What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-12 compared with 2024-02-14 · 169 added, 176 removed, 312 unchanged (53% of the section changed)

3 unchanged sentences

The Company develops, acquires and operates distribution facilities, the majority of which are clustered around major transportation features in supply-constrained submarkets in major Sunbelt regions.

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

During 2023, economic uncertainty and stock market volatility increased due to a number of factors, including rising inflation, increasing interest rates and supply chain disruptions.

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

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

During 2024, economic uncertainty and stock market volatility continued due to a number of factors, including persistent inflation, interest rate uncertainty, concerns about supply chain or trade disruptions, particularly between the United States, Mexico and Canada and geopolitical conflict.

While these factors did not have a significant adverse impact on EastGroup’s operations during 2024, they may adversely impact the Company in the future.

Most of the Company’s leases require the tenants to pay their pro rata share of operating expenses, including real estate taxes, insurance and common area maintenance, thereby reducing the Company’s exposure to increases in operating expenses resulting from inflation or other factors.

1 unchanged sentence

In the event inflation causes increases in the Company’s general and administrative expenses, or higher interest rates increase the Company’s cost of doing business, such increased costs would not be passed through to tenants and could adversely affect the Company’s results of operations.

The Company continues to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.

The Company 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 2023, EastGroup issued 4,094,896 shares of common stock through its ATM programs, providing net proceeds to the Company of $691,478,000.

During 2023, the Company closed $100,000,000 of unsecured debt 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.

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

The Company continues to monitor inflation and interest rates, as well as the uncertainty resulting from the overall regulatory and economic environment.

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 2024, EastGroup sold, and subsequently settled the issuance of, 1,373,459 shares of common stock directly through sales agents under its at-the-market (“ATM”) common stock offering programs at a weighted average price of $174.30 per share, providing aggregate net proceeds to the Company of $236,996,000.

During 2024, EastGroup entered into forward equity sale agreements with certain financial institutions acting as forward counterparties under its ATM programs with respect to 2,677,289 shares of common stock with an initial weighted average forward price of $178.32 per share.

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

Also during 2024, the Company settled outstanding forward equity sale agreements that were previously entered into under its ATM programs by issuing 2,698,077 shares of common stock in exchange for net proceeds of approximately $480,663,000.

Additionally, on June 13, 2024, the Company amended its unsecured bank credit facilities to extend the maturity date by three years to July 31, 2028.

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

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

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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, 2023 through December 31, 2024), increased 4.8% for 2024 compared to 2023.

EastGroup’s operating portfolio was 98.7% leased at both December 31, 2023 and 2022.

EastGroup’s operating portfolio was 97.1% leased at December 31, 2024 compared to 98.7% at December 31, 2023.

Occupancy at the end of 2024 for the operating portfolio was 96.1% compared to 98.2% at December 31, 2023.

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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 year ended December 31, 2023, EastGroup purchased 328.3 acres of land in seven markets for a total of $70,664,000.

The Company began construction of 11 development projects containing 2,435,000 square feet in eight markets.

Also in 2023, the Company transferred 13 development and value-add projects (2,341,000 square feet) in 10 markets from its

development and value-add program to real estate properties, with costs of $271,568,000 at the date of transfer.

During the year ended December 31, 2024, EastGroup purchased 61.1 acres of land in two markets for a total of $13,762,000.

The Company began construction of 10 development projects containing 1,585,000 square feet in seven markets.

Also in 2024, the Company transferred seven development and value-add projects (1,519,000 square feet) in six markets from its development and value-add program to real estate properties, with costs of $199,971,000 at the date of transfer.

As of December 31, 2024, EastGroup’s development and value-add program consisted of 21 projects (4,143,000 square feet) located in 14 markets.

The projected total cost for the development and value-add projects, which were collectively 22.5% leased as of February 11, 2025, is $608,700,000, of which $184,632,000 remained to be invested as of December 31, 2024.

During the year ended December 31, 2023, EastGroup acquired 987,000 square feet of operating properties in Dallas, Las Vegas, Nashville and Greenville for a total of $165,116,000.

During the year ended December 31, 2024, EastGroup acquired 2,474,000 square feet of operating properties in six markets for a total of $390,011,000.

