What changed in this filing

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Item 1. Financial Statements

2022-10-26 compared with 2022-07-27 · 142 added, 117 removed, 683 unchanged (27% of the section changed)

4 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

September 30,

2022 December 31,

20 unchanged sentences

70,000,000 shares authorized;

43,566,016 shares issued and outstanding at June 30, 2022 and 41,268,846 at December 31, 2021

43,573,951 shares issued and outstanding at September 30, 2022 and 41,268,846 at December 31, 2021

Excess shares;

14 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

15 unchanged sentences

COMMON STOCKHOLDERS 37,792 30,771 147,511 85,668

Other comprehensive income (loss) - interest rate swaps 6,841 ( 1,263 ) 22,669 6,951

Other comprehensive income - interest rate swaps 17,157 1,325 39,826 8,276

TOTAL COMPREHENSIVE INCOME $ 54,949 32,096 187,337 93,944

12 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

For the six months ended June 30, 2022:

For the nine months ended September 30, 2022:

Common Shares Additional

27 unchanged sentences

BALANCE, JUNE 30, 2022 4 2,263,072 ( 302,324 ) 23,971 1,351 1,986,074

Net income — — 37,792 — 25 37,817

Net unrealized change in fair value of interest rate swaps — — — 17,157 — 17,157

Common dividends declared – $ 1.25 per

— — ( 54,531 ) — — ( 54,531 )

Stock-based compensation, net of forfeitures

— 2,855 — — — 2,855

Issuance of 6,368 shares of common

stock, common stock offering, net of

— 1,010 — — — 1,010

Withheld 733 shares of common stock to satisfy tax withholding obligations in connection with the issuance of common stock

— ( 106 ) — — — ( 106 )

Net distributions to noncontrolling interest — — — — ( 90 ) ( 90 )

BALANCE, SEPTEMBER 30, 2022 $ 4 2,266,831 ( 319,063 ) 41,128 1,286 1,990,186

See accompanying Notes to Consolidated Financial Statements (unaudited).

3 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

For the six months ended June 30, 2021:

For the nine months ended September 30, 2021:

Common Shares Additional

27 unchanged sentences

BALANCE, JUNE 30, 2021 4 1,714,661 ( 338,423 ) ( 3,801 ) 890 1,373,331

Net income — — 30,771 — 21 30,792

Net unrealized change in fair value of interest rate swaps — — — 1,325 — 1,325

Common dividends declared –$ 0.90 per

— — ( 36,726 ) — — ( 36,726 )

Stock-based compensation, net of forfeitures

— 2,461 — — — 2,461

Issuance of 278,893 shares of common

stock, common stock offering, net of

— 48,626 — — — 48,626

Net distributions to noncontrolling interest — — — — ( 69 ) ( 69 )

BALANCE, SEPTEMBER 30, 2021 $ 4 1,765,748 ( 344,378 ) ( 2,476 ) 842 1,419,740

See accompanying Notes to Consolidated Financial Statements (unaudited).

3 unchanged sentences

(IN THOUSANDS)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES

55 unchanged sentences

The consolidated financial statements include the accounts of EastGroup, its wholly owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest.

As of June 30, 2022 and December 31, 2021, EastGroup held a controlling interest in two joint venture arrangements.

As of September 30, 2022 and December 31, 2021, EastGroup held a controlling interest in two joint venture arrangements.

In 2019, the Company acquired 6.5 acres of land in San Diego, known by the Company as the Miramar land.

1 unchanged sentence

During the year ended December 31, 2021, EastGroup began construction of Speed Distribution Center, a 519,000 square foot building on the Otay Mesa land, which was completed and transferred to the Company’s operating portfolio during the three months ended March 31, 2022.

As of June 30, 2022 and December 31, 2021, EastGroup had a 95 % controlling interest in the Miramar land and a 99 % controlling interest in Speed Distribution Center.

As of September 30, 2022 and December 31, 2021, EastGroup had a 95 % controlling interest in the Miramar land and a 99 % controlling interest in Speed Distribution Center.

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.

6 unchanged sentences

The Company’s primary revenue is rental income from business distribution space.

The table below presents the components of Income from real estate operations for the three and six months ended June 30, 2022 and 2021:

The table below presents the components of Income from real estate operations for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

14 unchanged sentences

future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

During the six month periods ended June 30, 2022 and 2021, the Company did not identify any impairment charges which should be recorded.

