions
|
|
$60
million
|
|
$50
million
|
|
$378
million
|
Operating property
dispositions
(Potential gains
on dispositions are not included in the projections)
|
|
$75
million
|
|
$70
million
|
|
$52
million
|
Unsecured debt closing
in period
|
|
$200 million at
5.50%
weighted
average interest rate
|
|
$350 million at
5.00%
weighted
average interest rate
|
|
$525 million at
3.82%
weighted
average interest rate
|
Common stock
issuances
|
|
$180
million
|
|
$100
million
|
|
$75
million
|
General and
administrative expense
|
|
$17.8
million
|
|
$17.4
million
|
|
$16.4
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 1/1/22 and are
projected to be in the operating portfolio through 12/31/23;
includes 46,437,000 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.
FFO Excluding Gain on Casualties and Involuntary Conversion is
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
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 2023 on
Wednesday, April 26, 2023, 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 3, 2023. The telephone
replay can be accessed by dialing 1-877-344-7529 (access code
3260585), 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 57.1 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), Twitter
(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," 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;
- 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;
- 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 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.
EASTGROUP PROPERTIES, INC. AND
SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
|
(UNAUDITED)
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2023
|
|
2022
|
REVENUES
|
|
|
|
|
Income from real estate
operations
|
|
$
|
133,964
|
|
|
112,952
|
|
Other
revenue
|
|
1,061
|
|
|
22
|
|
|
|
135,025
|
|
|
112,974
|
|
EXPENSES
|
|
|
|
|
Expenses from real
estate operations
|
|
36,186
|
|
|
31,064
|
|
Depreciation and
amortization
|
|
41,014
|
|
|
36,341
|
|
General and
administrative
|
|
5,204
|
|
|
4,310
|
|
Indirect leasing
costs
|
|
140
|
|
|
175
|
|
|
|
82,544
|
|
|
71,890
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Interest
expense
|
|
(13,025)
|
|
|
(8,110)
|
|
Gain on sales of real
estate investments
|
|
4,809
|
|
|
30,352
|
|
Other
|
|
439
|
|
|
278
|
|
NET INCOME
|
|
44,704
|
|
|
63,604
|
|
Net income attributable
to noncontrolling interest in joint ventures
|
|
(14)
|
|
|
(24)
|
|
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
|
|
44,690
|
|
|
63,580
|
|
Other comprehensive
income (loss) - interest rate swaps
|
|
(10,262)
|
|
|
15,828
|
|
TOTAL COMPREHENSIVE INCOME
|
|
$
|
34,428
|
|
|
79,408
|
|
|
|
|
|
|
BASIC PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
|
1.02
|
|
|
1.54
|
|
Weighted average shares
outstanding
|
|
43,751
|
|
|
41,246
|
|
DILUTED PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
|
1.02
|
|
|
1.54
|
|
Weighted average shares
outstanding
|
|
43,823
|
|
|
41,359
|
|
EASTGROUP PROPERTIES, INC. AND
SUBSIDIARIES
|
RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
|
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
|
|
$
|
44,690
|
|
|
63,580
|
|
Depreciation and
amortization
|
|
41,014
|
|
|
36,341
|
|
Company's share of
depreciation from unconsolidated investment
|
|
31
|
|
|
31
|
|
Depreciation and
amortization from noncontrolling interest
|
|
(1)
|
|
|
(3)
|
|
Gain on sales of real
estate investments
|
|
(4,809)
|
|
|
(30,352)
|
|
Gain on sales of
