# EASTGROUP PROPERTIES INC (EGP) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from EASTGROUP PROPERTIES INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/49600/000004960025000019/egp-20241231.htm
Accession: 0000049600-25-000019
Filing date: 2025-02-12
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/EGP/
All MD&A years: /company/EGP/mda/
Previous year: /company/EGP/mda/fy2023/ (FY 2023)
Next year: /company/EGP/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of results of operations and financial condition should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.

OVERVIEW

EastGroup’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 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 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. Additionally, most of the Company’s leases include scheduled rent increases. 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 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.  During 2024, EastGroup executed leases on 9,384,000 square feet of operating properties (15.9% of EastGroup’s total square footage of 58,987,000 as of December 31, 2024). For new and renewal leases signed during 2024, average rental rates increased by 53.0% as compared to the former leases on the same spaces.  

On a diluted per share basis, Net Income Attributable to EastGroup Properties, Inc. Common Stockholders was $4.66 for the year ended December 31, 2024, compared to $4.42 for 2023, a 5.4% increase. See the Company’s analysis of performance trends below for further details.

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.

21

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. As of February 11, 2025, the operating portfolio was 96.5% leased and 95.7% occupied. As of December 31, 2024, leases approximating 10.1% of the operating portfolio, based on a percentage of annualized based rent, were scheduled to expire in 2025. This percentage was reduced to 8.2% as of February 11, 2025.

The Company generates new sources of leasing revenue through its acquisitions and also its development and value-add program.  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, 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, 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 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. Moody’s Investors Service has assigned the Company’s issuer rating of Baa2 with a stable outlook. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. 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.

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”). 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.

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. FFO is not considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance, nor is it a measure of the Company’s liquidity or indicative of funds available to provide for the Company’s cash needs, including its ability to make distributions.  The Company’s key drivers affecting FFO are changes in PNOI (as discussed below), interest rates, the amount of leverage the Company employs and general and administrative expenses.  

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.

22

EastGroup sometimes refers to PNOI from Same Properties as “Same PNOI”; the Company also presents Same PNOI Excluding Income from Lease Terminations. Same Properties is defined as operating properties owned during the entire current period and prior year reporting period. Properties developed or acquired are excluded 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. For the year ended December 31, 2024, Same Properties includes properties which were included in the operating portfolio for the entire period from January 1, 2023 through December 31, 2024. 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.

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 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. These non-GAAP figures should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.

The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three fiscal years ended December 31, 2024, 2023 and 2022.

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["2024","","2023","","2022"],["","","(In thousands)"],["NET INCOME","$","227,807","","","200,548","","","186,274"],["Gain on sales of real estate investments","(8,751)","","","(17,965)","","","(40,999)"],["Gain on sales of non-operating real estate","(362)","","","(446)","","","\u2014"],["Interest income","(1,334)","","","(879)","","","(100)"],["Other revenue","(2,199)","","","(4,412)","","","(208)"],["Indirect leasing costs","785","","","582","","","546"],["Depreciation and amortization","189,411","","","171,078","","","153,638"],["Company\u2019s share of depreciation from unconsolidated investment","125","","","124","","","124"],["Interest expense","38,956","","","47,996","","","38,499"],["General and administrative expense","20,619","","","16,757","","","16,362"],["Noncontrolling interest in PNOI of consolidated joint ventures","(62)","","","(62)","","","(105)"],["PROPERTY NET OPERATING INCOME (\u201cPNOI\u201d)","464,995","","","413,321","","","354,031"],["PNOI from 2023 and 2024 acquisitions","(19,249)","","","(3,334)","","","*"],["PNOI from 2023 and 2024 development and value-add properties","(31,544)","","","(13,190)","","","*"],["PNOI from 2023 and 2024 operating property dispositions","(177)","","","(2,819)","","","*"],["Other PNOI","208","","","166","","","*"],["SAME PNOI","414,233","","","394,144","","","*"],["Lease termination fee income from same properties","(2,192)","","","(1,020)","","","*"],["SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS","$","412,041","","","393,124","","","*"]]
[[/GREPCENT_TABLE]]

* Same property metrics are not applicable to the year ended December 31, 2022, as the same property metrics for 2024 and 2023 are based on operating properties owned during the entire current and prior year reporting periods (January 1, 2023 through December 31, 2024).