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

During 2023, EastGroup sold 231,000 square feet of operating properties and 11.9 acres of land, generating gross sales proceeds of $43,150,000.

The Company recognized $17,965,000 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 2023.

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

During the year ended December 31, 2024, EastGroup sold a group of operating properties in the Jackson, Mississippi market, containing 159,000 square feet and disposed of 5.4 acres of land in two markets, generating gross sales proceeds of $18,311,000.

The Company recognized $8,751,000 in Gain on sales of real estate investments and $362,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the year ended December 31, 2024.

In the near term, the Company funds its development and acquisition programs through its $675,000,000 unsecured bank credit facilities (as discussed below 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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The Company may also access the public debt market in the future as a means to raise capital.

EastGroup has one reportable segment – industrial properties, consistent with the Company’s manner of internal reporting, measurement of operating results and allocation of the Company’s resources.

The Company’s chief decision makers use two primary measures of operating results in making decisions:

Investors and industry analysts following the real estate industry primarily utilize two supplemental operating performance measures in analyzing the Company's operating results:

(1) funds from operations attributable to common stockholders (“FFO”), and (2) property net operating income (“PNOI”).

FFO is computed in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc.

Nareit’s guidance allows preparers an option as it pertains to whether gains or losses on sale, or impairment charges, on real estate assets incidental to a real estate investment trust's (“REIT’s”) business are excluded from the calculation of FFO.

Nareit’s guidance allows preparers an option as it pertains to whether gains or losses on sale, or impairment charges, on real estate assets incidental to a REIT’s business are excluded from the calculation of FFO.

EastGroup has made the election to exclude activity related to such assets that are incidental to our business.

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The Company believes that the exclusion of depreciation and amortization in the calculations of PNOI and FFO provides supplemental indicators of the properties’ performance since real estate values have historically risen or fallen with market conditions.

PNOI and FFO as calculated by the Company may not be

comparable to similarly titled but differently calculated measures for other REITs.

PNOI and FFO as calculated by the Company may not be comparable to similarly titled but differently calculated measures for other REITs.

Investors should be aware that items excluded from or added back to FFO are significant components in understanding and assessing the Company’s financial performance.

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PNOI from 2023 and 2024 acquisitions

(19,249) (3,334) *

PNOI from 2023 and 2024 development and value-add properties

(31,544) (13,190) *

PNOI from 2023 and 2024 operating property dispositions

(177) (2,819) *

Other PNOI 208 166 *

SAME PNOI 414,233 394,144 *

Net lease termination fee income from same properties (907) (2,708) *

Lease termination fee income from same properties (2,192) (1,020) *

SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS $ 412,041 393,124 *

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PROPERTY NET OPERATING INCOME (“PNOI”) $ 464,995 413,321 354,031

Income from real estate operations is comprised of rental income, net of reserves for uncollectible rent, expense reimbursement pass-through income and other real estate income including lease termination fees.

Income from real estate operations is comprised of rental income, expense reimbursement pass-through income and other real estate income.

Expenses from real estate operations is comprised of property taxes, insurance, utilities, repair and maintenance expenses, management fees and other operating costs.

1 unchanged sentence

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.

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

Modified gross leases often include base year amounts, and expense increases over these amounts are recoverable.

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Company’s share of depreciation from unconsolidated investment 125 124 124

Depreciation and amortization from noncontrolling interest (5) (17) —

Depreciation and amortization attributable to noncontrolling interest (5) (5) (17)

Gain on sales of real estate investments (8,751) (17,965) (40,999)

Gain on sales of non-operating real estate (362) (446) —

FUNDS FROM OPERATIONS (“FFO”) ATTRIBUTABLE TO COMMON STOCKHOLDERS 353,277 298,928 245,933

FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS 408,169 353,277 298,928

Gain on involuntary conversion and business interruption claims (1,708) (4,187) —

2 unchanged sentences

FFO attributable to common stockholders per diluted share $ 8.35 7.79 7.00

FFO attributable to common stockholders - excluding gain on involuntary conversion and business interruption claims per diluted share $ 7.70 7.00 6.09

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

involuntary conversion and business interruption claims

$ 8.31 7.70 7.00

Diluted shares for earnings per share and funds from operations 48,911 45,331 42,712

6 unchanged sentences

FFO Excluding Gain on Involuntary Conversion and Business Interruption Claims was $8.31 per diluted share for the year ended December 31, 2024 compared to $7.70 per diluted share for 2023, an increase of 7.9%.

