EASTGROUP PROPERTIES INC Q4 FY2024 earnings call

• Team execution: The team worked hard in a challenging environment, achieving strong FFO growth and resilient portfolio performance.
• Portfolio resilience: Occupancy, leasing, and same-store NOI showed positive trends despite occupancy declines. The diversified rent roll and geographic diversity are strategic for stabilizing earnings.
• Acquisitions: Closed acquisitions in Dallas and Phoenix in late 2024, with acquisitions guided by being immediately accretive and enhancing portfolio growth.
• Development: Projected 2025 development starts of $300 million, majority in the second half of the year, with development starts pulled by market demand and supply pipeline at a historic low.
• Long-term trends: Benefiting from population migration, near-shoring/onshoring, evolving logistics, and low vacancies in shallow bay markets.

For the fourth quarter, funds from operations (FFO) rose 5.9% to $2.15 per share compared to $2.03 per share in the same quarter prior year, and full-year FFO increased 7.9%. Year leasing was 97.1% with occupancy at 96.1%. Average quarterly occupancy was 95.8%, down over 200 basis points from Q4 2023. Cash same-store NOI rose 3.4% for the quarter and 5.6% for the year. The top 10 tenants accounted for 7.2% of rents, down 70 basis points from year-end 2023, demonstrating a diversified rent roll.

• FFO guidance: Q1 2025 FFO estimated in the range of $2.05 to $2.13 per share; full-year FFO $8.80 to $9, up 5.6% and 7.1% excluding involuntary conversion.
• Development: Projected $300 million in development starts in 2025, majority in the second half of the year.
• Acquisitions: Budgeted $150 million in strategic acquisitions for 2025.

• Market uncertainties: Economic conditions and market fluctuations can impact performance.
• Tenant defaults: Potential for tenant defaults, though currently contained to a few larger customers.
• Tariffs: Impact on manufacturing and logistics planning, affecting market dynamics.
• Supply chain: Issues related to supply chain disruptions and inflation affecting leasing costs and development.

Q: Andrew Berger from Bank of America asked about green shoots in markets.

A: Marshall Loeb responded that green shoots are broad-based, not limited to one market, with increased prospect activity seen across the portfolio.

Q: Craig Mailman from Citigroup asked about balance sheet delevering.

A: Brent Wood responded that delevering is a byproduct of viewing equity as the best cost-benefit investment, with flexibility and strong balance sheet metrics.

Q: Alexander Goldfarb from Piper Sandler asked about development demand.

A: Marshall Loeb responded that development starts are projected to pick up in the second half of 2025, driven by low supply and market demand.

Q: Blaine Heck from Wells Fargo asked about market lease rate moves.

A: Marshall Loeb responded that lease rate moves are due to factors like vacancy from bankrupt tenants, supply in certain markets, and tenant backfilling efforts.

Q: Ronald Kamdem from Morgan Stanley asked about occupancy guidance.

A: Brent Wood and Marshall Loeb discussed occupancy cadence, with a back half weighted gain and market-specific dynamics affecting occupancy projections.