non-operating real estate
|
|
(81)
|
|
|
—
|
|
FUNDS FROM OPERATIONS ("FFO") ATTRIBUTABLE TO COMMON
STOCKHOLDERS*
|
|
80,844
|
|
|
69,597
|
|
Gain on casualties and
involuntary conversion
|
|
(1,027)
|
|
|
—
|
|
FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS EXCLUDING
GAIN ON CASUALTIES AND INVOLUNTARY
CONVERSION*
|
|
$
|
79,817
|
|
|
69,597
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
44,704
|
|
|
63,604
|
|
Interest
expense (1)
|
|
13,025
|
|
|
8,110
|
|
Depreciation and
amortization
|
|
41,014
|
|
|
36,341
|
|
Company's share of
depreciation from unconsolidated investment
|
|
31
|
|
|
31
|
|
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA")
|
|
98,774
|
|
|
108,086
|
|
Gain on sales of real
estate investments
|
|
(4,809)
|
|
|
(30,352)
|
|
Gain on sales of
non-operating real estate
|
|
(81)
|
|
|
—
|
|
EBITDA FOR REAL ESTATE
("EBITDAre")*
|
|
$
|
93,884
|
|
|
77,734
|
|
|
|
|
|
|
Debt
|
|
$
|
1,797,595
|
|
|
1,464,516
|
|
Debt-to-EBITDAre ratio*
|
|
4.79
|
|
|
4.71
|
|
DILUTED PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
|
1.02
|
|
|
1.54
|
|
FFO attributable to
common stockholders
|
|
$
|
1.84
|
|
|
1.68
|
|
FFO Excluding Gain on
Casualties and Involuntary Conversion attributable to common
stockholders
|
|
$
|
1.82
|
|
|
1.68
|
|
Weighted average shares
outstanding for EPS and FFO purposes
|
|
43,823
|
|
|
41,359
|
|
|
(1) Net
of capitalized interest of $3,735 and $2,244 for the three months
ended March 31, 2023 and 2022, 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,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
NET INCOME
|
|
$
|
44,704
|
|
|
63,604
|
|
Gain on sales of real
estate investments
|
|
(4,809)
|
|
|
(30,352)
|
|
Gain on sales of
non-operating real estate
|
|
(81)
|
|
|
—
|
|
Interest
income
|
|
(81)
|
|
|
—
|
|
Other
revenue
|
|
(1,061)
|
|
|
(22)
|
|
Indirect leasing
costs
|
|
140
|
|
|
175
|
|
Depreciation and
amortization
|
|
41,014
|
|
|
36,341
|
|
Company's share of
depreciation from unconsolidated investment
|
|
31
|
|
|
31
|
|
Interest
expense (1)
|
|
13,025
|
|
|
8,110
|
|
General and
administrative expense (2)
|
|
5,204
|
|
|
4,310
|
|
Noncontrolling interest
in PNOI of consolidated joint ventures
|
|
(16)
|
|
|
(21)
|
|
PROPERTY NET OPERATING INCOME
("PNOI")*
|
|
98,070
|
|
|
82,176
|
|
PNOI from 2022
acquisitions
|
|
(4,039)
|
|
|
—
|
|
PNOI from 2022 and 2023
development and value-add properties
|
|
(9,591)
|
|
|
(1,896)
|
|
PNOI from 2022 and 2023
operating property dispositions
|
|
94
|
|
|
(273)
|
|
Other PNOI
|
|
112
|
|
|
11
|
|
SAME PNOI (Straight-Line
Basis)*
|
|
84,646
|
|
|
80,018
|
|
Lease termination fee
income from same properties
|
|
(38)
|
|
|
(1,394)
|
|
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS
(Straight-Line Basis)*
|
|
84,608
|
|
|
78,624
|
|
Straight-line rent
adjustments for same properties
|
|
(245)
|
|
|
(2,075)
|
|
Acquired leases -
market rent adjustment amortization for same properties
|
|
(161)
|
|
|
(713)
|
|
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS
(Cash Basis)*
|
|
$
|
84,202
|
|
|
75,836
|
|
|
(1) Net of
capitalized interest of $3,735 and $2,244 for the three months
ended March 31, 2023 and 2022, respectively.
|
(2) Net of
capitalized development costs of $2,455 and $2,469 for the three
months ended March 31, 2023 and 2022, respectively.
|
*This is a non-GAAP financial measure. Please refer to
Definitions.
|
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SOURCE EastGroup Properties