EastGroup Properties, Inc. Q3 FY2025 earnings call

• Team has worked hard and made solid progress towards 2025 goals. - FFO per share has exceeded prior year same quarter for over a decade. - Leasing improved from Q2, market is bifurcated with better conversion in smaller spaces, larger spaces have prospects with improved activity. - Retention rate rose to almost 80%, development pipeline leasing maintaining projected yields but at slower pace, leading to reforecasted 2025 starts to $200 million. - Acquired properties in Raleigh, NC, new development land in Orlando, and land in Northeast Dallas. - Balance sheet is strong with low debt to total market capitalization and high interest/fixed charge coverage.

Financial performance includes funds from operation (FFO) at $2.27 per share, up 6.6% for the quarter over prior year. Cash same-store rose 6.9% for the quarter and 6.2% year-to-date. Quarter-end leasing was 96.7% with occupancy at 95.9%, average quarterly occupancy 95.7% (down 100 basis points from Q3 2024). Quarterly leasing spreads were 36% GAAP and 22% cash for leases signed during the quarter, year-to-date at 42% GAAP and cash. The top 10 tenants fall to 6.9% of rent, down 60 basis points from last year. Revenue contribution % isn't explicitly stated beyond the tenant concentration info.

• Fourth quarter FFO guidance in range of $2.30 to $2.34 per share. - Full year FFO guidance in range of $8.94 to $8.98, representing increases of 7.9% to 7.3% compared to prior year. - Same-store occupancy for Q4 projected to be 97%. - Revised cash same-store growth midpoint increased by 20 basis points to 6.7%. - Construction starts reduced by $15 million due to slower development leasing.

• Known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from forward-looking statements. - Market conditions, interest rate fluctuations, difficulties in obtaining zoning and permitting, potential delays in development leasing, and macroeconomic uncertainties.

Q: Regarding releasing spreads and time for activity to reverse.

A: Brent W. Wood and Marshall A. Loeb discussed that it would take several years for spreads to close in on single digit numbers if steady state, but supply tightness means not much shift in sentiment or execution could quickly turn markets. Also, demand is the key factor.

Q: On bad debt and tenant watch list.

A: Brent W. Wood said bad debt is a non-factor, still in 30% range, watch list has been consistent this year with few tenants on it.

Q: On capital position and debt utilization.

A: Brent W. Wood discussed flexible balance sheet, credit facilities availability, plans to tap into debt, revolver balance tied to Fed fund rate, and ability to be patient in evaluating capital sources.