EastGroup Properties Announces Fourth Quarter and Year 2022 Results
EastGroup Properties reported its Q4 2022 results, revealing a diluted EPS of $0.89, down from $1.75 in Q4 2021. In contrast, FFO rose 12.3% to $1.82 per share. The company maintained a 98.7% leasing rate and recorded a substantial rental rate increase of 49.2% for new and renewal leases. Despite no real estate sales in Q4 2022, EastGroup completed acquisitions worth approximately $46 million and initiated construction of a 351,000-square-foot project. The annual EPS for 2022 was $4.36, up from $3.90, with a declared cash dividend of $1.25 per share, marking the 172nd consecutive quarterly dividend. Outlook for 2023 projects EPS between $3.22 and $3.42.
- FFO per share increased by 12.3% to $1.82 for Q4 2022.
- Same Property Net Operating Income grew by 7.1% on a straight-line basis for Q4 2022.
- 98.7% of the operating portfolio was leased as of December 31, 2022.
- Rental rates on new leases increased by 49.2% in Q4 2022.
- Acquired 170.3 acres of development land for approximately $46 million.
- EPS decreased to $0.89 in Q4 2022 from $1.75 in Q4 2021 due to no gains on real estate sales.
- Depreciation and amortization expense increased by $7.4 million ($0.17 per share) for Q4 2022.
Fourth Quarter 2022 Results
- Net Income Attributable to Common Stockholders of
$0.89 Per Diluted Share for Fourth Quarter 2022 Compared to$1.75 Per Diluted Share for Fourth Quarter 2021 (Gains on Sales of Real Estate Investments Were$39 Million , or$0.95 Per Diluted Share, for Fourth Quarter 2021; There Were No Sales in Fourth Quarter 2022) - Funds from Operations of
$1.82 Per Share for Fourth Quarter 2022 Compared to$1.62 Per Share for Fourth Quarter 2021, an Increase of12.3% - Same Property Net Operating Income for the Same Property Pool Excluding Income From Lease Terminations Increased
7.1% on a Straight-Line Basis and8.7% on a Cash Basis for Fourth Quarter 2022 Compared to the Same Period in 2021 - Operating Portfolio was
98.7% Leased and98.3% Occupied as of December 31, 2022; Average Occupancy of Operating Portfolio was98.4% for Fourth Quarter 2022 as Compared to97.3% for Fourth Quarter 2021 - Rental Rates on New and Renewal Leases Increased an Average of
49.2% on a Straight-Line Basis - Acquired 170.3 Acres of Development Land for Approximately
$46 Million - Started Construction of One Development Project Containing 351,000 Square Feet with Projected Total Costs of Approximately
$45 Million - Transferred Eight Development and Value-Add Projects Totaling 1,304,000 Square Feet to the Operating Portfolio, Which Are Collectively
100% Leased - Development and Value-Add Program Consisted of 20 Projects in 12 Cities (4.0 Million Square Feet) at December 31, 2022 with a Projected Total Investment of Approximately
$494 Million - Declared 172nd Consecutive Quarterly Cash Dividend:
$1.25 Per Share - Closed
$150 Million of Senior Unsecured Debt:$75 Million has an 11-Year Term and a Fixed Interest Rate of4.90% and$75 Million has a 12-Year Term and a Fixed Interest Rate of4.95% - Agreed to Terms on a
$100 Million Senior Unsecured Term Loan with a Fixed Interest Rate of5.27% and a 7-Year Term - Agreed to Terms to Expand the Borrowing Capacity of the Unsecured Bank Credit Facilities from
$475 Million to$675 Million
Year 2022 Results
- Net Income Attributable to Common Stockholders of
$4.36 Per Diluted Share for 2022 Compared to$3.90 Per Diluted Share for 2021 - Funds from Operations of
$7.00 Per Share for 2022 Compared to$6.09 Per Share for 2021, an Increase of14.9% - Same Property Net Operating Income for the Same Property Pool Excluding Income From Lease Terminations for 2022 Increased
7.2% on a Straight-Line Basis and8.9% on a Cash Basis Compared to 2021 - Average Occupancy of the Operating Portfolio was
98.0% for 2022 as Compared to97.1% for 2021 - Rental Rates on New and Renewal Leases Increased an Average of
39.0% on a Straight-Line Basis - Acquired Tulloch Corporation, the Owner of an Industrial Real Estate Portfolio Located within the San Francisco and Sacramento Markets, Comprised of 14 Properties Totaling Approximately 1.7 Million Square Feet and Two Land Parcels Totaling 10.5 Acres for Approximately
$366 Million - Acquired 1,044,000 Square Feet of Value-Add Properties for Approximately
