What changed in this filing

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Item 1. Financial Statements

2023-07-26 compared with 2023-04-26 · 174 added, 111 removed, 569 unchanged (33% of the section changed)

11 unchanged sentences

Unconsolidated investment 7,785 7,230

Cash 9,390 56

Cash and cash equivalents 1,082 56

Other assets 254,533 244,944

11 unchanged sentences

70,000,000 shares authorized;

44,242,699 shares issued and outstanding at March 31, 2023 and 43,575,539 at December 31, 2022

45,323,836 shares issued and outstanding at June 30, 2023 and 43,575,539 at December 31, 2022

Excess shares;

14 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Income from real estate operations $ 138,811 118,498 272,775 231,450

19 unchanged sentences

Net income attributable to common stockholders $ 0.97 1.09 1.99 2.63

Weighted average shares outstanding 43,751 41,246

Weighted average shares outstanding - Basic 44,656 42,211 44,204 41,729

DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.

1 unchanged sentence

Net income attributable to common stockholders $ 0.97 1.09 1.99 2.62

Weighted average shares outstanding 43,823 41,359

Weighted average shares outstanding - Diluted 44,734 42,316 44,279 41,838

See accompanying Notes to Consolidated Financial Statements (unaudited).

3 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

For the three months ended March 31, 2023:

For the six months ended June 30, 2023:

Common Shares Additional

18 unchanged sentences

BALANCE, MARCH 31, 2023 4 2,355,476 ( 345,622 ) 26,109 415 2,036,382

For the three months ended March 31, 2022:

Net income — — 43,450 — 15 43,465

Net unrealized change in fair value of interest rate swaps — — — 10,202 — 10,202

Common dividends declared – $ 1.25 per

— — ( 56,762 ) — — ( 56,762 )

Stock-based compensation, net of forfeitures

— 2,771 — — — 2,771

Issuance of 1,065,678 shares of common

stock, common stock offering, net of expenses

— 177,749 — — — 177,749

Net distributions to noncontrolling interest — — — — ( 86 ) ( 86 )

BALANCE, JUNE 30, 2023 $ 4 2,535,996 ( 358,934 ) 36,311 344 2,213,721

See accompanying Notes to Consolidated Financial Statements (unaudited).

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

For the six months ended June 30, 2022:

Common Shares Additional

16 unchanged sentences

BALANCE, MARCH 31, 2022 4 1,956,328 ( 300,429 ) 17,130 1,356 1,674,389

Net income — — 46,139 — 26 46,165

Net unrealized change in fair value of interest rate swaps — — — 6,841 — 6,841

Common dividends declared – $ 1.10 per

— — ( 48,034 ) — — ( 48,034 )

Stock-based compensation, net of forfeitures

— 3,062 — — — 3,062

Issuance of 1,868,809 shares of common

stock, net of expenses, in the purchase of real estate

— 303,682 — — — 303,682

Net distributions to noncontrolling interest — — — — ( 31 ) ( 31 )

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

See accompanying Notes to Consolidated Financial Statements (unaudited).

3 unchanged sentences

(IN THOUSANDS)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

9 unchanged sentences

Accounts payable, accrued expenses and prepaid rent 22,291 28,104

Other 384 558

NET CASH PROVIDED BY OPERATING ACTIVITIES 178,779 176,152

1 unchanged sentence

Development and value-add properties ( 172,940 ) ( 283,451 )

Purchases of real estate ( 34,365 ) ( 2,049 )

Real estate improvements ( 28,733 ) ( 21,723 )

Net proceeds from sales of real estate investments 10,765 38,133

Net proceeds from sales of real estate investments and non-operating real estate 13,821 51,006

Leasing commissions ( 16,548 ) ( 18,362 )

Proceeds from casualties and involuntary conversion on real estate assets 1,339 —

Changes in accrued development costs 20,614 16,062

12 unchanged sentences

Other ( 4,911 ) ( 7,376 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ( 19,304 ) 33,206

NET CASH PROVIDED BY FINANCING ACTIVITIES 31,050 86,148

INCREASE IN CASH AND CASH EQUIVALENTS 1,026 1,162

5 unchanged sentences

Cash paid for operating lease liabilities 1,134 962

Common stock issued in the purchase of real estate — 303,682

Debt assumed in the purchase of real estate — 60,000

NON-CASH OPERATING ACTIVITY

Operating lease liabilities arising from obtaining right of use assets $ — 398

See accompanying Notes to Consolidated Financial Statements (unaudited).