FFO increased during the year ended December 31, 2023, as compared to 2022, primarily due to the increase in PNOI and other revenue, partially offset by the increase in interest expense.

FFO increased during the year ended December 31, 2024, as compared to 2023, primarily due to the

increase in PNOI and the decrease in interest expense, partially offset by an increase in general and administrative expense.

• For the year ended December 31, 2024, PNOI increased by $51,674,000, or 12.5%, compared to 2023.

PNOI increased $29,821,000 from newly developed and value-add properties, $19,557,000 from same property operations and $9,694,000 from 2022 and 2023 acquisitions.

PNOI increased $20,089,000 from same property operations, $18,354,000 from newly developed and value-add properties and $15,915,000 from 2023 and 2024 acquisitions;

PNOI decreased $2,642,000 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, 2023 through December 31, 2024).

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

For the year 2023, rental rate increases on new and renewal leases (14.7% of total square footage) averaged 55.0%.

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

For the year 2023, lease termination fee income was $1,020,000 compared to $2,708,000 for 2022.

• 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 $1,516,000 in 2023 compared to $138,000 in 2022.

We evaluate the collectability of rents and other receivables for individual leases at each reporting period based on factors including, among others, tenant’s 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.

If evaluation of these factors or others indicates it is not probable we will collect substantially all rent, we recognize an adjustment to rental revenue.

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 year ended December 31, 2023.

Rental rate increases on new and renewal leases (15.9% of total square footage) averaged 53.0% for the year ended December 31, 2024.

FINANCIAL CONDITION

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The increase was primarily due to:

(i) the transfer of 13 properties from Development and value-add properties to Real estate properties (as detailed under Development and Value-Add Properties below);

(ii) the acquisition of five operating properties;

(i) the acquisition of operating properties;

(ii) the transfer of properties 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.

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

(iv) right of use assets for the Company’s ground leases;

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

These increases were partially offset by the sale of operating properties.

During 2024, EastGroup acquired the following operating properties:

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(Square feet) (In thousands)

Craig Corporate Center

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

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

McKinney Logistics Center Dallas, TX 193,000 10/02/2023 25,739

Park at Myatt Nashville, TN 171,000 11/03/2023 30,793

Pelzer Point Commerce Center 1 Greenville, SC 213,000 12/21/2023 21,246

Operating properties acquired (2)(3)

Spanish Ridge Industrial Park Las Vegas, NV 231,000 01/23/2024 $ 54,859

147 Exchange Raleigh, NC 274,000 05/03/2024 52,945

Hays Commerce Center 3 & 4 Austin, TX 179,000 08/19/2024 35,781

Riverpoint Industrial Park Atlanta, GA 779,000 11/12/2024 87,576

DFW Global Logistics Centre 5-8 (4)

Dallas, TX 492,000 11/21/2024 75,852

Akimel Gateway (4)

Phoenix, AZ 519,000 12/26/2024 82,998

Total operating property acquisitions 2,474,000 $ 390,011

987,000 $ 165,116

(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 Notes 1(j) and 2 in the Notes to Consolidated Financial Statements.

(1) Cost is calculated in accordance with 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 Notes 1(j) and 2 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 year ended December 31, 2023, the Company made capital improvements of $53,550,000 on existing and acquired properties (included in the Capital Expenditures table under Results of Operations ).

(3) Excludes acquired development land as discussed below.

(4) This operating property is located on land subject to a ground lease.

See Note 2 of the Consolidated Financial Statements for further details.

During the year ended December 31, 2024, the Company made capital improvements of $58,128,000 on existing and acquired properties (included in the Real Estate Improvements table under Results of Operations ).

Also, the Company incurred costs of $3,784,000 on development and value-add projects 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.

Also, during the year ended December 31, 2023, EastGroup sold 231,000 square feet of operating properties, generating gross sales proceeds of $38,400,000.

Also, during the year ended December 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 year ended December 31, 2024.

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EastGroup capitalized internal development costs of $8,181,000 during the year ended December 31, 2024, compared to $10,472,000 during 2023.

