EastGroup Properties Inc. Q2 2024 10-Q Filing

TL;DR

**EGP Q2 10-Q filed. Financials and ops details out.**

AI Summary

EastGroup Properties Inc. filed its 10-Q for the period ending June 30, 2024. The filing details financial performance and operational updates for the second quarter of 2024. Key financial figures and business activities are presented, reflecting the company's ongoing operations in the real estate sector.

Why It Matters

This filing provides investors with a detailed look at EastGroup Properties' financial health and strategic direction for the second quarter of 2024, impacting investment decisions.

Risk Assessment

Risk Level: medium — As a real estate investment trust, EastGroup Properties is subject to market fluctuations, interest rate changes, and economic downturns that can impact property values and rental income.

Key Players & Entities

• EASTGROUP PROPERTIES INC (company) — Filer of the 10-Q
• 0000049600 (company) — Central Index Key for EastGroup Properties Inc.
• 20240630 (date) — Period of report for the 10-Q
• 20240724 (date) — Filing date of the 10-Q

FAQ

Key Financial Figures

• $0.0001 — ange on which registered Common stock, $0.0001 par value per share EGP New York Stock

Filing Documents

• egp-20240630.htm (10-Q) — 1414KB
• exhibit101directorcompen.htm (EX-10.1) — 6KB
• exhibit311q22024.htm (EX-31.1) — 10KB
• exhibit312q22024.htm (EX-31.2) — 10KB
• exhibit321q22024.htm (EX-32.1) — 4KB
• exhibit322q22024.htm (EX-32.2) — 4KB
• egp-20240630_g1.jpg (GRAPHIC) — 29KB
• exhibit101directorcompen001.jpg (GRAPHIC) — 208KB
• exhibit101directorcompen002.jpg (GRAPHIC) — 160KB
• 0000049600-24-000088.txt ( ) — 7405KB
• egp-20240630.xsd (EX-101.SCH) — 53KB
• egp-20240630_cal.xml (EX-101.CAL) — 66KB
• egp-20240630_def.xml (EX-101.DEF) — 187KB
• egp-20240630_lab.xml (EX-101.LAB) — 557KB
• egp-20240630_pre.xml (EX-101.PRE) — 349KB
• egp-20240630_htm.xml (XML) — 1065KB

Financial Statements

Financial Statements Consolidated Balance Sheets, June 30, 2024 and December 31, 2023 (unaudited) 4 Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2024 and 2023 (unaudited) 5 Consolidated Statements of Changes in Equity for the six months ended June 30, 2024 and 2023 (unaudited) 6 Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited) 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 9 Item 2.

Management's Discussion and Analysis of Financial Condition

Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 40 Item 4.

Controls and Procedures

Controls and Procedures 41 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 41 Item 1A.

Risk Factors

Risk Factors 41 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 Item 3. Defaults Upon Senior Securities 41 Item 4. Mine Safety Disclosures 41 Item 5. Other Information 42 Item 6. Exhibits 42

SIGNATURES

SIGNATURES Authorized signatures 43 -3-

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION.

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS. EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) June 30, 2024 December 31, 2023 ASSETS Real estate properties $ 5,039,199 4,853,548 Development and value-add properties 693,072 639,647 5,732,271 5,493,195 Less accumulated depreciation ( 1,336,535 ) ( 1,273,723 ) 4,395,736 4,219,472 Unconsolidated investment 7,393 7,539 Cash and cash equivalents 39,400 40,263 Other assets 272,164 251,939 TOTAL ASSETS $ 4,714,693 4,519,213 LIABILITIES AND EQUITY LIABILITIES Unsecured bank credit facilities, net of debt issuance costs $ ( 4,100 ) ( 1,520 ) Unsecured debt, net of debt issuance costs 1,676,799 1,676,347 Accounts payable and accrued expenses 188,837 146,337 Other liabilities 86,210 89,415 Total Liabilities 1,947,746 1,910,579 EQUITY Stockholders' Equity: Common shares; $ 0.0001 par value; 70,000,000 shares authorized; 48,652,525 shares issued and outstanding at June 30, 2024 and 47,700,432 at December 31, 2023 5 5 Excess shares; $ 0.0001 par value; 30,000,000 shares authorized; no shares issued — — Additional paid-in capital 3,112,554 2,949,907 Distributions in excess of earnings ( 375,556 ) ( 366,473 ) Accumulated other comprehensive income 29,687 24,888 Total Stockholders' Equity 2,766,690 2,608,327 Noncontrolling interest in joint ventures 257 307 Total Equity 2,766,947 2,608,634 TOTAL LIABILITIES AND EQUITY $ 4,714,693 4,519,213 See accompanying Notes to Consolidated Financial Statements (unaudited). -4- EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 REVENUES Income from real estate operations $ 157,333 138,811 311,407 272,775 Other revenue 1,757 1,076 1,907 2,137 159,090 139,887 313,314 274,912 EXPENSES Expenses from

