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,
Miss., April 26, 2022 /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, 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."
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.
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.
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%.
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
|
|
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
(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
|
|
(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
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.
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;
- 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.
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)
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
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
|
|
|
|
|
|
|
Debt
|
|
$
|
1,464,516
|
|
|
1,286,063
|
|
Debt-to-EBITDAre
ratio
|
|
4.71
|
|
|
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
|
|
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.
|
EASTGROUP PROPERTIES, INC. AND
SUBSIDIARIES
|
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
(Continued)
|
(IN THOUSANDS)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
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SOURCE EastGroup Properties