During the nine month periods ended September 30, 2022 and 2021, the Company did not identify any impairment charges which should be recorded.

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.

1 unchanged sentence

Significant renovations and improvements that improve or extend the useful life of the assets are capitalized.

Depreciation expense was $ 30,715,000 and $ 60,107,000 for the three and six months ended June 30, 2022, respectively, and $ 25,858,000 and $ 51,005,000 for the same periods in 2021.

The Company’s Real estate properties and Development and value-add properties at June 30, 2022 and December 31, 2021 were as follows:

Depreciation expense was $ 32,052,000 and $ 92,159,000 for the three and nine months ended September 30, 2022, respectively, and $ 26,599,000 and $ 77,604,000 for the same periods in 2021.

The Company’s Real estate properties and Development and value-add properties at September 30, 2022 and December 31, 2021 were as follows:

September 30,

2022 December 31,

30 unchanged sentences

Criteria considered in grouping similar assets include geographic location, market and operational risks and the physical characteristics of the assets.

EastGroup determined that its real estate property acquisitions in 2021 and the first six months of 2022 are considered to be acquisitions of groups of similar identifiable assets;

EastGroup determined that its real estate property acquisitions in 2021 and the first nine months of 2022 are considered to be acquisitions of groups of similar identifiable assets;

EASTGROUP PROPERTIES, INC.

15 unchanged sentences

These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease or the anticipated life of the customer relationship, as applicable.

Amortization expense for in-place lease intangibles was $ 2,198,000 and $ 4,663,000 for the three and six months ended June 30, 2022, respectively, and $ 1,307,000 and $ 2,738,000 for the same periods in 2021.

Amortization of above and below market lease intangibles increased rental income by $ 507,000 and $ 1,352,000 for the three and six months ended June 30, 2022, respectively, and $ 245,000 and $ 474,000 for the same periods in 2021.

Amortization expense for in-place lease intangibles was $ 2,541,000 and $ 7,204,000 for the three and nine months ended September 30, 2022, respectively, and $ 1,647,000 and $ 4,385,000 for the same periods in 2021.

Amortization of above and below market lease intangibles increased rental income by $ 605,000 and $ 1,957,000 for the three and nine months ended September 30, 2022, respectively, and $ 230,000 and $ 704,000 for the same periods in 2021.

EASTGROUP PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the six months ended June 30, 2022, EastGroup acquired the following properties:

During the nine months ended September 30, 2022, EastGroup acquired the following properties:

REAL ESTATE PROPERTIES ACQUIRED IN 2022

17 unchanged sentences

Mesa Gateway Commerce Center Phoenix, AZ 147,000 04/15/2022 18,315

Access Point 3 Greenville, SC 299,000 07/12/2022 21,127

Total value-add property acquisitions 1,044,000 122,921

Total acquired assets 2,750,000 $ 482,051

(1) Cost is calculated in accordance with FASB ASC 805, Business Combinations, and r epresents the sum of the purchase price, closing costs and capitalized acquisition costs.

(1) Cost is calculated in accordance with FASB ASC 805, Business Combinations, and represents the sum of the purchase price, closing costs and capitalized acquisition costs.

(2) Operating properties are defined as stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio;

10 unchanged sentences

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 acquisition identified in the table above which was acquired during the six months ended June 30, 2022.

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 was acquired during the nine months ended September 30, 2022.

ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2022

11 unchanged sentences

These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.

The leases in the properties acquired during the six months ended June 30, 2022 had a weighted average remaining lease term at acquisition of approximately 3.7 years.

Also during the six months ended June 30, 2022, the Company acquired 177.5 acres of development land in Miami, Houston, Phoenix, San Francisco, Sacramento and Atlanta for $ 54,751,000 .

The leases in the properties acquired during the nine months ended September 30, 2022 had a weighted average remaining lease term at acquisition of approximately 3.9 years.

Also during the nine months ended September 30, 2022, the Company acquired 286.0 acres of development land in nine cities for $ 77,645,000 .

The land acquisitions in San Francisco and Sacramento were acquired in connection with the Company’s acquisition of Tulloch Corporation in June 2022.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During 2021, EastGroup acquired the following properties:

16 unchanged sentences

Total acquired assets 1,806,000 $ 279,225

(1) Represents the sum of the purchase price, closing costs and capitalized acquisition costs.

