What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-04-24 compared with 2023-10-25 · 200 added, 232 removed, 276 unchanged (61% of the section changed)

2 unchanged sentences

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect EastGroup’s expectations and projections about the Company’s future results, performance, prospects, plans and opportunities.

This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect EastGroup Properties Inc.’s (the “Company” or “EastGroup”) expectations and projections about the Company’s future results, performance, prospects, plans and opportunities.

The Company has attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “goals,” “plans” or variations of such words and similar expressions or the negative of such words, although not all forward-looking statements contain such words.

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• natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;

• pandemics, epidemics or other public health emergencies, such as the coronavirus (“COVID-19”) pandemic;

• pandemics, epidemics or other public health emergencies, such as the coronavirus pandemic;

• availability of financing and capital, increase in interest rates, and ability to raise equity capital on attractive terms;

3 unchanged sentences

• credit risk in the event of non-performance by the counterparties to our interest rate swaps;

• how and when pending forward equity sales may settle;

• lack of or insufficient amounts of insurance;

12 unchanged sentences

The Company’s core markets are in the states of Florida, Texas, Arizona, California and North Carolina.

During the nine months ended September 30, 2023, economic uncertainty and stock market volatility have increased due to a number of factors, including rising inflation, increasing interest rates, and lingering supply chain disruptions.

During the three months ended March 31, 2024, economic uncertainty and stock market volatility have continued due to a number of factors, including rising inflation, increasing interest rates, and geopolitical conflict.

While these factors have not had a significant adverse impact on EastGroup to date, they may adversely impact the Company in the future.

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EastGroup believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company, and the Company also believes it can issue common and/or preferred equity and obtain debt financing on currently acceptable terms.

During the nine months ended September 30, 2023, EastGroup sold, and subsequently settled the issuance of, 2,725,021 shares of common stock through its continuous common equity offering program at a weighted average price of $170.39 per share, providing aggregate net proceeds to the Company of $459,179,000.

Included in this activity are 53,364 shares sold on September 28 and September 29, 2023, providing aggregate net proceeds to the Company of $8,794,000, which were deemed to be issued and outstanding upon settlement in October 2023.

Also during the nine months ended September 30, 2023, the Company closed a $100,000,000 senior unsecured term loan with an effectively fixed interest rate of 5.27%.

Additionally, the Company amended its unsecured bank credit facilities, effective January 2023, to expand the total capacity on its unsecured bank credit facilities from $475,000,000 to $675,000,000 and to replace LIBOR with Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate.

The maturity date remains July 30, 2025.

EastGroup’s financing and equity issuances are further described in Liquidity and Capital Resources below.

The Company’s primary revenue is rental income.

During the nine months ended September 30, 2023, EastGroup executed new and renewal leases on 6,159,000 square feet (11.3% of the operating portfolio’s total square footage of 54,581,000).

For new and renewal leases signed during the first nine months of 2023, average rental rates increased by 52.7% as compared to the former leases on the same spaces.

During the three months ended March 31, 2024, the Company settled outstanding forward equity sale agreements that were previously entered into under our current at-the-market common stock offering program (“Current 2023 ATM Program”) by issuing 272,342 shares of common stock in exchange for net proceeds of approximately $49,294,000.

EastGroup’s financing and equity issuances are further described in Liquidity and Capital Resources .

The Company’s primary source of revenue is rental income.

During the three months ended March 31, 2024, EastGroup executed new and renewal leases on 1,998,000 square feet (representing 3.6% of the operating portfolio’s total square footage of 55,358,000).

For new and renewal leases signed during the first three months of 2024, average rental rates increased by 57.8% as compared to the former leases on the same spaces.

On a diluted per share basis, Net Income Attributable to EastGroup Properties, Inc.

Common Stockholders was $3.06 for the nine months ended September 30, 2023, compared to $3.48 for the same period of 2022, a 12.1% decrease.

Common Stockholders was $1.22 for the three months ended March 31, 2024, compared to $1.02 for the same period of 2023, a 19.6% increase.

See the Company’s analysis of performance trends below for further details.

Property Net Operating Income (“PNOI”) Excluding Income from Lease Terminations from same properties (defined as operating properties owned during the entire current and prior year reporting periods – January 1, 2022 through September 30, 2023), increased 6.5% for the nine months ended September 30, 2023, as compared to the same period in 2022.

EastGroup’s operating portfolio was 98.5% leased and 97.7% occupied as of September 30, 2023, compared to 99.0% and 98.5%, respectively, at September 30, 2022.

As of October 24, 2023, the operating portfolio was 98.4% leased and 97.9%

Leases scheduled to expire for the remainder of 2023 were 2.0% of the operating portfolio on a square foot basis at September 30, 2023, and this percentage was reduced to 1.6% as of October 24, 2023.

Property Net Operating Income (“PNOI”) Excluding Income from Lease Terminations from same properties (defined as operating properties owned during the entire period from January 1, 2023 through March 31, 2024), increased 4.9% for the three months ended March 31, 2024, as compared to the same period in 2023.

EastGroup’s operating portfolio was 98.0% leased and 97.7% occupied as of March 31, 2024, compared to 98.7% and 97.9%, respectively, at March 31, 2023.

As of April 23, 2024, the operating portfolio was 97.4% leased and 97.0% occupied.

As of March 31, 2024, leases approximating 7.4% of the operating portfolio, based on a percentage of annualized based rent, were scheduled to expire during the remainder of 2024.

This percentage was reduced to 6.2% as of April 23, 2024.

The Company generates new sources of leasing revenue through its acquisitions and also its development and value-add program.

The Company mitigates risks associated with development through a Board-approved maximum level of land held for development and by adjusting development start dates according to leasing activity.

During the nine months ended September 30, 2023, EastGroup acquired 210.1 acres of development land in Tampa, Dallas, San Antonio, Phoenix and Denver for $44,468,000.

The Company also began construction of 10 development projects containing 2,191,000 square feet in seven markets.

EastGroup also transferred 12 development and value-add projects (2,241,000 square feet) in 10 markets from its development and value-add program to real estate properties, with costs of $258,319,000 at the date of transfer.

As of September 30, 2023, EastGroup’s development and value-add program consisted of 18 projects (3,931,000 square feet) located in 12 markets.

The projected total investment for the development and value-add projects, which were collectively 17.6% leased as of October 24, 2023, is $548,100,000, of which $230,650,000 remained to be invested as of September 30, 2023.

During the nine months ended September 30, 2023, EastGroup acquired two operating properties in Las Vegas containing 410,000 square feet for $87,338,000.

During the three months ended March 31, 2024, EastGroup acquired 34.3 acres of development land in Atlanta for $3,302,000.