12 unchanged sentences

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 March 31, 2023 and December 31, 2022, EastGroup had a 95 % controlling interest in one joint venture arrangement, which owns 6.5 acres of land in San Diego, known by the Company as the Miramar land.

As of June 30, 2023 and December 31, 2022, EastGroup had a 95 % controlling interest in one joint venture arrangement, which owns 6.5 acres of land in San Diego, known by the Company as the Miramar land.

During the year ended December 31, 2022, EastGroup acquired the 1 % noncontrolling interest in Speed Distribution Center, a 519,000 square foot building in San Diego, in which the Company held a 99 % controlling interest.

8 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 months ended March 31, 2023 and 2022:

Three Months Ended March 31,

The table below presents the components of Income from real estate operations for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

(In thousands)

8 unchanged sentences

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows (including estimated future expenditures necessary to substantially complete the asset) expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair

If the carrying amount of an asset exceeds its estimated 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, 2023 and 2022, the Company did not identify any impairment charges which should be recorded.

EASTGROUP PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

value of the asset.

During the three month periods ended March 31, 2023 and 2022, 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 $ 33,846,000 and $ 29,392,000 for the three months ended March 31, 2023 and 2022, respectively.

The Company’s Real estate properties and Development and value-add properties at March 31, 2023 and December 31, 2022 were as follows:

Depreciation expense was $ 34,690,000 and $ 68,536,000 for the three and six months ended June 30, 2023, respectively, and $ 30,715,000 and $ 60,107,000 for the same periods in 2022.

The Company’s Real estate properties and Development and value-add properties at June 30, 2023 and December 31, 2022 were as follows:

2023 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 2022 are considered to be acquisitions of groups of similar identifiable assets;

EastGroup determined that its real estate property acquisitions in 2022 and the first six months of 2023 are considered to be acquisitions of groups of similar identifiable assets;

therefore, the acquisitions are not considered to be acquisitions of a business.

As a result, the Company capitalized acquisition costs related to its 2022 acquisitions.

There were no real estate property acquisitions during the three months ended March 31, 2023.

As a result, the Company capitalized acquisition costs related to its 2022 and 2023 acquisitions.

EASTGROUP PROPERTIES, INC.

12 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.

Amortization expense for in-place lease intangibles was $ 1,962,000 and $ 2,465,000 for the three months ended March 31, 2023 and 2022, respectively.

Amortization of above and below market lease intangibles increased rental income by $ 599,000 and $ 845,000 for the three months ended March 31, 2023 and 2022, respectively.

Amortization expense for in-place lease intangibles was $ 2,174,000 and $ 4,136,000 for the three and six months ended June 30, 2023, respectively, and $ 2,198,000 and $ 4,663,000 for the same periods in 2022.

Amortization of above and below market lease intangibles increased rental income by $ 696,000 and $ 1,295,000 for the three and six months ended June 30, 2023, respectively, and $ 507,000 and $ 1,352,000 for the same periods in 2022.

During six months ended June 30, 2023, EastGroup acquired the following property:

REAL ESTATE PROPERTY ACQUIRED IN 2023

Location Size Date

Acquired Cost (1)

(Square feet) (In thousands)

Operating property acquired (2)

Craig Corporate Center

Las Vegas, NV 156,000 04/18/2023 $ 34,365

(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;

included in Real estate properties on the Consolidated Balance Sheets.

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, 2023.

ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2023

(In thousands)

Land $ 13,913

Buildings and building improvements 18,202

Tenant and other improvements 646

Total real estate properties acquired 32,761

In-place lease intangibles (1)

Total assets acquired, net of liabilities assumed $ 34,365

(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 lives of the associated leases in place at the time of acquisition.

The lease in the property acquired during the six months ended June 30, 2023 had a remaining lease term at acquisition of approximately 10.1 years.