(1) Cost is calculated in accordance with FASB ASC 805, Business Combinations, and represents the sum of the purchase price, closing costs and capitalized acquisition costs.

(2) Operating properties are defined as stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio;

3 unchanged sentences

(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.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

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, 2021.

16 unchanged sentences

(3) Operating lease liabilities - Ground leases are included in Other liabilities on the Consolidated Balance Sheets.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The leases in the properties acquired during the year ended December 31, 2021 had a weighted average remaining lease term at acquisition of approximately 2.9 years.

1 unchanged sentence

The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment.

No impairment of goodwill or other intangibles existed during the three and six month periods ended June 30, 2022 and 2021.

No impairment of goodwill or other intangibles existed during the three and nine month periods ended September 30, 2022 and 2021.

(8) REAL ESTATE SOLD AND HELD FOR SALE

1 unchanged sentence

Real estate properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale.

The Company did not classify any properties as held for sale as of June 30, 2022.

The Company did not classify any properties as held for sale as of September 30, 2022.

As of December 31, 2021, the Company owned one operating property that was classified as held for sale on the December 31, 2021 Consolidated Balance Sheet.

3 unchanged sentences

EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.

The Company sold operating properties during the six months ended June 30, 2022, as shown in the table below.

The Company sold operating properties during the nine months ended September 30, 2022, as shown in the table below.

The results of operations and gains and losses on sales for the properties sold are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income.

1 unchanged sentence

The Company did not consider its sales in 2022 to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of Gain on sales of real estate investments for the six months ended June 30, 2022 and the year ended December 31, 2021 follows:

A summary of Gain on sales of real estate investments for the nine months ended September 30, 2022 and the year ended December 31, 2021 follows:

REAL ESTATE PROPERTIES SOLD Location Size Date Sold Net Sales Price Basis Recognized Gain

8 unchanged sentences

In conjunction with the sale of the property, the Company fully amortized the associated right-of-use asset and liability of $ 1,745,000 .

The Company had no sales during the six months ended June 30, 2021.

The Company had no sales during the nine months ended September 30, 2021.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(9) OTHER ASSETS

A summary of the Company’s Other assets follows:

September 30,

2022 December 31,

13 unchanged sentences

Right of use assets — Office leases (operating) 2,015 1,984

Escrow deposits for pending acquisitions 4,450 3,050

Escrow deposits and prepaid costs for pending transactions 5,198 3,864

Prepaid insurance 3,826 7,793

4 unchanged sentences

$ 241,163 182,220

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company’s debt is detailed below:

September 30,

2022 December 31,

12 unchanged sentences

(1) These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Until June 29, 2021, EastGroup had $ 350 million and $ 45 million unsecured bank credit facilities with margins over London Interbank Offered Rate (“LIBOR”) of 100 basis points, facility fees of 20 basis points and maturity dates of July 30, 2022 .

2 unchanged sentences

The credit facility contains options for two six-month extensions (at the Company's election) and a $ 325 million accordion (with agreement by all parties).

The interest rate on each tranche is reset on a monthly basis and as of June 30, 2022, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points.

As of June 30, 2022, the Company had $ 170,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 2.058 %.

The interest rate on each tranche is reset on a monthly basis and as of September 30, 2022, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points.

As of September 30, 2022, the Company had $ 120,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 3.752 %.

The Company's $ 50 million unsecured bank credit facility has a maturity date of July 30, 2025 , or such later date as designated by the bank;

the Company also has two six-month extensions available if the extension options in the $ 425 million facility are exercised.

The interest rate is reset on a daily basis and as of June 30, 2022, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points.

As of June 30, 2022, the interest rate was 2.562 % on a balance of $ 36,419,000 .

The interest rate is reset on a daily basis and as of September 30, 2022, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points.

As of September 30, 2022, the interest rate was 3.918 % on a balance of $ 35,883,000 .

For both facilities, the margin and facility fee are subject to changes in the Company's credit ratings.

4 unchanged sentences

The notes 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.

The notes will not be and have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), 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 $ 75 million unsecured term loan at maturity with an effectively fixed interest rate of 3.03 %.