23

PNOI was calculated as follows for the three fiscal years ended December 31, 2024, 2023 and 2022.

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["2024","","2023","","2022"],["(In thousands)"],["Income from real estate operations","$","638,035","","","566,179","","","486,817"],["Expenses from real estate operations","(174,212)","","","(154,030)","","","(133,915)"],["Noncontrolling interest in PNOI of consolidated joint ventures","(62)","","","(62)","","","(105)"],["PNOI from 50% owned unconsolidated investment","1,234","","","1,234","","","1,234"],["PROPERTY NET OPERATING INCOME (\u201cPNOI\u201d)","$","464,995","","","413,321","","","354,031"]]
[[/GREPCENT_TABLE]]

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.  Generally, the Company’s most significant operating expenses are property taxes and insurance.  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.  Modified gross leases often include base year amounts, and expense increases over these amounts are recoverable.  The Company’s exposure to property operating expenses is primarily due to vacancies and leases for occupied space that limit the amount of expenses that can be recovered.

The following table presents reconciliations of Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO Attributable to Common Stockholders for the three fiscal years ended December 31, 2024, 2023 and 2022.

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["2024","","2023","","2022"],["(In thousands, except per share data)"],["NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS","$","227,751","","","200,491","","","186,182"],["Depreciation and amortization","189,411","","","171,078","","","153,638"],["Company\u2019s share of depreciation from unconsolidated investment","125","","","124","","","124"],["Depreciation and amortization attributable to noncontrolling interest","(5)","","","(5)","","","(17)"],["Gain on sales of real estate investments","(8,751)","","","(17,965)","","","(40,999)"],["Gain on sales of non-operating real estate","(362)","","","(446)","","","\u2014"],["FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS","408,169","","","353,277","","","298,928"],["Gain on involuntary conversion and business interruption claims","(1,708)","","","(4,187)","","","\u2014"],["FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS \u2014 EXCLUDING GAIN ON INVOLUNTARY CONVERSION AND BUSINESS INTERRUPTION CLAIMS","$","406,461","","","349,090","","","298,928"],["Net income attributable to common stockholders per diluted share","$","4.66","","","4.42","","","4.36"],["FFO attributable to common stockholders per diluted share","$","8.35","","","7.79","","","7.00"],["FFO attributable to common stockholders per diluted share \u2014 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"]]
[[/GREPCENT_TABLE]]

The Company analyzes the following performance trends in evaluating the revenues and expenses of the Company:

•Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the year ended December 31, 2024 was $227,751,000 ($4.67 per basic and $4.66 per diluted share) compared to $200,491,000 ($4.43 per basic and $4.42 per diluted share) for 2023. See Results of Operations for further analysis.

•The change in FFO per diluted share represents the increase or decrease in FFO per diluted share from the current year compared to the prior year.  For 2024, FFO was $8.35 per diluted share compared with $7.79 per diluted share for 2023, an increase of 7.2%. 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, 2024, as compared to 2023, primarily due to the

24

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 $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).  Same PNOI, excluding income from lease terminations, increased 4.8% for the year ended December 31, 2024, compared to 2023.

•Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2023 through December 31, 2024). Same property average occupancy for the year ended December 31, 2024 was 96.7% compared to 98.2% for 2023.

•The same property average rental rate calculated in accordance with GAAP represents the average annual rental rates of leases in place for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2023 through December 31, 2024). The same property average rental rate was $8.22 per square foot for the year ended December 31, 2024, compared to $7.76 per square foot for the year ended December 31, 2023.

•Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period.  Occupancy at December 31, 2024 was 96.1%.  Quarter-end occupancy ranged from 96.5% to 98.2% over the previous four quarters ended December 31, 2023 to September 30, 2024.

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

EastGroup’s Total Assets were $5,077,476,000 at December 31, 2024, an increase of $558,263,000 from December 31, 2023.  Total Liabilities decreased $125,647,000 to $1,784,932,000, and Total Equity increased $683,910,000 to $3,292,544,000 during the same period.  The following paragraphs explain these changes in greater detail.