The decrease was due to variations in timing and volume of development projects starting during the year ended December 31, 2024, as compared to the same period of 2023.

There were no value-add acquisitions during the year ended December 31, 2024.

Also during 2023, EastGroup purchased 328.3 acres of development land in seven markets for $70,664,000.

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

These increases were offset by the transfer of 13 development and value-add projects to Real estate properties with a total investment of $271,568,000 as of the date of transfer.

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 year ended December 31, 2023, EastGroup sold 11.9 acres of land, generating gross sales proceeds of $4,750,000.

Also during 2024, EastGroup purchased 61.1 acres of development land in two markets for $13,762,000.

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

These increases were offset by the transfer of seven development and value-add projects to Real estate properties with a total investment of $199,971,000 as of the date of transfer.

During the year ended December 31, 2024, EastGroup sold 5.4 acres of land in two markets, generating gross sales proceeds of $4,261,000.

The Company recognized $362,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the year ended December 31, 2024.

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Accumulated Depreciation

Accumulated depreciation on real estate, development and value-add properties increased $122,909,000 during 2023 due primarily to depreciation expense of $141,003,000, partially offset by the sale of three operating properties totaling 231,000 square feet during 2023.

Accumulated depreciation on real estate, development and value-add properties increased $141,853,000 during 2024 due primarily to depreciation expense of $155,240,000, which increased due to operating properties acquired in 2023 and 2024 and properties transferred to Real estate properties .

This increase was partially offset by the sale of operating properties.

Other assets increased $38,220,000 during 2024.

See Note 4 in the Notes to Consolidated Financial Statements for further details.

Unsecured bank credit facilities, net of debt issuance costs decreased $169,974,000 during the year ended December 31, 2023, mainly due to repayments of $641,624,000 and new debt issuance costs incurred during the year, partially offset by borrowings of $471,624,000 and the amortization of debt issuance costs during the year.

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

Unsecured debt, net of debt issuance costs decreased $14,912,000 during the year ended December 31, 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.

These changes are described in greater detail below under Liquidity and Capital Resources .

Unsecured bank credit facilities, net of debt issuance costs decreased $2,075,000 during the year ended December 31, 2024, mainly due to repayments of $64,968,000 and new debt issuance costs incurred during the year, offset by borrowings of $64,968,000 and the amortization of debt issuance costs during the year.

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

Unsecured debt, net of debt issuance costs decreased $169,190,000 during the year ended December 31, 2024, primarily due to the repayment of a $50,000,000 term loan in August and $120,000,000 in principal repayments on the Company's senior unsecured notes in December.

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 $1,005,000 during 2024.

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See Note 8 in the Notes to Consolidated Financial Statements for further details.

Additional paid-in capital increased $698,386,000 during the year ended December 31, 2023 primarily due to:

(i) the issuance of common stock under the Company’s continuous common equity offering program (as discussed below under Liquidity and Capital Resources ) and (ii) activity related to stock-based compensation (as discussed in Note 10 in the Notes to Consolidated Financial Statements).

During the year ended December 31, 2023, EastGroup issued 4,094,896 shares of common stock under its continuous common equity offering program at a weighted average price of $170.77 per share, providing aggregate net proceeds to the Company of $691,478,000.

Additional paid-in capital increased $723,486,000 during the year ended December 31, 2024 primarily due to the issuance of common stock under the Company’s ATM programs (as discussed in Note 9 in the Notes to Consolidated Financial Statements) and activity related to stock-based compensation (as discussed in Note 10 in the Notes to Consolidated Financial Statements).

During the year ended December 31, 2024, Distributions in excess of earnings increased $36,699,000 as a result of dividends on common stock of $264,450,000 exceeding Net Income Attributable to EastGroup Properties, Inc.

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

• PNOI increased by $59,290,000 ($1.31 per diluted share) for 2023 as compared to 2022.

PNOI increased $29,821,000 from newly developed and value-add properties, $19,557,000 from same property operations and $9,694,000 from 2022 and 2023 acquisitions.

For the year 2023, lease termination fee income was $1,020,000 compared to $2,708,000 for 2022.

The Company recorded net reserves for uncollectible rent of $1,516,000 in 2023 compared to $138,000 in 2022.