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION The accompanying unaudited financial statements of EastGroup Properties, Inc. ("EastGroup" or "the Company") have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The financial statements should be read in conjunction with the financial statements contained in the Company's annual report on Form 10-K for the year ended December 31, 2023 and the notes thereto. (2) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of EastGroup, its wholly owned subsidiaries and the investee of any joint ventures in which the Company has a controlling interest. As of June 30, 2024 and December 31, 2023, EastGroup had a 95 % controlling interest in a joint venture arrangement owning 6.5 acres of land in San Diego, known by the Company as Miramar Land. During the year ended December 31, 2023, a joint venture, in which EastGroup owns a 99.5 % interest, acquired 29.3 acres of land in Denver, known by the Company as Arista 36 Business Park 1-3. As of June 30, 2024 and December 31, 2023, EastGroup continued to hold a controlling interest in these two joint venture arrangements. The Company records 100% of the assets, liabilities, revenues and expenses of the buildings and land held in joint ventures with the noncontrolling interests provided for in accordance with the joint venture agreements. The equity method of accounting is used for the Company's 50 % undivided tenant-in-common interest in Industry Distribution Center 2. All significant intercompany

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Depreciation of buildings and other improvements is computed using the straight-line method over estimated useful lives of generally 40 years for buildings and 3 to 15 years for improvements. Building improvements are capitalized, while maintenance and repair expenses are charged to expense as incurred. Significant renovations and improvements that improve or extend the useful life of the assets are capitalized. Depreciation expense was $ 37,646,000 and $ 74,851,000 for the three and six months ended June 30, 2024, respectively, and $ 34,690,000 and $ 68,536,000 for the same periods in 2023. The Company's Real estate properties and Development and value-add properties at June 30, 2024 and December 31, 2023 were as follows: June 30, 2024 December 31, 2023 (In thousands) Real estate properties: Land $ 850,349 814,364 Buildings and building improvements 3,459,744 3,336,615 Tenant and other improvements 711,773 684,573 Right of use assets — Ground leases (operating) (1) 17,333 17,996 Development and value-add properties (2) 693,072 639,647 5,732,271 5,493,195 Less accumulated depreciation ( 1,336,535 ) ( 1,273,723 ) $ 4,395,736 4,219,472 (1) EastGroup applies the principles of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 842, Leases, and its related Accounting Standards Updates ("ASUs") to account for its ground leases, which are classified as operating leases. The related operating lease liabilities for ground leases are included in Other liabilities on the Consolidated Balance Sheets. (2) Value-add properties are defined in Note 6. (6) DEVELOPMENT AND VALUE-ADD PROPERTIES Development and value-add properties consists of properties in lease-up, under construction, and prospective development (primarily land). Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use. Ac

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company capitalized acquisition costs related to its 2023 and 2024 acquisitions. The FASB Codification also provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their respective fair values. The allocation to tangible assets (land, building and improvements) is based upon management's determination of the value of the property as if it were vacant using discounted cash flow models. Land is valued using comparable land sales specific to the applicable market, provided by a third party. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates. The purchase price is also allocated among the following categories of intangible assets: the above or below market component of in-place leases and the value of leases in-place at the time of acquisition. The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term and (ii) management's estimate of the amounts that would be paid using current market rents over the remaining term of the lease. The amounts allocated to above and below market lease intangibles are included in Other assets and Other liabilities , respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. In-place lease inta

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes the allocation of the total consideration for the acquired assets and assumed liabilities in connection with the acquisitions identified in the table above which were acquired during the six months ended June 30, 2024. ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2024 Cost (In thousands) Land $ 28,251 Buildings and building improvements 69,476 Tenant and other improvements 4,267 Total real estate properties acquired 101,994 In-place lease intangibles (1) 6,269 Above market lease intangibles (1) 121 Below market lease intangibles (2) ( 580 ) Total assets acquired, net of liabilities assumed $ 107,804 (1) In-place lease intangibles and above market lease intangibles are each included in Other assets on the Consolidated Balance Sheets. These costs are amortized over the remaining terms of the associated leases in place at the time of acquisition. (2) Below market lease intangibles are included in Other liabilities on the Consolidated Balance Sheets. These costs are amortized over the remaining terms of the associated leases in place at the time of acquisition. The leases in the properties acquired during the six months ended June 30, 2024 had a weighted average remaining lease term at acquisition of approximately 5.9 years. Also during the six months ended June 30, 2024, EastGroup purchased 34.3 acres of development land in Atlanta for $ 3,302,000 . During 2023, EastGroup acquired the following properties: REAL ESTATE PROPERTIES ACQUIRED IN 2023 Location Size Date Acquired Cost (1) (Square feet) (In thousands) Operating properties acquired (2)(3) Craig Corporate Center Las Vegas, NV 156,000 04/18/2023 $ 34,365 Blue Diamond Business Park Las Vegas, NV 254,000 09/05/2023 52,973 McKinney Logistics Center Dallas, TX 193,000 10/02/2023 25,739 Park at Myatt Nashville, TN 171,000 11/03/2023 30,793 Pelzer Point Commerce Center 1 Greenville, SC 213,000 12/

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes the allocation of the total consideration for the acquired assets and assumed liabilities in connection with the acquisitions identified in the table above which were acquired during the year ended December 31, 2023. ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2023 Cost (In thousands) Land $ 44,676 Buildings and building improvements 111,082 Tenant and other improvements 4,346 Total real estate properties acquired 160,104 In-place lease intangibles (1) 7,242 Below market lease intangibles (2) ( 2,230 ) Total assets acquired, net of liabilities assumed $ 165,116 (1) In-place lease intangibles and above market lease intangibles

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