$123 Million - Acquired 456.3 Acres of Development Land for Approximately
$124 Million - Started Construction of 14 Development Projects Containing 2,668,000 Square Feet with Projected Total Costs of
$329 Million - Transferred 19 Development and Value-Add Projects Totaling 3,638,000 Square Feet to the Real Estate Portfolio, Which are Collectively
99% Leased - Sold Three Operating Properties Totaling 287,000 Square Feet for Approximately
$52 Million (Gains of$41 Million Not Included in FFO) - Closed
$525 Million of Unsecured Debt with a Weighted Average Effective Fixed Interest Rate of3.82% - Repaid a
$75 Million Unsecured Term Loan with a Fixed Interest Rate of3.03% - Refinanced a
$100 Million Senior Unsecured Term Loan with Five Years Remaining, Reducing the Effective Fixed Interest Rate by 60 basis points to1.80% - Issued 393,406 Shares of Common Stock Pursuant to the Company's Continuous Common Equity Offering Program at an Average Price of
$194.17 Per Share for Aggregate Net Proceeds of approximately$75 Million
JACKSON, Miss., Feb. 7, 2023 /PRNewswire/ -- EastGroup Properties, Inc. (NYSE: EGP) (the "Company", "we", "us" or "EastGroup") announced today the results of its operations for the three and twelve months ended December 31, 2022.
Commenting on EastGroup's performance, Marshall Loeb, CEO, stated, "Our team continues delivering solid, consistent results as evidenced by fourth quarter growth in FFO per share of more than
EARNINGS PER SHARE
Three Months Ended December 31, 2022
On a diluted per share basis, earnings per common share ("EPS") were
Twelve Months Ended December 31, 2022
Diluted EPS for the twelve months ended December 31, 2022 were
FUNDS FROM OPERATIONS AND PROPERTY NET OPERATING INCOME
Three Months Ended December 31, 2022
For the three months ended December 31, 2022, funds from operations attributable to common stockholders ("FFO") were
PNOI increased by
Same PNOI Excluding Income from Lease Terminations increased
On a straight-line basis, rental rates on new and renewal leases (
Twelve Months Ended December 31, 2022
FFO for the twelve months ended December 31, 2022, was
PNOI increased by
Same PNOI Excluding Income from Lease Terminations increased
On a straight-line basis, rental rates on new and renewal leases (
The same property pool for the three and twelve months ended December 31, 2022 includes properties which were included in the operating portfolio for the entire period from January 1, 2021 through December 31, 2022; this pool is comprised of properties containing 43,349,000 square feet.
FFO, PNOI and Same PNOI are non-GAAP financial measures, which are defined under Definitions later in this release. Reconciliations of Net Income to PNOI and Same PNOI, and Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO are presented in the attached schedule "Reconciliations of GAAP to Non-GAAP Measures."
ACQUISITIONS AND DISPOSITIONS
During the three months ended December 31, 2022, the Company closed on the acquisition of development land in four different markets:
- Greenway Land – 60.9 acres of land in Atlanta, acquired for
$5,785,000 , that will accommodate the future development of five buildings containing approximately 739,000 square feet. In the Atlanta market, the Company owns 1,312,000 square feet of operating properties, which are100% leased as of February 6, 2023. - Cameron Land – 87.5 acres of land in Austin, acquired for
$30,776,000 , that will accommodate the future development of seven buildings containing approximately 1,007,000 square feet. In the Austin market, the Company owns 1,322,000 square feet of operating properties, which are97.8% leased as of February 6, 2023. - Eisenhauer Point 13-14 Land – 11.2 acres of land in San Antonio, acquired for
$2,742,000 , that will accommodate the future development of two buildings containing approximately 156,000 square feet. This land is adjacent to the Company's existing Eisenhauer Point development, which consists of 958,000 square feet and is100% leased as of February 6, 2023. - MCO Logistics Center Land – 10.7 acres of land in Orlando, acquired for
$6,769,000 , that will accommodate the future development of a building totaling approximately 167,000 square feet. This acquisition is adjacent to the Orlando International Airport and supports the Company's effort to further expand its presence in Southeast Orlando.