The Company also began construction of two development projects containing a total of 388,000 square feet in Tampa and San Antonio.

EastGroup also transferred a development project (133,000 square feet) in Miami from Development and value-add propertie s to Real estate properties , with costs of $22,228,000 at the date of transfer.

As of March 31, 2024, EastGroup’s development and value-add program consisted of 19 projects (4,332,000 square feet) located in 13 markets.

The projected total investment for the development projects, which were collectively 29.3% leased as of April 23, 2024, is $611,200,000, of which $203,816,000 remained to be invested as of March 31, 2024.

During the three months ended March 31, 2024, EastGroup acquired an operating property in Las Vegas containing 231,000 square feet for $54,859,000.

There were no value-add property acquisitions during the period.

During the nine months ended September 30, 2023, EastGroup sold a 125,000 square foot operating property and 11.9 acres of land, generating gross sales proceeds of $14,350,000.

The Company recognized $4,809,000 in Gain on sales of real estate investments and $446,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the nine months ended September 30, 2023.

The Company typically initially funds its development and acquisition programs through its unsecured bank credit facilities, the total capacity of which was increased in January 2023 by $200,000,000, from $475,000,000 to $675,000,000 (as discussed in Liquidity and Capital Resources ).

During the three months ended March 31, 2024, EastGroup sold a group of operating properties in the Jackson, Mississippi market containing 159,000 square feet and 3.9 acres of land in San Francisco, generating gross sales proceeds of $18,050,000.

The Company recognized $8,751,000 in Gain on sales of real estate investments and $222,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the three months ended March 31, 2024.

The Company typically initially funds its development and acquisition programs through its $675,000,000 unsecured bank credit facilities (as discussed in Liquidity and Capital Resources ).

As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace short-term bank borrowings.

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Properties sold during the current or prior year reporting periods are also excluded.

For the three and nine months ended September 30, 2023, Same Properties includes properties which were included in the operating portfolio for the entire period from January 1, 2022 through September 30, 2023.

For the three months ended March 31, 2024, Same Properties includes properties which were included in the operating portfolio for the entire period from January 1, 2023 through March 31, 2024.

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.

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These non-GAAP figures should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.

The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three and nine months ended September 30, 2023 and 2022.

The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three months ended March 31, 2024 and 2023.

Three Months Ended

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(In thousands)

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PNOI from 2023 and 2024 acquisitions

(4,807) (4,261) (13,548) (5,686)

PNOI from 2023 and 2024 development and value-add properties

1 unchanged sentence

PNOI from 2023 and 2024 operating property dispositions

— 134 95 (31)

Other PNOI 81 111

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SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS $ 101,168 96,417

PNOI was calculated as follows for the three and nine months ended September 30, 2023 and 2022.

PNOI was calculated as follows for the three months ended March 31, 2024 and 2023.

Three Months Ended

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(In thousands)

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Generally, the Company’s most significant operating expenses are property taxes and insurance.

Tenant leases may be net leases in which the total operating expenses are recoverable, modified gross leases in which some of the operating expenses are recoverable, or gross leases in which no expenses are recoverable (gross leases represent only a small portion of the Company’s total leases).

Tenant leases may be net leases in which the total operating expenses are recoverable, modified gross leases in which some of the operating expenses

are recoverable, or gross leases in which no expenses are recoverable (gross leases represent only a small portion of the Company’s total leases).

Increases in property operating expenses are fully recoverable under net leases and recoverable to a high degree under modified gross leases.

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The following table presents reconciliations of Net Income Attributable to EastGroup Properties, Inc.

Common Stockholders to FFO Attributable to Common Stockholders for the three and nine months ended September 30, 2023 and 2022.

Common Stockholders to FFO Attributable to Common Stockholders for the three months ended March 31, 2024 and 2023.

Three Months Ended

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(In thousands, except per share data)

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Gain on sales of non-operating real estate (222) (81)

FUNDS FROM OPERATIONS (“FFO”) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 91,446 77,095 257,700 219,670

FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS 94,870 80,844

Gain on involuntary conversion and business interruption claims — (1,027)

FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS — EXCLUDING GAIN ON INVOLUNTARY CONVERSION AND BUSINESS INTERRUPTION CLAIMS $ 94,870 79,817

Net income attributable to common stockholders per diluted share $ 1.22 1.02

FFO attributable to common stockholders per diluted share $ 1.98 1.84

Diluted shares for earnings per share and funds from operations 45,788 43,581 44,782 42,419

FFO attributable to common stockholders per diluted share — excluding gain on involuntary

conversion and business interruption claims

Diluted shares for earnings per share and funds from operations per share 47,961 43,823

The Company analyzes the following performance trends in evaluating the revenues and expenses of the Company:

• Net Income Attributable to EastGroup Properties, Inc.

Common Stockholders for the three and nine months ended September 30, 2023 was $48,896,000 ($1.07 per basic and diluted share) and $137,036,000 ($3.07 per basic and $3.06 per diluted share), respectively, compared to $37,792,000 ($0.87 per basic and diluted share) and $147,511,000 ($3.49 per basic share and $3.48 per diluted share) for the same periods in 2022.

Common Stockholders for the three months ended March 31, 2024 was $58,644,000 ($1.23 per basic and $1.22 per diluted share), compared to $44,690,000 ($1.02 per basic and diluted share) for the same period in 2023.

See Results of Operations for further analysis.

• The change in FFO per share represents the increase or decrease in FFO per share from the current period compared to the same period in the prior year.

For the three months ended September 30, 2023, FFO was $2.00 per share compared with $1.77 per share for the same period of 2022, an increase of 13.0%.

For the nine months ended September 30, 2023, FFO was $5.75 per share compared with $5.18 per share for the same period of 2022, an increase of 11.0%.

FFO increased during the three and nine months ended September 30, 2023, as compared to the same periods in 2022, primarily due to the increase in PNOI and other revenue, partially offset by the increase in interest expense.

• For the three months ended September 30, 2023, PNOI increased by $13,134,000, or 14.5%, as compared to the same period in 2022.

PNOI increased $7,333,000 from newly developed and value-add properties, $5,061,000 from same property operations, $546,000 from 2022 and 2023 acquisitions and $134,000 from operating properties sold in 2022 and 2023.

For the nine months ended September 30, 2023, PNOI increased by $44,137,000, or 17.0%, as compared to the same period in 2022.

For the three months ended March 31, 2024, FFO was $1.98 per share compared with $1.84 per share for the same period of 2023, an increase of 7.6%.

FFO increased during the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to the increase in PNOI and the decrease in interest expense.