Also during the six months ended June 30, 2023, EastGroup purchased 116.7 acres of development land in three markets for $ 17,754,000 .

EASTGROUP PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

There were no real estate property acquisitions during the three months ended March 31, 2023.

During 2022, EastGroup acquired the following properties:

29 unchanged sentences

(4) Value-add properties are defined in Note 5.

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, 2022.

12 unchanged sentences

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

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The leases in the properties acquired during the year ended December 31, 2022 had a weighted average remaining lease term at acquisition of approximately 3.9 years.

Also during 2022, EastGroup purchased 456.3 acres of development land in 10 cities for $ 123,717,000 .

Also during 2022, EastGroup purchased 456.3 acres of development land in 10 markets for $ 123,717,000 .

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

2 unchanged sentences

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 month periods ended March 31, 2023 and 2022.

No impairment of goodwill or other intangibles existed during the three and six month periods ended June 30, 2023 and 2022.

(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 March 31, 2023 and December 31, 2022.

The Company did not classify any properties as held for sale as of June 30, 2023 and December 31, 2022.

In accordance with ASC 360 and ASC 205, Presentation of Financial Statements , the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale.

1 unchanged sentence

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

The Company sold an operating property during the three months ended March 31, 2023, as shown in the table below.

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

The Company sold one operating property during the six months ended June 30, 2023 and three operating properties during the year ended December 31, 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.

The gains and losses on sales are included in Gain on sales of real estate investments.

The Company did not consider its sale in 2023 to be a disposal 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 three months ended March 31, 2023 and the year ended December 31, 2022 follows:

The Company did not consider its sales in 2022 or 2023 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.

A summary of Gain on sales of real estate investments for the six months ended June 30, 2023 and the year ended December 31, 2022 follows:

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

9 unchanged sentences

The table above includes sales of operating properties.

During the three months ended March 31, 2023, the Company also sold a 2.0 acre parcel of land in Forth Worth, TX, for $ 1,550,000 and recognized a gain on the sale of $ 81,000 .

During the six months ended June 30, 2023, the Company also sold 11.9 acres of land in Houston and Fort Worth, for $ 4,750,000 and recognized gains on the sales of $ 446,000 .

The gains on sales of non-operating real estate are included in Other on the Consolidated Statements of Income and Comprehensive Income.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(9) OTHER ASSETS

22 unchanged sentences

$ 254,533 244,944

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company’s debt is detailed below:

13 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 January 10, 2023, EastGroup had $ 425,000,000 and $ 50,000,000 unsecured bank credit facilities with margins over London Interbank Offered Rate (“LIBOR”) of 77.5 basis points, facility fees of 15 basis points and maturity dates of July 30, 2025 .

2 unchanged sentences

The credit facility contains options for two six-month extensions (at the Company's election) and an additional $ 125,000,000 accordion (with agreement by all parties).

The interest rate on each tranche is reset on a monthly basis and as of March 31, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points.

As of March 31, 2023, the Company had $ 55,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 5.682 %.

The interest rate on each tranche is reset on a monthly basis and as of June 30, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points.

As of June 30, 2023, the Company had no variable rate borrowings on this unsecured bank credit facility and a weighted average interest rate of 6.006 %.

The Company has a standby letter of credit of $ 67,000 pledged on this facility, which reduces borrowing capacity under the credit facility.

1 unchanged sentence

the Company also has two six-month extensions available if the extension options in the $ 625,000,000 facility are exercised.

The interest rate is reset on a daily basis and as of March 31, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points.

As of March 31, 2023, the interest rate was 5.745 % on a balance of $ 17,027,000 .

The interest rate is reset on a daily basis and as of June 30, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points.

As of June 30, 2023, the interest rate was 5.955 % with no outstanding balance.

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

3 unchanged sentences

This sustainability metric is evaluated annually and was achieved for the year ended December 31, 2022, which effectively reduced the margin on the unsecured bank credit facilities during 2023 by one basis point from 77.5 to 76.5 basis points.

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.