In March 2022, the Company closed a $ 100 million senior unsecured term loan with a 6.5 -year term and interest only payments, which bears interest at an annual rate of the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

( 1.30 % as of June 30, 2022) 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 3.06 %.

3 unchanged sentences

In June 2022, the Company assumed a $ 60 million loan in connection with the acquisition of Tulloch Corporation, the owner of an industrial real estate portfolio comprised of 14 operating properties and two parcels of land, which was immediately repaid with no penalty during June 2022.

Also during June 2022, the Company agreed to terms with a bank on a $ 75 million senior unsecured term loan with interest- only payments, bearing 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 is expected to close in the third quarter of 2022 and have a five -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 4.00 %.

Scheduled principal payments on long-term debt, including Unsecured debt, net of debt issuance costs and Secured debt, net of debt issuance costs (not including Unsecured bank credit facilities, net of debt issuance costs ), as of June 30, 2022, are as follows:

In August 2022, the Company closed a $ 125 million senior unsecured term loan with interest only payments, bearing 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 $ 75 million tranche with a five -year term and a $ 50 million tranche with a two -year term.

The Company also entered into interest rate swap agreements to convert the loans’ SOFR rate components to fixed interest rates for the entire term of the loans, providing total effectively fixed interest rates of 4.00 % and 4.09 % on the $ 75 million and $ 50 million tranches, respectively.

In July 2022, the Company and a group of lenders agreed to terms on the private placement of two senior unsecured notes totaling $ 150 million.

One note for $ 75 million has an 11 -year term and a fixed interest rate of 4.90 % with semi-annual

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

interest-only payments.

The other $ 75 million note has a 12 -year term and a fixed interest rate of 4.95 % with semi-annual interest-only payments.

The notes, dated August 16, 2022, were issued and sold on October 12, 2022.

The notes will not be and have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Years Ending December 31, (In thousands)

2 unchanged sentences

Total $ 1,547,071

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(11) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

A summary of the Company’s Accounts payable and accrued expenses follows:

September 30,

2022 December 31,

13 unchanged sentences

When the checks clear the bank, they will be funded through the Company’s working cash line of credit, which is included in the Company’s Unsecured bank credit facilities.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(12) OTHER LIABILITIES

A summary of the Company’s Other liabilities follows:

September 30,

2022 December 31,

12 unchanged sentences

$ 83,459 82,338

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(13) COMPREHENSIVE INCOME

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Balance at beginning of period $ 23,971 ( 3,801 ) 1,302 ( 10,752 )

Other comprehensive income (loss) - interest rate swaps 6,841 ( 1,263 ) 22,669 6,951

Other comprehensive income - interest rate swaps 17,157 1,325 39,826 8,276

Balance at end of period $ 41,128 ( 2,476 ) 41,128 ( 2,476 )

7 unchanged sentences

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of June 30, 2022, the Company had six interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of September 30, 2022, the Company had seven interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans.

All of the Company’s interest rate swaps convert the related loans’ LIBOR or SOFR rate components to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective.

9 unchanged sentences

dollar LIBOR as a reference rate as soon as practicable and in any event no later than December 31, 2021.

In the U.S., the Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

that SOFR plus a recommended spread adjustment as its preferred alternative to USD-LIBOR.

In the U.S., the Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended SOFR plus a recommended spread adjustment as its preferred alternative to USD-LIBOR.

There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities.

3 unchanged sentences

The value of loans, securities or derivative instruments tied to LIBOR could also be impacted.

During the six months ended June 30, 2022, the Company entered into a new term loan and two swap agreements which are indexed to SOFR.

Also, during the six months ended June 30, 2022, EastGroup refinanced an existing term loan modifying the index from LIBOR to SOFR and concurrently amended the related swap to reference SOFR rather than LIBOR.

The Company’s unsecured bank credit facilities and three of its senior unsecured term loans and interest rate swap contracts are indexed to LIBOR and include provisions for a replacement rate which we believe will be substantially equivalent to the all-in LIBOR-based interest rate in effect prior to its replacement.

During the nine months ended September 30, 2022, the Company entered into two new term loans and three swap agreements which are indexed to SOFR.

Also, during the nine months ended September 30, 2022, EastGroup refinanced two existing term loans modifying the index from LIBOR to SOFR and concurrently amended the related swaps to reference SOFR rather than LIBOR.