• For the three months ended March 31, 2024, PNOI increased by $13,293,000, or 13.6%, as compared to the same period in 2023.

PNOI increased $5,516,000 from newly developed and value-add properties, $4,843,000 from same property operations, and $3,397,000 from 2023 and 2024 acquisitions;

PNOI decreased $493,000 from operating properties sold in 2023 and 2024.

• The change in Same PNOI represents the PNOI increase or decrease for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2022 through September 30, 2023).

Same PNOI, excluding income from lease terminations, increased 6.0% and 6.5% for the three and nine months ended September 30, 2023, as compared to the same periods in 2022.

• Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2022 through September 30, 2023).

Same property average occupancy was 98.1% and 98.4% for the three and nine months ended September 30, 2023, respectively, compared to 98.5% and 98.1% for the same periods of 2022.

• The same property average rental rate calculated in accordance with GAAP represents the average annual rental rates of leases in place for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2022 through September 30, 2023).

The same property average rental rate was $7.66 and $7.55 per square foot for the three and nine months ended September 30, 2023, respectively, compared to $7.19 and $7.06 per square foot for the same periods of 2022.

• The change in Same PNOI represents the PNOI increase or decrease for the same operating properties owned during the entire period from January 1, 2023 through March 31, 2024.

Same PNOI, excluding income from lease terminations, increased 4.9% for the three months ended March 31, 2024, as compared to the same period in 2023.

Same property

average occupancy was 97.5% for the three months ended March 31, 2024, compared to 98.4% for the same period of 2023.

The same property average rental rate was $8.05 per square foot for the three months ended March 31, 2024, compared to $7.60 per square foot for the same period of 2023.

• Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period.

Occupancy at September 30, 2023 was 97.7%.

Quarter-end occupancy ranged from 97.9% to 98.5% over the previous four quarters ended September 30, 2022 to June 30, 2023.

Occupancy at March 31, 2024 was 97.7%.

Quarter-end occupancy ranged from 97.7% to 98.2% over the previous four quarters ended March 31, 2023 to December 31, 2023.

• Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases on the same space.

Rental rate increases on new and renewal leases (4.2% of the operating portfolio’s total square footage) averaged 55.4% for the three months ended September 30, 2023.

For the nine months ended September 30, 2023, rental rate increases on new and renewal leases (11.3% of the operating portfolio’s total square footage) averaged 52.7%.

Rental rate increases on new and renewal leases (3.6% of the operating portfolio’s total square footage) averaged 57.8% for the three months ended March 31, 2024.

• Lease termination fee income is included in Income from real estate operations.

Lease termination fee income for the three and nine months ended September 30, 2023 was $221,000 and $532,000, respectively, compared to $24,000 and $2,397,000 for the same periods of 2022.

Lease termination fee income for the three months ended March 31, 2024 was $147,000, compared to $55,000 for the same period of 2023.

• The Company records reserves for uncollectible rent as reductions to Income from real estate operations ;

recoveries for uncollectible rent are recorded as additions to Income from real estate operations .

The Company recorded net reserves for uncollectible rent of $446,000 and $1,201,000 for the three and nine months ended September 30, 2023, compared to net reserves for uncollectible rent of $198,000 and $128,000 for the same periods of 2022.

The Company recorded net reserves for uncollectible rent of $775,000 for the three months ended March 31, 2024, compared to $369,000 for the same period of 2023.

We evaluate the collectability of rents and other receivables for individual leases at each reporting period based on factors including, among others, tenant payment history, the financial condition of the tenant, business conditions and trends in the industry in which the tenant operates and economic conditions in the geographic area where the property is located.

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If our judgment or estimation regarding probability of collection changes we may adjust or record additional rental revenue in the period such conclusion is reached.

The Company followed its normal process for recording reserves for uncollectible rent during the three and nine months ended September 30, 2023.

The Company followed its normal process for recording reserves for uncollectible rent during the three months ended March 31, 2024.

FINANCIAL CONDITION

EastGroup’s Total Assets were $4,354,854,000 at September 30, 2023, an increase of $319,017,000 from December 31, 2022.

Total Liabilities decreased $106,809,000 to $1,975,589,000, and Total Equity increased $425,826,000 to $2,379,265,000 during the same period.

EastGroup’s Total Assets were $4,577,005,000 at March 31, 2024, an increase of $57,792,000 from December 31, 2023.

Total Liabilities increased $7,067,000 to $1,917,646,000, and Total Equity increased $50,725,000 to $2,659,359,000 during the same period.

The following paragraphs explain these changes in additional detail.

Real Estate Properties

Real estate properties increased $380,383,000 during the nine months ended September 30, 2023, primarily due to:

(i) the transfer of 12 projects from Development and value-add properties to Real estate properties ;

(ii) the acquisition of two operating properties;

Real estate properties increased $74,373,000 during the three months ended March 31, 2024, primarily due to:

(i) the acquisition of one operating property;

(ii) the transfer of one project from Development and value-add properties to Real estate properties ;

(iii) capital improvements at the Company’s properties;

and (iv) costs incurred on development and value-add projects subsequent to transfer to Real estate properties discussed below.

The increases were partially offset by the sale of one operating property and the transfer of one property from Real estate properties to Development and value-add propertie s.

During the nine months ended September 30, 2023, EastGroup acquired the following properties:

REAL ESTATE PROPERTIES ACQUIRED IN 2023

The increases were partially offset by the sale of a group of operating properties.

During the three months ended March 31, 2024, EastGroup acquired the following property:

REAL ESTATE PROPERTY ACQUIRED IN 2024

Location Size Date

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(Square feet) (In thousands)

Operating properties acquired (2)

Craig Corporate Center

Operating property acquired (2)(3)

Spanish Ridge Industrial Park

Las Vegas, NV 231,000 01/23/2024 $ 54,859

Blue Diamond Business Park Las Vegas, NV 254,000 09/05/2023 52,973

Total operating property acquisitions 410,000 $ 87,338

(1) Cost is calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations, and represents the sum of the purchase price, closing costs and capitalized acquisition costs.

Refer to Note 7 in the Notes to Consolidated Financial Statements.

(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.

Refer to Note 7 in the Notes to Consolidated Financial Statements for further details.

(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.

During the nine months ended September 30, 2023, the Company made capital improvements of $43,054,000 on existing properties (included in the Real Estate Improvements table under Results of Operations ).

(3) Excludes acquired development land as discussed below.

During the three months ended March 31, 2024, the Company made capital improvements of $11,691,000 on existing properties (included in the Real Estate Improvements table under Results of Operations ).