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 June 30, 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 %.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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 March 31, 2023, are as follows:

Years Ending December 31, (In thousands)

2 unchanged sentences

Total $ 1,731,983

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(11) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

15 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

13 unchanged sentences

$ 85,844 83,666

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(13) COMPREHENSIVE INCOME

Total Comprehensive Income is comprised of net income plus all other changes in equity from non-owner sources and is presented on the Consolidated Statements of Income and Comprehensive Income.

The components of Accumulated other comprehensive income (loss) are presented in the Company’s Consolidated Statement of Changes in Equity and are summarized below.

The components of Accumulated other comprehensive income are presented in the Company’s Consolidated Statement of Changes in Equity and are summarized below.

See Note 14 for information regarding the Company’s interest rate swaps.

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

(In thousands)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):

ACCUMULATED OTHER COMPREHENSIVE INCOME:

Balance at beginning of period $ 26,109 17,130 36,371 1,302

9 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.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of March 31, 2023, the Company had seven interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans.

As of June 30, 2023, 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’ SOFR rate components to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective.

4 unchanged sentences

The Company calculates its derivative valuations using mid-market prices.

The Financial Conduct Authority announced it intended to stop compelling banks to submit rates for the calculation of LIBOR after June 30, 2023.

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.

On June 30, 2023, LIBOR’s administrator, ICE Benchmark Administration (IBA) ceased publication of the different tenors of USD LIBOR.

This cessation follows an announcement by the IBA’s regulator, the Financial Conduct Authority, in March 2021 that LIBOR would no longer be a representative rate beyond this date.

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

As a result, all of the Company’s remaining borrowings which were LIBOR-based have been amended to modify the index from LIBOR to SOFR.

1 unchanged sentence

The transition did not have a material impact on the Company’s consolidated financial statements.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

3 unchanged sentences

The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

Application of these expedients preserved the presentation of derivatives consistent with past presentation.

In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 , which was issued to defer the sunset date of Topic 848 to December 31, 2024.

ASU 2022-06 is effective immediately for all companies.

ASU 2022-06 has no impact on the Company’s consolidated financial statements for the three months ended March 31, 2023.

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 March 31, 2023 and December 31, 2022, 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 March 31, 2023

ASU 2022-06 had no impact on the Company’s consolidated financial statements for the three and six months ended June 30, 2023.

As of June 30, 2023 and December 31, 2022, 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, 2023

Notional Amount as of December 31, 2022

8 unchanged sentences

Interest Rate Swap $ 100,000 $ 100,000

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 March 31, 2023 and December 31, 2022.

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, 2023 and December 31, 2022.

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

As of March 31, 2023

As of June 30, 2023

As of December 31, 2022

4 unchanged sentences

Interest rate swap liabilities Other liabilities 1,264 Other liabilities 1,981

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 months ended March 31, 2023 and 2022:

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, 2023 and 2022:

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

(In thousands)

1 unchanged sentence

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

$ 14,452 6,403 8,255 21,355

2 unchanged sentences

See Note 13 for additional information on the Company’s Accumulated other comprehensive income (loss) resulting from its interest rate swaps.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements.

1 unchanged sentence

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 $ 26,425,000 as of March 31, 2023.

If the Company breached any of these provisions, it would be required to settle its obligations under the agreements at their termination value of $ 36,782,000 as of June 30, 2023.

(15) EARNINGS PER SHARE

9 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,

2023 2022 2023 2022

(In thousands)

2 unchanged sentences

Numerator – net income attributable to common stockholders $ 43,450 46,139 88,140 109,719

Denominator – weighted average shares outstanding 43,751 41,246

Denominator – weighted average shares outstanding - Basic 44,656 42,211 44,204 41,729

DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.

1 unchanged sentence

Numerator – net income attributable to common stockholders $ 43,450 46,139 88,140 109,719

Weighted average shares outstanding 43,751 41,246

Weighted average shares outstanding - Basic 44,656 42,211 44,204 41,729

Unvested restricted stock 78 105 75 109

Weighted average diluted shares outstanding 43,823 41,359

Weighted average shares outstanding - Diluted 44,734 42,316 44,279 41,838

(16) STOCK-BASED COMPENSATION

5 unchanged sentences

For awards with a performance condition, compensation expense is recognized when the performance condition is considered probable of achievement.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The total compensation expense for service and performance based awards is based upon the fair market value of the shares on the grant date.