Straight-lining of rent increased PNOI by $11,898,000 and $9,991,000 in 2023 and 2022, respectively.

• PNOI was $464,995,000 ($9.51 per diluted share) for the year ended December 31, 2024, compared to $413,321,000 ($9.12 per diluted share) for the year ended December 31, 2023.

PNOI increased $20,089,000 from same property operations, $18,354,000 from newly developed and value-add properties and $15,915,000 from 2023 and 2024 acquisitions;

PNOI decreased $2,642,000 from operating properties sold in 2023 and 2024.

Straight-lining of rent increased Income from real estate operations by $11,450,000 and $11,289,000 in 2024 and 2023, respectively.

• EastGroup recognized Gains on sales of real estate investments of $8,751,000 ($0.18 per diluted share) during 2024, compared to $17,965,000 ($0.40 per diluted share) during 2023.

The Company’s sales transactions are described in Note 2 of the Notes to Consolidated Financial Statements.

• Depreciation and amortization expense increased by $17,440,000 ($0.38 per diluted share) during 2023 compared to 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 $9,497,000 ($0.21 per diluted share) during 2023 compared to 2022.

• Depreciation and amortization was $189,411,000 ($3.87 per diluted share) for the year ended December 31, 2024, compared to $171,078,000 ($3.77 per diluted share) for the year ended December 31, 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.

These increases are partially offset by operating properties sold in 2023 and 2024.

• Interest expense recognized was $38,956,000 ($0.80 per diluted share) during 2024, compared to $47,996,000 ($1.06 per diluted share) during 2023.

See the table below for details.

• During 2023, EastGroup recognized gains on involuntary conversion and business interruption claims of $4,187,000 ($0.09 per diluted share).

There were no gains on involuntary conversion and business interruption claims during 2022.

• EastGroup recognized gains on involuntary conversion and business interruption claims of $1,708,000 ($0.03 per diluted share) during 2024, compared to $4,187,000 ($0.09 per diluted share) during 2023.

Gains on involuntary conversion and business interruption claims are included in Other revenue on the Consolidated Statements of Income and Comprehensive Income.

• Weighted average shares outstanding increased by 3,580,000, on a diluted basis, during 2024 compared to 2023.

The increase is primarily due to issuance of shares through the Company's offering programs, as discussed in Liquidity and Capital Resources .

EastGroup entered into 136 leases with certain rent concessions on 5,201,000 square feet during 2024 with total rent concessions of $13,135,000 over the terms of the leases, compared to 91 leases with rent concessions on 3,282,000 square feet with total rent concessions of $7,543,000 over the terms of the leases in 2023.

The Company’s percentage of leased square footage for the operating portfolio was 98.7% at both December 31, 2023 and 2022.

The Company’s percentage of leased square footage for the operating portfolio was 97.1% at December 31, 2024, compared to 98.7% at December 31, 2023.

Occupancy at the end of 2024 for the operating portfolio was 96.1% compared to 98.2% at December 31, 2023.

Interest Expense increased $9,497,000 for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Interest Expense decreased $9,040,000 for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The following table presents the components of Interest Expense for 2024 and 2023:

Years Ended December 31,

2023 2022 Increase (Decrease)

VARIABLE RATE INTEREST EXPENSE 2024 2023 Increase (Decrease)

(In thousands)

VARIABLE RATE INTEREST EXPENSE

Unsecured bank credit facilities interest — variable rate

22 unchanged sentences

(excluding amortization of facility fees and debt issuance costs)

The Company’s fixed rate interest expense increased by $14,131,000 for 2023 as compared to 2022 primarily as a result of the unsecured debt activity described below.

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

NEW UNSECURED DEBT IN 2022 AND 2023

Margin Effectively Fixed Interest Rate Date Obtained Maturity Date Amount

(In thousands)

$100 Million Senior Unsecured Term Loan (1)(2)

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 Effectively Fixed Interest Rate

and Total Amount for 2022 and 2023

3.98% $ 625,000

(1) The interest rates on these unsecured term loans are 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 interest rate swap agreements (further described in Note 12) 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 December 31, 2023.

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

The increase in interest expense from the new unsecured debt was partially offset by the repayment of unsecured debt and the refinance of senior unsecured term loans during 2022 and 2023.

