East Properties(EGP) - 2025 Q2 - Quarterly Report

Property Portfolio - As of June 30, 2025, EastGroup owned 539 industrial properties across 12 states, with a total portfolio of approximately 63.6 million square feet[112] - The operating portfolio was 97.1% leased and 96.0% occupied as of June 30, 2025, with a slight decrease in occupancy compared to 97.4% leased and 97.1% occupied a year earlier[122] - Total Development and value-add properties as of June 30, 2025, amounted to 14,065,000 square feet with cumulative costs of $678,013,000[150] Leasing Activity - During the six months ended June 30, 2025, EastGroup executed new and renewal leases on 4.5 million square feet, representing 7.6% of the operating portfolio, with average rental rates increasing by 45.8% compared to previous leases[119] - The Company entered into 74 leases with rent concessions totaling $4,796,000 over 2,087,000 square feet during the six months ended June 30, 2025[162] - Same property average occupancy was 96.3% for Q2 2025, down from 97.1% in Q2 2024[147] Financial Performance - Net Income Attributable to EastGroup Properties, Inc. Common Stockholders was $2.35 per diluted share for the six months ended June 30, 2025, a decrease of 0.8% from $2.37 in the same period of 2024[120] - Net Income attributable to EastGroup Properties, Inc. Common Stockholders for Q2 2025 was $63,299,000, an increase of 14.5% from $55,287,000 in Q2 2024[141] - FFO attributable to Common Stockholders for Q2 2025 was $116,341,000, up 15.2% from $100,980,000 in Q2 2024[139] - Net Income Attributable to EastGroup Properties, Inc. for the six months ended June 30, 2025, was $122,722,000, an increase from $113,931,000 for the same period in 2024, representing a growth of 6.9%[159] Property Operating Income - Property Net Operating Income (PNOI) from same properties increased by 5.9% for the six months ended June 30, 2025, compared to the same period in 2024[121] - PNOI for the six months ended June 30, 2025 increased by $30,224,000, or 13.4%, compared to the same period in 2024[140] - Same PNOI, excluding income from lease terminations, increased by 6.6% for Q2 2025 compared to Q2 2024[140] Development and Capital Expenditures - EastGroup acquired 94.5 acres of development land for $50.2 million and began construction on projects totaling 731,000 square feet during the six months ended June 30, 2025[124] - The projected total investment for EastGroup's development projects is $531.4 million, with $157.8 million remaining to be invested as of June 30, 2025[124] - The Company made capital improvements of $38,700,000 on existing properties during the six months ended June 30, 2025[145] - Total real estate improvements for the six months ended June 30, 2025, amounted to $38,700,000, compared to $29,634,000 for the same period in 2024, reflecting an increase of 30.6%[169] Financial Position - Total Assets as of June 30, 2025 were $5,189,608,000, an increase of $112,132,000 from December 31, 2024[142] - Total Liabilities decreased by $2,435,000 to $1,782,497,000, while Total Equity increased by $114,567,000 to $3,407,111,000 during the same period[142] - As of June 30, 2025, the Company had total immediate liquidity of approximately $823,832,000, comprised of $32,921,000 in cash and cash equivalents and $672,412,000 available on unsecured credit facilities[174] Debt and Financing - EastGroup's financing strategy includes utilizing $675 million in unsecured bank credit facilities and issuing equity or fixed-rate debt as market conditions permit[126] - Scheduled principal payments on long-term debt as of June 30, 2025, total $1,460,000,000 with a weighted average interest rate of 3.38%[177] - The total fixed-rate unsecured debt amounts to $1,460,000,000 with a weighted average interest rate of 3.38%[204] Interest Rates and Economic Conditions - The weighted average interest rate for the Company's variable rate unsecured bank credit facilities is 5.22% as of June 30, 2025[204] - The Company is exposed to interest rate changes primarily due to its unsecured bank credit facilities and long-term debt maturities, impacting liquidity and capital expenditures[202] - Economic conditions in the markets where the Company's properties are located could affect tenants' ability to make lease payments, potentially leading to uncollectible rent[206] Regulatory Environment - The enactment of H.R. 1 (One Big Beautiful Bill Act) includes provisions that relax the REIT asset test requirement and extend the section 199A pass-through deduction[201] Ratings and Compliance - Moody's Ratings affirmed EastGroup's issuer rating of Baa2 and changed its outlook from stable to positive in May 2025[126] - The Company was in compliance with all financial debt covenants at June 30, 2025[183]