14 unchanged sentences

The certain Company performance measures for 2023 are:

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

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 $ 3,252,000 for the three months ended March 31, 2023, of which $ 693,000 was capitalized as part of the Company’s development costs.

For the three months ended March 31, 2022, stock-based compensation cost for employees was $ 2,561,000 , of which $ 691,000 was capitalized as part of the Company’s development costs.

Stock-based compensation expense for directors was $ 225,000 for the three months ended March 31, 2023, and $ 33,000 for the same period in 2022.

Stock-based compensation cost for employees was $ 2,579,000 and $ 5,831,000 for the three and six months ended June 30, 2023, of which $ 601,000 and $ 1,294,000 were capitalized as part of the Company’s development costs.

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

Stock-based compensation expense for directors was $ 192,000 and $ 417,000 for the three and six months ended June 30, 2023, respectively, and $ 73,000 and $ 106,000 for the same periods in 2022.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 three months ended March 31, 2023, the Company withheld 31,254 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 three months ended March 31, 2023 was $ 6,606,000 .

As of the vesting dates, the aggregate fair value of shares that vested during the three months ended March 31, 2023 was $ 11,309,000 .

Of the shares that vested in the six months ended June 30, 2023, the Company withheld 31,254 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, 2023 was $ 9,222,000 .

As of the vesting dates, the aggregate fair value of shares that vested during the six months ended June 30, 2023 was $ 12,199,000 .

Award Activity:

Three Months Ended March 31, 2023

Three Months Ended

June 30, 2023 Six Months Ended June 30, 2023

Weighted Average Grant Date Fair Value

Shares Weighted Average Grant Date Fair Value

Unvested at beginning of period 74,725 $ 150.91 102,508 $ 133.29

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

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 March 31, 2023 and December 31, 2022.

March 31, 2023 December 31, 2022

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 June 30, 2023 and December 31, 2022.

June 30, 2023 December 31, 2022

Carrying Amount (1)

16 unchanged sentences

Cash and cash equivalents:

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

The carrying amounts approximate fair value due to the short maturity of those instruments.

Interest rate swap assets (included in Other assets on the Consolidated Balance Sheets):

The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR or SOFR swap curves, observable for substantially the full term of the contract (Level 2 input).

The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR or SOFR swap curves, observable for

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

substantially the full term of the contract (Level 2 input).

See Note 14 for additional information on the Company’s interest rate swaps.

15 unchanged sentences

EastGroup has evaluated all ASUs recently released by the FASB through the date the financial statements were issued and determined that the following ASUs apply to the Company.

EASTGROUP PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ASU 2020-04, Reference Rate Reform (Topic 848):

2 unchanged sentences

ASU 2022-06 is effective immediately for all companies.

ASU 2022-06 had no impact on the Company’s consolidated financial statements for the three months ended March 31, 2023.

See Note 14 in the Consolidated Financial Statements for further evaluation of these ASUs.

ASU 2022-06 had no impact on the Company’s consolidated financial statements for the six months ended June 30, 2023.

See Note 14 in the Notes to Consolidated Financial Statements for further evaluation of these ASUs.

(21) SUBSEQUENT EVENTS

On March 30 and 31, 2023, the Company sold 168,125 shares of common stock under its continuous common equity program at a weighted average price of $ 163.35 .

These shares were deemed to be issued and outstanding upon settlement in April 2023.

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 .

In April, the Company closed on the acquisition of 48.7 acres of development land in San Antonio’s Northeast Submarket for approximately $ 6,100,000 .

Also in April, EastGroup acquired Craig Corporate Center, a 155,000 square foot building in Las Vegas, for approximately $ 34,200,000 .

On June 29 and 30, 2023, the Company sold 75,016 shares of common stock under its continuous common equity program at a weighted average price of $ 172.42 .

These shares were deemed to be issued and outstanding upon settlement in July 2023.

Subsequent to June 30, 2023, EastGroup closed on the acquisition of 20.3 acres of development land in Dallas, known by the Company as Denton 35 Exchange Land, for approximately $ 5,500,000 .

The site will accommodate the future development of two buildings containing approximately 245,000 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