Also in the three months ended December 31, 2022, the Company acquired the
In aggregate, during 2022, EastGroup acquired 1,706,000 square feet of operating properties for
Also during the year ended December 31, 2022, the Company sold three operating properties totaling 287,000 square feet, for
DEVELOPMENT AND VALUE-ADD PROPERTIES
During the fourth quarter of 2022, EastGroup began construction of one new development project in Fort Worth, which will contain a total of 351,000 square feet and has projected total costs of
The development projects started during 2022 are detailed in the table below:
Development Projects Started in 2022 | Location | Size | Actual or Anticipated | Projected Total | |||||||||||||||||||||||||
(Square feet) | (In thousands) | ||||||||||||||||||||||||||||
World Houston 47 | Houston, TX | 139,000 | 11/2022 | $ | 18,600 | ||||||||||||||||||||||||
Horizon West 4 | Orlando, FL | 295,000 | 12/2022 | 29,500 | |||||||||||||||||||||||||
SunCoast 11 | Fort Myers, FL | 79,000 | 04/2023 | 9,900 | |||||||||||||||||||||||||
Arlington Tech 3 | Fort Worth, TX | 77,000 | 02/2024 | 10,300 | |||||||||||||||||||||||||
Gateway 2 | Miami, FL | 133,000 | 02/2024 | 23,700 | |||||||||||||||||||||||||
Hillside 1 | Greenville, SC | 122,000 | 02/2024 | 11,600 | |||||||||||||||||||||||||
Horizon West 1 | Orlando, FL | 97,000 | 03/2024 | 13,200 | |||||||||||||||||||||||||
Steele Creek 11 & 12 | Charlotte, NC | 241,000 | 04/2024 | 25,900 | |||||||||||||||||||||||||
Springwood 1 & 2 | Houston, TX | 292,000 | 05/2024 | 33,300 | |||||||||||||||||||||||||
Stonefield 35 1-3 | Austin, TX | 274,000 | 06/2024 | 35,300 | |||||||||||||||||||||||||
SunCoast 10 | Fort Myers, FL | 100,000 | 06/2024 | 13,600 | |||||||||||||||||||||||||
Basswood 3-5 | Fort Worth, TX | 351,000 | 08/2024 | 45,000 | |||||||||||||||||||||||||
McKinney 1 & 2 | Dallas, TX | 172,000 | 08/2024 | 27,300 | |||||||||||||||||||||||||
Cass White 1 & 2 | Atlanta, GA | 296,000 | 10/2024 | 31,900 | |||||||||||||||||||||||||
Total Development Projects Started | 2,668,000 | $ | 329,100 | ||||||||||||||||||||||||||
At December 31, 2022, EastGroup's development and value-add program consisted of 20 projects (3,981,000 square feet) in 12 cities. The projects, which were collectively
During the fourth quarter of 2022, EastGroup transferred eight projects to the operating portfolio (at the earlier of
The development and value-add properties transferred to the operating portfolio during 2022 are detailed in the table below:
Development and Value-Add Properties | Location | Size | Conversion Date | Cumulative Cost as of | Percent Leased as | |||||||||||||||||||||||||||
(Square feet) | (In thousands) | |||||||||||||||||||||||||||||||
Access Point 1 (1) | Greenville, SC | 156,000 | 01/2022 | $ | 13,046 | 100 % | ||||||||||||||||||||||||||
Speed Distribution Center | San Diego, CA | 519,000 | 03/2022 | 72,428 | 100 % | |||||||||||||||||||||||||||
Access Point 2 (1) | Greenville, SC | 159,000 | 05/2022 | 12,336 | 100 % | |||||||||||||||||||||||||||
Grand Oaks 75 3 | Tampa, FL | 136,000 | 06/2022 | 11,644 | 100 % | |||||||||||||||||||||||||||
Siempre Viva 3-6 (1) | San Diego, CA | 547,000 | 06/2022 | 133,246 | 100 % | |||||||||||||||||||||||||||
Steele Creek 8 | Charlotte, NC | 72,000 | 07/2022 | 8,291 | 100 % | |||||||||||||||||||||||||||
CreekView 9 & 10 | Dallas, TX | 145,000 | 08/2022 | 16,176 | 100 % | |||||||||||||||||||||||||||
Gateway 3 | Miami, FL | 133,000 | 08/2022 | 18,456 | 100 % | |||||||||||||||||||||||||||
Ridgeview 3 | San Antonio, TX | 88,000 | 08/2022 | 9,400 | 100 % | |||||||||||||||||||||||||||
Americas Ten 2 | El Paso, TX | 169,000 | 09/2022 | 14,403 | 100 % | |||||||||||||||||||||||||||
Horizon West 2 & 3 | Orlando, FL | 210,000 | 09/2022 | 18,860 | 83 % | |||||||||||||||||||||||||||
Mesa Gateway (1) | Phoenix, AZ | 147,000 | 11/2022 | 18,946 | 100 % | |||||||||||||||||||||||||||
World Houston 47 | Houston, TX | 139,000 | 11/2022 | 17,263 | 100 % | |||||||||||||||||||||||||||
45 Crossing | Austin, TX | 177,000 | 12/2022 | 25,302 | 100 % | |||||||||||||||||||||||||||
Basswood 1 & 2 | Fort Worth, TX | 237,000 | 12/2022 | 23,980 | 100 % | |||||||||||||||||||||||||||
Horizon West 4 | Orlando, FL | 295,000 | 12/2022 | 25,308 | 100 % | |||||||||||||||||||||||||||
SunCoast 12 | Fort Myers, FL | 79,000 | 12/2022 | 8,335 | 100 % | |||||||||||||||||||||||||||
Tri-County Crossing 5 | San Antonio, TX | 106,000 | 12/2022 | 11,151 | 100 % | |||||||||||||||||||||||||||
Tri-County Crossing 6 | San Antonio, TX | 124,000 | 12/2022 | 10,373 | 100 % | |||||||||||||||||||||||||||
Total Projects Transferred | 3,638,000 | $ | 468,944 | 99 % | ||||||||||||||||||||||||||||
Projected Stabilized Yield (2) | 7.1 % | |||||||||||||||||||||||||||||||
1 | Represents value-add acquisitions. |
2 | Weighted average yield based on projected stabilized annual property net operating income on a straight-line basis at |
Subsequent to quarter-end, EastGroup began construction of two additional projects. Riverside 1 & 2 in Atlanta will contain 284,000 square feet and has a projected total cost of approximately
DIVIDENDS
EastGroup declared a cash dividend of
FINANCIAL STRENGTH AND FLEXIBILITY
EastGroup continues to maintain a strong and flexible balance sheet. Debt-to-total market capitalization was
During the fourth quarter, EastGroup issued and sold 1,500 shares of common stock under its continuous common equity offering program at an average price of
As previously announced, the Company and a group of lenders agreed to terms on the private placement of two senior unsecured notes totaling
During the fourth quarter, the Company agreed to terms on a
During the three months ended December 31, 2022, EastGroup and a group of banks agreed to expand the capacity on its unsecured bank credit facilities from
During the twelve months ended December 31, 2022, the Company closed a total of
COMPANY UPDATES
David H. Hoster II, Chairman of the Company's Board of Directors (the "Board"), and Hayden C. Eaves III, a member of the Board, will not be standing for re-election at the Company's upcoming 2023 Annual Meeting of Shareholders. Mr. Hoster has served as Chairman of the Board since 2016 and as a director since 1993. He also served as the Company's Chief Executive Officer from 1997 to 2015 and President from 1993 to 2015. Mr. Eaves has served as a director since 2002, and he currently serves on the Board's Compensation Committee.
Mr. Loeb stated, "I would like to thank David and Hayden for their leadership, guidance and service to the Company over the years. As CEO and later as Chairman, David led the Company through various economic cycles and periods of growth, while helping build the positive culture we enjoy today. His leadership and industrial real estate knowledge and expertise have been valuable to the Company and the Board. Hayden has made significant contributions to the Board through his years of experience in the real estate market, including real estate development and operations. Both David and Hayden have played important roles in the success of the Company, and we thank them both for their contributions."
OUTLOOK FOR 2023
EPS for 2023 is estimated to be in the range of
EastGroup's projections are based on management's current beliefs and assumptions about our business, the industry and the markets in which we operate; there are known and unknown risks and uncertainties associated with these projections. We assume no obligation to update publicly any forward-looking statements, including our outlook for 2023, whether as a result of new information, future events or otherwise. Please refer to the "Forward-Looking Statements" disclosures included in this earnings release and "Risk Factors" disclosed in our annual and quarterly reports filed with the Securities and Exchange Commission for more information.
Low Range | High Range | |||||||||||||||||||||||||
Q1 2023 | Y/E 2023 | Q1 2023 | Y/E 2023 | |||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 33,789 | 141,496 | 37,279 | 150,276 | |||||||||||||||||||||
Depreciation and amortization | 42,466 | 179,162 | 42,466 | 179,162 | ||||||||||||||||||||||
Funds from operations attributable to common stockholders* | $ | 76,255 | 320,658 | 79,745 | 329,438 | |||||||||||||||||||||
Diluted shares | 43,628 | 43,902 | 43,628 | 43,902 | ||||||||||||||||||||||
Per share data (diluted): | ||||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 0.77 | 3.22 | 0.85 | 3.42 | |||||||||||||||||||||
Funds from operations attributable to common stockholders | 1.75 | 7.30 | 1.83 | 7.50 | ||||||||||||||||||||||
*This is a non-GAAP financial measure. Please refer to Definitions. |
The following assumptions were used for the mid-point: | ||||||||||||||||||||||||||
Metrics | Initial Guidance for Year 2023 | Actual for Year 2022 | ||||||||||||||||||||||||
FFO per share | ||||||||||||||||||||||||||
FFO per share increase over prior year | 5.7 % | 14.9 % | ||||||||||||||||||||||||
Same PNOI growth: cash basis(1) | 8.9 % | |||||||||||||||||||||||||
Average month-end occupancy - operating portfolio | 98.0 % | |||||||||||||||||||||||||
Lease termination fee income | ||||||||||||||||||||||||||
Reserves of uncollectible rent | ||||||||||||||||||||||||||
Development starts: | ||||||||||||||||||||||||||
Square feet | 2.7 million | 2.7 million | ||||||||||||||||||||||||
Projected total investment | ||||||||||||||||||||||||||
Value-add property acquisitions (Projected total investment) | none | |||||||||||||||||||||||||
Operating property acquisitions | ||||||||||||||||||||||||||
Operating property dispositions | ||||||||||||||||||||||||||
Unsecured debt closing in period |
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Common stock issuances | ||||||||||||||||||||||||||
General and administrative expense | ||||||||||||||||||||||||||
1 | Excludes straight-line rent adjustments, amortization of market rent intangibles for acquired leases and income from lease terminations. |
2 | Includes properties which have been in the operating portfolio since 1/1/22 and are projected to be in the operating portfolio through 12/31/23; includes 46,583,000 square feet. |
DEFINITIONS
The Company's chief decision makers use two primary measures of operating results in making decisions: (1) funds from operations attributable to common stockholders ("FFO") and (2) property net operating income ("PNOI"), as defined below.
FFO is computed in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("Nareit"). 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. EastGroup has made the election to exclude activity related to such assets that are incidental to our business. FFO is calculated as net income (loss) attributable to common stockholders computed in accordance with U.S. generally accepted accounting principles ("GAAP"), excluding gains and losses from sales of real estate property (including other assets incidental to the Company's business) and impairment losses, adjusted for real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
PNOI is defined as Income from real estate operations less Expenses from real estate operations (including market-based internal management fee expense) plus the Company's share of income and property operating expenses from its less-than-wholly-owned real estate investments. EastGroup sometimes refers to PNOI from Same Properties as "Same PNOI" in this press release and the accompanying reconciliation; the Company also presents Same PNOI Excluding Income from Lease Terminations. 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. The Company believes it is useful to evaluate Same PNOI Excluding Income from Lease Terminations on both a straight-line and cash basis. The straight-line basis is calculated by averaging the customers' rent payments over the lives of the leases; GAAP requires the recognition of rental income on a straight-line basis. The cash basis excludes adjustments for straight-line rent and amortization of market rent intangibles for acquired leases; cash basis is an indicator of the rents charged to customers by the Company during the periods presented and is useful in analyzing the embedded rent growth in the Company's portfolio. "Same Properties" is defined as operating properties owned during the entire current period and prior year reporting period. Operating properties are stabilized real estate properties (land including building and improvements) that make up the Company's operating portfolio. Properties developed or acquired are excluded from the same property pool until held in the operating portfolio for both the current and prior year reporting periods. Properties sold during the current or prior year reporting periods are also excluded.
FFO and PNOI are supplemental industry reporting measurements used to evaluate the performance of the Company's investments in real estate assets and its operating results. The Company believes that the exclusion of depreciation and amortization in the industry's 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. 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.
The Company's chief decision makers also use Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre") in making decisions. EBITDAre is computed in accordance with standards established by Nareit and defined as Net Income, adjusted for gains and losses from sales of real estate investments, non-operating real estate and other assets incidental to the Company's business, interest expense, income tax expense, depreciation and amortization. EBITDAre is a non-GAAP financial measure used to measure the Company's operating performance and its ability to meet interest payment obligations and pay quarterly stock dividends on an unleveraged basis.
EastGroup's chief decision makers also use its Debt-to-EBITDAre ratio, a non-GAAP financial measure calculated by dividing the Company's debt by its EBITDAre, in analyzing the financial condition and operating performance of the Company relative to its leverage.
The Company's interest and fixed charge coverage ratio is a non-GAAP financial measure calculated by dividing the Company's EBITDAre by its interest expense. We believe this ratio is useful to investors because it provides a basis for analysis of the Company's leverage, operating performance and its ability to service the interest payments due on its debt.
CONFERENCE CALL
EastGroup will host a conference call and webcast to discuss the results of its fourth quarter, review the Company's current operations, and present its earnings outlook for 2023 on Wednesday, February 8, 2023, at 11:00 a.m. Eastern Time. A live broadcast of the conference call is available by dialing 1-888-346-0688 (conference ID: EastGroup) or by webcast through a link on the Company's website at www.eastgroup.net. If you are unable to listen to the live conference call, a telephone and webcast replay will be available until Wednesday, February 15, 2023. The telephone replay can be accessed by dialing 1-877-344-7529 (access code 5810289), and the webcast replay can be accessed through a link on the Company's website at www.eastgroup.net.
SUPPLEMENTAL INFORMATION
Supplemental financial information is available under Quarterly Results in the Investor Relations section of the Company's website at www.eastgroup.net or upon request by calling the Company at 601-354-3555.
COMPANY INFORMATION
EastGroup Properties, Inc. (NYSE: EGP), a member of the S&P Mid-Cap 400 and Russell 1000 Indexes, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 20,000 to 100,000 square foot range). The Company's strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets. The Company's portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 56.6 million square feet. EastGroup Properties, Inc. press releases are available on the Company's website at www.eastgroup.net.
The Company announces information about the Company and its business to investors and the public using the Company's website (eastgroup.net), including the investor relations website (investor.eastgroup.net), filings with the Securities and Exchange Commission, press releases, public conference calls, and webcasts. The Company also uses social media to communicate with its investors and the public. While not all the information that the Company posts to the Company's website or on the Company's social media channels is of a material nature, some information could be deemed to be material. Therefore, the Company encourages investors, the media, and others interested in the Company to review the information that it posts on the social media channels, including Facebook (facebook.com/eastgroupproperties), Twitter (twitter.com/eastgroupprop), and LinkedIn (linkedin.com/company/eastgroup-properties-inc). The list of social media channels that the company uses may be updated on its investor relations website from time to time. The information contained on, or that may be accessed through, our website or any of our social media channels is not incorporated by reference into, and is not a part of, this document.
FORWARD-LOOKING STATEMENTS
The statements and certain other information contained in this press release, which can be identified by the use of forward-looking terminology such as "may," "will," "seek," "expects," "anticipates," "believes," "targets," "intends," "should," "estimates," "could," "continue," "assume," "projects," "goals," or "plans" and variations of such words or similar expressions or the negative of such words, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These forward-looking statements reflect the Company's current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the Company and on assumptions it has made. Although the Company believes that its plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions, expectations or strategies will be attained or achieved. Furthermore, these forward-looking statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected. These uncertainties include, but are not limited to:
- international, national, regional and local economic conditions;
- disruption in supply and delivery chains;
- construction costs could increase as a result of inflation impacting the costs to develop properties;
- availability of financing and capital, increase in interest rates, and ability to raise equity capital on attractive terms;
- financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest, and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;
- our ability to retain our credit agency ratings;
- our ability to comply with applicable financial covenants;
- the competitive environment in which the Company operates;
- fluctuations of occupancy or rental rates;
- potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants, or our ability to lease space at current or anticipated rents, particularly in light of impacts of inflation;
- potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws or REIT or corporate income tax laws, and potential increases in real property tax rates;
- our ability to maintain our qualification as a REIT;
- acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections;
- natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;
- pandemics, epidemics or other public health emergencies, such as the coronavirus pandemic;
- the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;
- credit risk in the event of non-performance by the counterparties to our interest rate swaps;
- the discontinuation of London Interbank Offered Rate;
- lack of or insufficient amounts of insurance;
- litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;
- our ability to attract and retain key personnel;
- risks related to the failure, inadequacy or interruption of our data security systems and processes;
- potentially catastrophic events such as acts of war, civil unrest and terrorism; and
- environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us.
All forward-looking statements should be read in light of the risks identified in Part I, Item 1A. Risk Factors within the Company's most recent Annual Report on Form 10-K and in its subsequent Quarterly Reports on Form 10-Q.
The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||
Income from real estate operations | $ | 129,797 | 107,349 | 486,817 | 409,412 | |||||||||||||||||||||
Other revenue | 43 | 23 | 208 | 63 | ||||||||||||||||||||||
129,840 | 107,372 | 487,025 | 409,475 | |||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||
Expenses from real estate operations | 35,272 | 29,557 | 133,915 | 115,078 | ||||||||||||||||||||||
Depreciation and amortization | 40,559 | 33,174 | 153,638 | 127,099 | ||||||||||||||||||||||
General and administrative | 3,859 | 3,623 | 16,362 | 15,704 | ||||||||||||||||||||||
Indirect leasing costs | 136 | 103 | 546 | 700 | ||||||||||||||||||||||
79,826 | 66,457 | 304,461 | 258,581 | |||||||||||||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||||||||
Interest expense | (11,648) | (8,072) | (38,499) | (32,945) | ||||||||||||||||||||||
Gain on sales of real estate investments | — | 38,859 | 40,999 | 38,859 | ||||||||||||||||||||||
Other | 322 | 209 | 1,210 | 830 | ||||||||||||||||||||||
NET INCOME | 38,688 | 71,911 | 186,274 | 157,638 | ||||||||||||||||||||||
Net income attributable to noncontrolling interest in joint ventures | (17) | (22) | (92) | (81) | ||||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | 38,671 | 71,889 | 186,182 | 157,557 | ||||||||||||||||||||||
Other comprehensive income (loss) - interest rate swaps | (4,757) | 3,778 | 35,069 | 12,054 | ||||||||||||||||||||||
TOTAL COMPREHENSIVE INCOME | $ | 33,914 | 75,667 | 221,251 | 169,611 | |||||||||||||||||||||
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 0.89 | 1.76 | 4.37 | 3.91 | |||||||||||||||||||||
Weighted average shares outstanding | 43,472 | 40,844 | 42,599 | 40,255 | ||||||||||||||||||||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 0.89 | 1.75 | 4.36 | 3.90 | |||||||||||||||||||||
Weighted average shares outstanding | 43,593 | 41,011 | 42,712 | 40,377 | ||||||||||||||||||||||
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES | ||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | $ | 38,671 | 71,889 | 186,182 | 157,557 | |||||||||||||||||||||
Depreciation and amortization | 40,559 | 33,174 | 153,638 | 127,099 | ||||||||||||||||||||||
Company's share of depreciation from unconsolidated investment | 31 | 34 | 124 | 136 | ||||||||||||||||||||||
Depreciation and amortization from noncontrolling interest | (3) | — | (17) | — | ||||||||||||||||||||||
Gain on sales of real estate investments | — | (38,859) | (40,999) | (38,859) | ||||||||||||||||||||||
FUNDS FROM OPERATIONS ("FFO") ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 79,258 | 66,238 | 298,928 | 245,933 | |||||||||||||||||||||
NET INCOME | $ | 38,688 | 71,911 | 186,274 | 157,638 | |||||||||||||||||||||
Interest expense (1) | 11,648 | 8,072 | 38,499 | 32,945 | ||||||||||||||||||||||
Depreciation and amortization | 40,559 | 33,174 | 153,638 | 127,099 | ||||||||||||||||||||||
Company's share of depreciation from unconsolidated investment | 31 | 34 | 124 | 136 | ||||||||||||||||||||||
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") | 90,926 | 113,191 | 378,535 | 317,818 | ||||||||||||||||||||||
Gain on sales of real estate investments | — | (38,859) | (40,999) | (38,859) | ||||||||||||||||||||||
EBITDA FOR REAL ESTATE ("EBITDAre") | $ | 90,926 | 74,332 | 337,536 | 278,959 | |||||||||||||||||||||
Debt | $ | 1,861,744 | 1,451,778 | 1,861,744 | 1,451,778 | |||||||||||||||||||||
Debt-to-EBITDAre ratio | 5.12 | 4.88 | 5.52 | 5.20 | ||||||||||||||||||||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON | ||||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 0.89 | 1.75 | 4.36 | 3.90 | |||||||||||||||||||||
FFO attributable to common stockholders | $ | 1.82 | 1.62 | 7.00 | 6.09 | |||||||||||||||||||||
Weighted average shares outstanding for EPS and FFO purposes | 43,593 | 41,011 | 42,712 | 40,377 | ||||||||||||||||||||||
(1) Net of capitalized interest of | ||||||||||||||||||||||||||
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Continued) | ||||||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
NET INCOME | $ | 38,688 | 71,911 | 186,274 | 157,638 | |||||||||||||||||||||
Gain on sales of real estate investments | — | (38,859) | (40,999) | (38,859) | ||||||||||||||||||||||
Interest income | (58) | — | (100) | (6) | ||||||||||||||||||||||
Other revenue | (43) | (23) | (208) | (63) | ||||||||||||||||||||||
Indirect leasing costs | 136 | 103 | 546 | 700 | ||||||||||||||||||||||
Depreciation and amortization | 40,559 | 33,174 | 153,638 | 127,099 | ||||||||||||||||||||||
Company's share of depreciation from unconsolidated investment | 31 | 34 | 124 | 136 | ||||||||||||||||||||||
Interest expense (1) | 11,648 | 8,072 | 38,499 | 32,945 | ||||||||||||||||||||||
General and administrative expense (2) | 3,859 | 3,623 | 16,362 | 15,704 | ||||||||||||||||||||||
Noncontrolling interest in PNOI of consolidated joint ventures | (21) | (15) | (105) | (61) | ||||||||||||||||||||||
PROPERTY NET OPERATING INCOME ("PNOI") | 94,799 | 78,020 | 354,031 | 295,233 | ||||||||||||||||||||||
PNOI from 2021 and 2022 acquisitions | (5,712) | (1,514) | (17,146) | (2,252) | ||||||||||||||||||||||
PNOI from 2021 and 2022 development and value-add properties | (12,306) | (3,830) | (37,329) | (9,937) | ||||||||||||||||||||||
PNOI from 2021 and 2022 operating property dispositions | — | (678) | (237) | (3,263) | ||||||||||||||||||||||
Other PNOI | 102 | (57) | 323 | (223) | ||||||||||||||||||||||
SAME PNOI (Straight-Line Basis) | 76,883 | 71,941 | 299,642 | 279,558 | ||||||||||||||||||||||
Net lease termination fee income from same properties | (311) | (464) | (1,426) | (1,411) | ||||||||||||||||||||||
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS (Straight-Line Basis) | 76,572 | 71,477 | 298,216 | 278,147 | ||||||||||||||||||||||
Straight-line rent adjustments for same properties | (362) | (1,331) | (1,926) | (5,744) | ||||||||||||||||||||||
Acquired leases - market rent adjustment amortization for same properties | (106) | (121) | (437) | (662) | ||||||||||||||||||||||
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS (Cash Basis) | $ | 76,104 | 70,025 | 295,853 | 271,741 | |||||||||||||||||||||
(1) Net of capitalized interest of | ||||||||||||||||||||||||||
(2) Net of capitalized development costs of | ||||||||||||||||||||||||||
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SOURCE EastGroup Properties
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