Also, the Company incurred costs of $674,000 on development and value-add properties subsequent to transfer to Real estate properties ;

the Company records these expenditures as development and value-add costs on the Consolidated Statements of Cash Flows.

During the nine months ended September 30, 2023, EastGroup sold a 125,000 square foot operating property, generating gross sales proceeds of $9,600,000.

The Company recognized $4,809,000 in Gain on sales of real estate investments during the nine months ended September 30, 2023.

During the three months ended March 31, 2024, EastGroup sold a group of operating properties in the Jackson, Mississippi market containing 159,000 square feet, generating gross sales proceeds of $14,050,000.

The Company recognized $8,751,000 in Gain on sales of real estate investments during the three months ended March 31, 2024.

Development and Value-Add Properties

EastGroup’s investment in Development and value-add properties at September 30, 2023 consisted of projects in lease-up and under construction of $317,450,000 and prospective development (primarily land) of $235,011,000.

The Company’s total investment in Development and value-add properties at September 30, 2023 was $552,461,000 compared to $538,449,000 at December 31, 2022.

Total capital invested for development during the first nine months of 2023 was $286,256,000, which consisted of improvement costs of $227,359,000 on development and value-add properties, $44,468,000 for new land investments, and costs of $14,429,000 on properties subsequent to transfer to Real estate properties.

EastGroup’s investment in Development and value-add properties at March 31, 2024 consisted of projects in lease-up and under construction of $407,384,000 and prospective development (primarily land) of $262,866,000.

The Company’s total investment in Development and value-add properties at March 31, 2024 was $670,250,000 compared to $639,647,000 at December 31, 2023.

Total capital invested for development during the first three months of 2024 was $57,771,000, which consisted of improvement costs of $53,795,000 on development and value-add properties, $3,302,000 for new land investments, and costs of $674,000 on properties subsequent to transfer to Real estate properties.

The capitalized costs incurred on development and value-add properties subsequent to transfer to Real estate properties include capital improvements at the properties and do not include other capitalized costs associated with development (i.e., interest expense, property taxes and internal personnel costs).

The Company capitalized internal development costs of $3,171,000 and $7,983,000 for the three and nine months ended September 30, 2023, respectively, compared to $2,388,000 and $7,474,000 for the same periods of 2022.

There were no value-add acquisitions during the nine months ended September 30, 2023.

During the nine months ended September 30, 2023, the Company acquired 210.1 acres of development land in Tampa, Dallas, San Antonio, Phoenix and Denver for $44,468,000.

Costs associated with these acquisitions are included in the Development and Value-Add Properties table.

These increases were offset by the transfer of 12 development and value-add projects to Real estate properties during the nine months ended September 30, 2023 with a total investment of $258,319,000 as of the date of

The Company also transferred one operating property to Development and value-add properties with a total investment of $4,553,000 as of the date of transfer.

During the nine months ended September 30, 2023, EastGroup sold 11.9 acres of land, generating gross sales proceeds of $4,750,000.

The Company recognized $446,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the nine months ended September 30, 2023.

A summary of the Company's Development and Value-Add Properties for the nine months ended September 30, 2023 follows:

The Company capitalized internal development costs of $2,223,000 for the three months ended March 31, 2024, compared to $2,455,000 for the same period of 2023.

There were no value-add acquisitions during the three months ended March 31, 2024.

During the three months ended March 31, 2024, the Company acquired 34.3 acres of development land in Atlanta for $3,302,000.

Costs associated with this acquisition are included in the Development and Value-Add Properties table.

These increases were offset by the transfer of one development and value-add project to Real estate properties during the three months ended March 31, 2024 with a total investment of $22,228,000 as of the date of transfer.

During the three months ended March 31, 2024, EastGroup sold 3.9 acres of land in San Francisco, generating gross sales proceeds of $4,000,000.

The Company recognized $222,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the three months ended March 31, 2024.

A summary of the Company's Development and Value-Add Properties for the three months ended March 31, 2024 follows:

Actual or Estimated Building Size Cumulative Costs Incurred as of 3/31/2024

5 unchanged sentences

Prospective development (primarily land) 10,633,000 262,866

Total Development and value-add properties as of September 30, 2023

Total Development and value-add properties as of March 31, 2024

14,965,000 $ 670,250

Total Development and value-add properties transferred to Real estate

properties during the nine months ended September 30, 2023

properties during the three months ended March 31, 2024

133,000 $ 22,228 (1)

1 unchanged sentence

Accumulated Depreciation

Accumulated depreciation on real estate, development and value-add properties increased $95,498,000 during the nine months ended September 30, 2023, primarily due to depreciation expense, partially offset by the sale of one operating property.

Other assets increased $19,771,000 during the nine months ended September 30, 2023.

Accumulated depreciation on real estate, development and value-add properties increased $26,182,000 during the three months ended March 31, 2024, primarily due to depreciation expense, partially offset by the sale of operating properties.

Other assets increased $3,359,000 during the three months ended March 31, 2024.

See Note 9 in the Notes to Consolidated Financial Statements for further details.

Unsecured bank credit facilities, net of debt issuance costs decreased $170,214,000 during the nine months ended September 30, 2023, mainly due to repayments of $504,230,000 and new debt issuance costs incurred during the period, partially offset by borrowings of $334,230,000 and the amortization of debt issuance costs during the period.

Unsecured bank credit facilities, net of debt issuance costs increased $239,000 during the three months ended March 31, 2024, mainly due to borrowings of $19,564,000 and the amortization of debt issuance costs during the period, partially offset by repayments of $19,564,000 during the period.

The Company’s credit facilities are described in greater detail under Liquidity and Capital Resources .

Unsecured debt, net of debt issuance costs decreased $15,128,000 during the nine months ended September 30, 2023, primarily due to the repayment of a $65,000,000 term loan in March, the $50,000,000 principal repayment on its senior unsecured notes in August and new debt issuance costs incurred during the period.

These decreases were partially offset by the closing of a $100,000,000 senior unsecured term loan in January and the amortization of debt issuance costs.

Unsecured debt, net of debt issuance costs increased $226,000 during the three months ended March 31, 2024, primarily due to the amortization of debt issuance costs during the period.

The borrowings and repayments on Unsecured debt, net of debt issuance costs are described in greater detail under Liquidity and Capital Resources .

Accounts payable and accrued expenses increased $81,131,000 during the nine months ended September 30, 2023.

Accounts payable and accrued expenses increased $8,918,000 during the three months ended March 31, 2024.

Refer to Note 11 in the Notes to Consolidated Financial Statements for further details.

Other liabilities decreased $567,000 during the nine months ended September 30, 2023.

See Note 12 in the Notes to Consolidated Financial Statements for further details.