Assets

Real Estate Properties

Real estate properties increased $649,896,000 during the year ended December 31, 2024. The increase was primarily due to: (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; (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.

25

During 2024, EastGroup acquired the following operating properties:

[[GREPCENT_TABLE]]
[["REAL ESTATE PROPERTIES ACQUIRED IN 2024","","Location","","Size","","Date Acquired","","Cost (1)"],["","","","","(Square feet)","","","","(In thousands)"],["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"]]
[[/GREPCENT_TABLE]]

(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.

(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, 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.

Development and Value-Add Properties

EastGroup’s investment in Development and value-add properties at December 31, 2024 consisted of properties in lease-up and under construction of $424,068,000 and prospective development (primarily land) of $250,404,000.  The Company’s total investment in Development and value-add properties at December 31, 2024 was $674,472,000 compared to $639,647,000 at December 31, 2023.  Total capital invested for development and value-add properties during 2024 was $245,033,000, which primarily consisted of improvement costs of $227,487,000 on development and value-add properties, $13,762,000 for new land investments, and costs of $3,784,000 on properties subsequent to transfer to Real estate properties. The capitalized costs incurred on development and value-add projects subsequent to transfer to Real estate properties include capital improvements at the properties and do not include other capitalized costs associated with development (i.e., interest expense, property taxes and internal personnel costs).

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 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.

26

A summary of the Company’s Development and Value-Add Properties for the year ended December 31, 2024 follows:

[[GREPCENT_TABLE]]
[["","Actual or Estimated Building Size","","Cumulative Costs Incurred as of 12/31/2024","","Projected Total Costs"],["","(Square feet)","","(In thousands)"],["Lease-up","1,721,000","","","$","223,889","","","$","239,400"],["Under construction","2,422,000","","","200,179","","","369,300"],["Total lease-up and under construction","4,143,000","","","424,068","","","$","608,700"],["Prospective development (primarily land)","9,919,000","","","250,404"],["Total Development and value-add properties as of December 31, 2024","14,062,000","","","$","674,472"],["Total Development and value-add properties transferred to Real estate properties during the year ended December 31, 2024","1,519,000","","","$","199,971","","","(1)"]]
[[/GREPCENT_TABLE]]

(1) Represents cumulative costs at the date of transfer.

Accumulated Depreciation

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

Other assets increased $38,220,000 during 2024.  See Note 4 in the Notes to Consolidated Financial Statements for further details.

Liabilities

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.  See Note 7 in the Notes to Consolidated Financial Statements for further details.

Other liabilities increased $44,613,000 during 2024.  See Note 8 in the Notes to Consolidated Financial Statements for further details.

Equity

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. Common Stockholders of $227,751,000.

Accumulated other comprehensive income decreased $2,935,000 during 2024. The decrease resulted from the change in fair value of the Company’s interest rate swaps (cash flow hedges) which are further discussed in Notes 11 and 12 in the Notes to Consolidated Financial Statements.

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RESULTS OF OPERATIONS

2024 Compared to 2023

Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the year ended December 31, 2024 was $227,751,000 ($4.67 per basic and $4.66 per diluted share) compared to $200,491,000 ($4.43 per basic and $4.42 per diluted share) for the year ended December 31, 2023. The following paragraphs provide further details with respect to these changes:

•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 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.

•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 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.