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.

In March 2022, the Company refinanced another $100,000,000 senior unsecured term loan, reducing the effectively fixed interest rate by approximately 60 basis points.

The repayments on unsecured debt are shown in the following table:

The Company’s fixed rate interest expense decreased by $2,799,000 for 2024 as compared to 2023 primarily as a result of the unsecured debt activity described below.

The following table presents the details of unsecured debt repayments during 2023 and 2024:

UNSECURED DEBT REPAID IN 2023 AND 2024

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$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

$50 Million Senior Unsecured Term Loan 4.08% 08/30/2024 50,000

$60 Million Senior Unsecured Notes 3.46% 12/13/2024 60,000

$60 Million Senior Unsecured Notes 3.48% 12/15/2024 60,000

Weighted Average Effectively Fixed Interest Rate and Total Payoff

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3.37% $ 285,000

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 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)

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 12 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 December 31, 2024.

During 2024, EastGroup did not enter into or refinance any unsecured debt agreements.

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 by $3,842,000 for 2023 as compared to 2022, due to increased borrowing rates and changes in development spending.

Capitalized interest increased by $3,588,000 for 2024 as compared to 2023, due to changes in development activity and spending.

Real Estate Improvements

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

Useful Life Years Ended December 31,

Estimated Useful Life Years Ended December 31,

(In thousands)

Upgrade on acquisitions 40 yrs $ 1,892 618

Upgrade on acquisitions 40 years $ 1,435 1,892

Tenant improvements:

New tenants Lease Life 16,352 13,224

Renewal tenants Lease Life 3,503 3,687

Building improvements 5-40 yrs 8,085 9,853

Roofs 5-15 yrs 17,386 6,611

Parking lots 3-5 yrs 4,824 3,482

Other 5 yrs 1,508 1,969

New tenants Lease Term 18,540 16,352

Renewal tenants Lease Term 2,964 3,503

Building improvements 5 - 40 years 13,006 8,085

Roofs 5 - 15 years 12,940 17,386

Parking lots 3 - 5 years 4,763 4,824

Other 5 years 4,480 1,508

Total real estate improvements (1)

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Capitalized leasing costs for the years ended December 31, 2024 and 2023 were as follows:

Useful Life Years Ended December 31,

Estimated Useful Life Years Ended December 31,

(In thousands)

Development and value-add Lease Life $ 9,597 14,366

New tenants Lease Life 9,379 10,392

Renewal tenants Lease Life 12,696 12,095

Development and value-add Lease Term $ 7,117 9,597

New tenants Lease Term 16,478 9,379

Renewal tenants Lease Term 11,318 12,696

Total capitalized leasing costs (1)

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Change in leasing commissions payables (2,759) 332

Leasing commissions on the

Consolidated Statements of Cash Flows

Leasing commissions on the Consolidated Statements of Cash Flows

$ 32,154 32,004

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A discussion of changes in the Company’s results of operations between 2023 and 2022 has been omitted from this Form 10-K and can be found in “Part II.

Management’s Discussion and Analysis of Financial Condition and Results of Operations”

under the heading “2022 Compared to 2021” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 15, 2023, and is incorporated herein by reference.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “2023 Compared to 2022” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 14, 2024, and is incorporated herein by reference.

LIQUIDITY AND CAPITAL RESOURCES

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 future years to be consistent in nature with those for the year ended December 31, 2024.

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 the short-term bank borrowings.

The Company believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company.

The Company also believes it can obtain debt financing and issue common and/or preferred equity.

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 or convertible bond markets in the future as a means to raise capital.

As of December 31, 2024, EastGroup had total immediate liquidity of approximately $757,320,000, comprised of $17,529,000 of cash and cash equivalents, $672,345,000 of availability on our unsecured bank credit facilities, and approximately $67,446,000 of gross proceeds available on its outstanding forward equity sale agreements.

See further details discussed below.

Net cash provided by operating activities was $416,587,000 for the year ended December 31, 2024.

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borrowings on unsecured bank credit facilities;

proceeds from unsecured debt;

and net proceeds from sales of real estate investments.

The Company distributed $252,794,000 in common stock dividends during 2024.