Additional paid-in capital increased $454,543,000 during the nine months ended September 30, 2023, primarily due to the issuance of common stock under the Company’s continuous common equity offering program (as discussed in Liquidity and Capital Resources) and activity related to stock-based compensation (as discussed in Note 16 in the Notes to Consolidated Financial Statements).

During the nine months ended September 30, 2023, EastGroup issued 2,671,657 shares of common stock through its continuous common equity offering program at a weighted average price of $170.46 per share, providing aggregate net proceeds to the Company of $450,385,000.

For the nine months ended September 30, 2023, Distributions in excess of earnings increased $34,294,000 as a result of dividends on common stock of $171,330,000 exceeding Net Income Attributable to EastGroup Properties, Inc.

Other liabilities decreased $2,316,000 during the three months ended March 31, 2024.

Refer to Note 12 in the Notes to Consolidated Financial Statements for further details.

Additional paid-in capital increased $47,303,000 during the three months ended March 31, 2024, primarily due to the issuance of common stock under the Company’s Current 2023 ATM Program (as discussed in Liquidity and Capital Resources ) and activity related to stock-based compensation (as discussed in Note 17 in the Notes to Consolidated Financial Statements).

During the three months ended March 31, 2024, the Company settled outstanding forward equity sale agreements that were previously entered into under our Current 2023 ATM Program by issuing 272,342 shares of common stock in exchange for net proceeds of approximately $49,294,000.

For the three months ended March 31, 2024, Distributions in excess of earnings increased $2,481,000 as a result of dividends on common stock of $61,125,000 exceeding Net Income Attributable to EastGroup Properties, Inc.

Common Stockholders of $58,644,000.

Accumulated other comprehensive income increased $5,717,000 during the nine months ended September 30, 2023.

Accumulated other comprehensive income increased $5,894,000 during the three months ended March 31, 2024.

The increase resulted from the change in fair value of the Company’s interest rate swaps (cash flow hedges) which are further discussed in Notes 13 and 14 in the Notes to Consolidated Financial Statements.

1 unchanged sentence

Net Income Attributable to EastGroup Properties, Inc.

The following paragraphs provide further details with respect to these changes:

• EastGroup had no operating property sales during the three months ended September 30, 2023.

The Company recognized Gains on sales of real estate investments of $4,809,000 ($0.11 per diluted share) during the nine months ended September 30, 2023.

EastGroup recognized Gains on sales of real estate investments of $40,999,000 ($0.97 per diluted share) during the nine months ended September 30, 2022.

There were no sales during the three months ended September 30, 2022.

The Company’s 2022 and 2023 sales transactions are described in Note 8 of the Notes to Consolidated Financial Statements .

• Depreciation and amortization expense increased by $3,244,000 ($0.07 per diluted share) and $12,751,000 ($0.28 per diluted share) during the three and nine months ended September 30, 2023, respectively, as compared to the same periods in 2022.

The increase is primarily due to the operating properties acquired by the Company in 2022 and 2023 and the properties transferred from Development and value-add properties in 2022 and 2023, partially offset by operating properties sold in 2022 and 2023.

• Interest expense increased by $1,517,000 ($0.03 per diluted share) and $10,037,000 ($0.22 per diluted share) during the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022.

See the table below for details.

• PNOI increased by $13,134,000 ($0.29 per diluted share), or 14.5%, for the three months ended September 30, 2023, as compared to the same period in 2022.

Lease termination fee income was $221,000 and $24,000 for the three month periods ended September 30, 2023 and 2022, respectively.

The Company recorded net reserves for uncollectible rent of $446,000 and $198,000 for the three months ended September 30, 2023 and 2022, respectively.

Straight-lining of rent increased PNOI by $2,343,000 and $2,764,000 for the three months ended September 30, 2023 and 2022, respectively.

PNOI increased by $44,137,000 ($0.99 per diluted share), or 17.0%, for the nine months ended September 30, 2023, as compared to the same period in 2022.

• PNOI increased by $13,293,000 ($0.28 per diluted share), or 13.6%, for the three months ended March 31, 2024, as compared to the same period in 2023.

PNOI increased $5,516,000 from newly developed and value-add properties, $4,843,000 from same property operations, and $3,397,000 from 2023 and 2024 acquisitions;

PNOI decreased $493,000 from operating properties sold in 2023 and 2024.

Lease termination fee income was $532,000 and $2,397,000 for the nine month periods ended September 30, 2023 and 2022, respectively.

The Company recorded net reserves for uncollectible rent of $1,201,000 and $128,000 for the nine months ended September 30, 2023 and 2022, respectively.

Straight-lining of rent increased PNOI by $8,787,000 and $6,654,000 for the nine months ended September 30, 2023 and 2022, respectively.

• During the three and nine months ended September 30, 2023, EastGroup recognized gains on involuntary conversion and business interruption claims of $2,118,000 ($0.05 per diluted share) and $4,187,000 ($0.09 per diluted share), respectively.

There were no gains on involuntary conversion and business interruption claims during the three and nine months ended September 30, 2022.

EastGroup entered into 22 leases with certain rent concessions on 515,000 square feet during the three months ended September 30, 2023, with total rent concessions of $863,000 over the lives of the leases.

During the same period of 2022, the Company entered into 24 leases with certain rent concessions on 1,178,000 square feet with total rent concessions of $2,293,000 over the lives of the leases.

EastGroup entered into 62 leases with certain rent concessions on 2,337,000 square feet during the nine months ended September 30, 2023, with total rent concessions of $5,130,000 over the lives of the leases.

During the same period of 2022, the Company entered into 90 leases with certain rent concessions on 3,824,000 square feet with total rent concessions of $6,126,000 over the lives of the leases.

The Company’s percentage of leased square footage for the operating portfolio was 98.5% at September 30, 2023, compared to 99.0% at September 30, 2022.

Occupancy for the Company’s operating portfolio at September 30, 2023 was 97.7% compared to 98.5% at September 30, 2022.

The following table presents the components of Interest expense for the three and nine months ended September 30, 2023 and 2022:

Lease termination fee income was $147,000 and $55,000 for the three month periods ended March 31, 2024 and 2023, respectively.

The Company recorded net reserves for uncollectible rent of $775,000 and $369,000 for the three months ended March 31, 2024 and 2023, respectively.

Straight-lining of rent increased Income from real estate operations by $2,483,000 and $3,442,000 for the three months ended March 31, 2024 and 2023, respectively.

• EastGroup recognized Gains on sales of real estate investments of $8,751,000 ($0.18 per diluted share) during the three months ended March 31, 2024.

The Company recognized Gains on sales of real estate investments of $4,809,000 ($0.11 per diluted share) during the same period of 2023.

The Company’s 2023 and 2024 sales transactions are described in Note 8 of the Notes to Consolidated Financial Statements .

• Depreciation and amortization expense increased by $4,155,000 ($0.09 per diluted share) during the three months ended March 31, 2024, as compared to the same period in 2023.

The increase is primarily due to the operating properties acquired by the Company in 2023 and 2024 and the properties transferred from Development and value-add properties in 2023 and 2024, partially offset by operating properties sold in 2023 and 2024.

• Interest expense decreased by $2,964,000 ($0.06 per diluted share) during the three months ended March 31, 2024, as compared to the same period of 2023.

Refer to the table below for additional details.

• EastGroup recognized no gains on involuntary conversion and business interruption claims during the three months ended March 31, 2024.

During the same period of 2023, the Company recognized gains on involuntary conversion and business interruption claims of $1,027,000 ($0.02 per diluted share).

EastGroup entered into 33 leases with certain rent concessions on 1,542,000 square feet during the three months ended March 31, 2024, with total rent concessions of $2,569,000 over the terms of the leases.

During the same period of 2023, the Company entered into 18 leases with certain rent concessions on 1,196,000 square feet with total rent concessions of $3,168,000 over the terms of the leases.

The Company’s percentage of leased square footage for the operating portfolio was 98.0% at March 31, 2024, compared to 98.7% at March 31, 2023.

Occupancy for the Company’s operating portfolio at March 31, 2024 was 97.7% compared to 97.9% at March 31, 2023.

The following table presents the components of Interest expense for the three months ended March 31, 2024 and 2023:

Three Months Ended

September 30, Nine Months Ended September 30,

2024 2023 Increase

(Decrease) 2023 2022 Increase

(In thousands)

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FIXED RATE INTEREST EXPENSE

Unsecured debt interest (1)

(excluding amortization of debt issuance costs)

14,613 11,147 3,466 44,227 30,881 13,346

Secured debt interest

(excluding amortization of debt issuance costs)

Unsecured debt interest (excluding amortization of debt issuance costs) (1)

14,141 14,876 (735)

Secured debt interest (excluding amortization of debt issuance costs)

Amortization of debt issuance costs — unsecured debt 226 239 (13)

5 unchanged sentences

(1) Includes interest on the Company’s unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 14 in the Notes to Consolidated Financial Statements.

The Company’s variable rate interest expense decreased by $1,333,000 and $165,000 for the three and nine months ended September 30, 2023, respectively, as compared to the same periods in 2022, primarily due to a decrease in average borrowings, partially offset by an increase in the Company’s weighted average variable interest rates on its unsecured bank credit facilities, as shown in the following table:

The Company’s variable rate interest expense decreased by $1,078,000 for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to a decrease in average borrowings, partially offset by an increase in the Company’s weighted average variable interest rates on its unsecured bank credit facilities, as shown in the following table:

Three Months Ended

September 30, Nine Months Ended September 30,

2024 2023 Increase

(Decrease) 2023 2022 Increase

(In thousands, except rates of interest)

3 unchanged sentences

6.29 % 5.32 %

The Company’s fixed rate interest expense increased by $3,529,000 and $13,551,000 for the three and nine months ended September 30, 2023, as compared to the same periods in 2022, primarily as a result of the unsecured debt activity described below.

Interest expense from fixed rate unsecured debt increased by $3,466,000 and $13,346,000 during the three and nine months ended September 30, 2023, as compared to the same periods in 2022.

The increases resulted from the Company’s unsecured debt activity described below.

The details of the unsecured debt obtained in 2022 and 2023 as of September 30, 2023 are shown in the following table:

NEW UNSECURED DEBT IN 2022 AND 2023

Margin Effectively Fixed Interest Rate Date Obtained Maturity Date Amount

The Company’s fixed rate interest expense decreased by $768,000 for the three months ended March 31, 2024, as compared to the same period in 2023, primarily as a result of the unsecured debt activity described below.

During the three months ended March 31, 2024, EastGroup did not obtain, repay, or refinance any unsecured debt.

The following table presents the details of unsecured debt repayments during the year ended December 31, 2023:

UNSECURED DEBT REPAID IN 2023

Interest Rate Date Repaid Payoff Amount

(In thousands)

$65 Million Senior Unsecured Term Loan 2.31% 03/31/2023 $ 65,000

0.95% 2.61% 03/31/2022 09/29/2028 $ 100,000

$150 Million Senior Unsecured Notes Not applicable 3.03% 04/20/2022 04/20/2032 150,000

$50 Million Senior Unsecured Term Loan (1)

0.95% 4.09% 08/31/2022 08/30/2024 50,000

$75 Million Senior Unsecured Term Loan (1)

0.95% 4.00% 08/31/2022 08/31/2027 75,000

$75 Million Senior Unsecured Notes Not applicable 4.90% 10/12/2022 10/12/2033 75,000

$75 Million Senior Unsecured Notes Not applicable 4.95% 10/12/2022 10/12/2034 75,000

$100 Million Senior Unsecured Term Loan (1)

1.35% 5.27% 01/13/2023 01/13/2030 100,000

Weighted Average/Total Amount for 2022 and 2023

$50 Million Senior Unsecured Notes 3.80% 08/28/2023 50,000

Weighted Average/Total Amount for 2023

2.96% $ 115,000

(1) The interest rates on these unsecured term loans are comprised of Term SOFR plus a margin which is subject to a pricing grid for changes in the Company’s coverage ratings.

The Company entered into interest rate swap agreements (further described in Note 14) to convert the loans’ Term SOFR rates to effectively fixed interest rates.

The interest rates in the table above are the effectively fixed interest rates for the loans, including the effects of the interest rate swaps, as of September 30, 2023.

(2) This term loan was amended and refinanced effective September 29, 2023.

The margin was reduced by approximately 45 basis points, changing the effectively fixed rate from 3.06% to 2.61%.

The increase in interest expense from the new unsecured debt was partially offset by the repayment of the following unsecured debt during 2022 and 2023:

UNSECURED DEBT REPAID IN 2022 AND 2023

Interest Rate Date Repaid Payoff Amount

In September 2023, the Company refinanced a $100,000,000 senior unsecured term loan, reducing the effectively fixed interest rate by approximately 45 basis points.