The Company’s unsecured bank credit facilities and two of its senior unsecured term loans and interest rate swap contracts are indexed to LIBOR and include provisions for a replacement rate which we believe will be substantially equivalent to the all-in LIBOR-based interest rate in effect prior to its replacement.

Therefore, management believes the transition will not have a material impact on the Company’s consolidated financial statements.

12 unchanged sentences

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

As of June 30, 2022 and December 31, 2021, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk:

Interest Rate Derivative Notional Amount as of June 30, 2022

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of September 30, 2022 and December 31, 2021, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk:

Interest Rate Derivative Notional Amount as of September 30, 2022

Notional Amount as of December 31, 2021

7 unchanged sentences

Interest Rate Swap $ 75,000 —

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021.

Interest Rate Swap $ 50,000 —

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021.

See Note 17 for additional information on the fair value of the Company’s interest rate swaps.

As of June 30, 2022

As of September 30, 2022

As of December 31, 2021

4 unchanged sentences

Interest rate swap liabilities Other liabilities — Other liabilities 935

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2022 and 2021:

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Interest Rate Swaps:

Amount of income (loss) recognized in Other comprehensive income (loss) on derivatives

Amount of income recognized in Other comprehensive income (loss) on derivatives

$ 18,162 247 39,517 5,015

Amount of loss reclassified from Accumulated other comprehensive income (loss) into Interest expense

Amount of (income) loss reclassified from Accumulated other comprehensive income (loss) into Interest expense

( 1,005 ) 1,078 309 3,261

3 unchanged sentences

The Company has an agreement with its derivative counterparties containing a provision stating that the Company could be declared in default on its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender.

If the Company breached any of these provisions it would be required to settle its obligations under the agreements at their termination value of $ 24,268,000 as of June 30, 2022.

If the Company breached any of these provisions it would be required to settle its obligations under the agreements at their termination value of $ 41,823,000 as of September 30, 2022.

(15) EARNINGS PER SHARE

The Company applies ASC 260, Earnings Per Share , which requires companies to present basic and diluted earnings per share (“EPS”).

Basic EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting period.

Basic EPS represents the amount of earnings for the period attributable to each share of common stock outstanding

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

during the reporting period.

The Company’s basic EPS is calculated by dividing Net Income Attributable to EastGroup Properties, Inc.

6 unchanged sentences

The dilutive effect of unvested restricted stock is determined using the treasury stock method.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

26 unchanged sentences

Restricted stock is granted to executive officers subject to both continued service and the satisfaction of certain annual performance goals and multi-year market conditions as determined by the Committee.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The long-term compensation awards include components based on the Company’s total shareholder return over the upcoming three -year period and the employee’s continued service as of the vesting dates.

5 unchanged sentences

The certain Company performance measures for 2022 are:

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

funds from operations (“FFO”) per share, (ii) cash same property net operating income change, (iii) debt-to-EBITDAre ratio, and (iv) fixed charge coverage.

(i) funds from operations (“FFO”) per share, (ii) cash same property net operating income change, (iii) debt-to-EBITDAre ratio, and (iv) fixed charge coverage.

The Company begins recognizing expense for its estimate of the shares that could be earned pursuant to these awards on the grant date;

8 unchanged sentences

The Company has adjusted its stock-based compensation expense to accelerate the recognition of expense for retirement-eligible employees.

Stock-based compensation cost for employees was $ 2,989,000 and $ 5,550,000 for the three and six months ended June 30, 2022, of which $ 645,000 and $ 1,336,000 were capitalized as part of the Company’s development costs.

For the three and six months ended June 30, 2021, stock-based compensation cost for employees was $ 2,189,000 and $ 4,333,000 , of which $ 479,000 and $ 1,029,000 were capitalized as part of the Company’s development costs.

Stock-based compensation expense for directors was $ 73,000 and $ 106,000 for the three and six months ended June 30, 2022, respectively, and $ 704,000 and $ 707,000 for the same periods in 2021.

Stock-based compensation cost for employees was $ 2,625,000 and $ 8,175,000 for the three and nine months ended September 30, 2022, of which $ 645,000 and $ 1,981,000 were capitalized as part of the Company’s development costs.

For the three and nine months ended September 30, 2021, stock-based compensation cost for employees was $ 2,458,000 and $ 6,791,000 , of which $ 632,000 and $ 1,661,000 were capitalized as part of the Company’s development costs.