28

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:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["VARIABLE RATE INTEREST EXPENSE","","2024","","2023","","Increase (Decrease)"],["","","(In thousands)"],["Unsecured bank credit facilities interest \u2014 variable rate(excluding amortization of facility fees and debt issuance costs)","","$","111","","","2,804","","","(2,693)"],["Amortization of facility fees \u2014 unsecured bank credit facilities","","1,012","","","1,005","","","7"],["Amortization of debt issuance costs \u2014 unsecured bank credit facilities","","1,036","","","1,003","","","33"],["Total variable rate interest expense","","2,159","","","4,812","","","(2,653)"],["FIXED RATE INTEREST EXPENSE"],["Unsecured debt interest (excluding amortization of debt issuance costs) (1)","","55,742","","","58,428","","","(2,686)"],["Secured debt interest (excluding amortization of debt issuance costs)","","\u2014","","","51","","","(51)"],["Amortization of debt issuance costs \u2014 unsecured debt","","878","","","909","","","(31)"],["Amortization of debt issuance costs \u2014 secured debt","","\u2014","","","31","","","(31)"],["Total fixed rate interest expense","","56,620","","","59,419","","","(2,799)"],["Total interest","","58,779","","","64,231","","","(5,452)"],["Less capitalized interest","","(19,823)","","","(16,235)","","","(3,588)"],["TOTAL INTEREST EXPENSE","","$","38,956","","","47,996","","","(9,040)"]]
[[/GREPCENT_TABLE]]

(1) Includes interest on the Company’s unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 12 in the Notes to Consolidated Financial Statements.

EastGroup’s variable rate interest expense decreased by $2,653,000 for 2024 as compared to 2023 primarily due to a decrease in average borrowings, partially offset by an increase in the Company’s weighted average variable interest rates on its unsecured bank credit facilities as shown in the following table:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2024","","2023","","Increase (Decrease)"],["","","(In thousands, except rates of interest)"],["Average borrowings on unsecured bank credit facilities \u2014 variable rate","","$","1,776","","49,384","","(47,608)"],["Weighted average variable interest rates (excluding amortization of facility fees and debt issuance costs)","","6.25%","","5.68%"]]
[[/GREPCENT_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:

[[GREPCENT_TABLE]]
[["UNSECURED DEBT REPAID IN 2023 AND 2024","","Interest Rate","","Date Repaid","","Payoff Amount"],["","","","","","","(In thousands)"],["$65 Million Senior Unsecured Term Loan","","2.31%","","03/31/2023","","$","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"],["$60 Million Senior Unsecured Notes","","3.48%","","12/15/2024","","60,000"],["Weighted Average Effectively Fixed Interest Rate and Total Payoff Amount for 2023 and 2024","","3.37%","","","","$","285,000"]]
[[/GREPCENT_TABLE]]

29

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:

[[GREPCENT_TABLE]]
[["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"]]
[[/GREPCENT_TABLE]]

(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 $3,588,000 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:

[[GREPCENT_TABLE]]
[["","Estimated Useful Life","","Years Ended December 31,"],["","2024","","2023"],["","","(In thousands)"],["Upgrade on acquisitions","40 years","","$","1,435","","","1,892"],["Tenant improvements:"],["New tenants","Lease Term","","18,540","","","16,352"],["Renewal tenants","Lease Term","","2,964","","","3,503"],["Other:"],["Building improvements","5 - 40 years","","13,006","","","8,085"],["Roofs","5 - 15 years","","12,940","","","17,386"],["Parking lots","3 - 5 years","","4,763","","","4,824"],["Other","5 years","","4,480","","","1,508"],["Total real estate improvements (1)","","","$","58,128","","","53,550"]]
[[/GREPCENT_TABLE]]

(1) Reconciliation of Total real estate improvements to Real estate improvements on the Consolidated Statements of Cash Flows:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","2024","","2023"],["","(In thousands)"],["Total real estate improvements","","$","58,128","","","53,550"],["Change in real estate property payables","","(719)","","","(527)"],["Change in construction in progress","","1,879","","","(1,907)"],["Real estate improvements on the Consolidated Statements of Cash Flows","","$","59,288","","","51,116"]]
[[/GREPCENT_TABLE]]

30

Capitalized Leasing Costs

The Company’s leasing costs (principally commissions) are capitalized and included in Other assets. The costs are amortized over the terms of the associated leases, and the amortization is included in Depreciation and amortization expense.  Capitalized leasing costs for the years ended December 31, 2024 and 2023 were as follows:

[[GREPCENT_TABLE]]
[["","Estimated Useful Life","","Years Ended December 31,"],["","2024","","2023"],["","","(In thousands)"],["Development and value-add","Lease Term","","$","7,117","","","9,597"],["New tenants","Lease Term","","16,478","","","9,379"],["Renewal tenants","Lease Term","","11,318","","","12,696"],["Total capitalized leasing costs (1)","","","$","34,913","","","31,672"],["Amortization of leasing costs","","","$","25,522","","","22,133"]]
[[/GREPCENT_TABLE]]

(1) Reconciliation of Total capitalized leasing costs to Leasing commissions on the Consolidated Statements of Cash Flows:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","2024","","2023"],["","(In thousands)"],["Total capitalized leasing costs","","$","34,913","","","31,672"],["Change in leasing commissions payables","","(2,759)","","","332"],["Leasing commissions on the Consolidated Statements of Cash Flows","","$","32,154","","","32,004"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

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. Item 7. 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.  The primary other sources of cash were from proceeds from common stock offerings; borrowings on unsecured bank credit facilities; and net proceeds from sales of real estate investments.  The Company distributed $252,794,000 in common stock dividends during 2024.  The Company also paid $390,011,000 related to the purchase of real estate property. Other primary uses of cash were for the

31

construction and development of properties; repayments on unsecured bank credit facilities and unsecured debt; capital improvements at various properties; and leasing commissions.

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.

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: 

[[GREPCENT_TABLE]]
[["MATURITY DATES","","Weighted Average Interest Rate (1)","","Principal Payments Maturing"],["","","","","(In thousands)"],["March 18, 2025","","1.58%","","$","50,000"],["August 28, 2025","","3.80%","","20,000"],["October 1, 2025","","3.97%","","25,000"],["October 7, 2025","","3.99%","","50,000"],["Year 2026","","2.56%","","140,000"],["Year 2027","","2.74%","","175,000"],["Year 2028","","3.10%","","160,000"],["Year 2029","","3.88%","","155,000"],["Year 2030 and beyond","","3.61%","","735,000"],["Total Unsecured Debt","","3.34%","","$","1,510,000"]]
[[/GREPCENT_TABLE]]

(1) These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.

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, 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 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. The interest rate is reset on a daily basis and as of December 31, 2024, was SOFR plus 77.5 basis points with an annual facility fee of 15 basis points. As of December 31, 2024, the interest rate was 5.335% with no outstanding balance.

32

For both facilities, the margin and facility fee are subject to changes in the Company’s credit ratings. Although the Company’s current credit rating is Baa2, given the strength of the Company’s key credit metrics, initial pricing for the credit facilities is based on the BBB+/Baa1 credit ratings level. 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 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 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.

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, 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. Future sales, if any, will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

33

EastGroup’s other material cash requirements from known contractual and other obligations as of December 31, 2024 were as follows:

[[GREPCENT_TABLE]]
[["","Cash Requirements (1)"],["","(In thousands)"],["Real estate property obligations (2)","$","19,195"],["Development and value-add obligations (3)","111,196"],["Tenant improvements obligations (4)","28,229"],["Operating lease obligations - Ground leases (5)","2,821"],["Total","$","161,441"]]
[[/GREPCENT_TABLE]]

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

(3)Represents commitments on properties in the Company’s development and value-add program, except for tenant improvement allowance obligations.

(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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s management considers the following accounting policies and estimates to be critical to the reported operations of the Company.

Acquisition and Development of Real Estate Properties

The FASB Codification provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their relative fair values.  Factors considered by management in allocating the cost of the properties acquired include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases.  The allocation to tangible assets (land, building and improvements) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models. Land is valued using comparable land sales specific to the applicable market, provided by a third party. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties.  The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.  

The purchase price is also allocated among the following categories of intangible assets:  the above or below market component of in-place leases and the value of in-place leases at the time of the acquisition.  The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using current market rents over the remaining term of the lease.  The amounts allocated to above and below market lease intangibles are included in Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. In-place lease intangibles are valued based upon management’s assessment of factors such as an estimate of foregone rents and avoided leasing costs during the expected lease-up periods considering current market conditions and costs to execute similar leases.  These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease.

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

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

34

costs) deemed related to such development activities. The internal costs are allocated to specific development projects based on development activity.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1(p) in the Notes to Consolidated Financial Statements.