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

the construction and development of properties;

purchases of real estate;

The Company also paid $390,011,000 related to the purchase of real estate property.

Other primary uses of cash were for the

construction and development of properties;

repayments on unsecured bank credit facilities and unsecured debt;

capital improvements at various properties;

and leasing commissions.

The Company expects liquidity sources and needs in future years to be consistent in nature with those for the year ended December 31, 2023.

As of December 31, 2024, the Company was contractually obligated to pay the dividend declared in December 2024, which was paid in January 2025.

An amount for dividends payable of $74,049,000 was included in Accounts payable and accrued expenses at December 31, 2024, which includes dividends payable on unvested restricted stock of $1,617,000, 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 December 31, 2023:

UNSECURED DEBT (FIXED RATE) (1)

Weighted Average Interest Rate Principal Payments Maturing

Scheduled principal payments on long-term debt, including Unsecured debt, net of debt issuance costs (not including Unsecured bank credit facilities, net of debt issuance costs ), as of December 31, 2024, are as follows:

MATURITY DATES

Weighted Average Interest Rate (1)

Principal Payments Maturing

(In thousands)

March 18, 2025 1.58% $ 50,000

August 28, 2025 3.80% 20,000

December 13, 2024 3.46% 60,000

December 15, 2024 3.48% 60,000

October 1, 2025 3.97% 25,000

October 7, 2025 3.99% 50,000

Year 2026 2.56% 140,000

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Year 2030 and beyond 3.61% 735,000

Total Unsecured Debt (Fixed Rate) (1)

3.37% $ 1,680,000

Total Unsecured Debt 3.34% $ 1,510,000

(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, which was increased in January 2023 by $200,000,000 from $425,000,000, is with a group of 11 banks and has a maturity date of July 30, 2025.

In August 2024, EastGroup repaid a $50,000,000 senior unsecured term loan at maturity with an effectively fixed interest rate of 4.08%.

In December 2024, the Company made principal repayments of two senior unsecured notes totaling $120,000,000.

Senior unsecured notes with a principal balance of $60,000,000 had a fixed interest rate of 3.46%.

The other senior unsecured notes with a principal balance of $60,000,000 had a fixed interest rate of 3.48%.

Both payments were made at maturity.

Subsequent to year end, EastGroup refinanced a $100,000,000 senior unsecured term loan, reducing the credit spread by 30 basis points to a total effectively fixed interest rate of 4.97%.

The loan, which previously had five years remaining, now has a three-year maturity with two, one-year extension options, at the Company's election.

On June 13, 2024, EastGroup entered into amended and restated credit agreements related to its $625,000,000 and $50,000,000 unsecured bank credit facilities, to extend the maturity dates from July 30, 2025 to July 31, 2028.

There were no other material changes to the credit facilities, which are outlined below.

The Company has a $625,000,000 unsecured bank credit facility with a group of 10 banks, which has a maturity date of July 31, 2028.

The credit facility contains options for two six-month extensions (at the Company’s election) and an additional $625,000,000 accordion (with agreement by all parties).

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

The interest rate on each tranche is reset on a monthly basis and as of December 31, 2024, was Term SOFR plus 76.5 basis points with an annual facility fee of 15 basis points.

As of December 31, 2024, the Company had no variable rate borrowings on this unsecured bank credit facility and an interest rate of 5.222%.

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 has a $50,000,000 unsecured bank credit facility with a maturity date of July 31, 2028, 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.

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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.

The $625,000,000 facility is also subject to a sustainability-linked pricing component, pursuant to which the applicable interest rate margin is adjusted if the Company meets a certain sustainability performance target.

This sustainability metric is evaluated annually and was achieved for the years ended December 31, 2024, 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 margin was effectively reduced on this unsecured bank credit facility for the years ended December 31, 2024 and 2023, 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 December 31, 2024.

The Company believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company.

The Company also believes it can obtain debt financing and issue common and/or preferred equity.

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 December 31, 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 had no remaining secured debt as of December 31, 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%.

As of December 31, 2023, EastGroup had total immediate liquidity of approximately $712,608,000, comprised of $40,263,000 of cash and cash equivalents and $672,345,000 of immediate availability on our unsecured credit facilities.

On October 25, 2023, we established an at-the-market common stock offering 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”).