Stock-based compensation expense for directors was $ 230,000 and $ 336,000 for the three and nine months ended September 30, 2022, respectively, and $ 3,000 and $ 710,000 for the same periods in 2021.

EASTGROUP PROPERTIES, INC.

2 unchanged sentences

Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to participants with the related weighted average grant date fair value share prices.

Of the shares that vested in the six months ended June 30, 2022, the Company withheld 34,251 shares to satisfy the tax obligations for those participants who elected this option as permitted under the applicable equity plan.

As of the grant dates, the fair value of shares that were granted during the six months ended June 30, 2022 was $ 9,560,000 .

As of the vesting dates, the aggregate fair value of shares that vested during the six months ended June 30, 2022 was $ 17,124,000 .

Of the shares that vested in the nine months ended September 30, 2022, the Company withheld 34,251 shares to satisfy the tax obligations for those participants who elected this option as permitted under the applicable equity plan.

As of the grant dates, the fair value of shares that were granted during the nine months ended September 30, 2022 was $ 9,560,000 .

As of the vesting dates, the aggregate fair value of shares that vested during the nine months ended September 30, 2022 was $ 17,132,000 .

Award Activity:

Three Months Ended

June 30, 2022 Six Months Ended June 30, 2022

September 30, 2022 Nine Months Ended September 30, 2022

Weighted Average Grant Date Fair Value

12 unchanged sentences

ASC 820 also provides guidance for using fair value to measure financial assets and liabilities.

The Codification requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2) and significant valuation assumptions that are not readily observable in the market (Level 3).

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820 at June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

The FASB Codification requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2) and significant valuation assumptions that are not readily observable in the market (Level 3).

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820 at September 30, 2022 and December 31, 2021.

September 30, 2022 December 31, 2021

Carrying Amount (1)

35 unchanged sentences

The state of the overall economy can significantly impact the Company’s operational performance and thus impact its financial position.

Should EastGroup experience a significant decline in operational performance due to the current coronavirus (“COVID-19”) pandemic or other general economic conditions, it may affect the Company’s ability to make distributions to its shareholders, service debt or meet other financial obligations.

Although COVID-19 has had an overall minimal impact on the Company in 2020, 2021 and during the first six months of 2022, EastGroup remains unable to predict any future impact that it may have on its business, financial condition, results of operations and cash flows.

Should EastGroup experience a significant decline in operational performance, it may affect the Company’s ability to make distributions to its shareholders, service debt or meet other financial obligations.

(19) LEGAL MATTERS

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(21) SUBSEQUENT EVENTS

Subsequent to June 30, 2022, the Company closed on the acquisition of Access Point 3 in Greenville, South Carolina for approximately $ 21.1 million.

This recently constructed 299,000 square foot building is currently in the lease-up phase of the development and value-add portfolio.

Also subsequent to June 30, 2022, EastGroup closed on the acquisition of two land parcels.

One site is 17.8 acres of undeveloped land in San Antonio.

This parcel was acquired for approximately $ 4.8 million and will accommodate the future development of three buildings containing approximately 225,000 square feet.

The other site is 33.2 acres located in Greenville and was acquired for approximately $ 1.2 million.

The Company has future plans to construct a building containing approximately 200,000 square feet on this site.

In July 2022, the Company agreed to terms with a bank on a $ 50 million senior unsecured term loan with interest-only payments, bearing 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 is expected to close in the third quarter of 2022 and have a 2 -year term.

Also in July 2022, the Company and a group of lenders agreed to terms on the private placement of two senior unsecured notes totaling $ 150 million.

One note for $ 75 million has an 11 -year term and a fixed interest rate of 4.90 % with semi-annual interest-only payments.

The other $ 75 million note has a 12 -year term and a fixed interest rate of 4.95 % with semi-annual interest-only payments.

The notes are expected to be issued and sold in October 2022.

Subsequent to September 30, 2022, EastGroup acquired 60.9 acres of development land in Atlanta for approximately $ 5.6 million.

The Company has future plans to construct five buildings totaling approximately 750,000 square feet.

Also subsequent to September 30, 2022, the Company closed on the acquisition of 87.5 acres of development land in Austin for approximately $ 30.1 million.

The Company has future plans to construct seven buildings totaling approximately 1,007,000 square feet.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements