• Funds from Operations (FFO): Increased 5.9% for Q4 and 7.9% for the year.
• FFO per Share: $2.15 for Q4, up from $2.03 in the same quarter last year.
• Year-end Leasing: 97.1% with occupancy at 96.1%.
• Average Quarterly Occupancy: 95.8%, down over 200 basis points from Q4 2023.
• Releasing Spreads: 47% GAAP and 29% cash for the quarter; 53% GAAP and 36% cash for the year.
• Same Store NOI: Increased 3.4% for the quarter and 5.6% for the year.
• Debt to Total Market Capitalization: 15%.
• Debt to EBITDA Ratio: 3.4 times.
• Interest and Fixed Charge Coverage Ratio: 11.5 times.
• FFO Guidance for 2025: $2.05 to $2.13 per share for Q1; $8.80 to $9 for the year.
• Projected Development Starts for 2025: $300 million.
• Strategic Acquisitions for 2025: $150 million.
• Capital Proceeds for 2025: $450 million from equity issuance and revolver use.

• Warning! GuruFocus has detected 6 Warning Sign with EGP.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Funds from operations (FFO) rose by 5.9% for the quarter and 7.9% for the year, indicating strong financial performance.
• Year-end leasing was at 97.1% with occupancy at 96.1%, showcasing high demand and efficient property management.
• EastGroup Properties Inc (NYSE:EGP) achieved a record amount of square footage leased within the operating portfolio in the past quarter.
• The company successfully acquired four fully leased buildings in Dallas and Phoenix, expanding its presence in key markets.
• EastGroup Properties Inc (NYSE:EGP) maintains a strong balance sheet with a debt to total market capitalization of 15% and a debt to EBITDA ratio of 3.4 times.

Negative Points

• Average quarterly occupancy decreased by over 200 basis points from the fourth quarter of 2023.
• The development leasing was slower, with decision-making taking longer than anticipated.
• Tenant defaults were contained to a few larger customers, impacting revenue.
• The company issued equity at a price slightly below NAV, which may not be ideal for shareholders.
• The industrial market in Los Angeles is experiencing challenges, with negative absorption affecting occupancy rates.

Q & A Highlights

Q: Are you seeing green shoots in any particular market? A: Marshall Loeb, President and CEO, mentioned that the green shoots are not limited to any specific market. Prospect activity picked up broadly late last year and has continued into this year, with increased activity even in slower markets like California.

Q: How are tariffs affecting tenant conversations? A: Marshall Loeb stated that tariffs have not come up in tenant conversations. The focus remains on being near the consumer, regardless of where products are manufactured, to avoid earnings shocks.

Q: Can you elaborate on the development leasing and your plans for ramping up development? A: Marshall Loeb explained that development starts are projected to pick up in the second half of the year, driven by low supply levels and improving demand. The company plans to capitalize on development opportunities earlier than private peers.

Q: What is the strategy behind the recent deleveraging and equity issuance? A: Brent Wood, CFO, clarified that the deleveraging was not intentional for a specific purpose but rather a byproduct of viewing equity as the best cost-benefit investment opportunity. The company aims to execute on acquisition and development opportunities.

Q: How are you addressing the pickup in leasing costs and expectations for retention in 2025? A: Brent Wood noted that leasing costs have increased due to inflationary pressures and higher rents. Retention rates have been consistent, and the company does not foresee any significant changes in 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.