What changed in this filing

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Item 1A. Risk Factors

2025-02-12 compared with 2024-02-14 · 30 added, 36 removed, 217 unchanged (23% of the section changed)

15 unchanged sentences

• construction costs;

• weather-related events.

• weather-related and climate-related events.

We may be unable to compete for properties and tenants .

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We also routinely develop properties with no pre-leasing.

If we are unable to lease all or a substantial portion of our properties, or if the rental rates upon such leasing are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and our ability to make expected distributions to stockholders may be adversely affected.

If we are unable to lease all or a substantial portion of our

properties, or if the rental rates upon such leasing are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and our ability to make expected distributions to stockholders may be adversely affected.

We may be affected negatively by tenant bankruptcies and leasing delays.

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If tenants are unable to comply with the terms of their leases for any reason, including because of rising costs or falling sales, we may deem it advisable to modify lease terms to allow tenants to pay a lower rent or a smaller share of taxes, insurance and other operating costs.

If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating

to the tenant.

We also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises.

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• the risk that we may not be able to obtain land on which to develop or that due to the increased cost of land, our activities may not be as profitable;

• construction costs exceeding original estimates due to rising interest rates and increases in the costs of materials and labor;

• construction costs exceeding original estimates due to tariffs or elevated interest rates and increases in the costs of materials and labor;

• disruption in supply and delivery chains;

13 unchanged sentences

As a result, if a claim were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.

Coverage under our existing insurance policies may be inadequate to cover losses .

Coverage under our existing insurance policies may be inadequate to cover losses, or we may not be able to obtain adequate insurance at certain properties in the future .

We generally maintain insurance policies related to our business, including casualty, general liability and other policies, covering our business operations, employees and assets as appropriate for the markets where our properties and business operations are located.

However, we would be required to bear all losses that are not adequately covered by insurance.

In addition, there may be certain losses that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so, including losses due to floods, wind, earthquakes, acts of war, acts of terrorism or riots.

If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties.

In addition, there may be certain losses that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so, or insurance coverage may not be available, including losses due to fire, floods, wind, earthquakes, acts of war, acts of terrorism or riots.

If an uninsured

loss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties.

In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.

We face risks due to lack of geographic and real estate sector diversity.

Substantially all of our properties are located in the Sunbelt region of the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina.

Substantially all of our properties are located in the Sunbelt region of the United States with an emphasis in the states of Texas, Florida, California, Arizona and North Carolina.

As of December 31, 2024, our largest markets were Houston and Dallas.

We owned operating properties totaling 6.8 million square feet in Houston and 5.4 million square feet in Dallas, which represent 10.7% and 9.6%, respectively, of the Company’s total Real estate properties based on percentage of total annualized base rent (as defined in Item 2.

We owned operating properties totaling 7,108,000 square feet in Houston and 6,108,000 square feet in Dallas, which represent 10.0% and 10.8%, respectively, of the Company’s total Real estate properties based on percentage of total annualized base rent (as defined in Item 2.

A downturn in general economic conditions and local real estate conditions in these geographic regions, as a result of oversupply of or reduced demand for industrial properties, local business climate, business layoffs and changing demographics, would have a particularly strong adverse effect on us.

In addition, our investments in real estate assets are concentrated in the industrial distribution

In addition, our investments in real estate assets are concentrated in the industrial distribution sector.

This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included other sectors of the real estate industry.

18 unchanged sentences

Even in the absence of direct physical damage to our properties, the occurrence of any natural disasters or a changing climate in the area of any of our properties could have a material adverse effect on business, supply chains and the economy generally.

Climate change could cause an increase in property and casualty insurance premiums.

Climate change could cause an increase in property and casualty insurance premiums or negatively impact our ability to obtain insurance.

The potential impacts of future climate change on our properties could adversely affect our ability to lease, develop or sell our properties or to borrow using our properties as collateral.

In addition, any proposed legislation enacted to address climate change could increase the costs of energy, utilities and overall development.

The resulting costs of any proposed legislation may adversely affect our financial position, results of operations and cash flows.

The resulting costs of any proposed legislation may adversely affect our or our tenants' financial position, results of operations and cash flows.

Financing Risks

14 unchanged sentences

The terms of our various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining minimum debt service coverage and leverage ratios and maintaining insurance coverage.

These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the

instruments governing the applicable indebtedness even if we had satisfied our payment obligations.

These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations.

If we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flow and our financial condition would be adversely affected.

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Our ability to execute our business strategy depends on our access to an appropriate blend of equity and debt financing, including common and preferred stock, lines of credit and other forms of secured and unsecured debt.

We have filed a registration statement with the SEC allowing us to offer, from time to time, an indefinite amount of equity securities on an as-needed basis, including shares under our Current 2023 ATM Program (as defined below).

Sales of a substantial number of shares of our common stock (or the perception that such sales might occur), the issuance of common stock in connection with acquisitions and other equity issuances may dilute the holdings of our existing stockholders or reduce the market prices of our securities, or both.

20 unchanged sentences

EastGroup evaluates new development projects on a case-by-case basis including many factors such as construction costs, potential yields, and tenant demand, and no assurance can be given that inflationary pricing will not have a material adverse impact on our development pipeline and future results.

Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so.

To the extent our exposure to increases in interest rates on any of our debt is not eliminated through interest rate swaps and interest rate protection agreements, such increases will result in higher debt service costs, which will adversely affect our cash flows.

Our exposure to increases in interest rates in the short term includes our variable-rate borrowings.

With the exception of the unsecured bank credit facilities, all of the Company’s debt has an effectively fixed interest rate.