The decrease in interest expense from unsecured debt repayments and refinancing was partially offset by new unsecured debt obtained during the year ended December 31, 2023:

NEW UNSECURED DEBT IN 2023

Margin Effectively Fixed Interest Rate Date Obtained Maturity Date Amount

(In thousands)

$100 Million Senior Unsecured Term Loan (1)

$65 Million Senior Unsecured Term Loan 2.31% 03/31/2023 65,000

$50 Million Senior Unsecured Notes 3.80% 08/28/2023 50,000

Weighted Average/Total Amount for 2022 and 2023

1.35% 5.27% 01/13/2023 01/13/2030 $ 100,000

(1) The interest rate on this unsecured term loan is comprised of Term Secured Overnight Financing Rate (“SOFR”) plus a margin, which is subject to a pricing grid for changes in the Company’s coverage ratings.

The Company entered into an interest rate swap agreement (further described in Note 14 in the Notes to Consolidated Financial Statements) to convert the loan’s Term SOFR rate to an effectively fixed interest rate.

The interest rate in the table above is the effectively fixed interest rate for the loan, including the effect of the interest rate swap, as of March 31, 2024.

EastGroup’s financing and debt maturities are further described in Liquidity and Capital Resources .

Interest costs during the period of construction of real estate properties are capitalized and offset against interest expense.

Capitalized interest increased $679,000 and $3,349,000 during the three and nine months ended September 30, 2023, as compared to the same periods of 2022, due to increased borrowing rates and changes in development spending.

Capitalized interest increased $1,118,000 during the three months ended March 31, 2024, as compared to the same period of 2023, due to increased borrowing rates and changes in development spending.

Real Estate Improvements

Real estate improvements for EastGroup’s operating properties for the three and nine months ended September 30, 2023 and 2022 were as follows:

Real estate improvements for EastGroup’s operating properties for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

September 30, Nine Months Ended September 30,

Estimated Useful Life 2024 2023

2 unchanged sentences

Tenant improvements:

New tenants Lease life 4,568 3,437 13,869 9,775

Renewal tenants Lease life 947 606 2,511 2,477

New tenants Lease term 2,337 5,441

Renewal tenants Lease term 835 911

Building improvements 5-40 yrs 3,075 2,203

5 unchanged sentences

(1) Reconciliation of Total real estate improvements to Real estate improvements on the Consolidated Statements of Cash Flows:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

8 unchanged sentences

The costs are amortized over the terms of the associated leases, and the amortization is included in Depreciation and amortization expense.

Capitalized leasing costs for the three and nine months ended September 30, 2023 and 2022 were as follows:

Capitalized leasing costs for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

September 30, Nine Months Ended September 30,

Estimated Useful Life 2024 2023

(In thousands)

Development and value-add Lease life $ 1,388 3,654 7,405 10,422

New tenants Lease life 2,600 2,414 7,695 8,554

Renewal tenants Lease life 3,448 2,881 8,739 9,779

Development and value-add Lease term $ 1,991 4,550

New tenants Lease term 4,051 2,137

Renewal tenants Lease term 2,523 2,363

Total capitalized leasing costs (1)

2 unchanged sentences

(1) Reconciliation of Total capitalized leasing costs to Leasing commissions on the Consolidated Statements of Cash Flows:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

4 unchanged sentences

$ 6,295 7,921

Real Estate Sold and Held for Sale

The Company considers a real estate property to be held for sale when it meets the criteria established under Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, including when it is probable that the property will be sold within a year.

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 September 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.

In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements.

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 nine months ended September 30, 2023, as discussed in Note 8 of the Notes to Consolidated Financial Statements .

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 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.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

The Company anticipates that its current cash balance, operating cash flows, borrowings under its unsecured bank credit facilities, proceeds from new debt and/or proceeds from the issuance of equity instruments will be adequate for (i) operating and administrative expenses, (ii) normal repair and maintenance expenses at its properties, (iii) debt service obligations, (iv) maintaining compliance with its debt covenants, (v) distributions to stockholders, (vi) capital improvements, (vii) purchases of properties, (viii) development, and (ix) any other normal business activities of the Company, both in the short-term and long-term.

The Company expects liquidity sources and needs in the coming year to be consistent in nature with those for the nine months ended September 30, 2023.

Net cash provided by operating activities was $300,099,000 for the nine months ended September 30, 2023.

The Company expects liquidity sources and needs in the coming year to be consistent in nature with those for the three months ended March 31, 2024.

Net cash provided by operating activities was $116,900,000 for the three months ended March 31, 2024.

The primary other sources of cash were proceeds from common stock offerings;

borrowings on unsecured bank credit facilities and unsecured debt;

borrowings on unsecured bank credit facilities;

and net proceeds from sales of real estate investments and non-operating real estate.

The Company distributed $166,960,000 in common stock dividends during the nine months ended September 30, 2023.

Other primary uses of cash were for repayments on unsecured bank credit facilities and unsecured debt;

the construction and development of properties;

The Company distributed $61,442,000 in common stock dividends during the three months ended March 31, 2024.

Other primary uses of cash were for the construction and development of properties;

purchases of real estate;

capital improvements at various properties;

and leasing commissions.

As of September 30, 2023, the Company was contractually obligated to pay the dividend declared in August 2023, which was paid in October 2023.

An amount for dividends payable of $60,322,000 was included in Accounts payable and accrued expenses at September 30, 2023, which includes dividends payable on unvested restricted stock of $1,658,000, which are subject to continued service and will be paid upon vesting in future periods.

See Note 10 in the Notes to Consolidated Financial Statements for details summarizing the Company’s debt.

repayments on unsecured bank credit facilities;

and capital improvements at various properties.

As of March 31, 2024, the Company was contractually obligated to pay the dividend declared in March 2024, which was paid in April 2024.

An amount for dividends payable of $62,076,000 was included in Accounts payable and accrued expenses at March 31, 2024, which includes dividends payable on unvested restricted stock of $1,201,000, which are subject to continued service and will be paid upon vesting in future periods.

The following table summarizes certain information with respect to our indebtedness outstanding as of March 31, 2024:

UNSECURED DEBT (FIXED RATE) (1)

Weighted Average Interest Rate Principal Payments Maturing

(In thousands)

August 30, 2024 4.08% $ 50,000

December 13, 2024 3.46% 60,000

December 15, 2024 3.48% 60,000

Year 2025 3.13% 145,000

Year 2026 2.56% 140,000

Year 2027 2.74% 175,000

Year 2028 3.10% 160,000

Year 2029 and beyond 3.66% 890,000

Total Unsecured Debt (Fixed Rate) (1)

3.37% $ 1,680,000

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

The Company’s $625,000,000 unsecured bank credit facility is with a group of 11 banks and has a maturity date of July 30, 2025.

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, 2024, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points.

As of March 31, 2024, the Company had no variable rate borrowings on this unsecured bank credit facility and an interest rate of 6.194%.