The Current 2023 ATM Program replaced our previous $750,000,000 ATM program (the “Prior 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.

On October 25, 2024, we established an ATM common stock offering 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 $1,000,000,000 (the “Current ATM Program”).

The Current ATM Program replaced our previous $750,000,000 ATM program (the “Prior ATM Program”), which was established on October 25, 2023, under which we had sold shares of our common stock having an aggregate gross sales price of $746,153,000 through October 25, 2024.

In connection with the Current 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 year ended December 31, 2023, we sold a total of 4,094,896 shares of our common stock under our ATM programs at a weighted average price of $170.77 per share, for gross proceeds of $699,304,000, and net proceeds of $691,478,000, after deducting offering-related costs.

During the year ended December 31, 2023, we entered into forward equity sale agreements with certain financial institutions acting as forward purchasers under our Current 2023 ATM program with respect to 406,041 shares of common stock at a weighted average initial forward price of $183.92 per share.

We 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.

As of December 31, 2023, we had not settled any of the outstanding forward equity sale agreements by issuing shares of our common stock.

Subsequent to December 31, 2023, the Company partially settled the aforementioned outstanding forward equity sale agreements by issuing 272,342 shares of our common stock in exchange for net proceeds of $49,364,000, based on a weighted average forward price of $181.26 per share at settlement.

As of February 14, 2024, the date of this Annual Report on Form 10-K, the remaining 133,699 shares of common stock, or approximately $24,333,000 of net proceeds, based on a forward price of $182.00 per share, are available for settlement prior to December 2024.

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 year ended December 31, 2024, EastGroup sold, and subsequently settled the issuance of, 1,373,459 shares of common stock directly through sales agents under its ATM programs at a weighted average price of $174.30 per share, providing aggregate net proceeds to the Company of $236,996,000.

During the year ended December 31, 2024, EastGroup entered into forward equity sale agreements with certain financial institutions acting as forward counterparties under its ATM programs with respect to 2,677,289 shares of common stock with an initial weighted average forward price of $178.32 per share.

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

Also during the year ended December 31, 2024, the Company settled outstanding forward equity sale agreements that were previously entered into under its ATM programs by issuing 2,698,077 shares of common stock in exchange for net proceeds of approximately $480,663,000.

Subsequent to December 31, 2024, EastGroup settled outstanding forward equity sale agreements that were previously entered into under the Current ATM Program by issuing 214,138 shares of common stock in exchange for net proceeds of approximately $37,005,000.

As of February 12, 2025, the date of this Annual Report on Form 10-K, the Company had 171,115 shares of common stock, or approximately $29,688,000 of net proceeds, based on a weighted average forward price of $173.50 per share, available for settlement before the applicable settlement period expires in November 2025.

As of February 12, 2025, approximately $719,665,000 of common stock remains available to be sold under the Current ATM Program.

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Tenant improvements obligations (4)

Operating lease obligations - Ground leases (5)

Total $ 161,441

(1) Cash requirement due in less than one year;

there were no related long-term cash requirements.

there were no related long-term cash requirements (other than ground lease payments, described below).

(2) Represents commitments on real estate properties, except for tenant improvement allowance obligations.

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(4) Represents tenant improvement allowance obligations.

(5) Represents ground lease payments due within one year.

The Company also estimates future minimum ground lease payments of $148,849,000, due within the current lease terms of its ground leases.

With the renewal options excluded, expiration dates range from August 2031 to December 2085.

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.

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The significance of this accounting policy will fluctuate given the transaction activity during the period.

For properties under development and value-add properties acquired in the development stage, costs associated with development (i.e., land, construction costs, interest expense, property taxes and other costs associated with development) are aggregated into the total capitalized costs of the property.

Included in these costs are management’s estimates for the portions of internal costs (primarily personnel costs) deemed related to such development activities.

For properties included in Development and value-add properties , costs associated with development (i.e., land, construction costs, interest expense, property taxes and other costs associated with development) are aggregated into the total capitalized costs of the property.

Included in these costs are management’s estimates for the portions of internal costs (primarily personnel

costs) deemed related to such development activities.

The internal costs are allocated to specific development projects based on development activity.

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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 7. Management’s Discussion and Analysis