See “ Financing Risks – Increases in interest rates would increase our interest expense .” Increases in interest rates could also increase our debt financing costs over time, either through near-term borrowings on our existing unsecured bank credit facilities or refinancing of our existing borrowings that may incur incrementally higher interest rates.

One of the factors that may influence the trading price of our publicly-traded common stock is the interest rate on our debt and the dividend yield on our common stock relative to market interest rates.

As market interest rates rise, unless we eliminate our exposure to such increases, our borrowing costs may rise and result in less funds being available for distribution.

Therefore, we may not be able to, or we may choose not to, provide a higher distribution rate on our common stock.

In addition, fluctuations in interest rates could adversely affect the market value of our properties.

These factors could result in a decline in the market prices of our common stock.

There is no guarantee we will be able to mitigate the impact of inflation.

The market value of our common stock could decrease based on our performance and market perception and conditions.

The market value of our common stock may be affected by the market’s perception of our operating results, growth potential, and current and future cash dividends and may also be affected by the real estate market value of our underlying assets.

The market price of our common stock may also be influenced by the dividend on our common stock relative to market interest rates.

1 unchanged sentence

In addition, rising interest rates would result in increased expense, thereby adversely affecting cash flow and our ability to service our indebtedness and pay dividends.

The state of the economy or other adverse changes in general or local economic conditions may adversely affect our operating results and financial condition.

The state of the economy, geopolitical conflict or adverse changes in general or local economic conditions may adversely affect our operating results and financial condition.

Turmoil in the global financial markets may have an adverse impact on the availability of credit to businesses generally and could lead to a further weakening of the U.S.

5 unchanged sentences

No assurances can be given that the effects of an adverse economic situation will not have a material adverse effect on our business, financial condition and results of operations.

Deficiencies in internal control over financial reporting could adversely affect our business.

The design and effectiveness of our procedures for internal control over financial reporting may not prevent all misstatements, errors or misrepresentations.

While our management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no assurance that our internal control over financial reporting will be effective in achieving all control objectives without fail.

Deficiencies could result in restatements of our financial statements or otherwise materially adversely affect our business.

We may fail to qualify as a REIT.

3 unchanged sentences

Furthermore, we would no longer be required by the Internal Revenue Code to make any dividends to our stockholders as a condition of REIT qualification.

If we were to fail to qualify as a REIT, subject to certain limitations in the Internal Revenue Code, corporate stockholders may be eligible for the dividends received deduction, and individual, trust and estate stockholders may be eligible to treat the dividends received from us as qualified dividend income taxable as net capital gains under the provisions of Section 1(h)(11) of the Internal Revenue Code.

If we were to fail to qualify as a REIT, subject to certain limitations in the Internal Revenue

Code, corporate stockholders may be eligible for the dividends received deduction, and individual, trust and estate stockholders may be eligible to treat the dividends received from us as qualified dividend income taxable as net capital gains under the provisions of Section 1(h)(11) of the Internal Revenue Code.

However, non-corporate stockholders (including individuals) will not be able to deduct 20% of certain dividends they receive from us in accordance with Section 199A of the Internal Revenue Code.

1 unchanged sentence

federal income tax laws governing REIT qualification is limited.

Although we believe we have operated and intend to operate in a manner that will

continue to qualify us as a REIT, we cannot be certain that we have been or will be successful in continuing to be taxed as a REIT.

Although we believe we have operated and intend to operate in a manner that will continue to qualify us as a REIT, we cannot be certain that we have been or will be successful in continuing to be taxed as a REIT.

In addition, facts and circumstances that may be beyond our control may affect our ability to qualify as a REIT.

29 unchanged sentences

The loss of the services of these key personnel could affect our operations because of diminished relationships with existing and prospective tenants, property sellers and industry personnel.

Unanticipated turnover or inadequate succession planning could have a material adverse impact on the Company's business plans and opportunities.

In addition, attracting new or replacement personnel may be difficult in a competitive market.

We have severance and change in control agreements with certain of our officers that may deter changes in control of the Company.

If, within a certain time period (as set in the officer’s agreement) following a change in control, we terminate the officer’s employment other than for cause, or if the officer elects to terminate his or her employment with us for reasons specified in the agreement, we will make a severance payment equal to the officer’s average annual compensation times an amount specified in the officer’s agreement, together with the officer’s base salary and vacation pay that have accrued but are

unpaid through the date of termination.

These agreements may deter a change in control because of the increased cost for a third party to acquire control of us.

If, within a certain time period (as set in the officer’s agreement) following a change in control, we terminate any such officer’s employment other than for cause, or if any such officer elects to terminate his or her employment with us for reasons specified in the agreement, we will make a severance payment equal to the officer’s average annual compensation times an amount specified in the officer’s agreement, together with the officer’s base salary and vacation pay that have accrued but are unpaid through the date of termination.

These agreements may deter a change in control because of the increased cost for a third party to acquire control of the Company.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or cyber-attack of that technology could harm our business.

5 unchanged sentences

In some cases, it may be difficult to anticipate or immediately detect such incidents and the damage they cause.

Techniques used to obtain unauthorized access to, disable or sabotage information technology systems are increasingly diverse and sophisticated, including as a result of emerging technologies, such as artificial intelligence and machine learning.

Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a materially adverse effect on our business, financial condition and results of operations.

5 unchanged sentences

Any changes to U.S.

tax laws, foreign trade, manufacturing, and development and investment in the territories and countries where our customers operate could adversely affect our operating results and our business.

tax laws, duties, tariffs, changes to bilateral or regional trade agreements, manufacturing, and development and investment in the territories and countries where we and our customers operate could adversely affect our operating results and our business.

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-K

Item 1A. Risk Factors