The Company has two standby letters of credit totaling $2,655,000 pledged on this facility, which reduces borrowing capacity under the credit facility.

The Company's $50,000,000 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 $625,000,000 facility are exercised.

The interest rate is reset on a daily basis and as of March 31, 2024, was SOFR plus 77.5 basis points with an annual facility fee of 15 basis points.

As of March 31, 2024, the interest rate was 6.215% with no outstanding balance.

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

Although the Company’s current credit rating is Baa2, given the strength of the Company’s key credit metrics, initial pricing for the credit facilities is based on the BBB+/Baa1 credit ratings level.

This favorable pricing level will be retained provided that the Company’s consolidated leverage ratio, as defined in the applicable agreements, remains less than 32.5%.

The $625,000,000 facility also includes a sustainability-linked pricing component pursuant to which the applicable interest rate margin is reduced by one basis point if the Company meets a certain sustainability performance target.

This sustainability metric is evaluated annually and was achieved for the years ended December 31, 2023 and 2022, which allowed for the interest rate reduction in each of the years subsequent to achieving the metric.

The margin was effectively reduced on this unsecured bank credit facility by one basis point, from 77.5 to 76.5 basis points.

The Company’s unsecured bank credit facilities have certain restrictive covenants, such as maintaining minimum debt service coverage and leverage ratios and maintaining insurance coverage, and the Company was in compliance with all of its financial debt covenants at March 31, 2024.

2 unchanged sentences

For future debt issuances, the Company intends to issue primarily unsecured fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps.

The Company may also access the public debt market in the future as a means to raise capital.

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 September 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%.

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.

In August 2023, the Company made a $50,000,000 principal repayment on senior unsecured notes with a fixed interest rate of 3.80%.

In September 2023, EastGroup repaid a mortgage loan with a balance of $1,905,000, an interest rate of 3.85% and an original maturity date of November 30, 2026.

The Company has no remaining secured debt as of September 30, 2023.

Also in September 2023, the Company closed on the refinance of a $100,000,000 senior unsecured term loan with five years remaining.

The amended term loan provides for interest only payments currently at an interest rate of SOFR plus 95 basis points, based on the Company’s current credit ratings and consolidated leverage ratio, which is a 45 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 effectively fixed interest rate of 2.61%.

On December 16, 2022, EastGroup entered into sales agreements with each of Robert W.

Incorporated;

BNY Mellon Capital Markets, LLC;

BofA Securities, Inc.;

Jefferies LLC;

Raymond James & Associates, Inc.;

Regions Securities LLC;

Ramirez & Company, Inc.;

TD Securities (USA) LLC;

and Wells Fargo Securities, LLC in connection with the establishment of a continuous common equity offering program pursuant to which the Company may sell shares of its common stock with an aggregate gross sales price of up to $750,000,000 from time to time.

As of October 25, 2023, the Company has sold an aggregate of 2,725,021 shares of common stock with gross proceeds of $464,305,000 under the sales agency financing agreements, and EastGroup may offer and sell additional shares of its common stock with an aggregate gross sales price of up to $285,695,000 through the sales agents.

During the nine months ended September 30, 2023, EastGroup sold, and subsequently settled the issuance of, 2,725,021 shares of common stock under its continuous common equity offering program at a weighted average price of $170.39 per share with gross proceeds to the Company of $464,305,000.

The Company incurred offering-related costs of $5,126,000 during the nine months, resulting in net proceeds to the Company of $459,179,000.

EastGroup’s other material cash requirements from known contractual and other obligations, including real estate property obligations, development and value-add obligations and tenant improvements as of December 31, 2022, did not materially change during the nine months ended September 30, 2023.

The Company may also access the public debt or convertible bond markets in the future as a means to raise capital.

As of March 31, 2024, EastGroup had total immediate liquidity of approximately $764,105,000, comprised of $15,625,000 of cash and cash equivalents, $672,345,000 of availability on our unsecured credit facilities, and approximately $76,135,000 of net proceeds available on our outstanding forward equity sale agreements.

On October 25, 2023, we established the Current 2023 ATM Program pursuant to which we are able to sell, from time to time, shares of our common stock having an aggregate gross sales price of up to $750,000,000.

The Current 2023 ATM Program replaced our previous $750,000,000 ATM program, which was established on December 16, 2022, under which we had sold shares of our common stock having an aggregate gross sales price of $464,305,000 through October 25, 2023.

In connection with the Current 2023 ATM Program, we may sell shares of our common stock through sales agents or through certain financial institutions acting as forward purchasers whereby, at our discretion, the forward counterparties may borrow from third parties and subsequently sell shares of our common stock.

The use of a forward equity sale agreement allows us to lock in a share price on the sale of shares of our common stock but defer settling and receiving the proceeds from the sale of shares until a later date.

Additionally, the forward price that we expect to receive upon settlement of an agreement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends during the term of the agreement.

During the three months ended March 31, 2024, the Company did not sell any shares of our common stock directly through sales agents under the Current 2023 ATM Program.

During the three months ended March 31, 2024, EastGroup entered into forward equity sale agreements with certain financial institutions acting as forward purchasers under our Current 2023 ATM Program with respect to 286,671 shares of common stock with an initial weighted average forward price of $181.95 per share.

The Company did not receive any proceeds from the sale of common shares by the forward purchasers at the time it entered into forward equity sale agreements.

During the year ended December 31, 2023, EastGroup entered into forward equity sale agreements with respect to 406,041 shares of common stock with an initial weighted average forward price of $183.92 per share.

The Company did not receive any proceeds from the sale of common shares by the forward purchasers at the time we entered into forward equity sale agreements.

Subsequent to March 31, 2024, EastGroup settled outstanding forward equity sale agreements that were previously entered into under our Current 2023 ATM Program by issuing 133,699 shares of common stock in exchange for net proceeds of approximately $24,496,000.

As of April 23, 2024, the Company has 286,671 shares of common stock, or approximately $52,160,000 of gross proceeds, available for settlement prior to the expiration of the applicable settlement period, ranging from February 2025 through April 2025.

Under the Current 2023 ATM Program, approximately $388,162,000 of common stock remains available to be sold.

Future sales, if any, will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

EastGroup’s other material cash requirements from known contractual and other obligations, including real estate property obligations, development and value-add obligations and tenant improvements as of December 31, 2023, did not materially change during the three months ended March 31, 2024.

The Company has no material off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

6 unchanged sentences

Land is valued using comparable land sales specific to the applicable market, provided by a third party.

The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties.

The Company determines whether any financing assumed is above or below market based upon comparison to similar

financing terms for similar properties.

The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.

12 unchanged sentences

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 2. Management’s Discussion and Analysis