EGP

• Overall Portfolio Strength

• Management reports a strong Q2 and first half of 2026, with 10+ consecutive years of year-over-year quarterly FFO per share growth, demonstrating long-term stable growth.
• The portfolio maintains high quality positioning in infill industrial markets, with intentional geographic and tenant diversity to stabilize earnings across economic environments.
• Occupancy remains near peak levels, releasing spreads have held at strong levels, and same-store NOI growth outperformed projections for the quarter.

• Leasing and Development Activity

• Leasing momentum accelerated to new quarterly records for both total signed leasing and first-generation development leasing, with customer demand becoming less impacted by macro and geopolitical uncertainty as firms focus on long-term space needs.
• 100% of the 669,000 square feet of completed development transferred to the operating portfolio this quarter was pre-leased, reflecting strong pre-lease demand for new product.
• Development leasing has been consistently strong across multiple quarters, allowing management to expand the full-year development start target.

• Capital and Balance Sheet

• The balance sheet remains exceptionally strong: no amount drawn on the secured bank credit facility, leaving $675 million in available capacity. Debt-to-total market capitalization is 12.9%, annualized debt-to-EBITDA is 3.0x, and interest coverage is 15.1x.
• The firm maintains $210 million in available forward equity sale agreements at over $201 per share, and remains flexible to access capital markets for growth opportunities as conditions allow.

• External Growth

• Subsequent to quarter-end, the firm expanded its Phoenix portfolio with the acquisition of a 143,000 square foot infill building, and is under contract to acquire a 5-building, 388,000 square foot portfolio in the Austin, TX market.
• New secular demand drivers, including data center supplier demand, near-shoring/on-shoring of manufacturing, population growth to high-growth sunbelt markets, and evolving logistics chains for last-mile delivery, support long-term portfolio growth.

• Tenant Demand Trends

• Customer decision-making timelines have normalized after extended delays in 2025, with deal closing timelines speeding up through 2026. Tenant expansion activity has also increased measurably compared to 2025, which management views as a positive organic demand indicator.

• Full-year 2026 FFO guidance midpoint was increased by 3 cents to $9.59 per share, representing a 6.8% increase over 2025 actual FFO. Guidance ranges were tightened as expected mid-year, with the low end of the range raised to reflect year-to-date outperformance, resulting in a narrower overall range. The midpoint increase marks a 9 cent rise from the start-of-year 2026 guidance midpoint. • Cash same-store NOI guidance midpoint was raised 60 basis points to 6.8% for full-year 2026, driven by stronger than expected rental growth and occupancy. Full-year same-store occupancy guidance was increased 30 basis points to 96.7%, and average month-end portfolio occupancy guidance was increased 20 basis points to 95.7%. • Full-year 2026 development starts guidance was increased $60 million to $325 million, reflecting stronger and more consistent development leasing demand and a robust current leasing pipeline. Year-to-date, $123 million in development starts have been completed, with $202 million projected for the second half of 2026. • Full-year 2026 acquisitions guidance was increased $55 million to $215 million, reflecting the completed and contracted acquisitions post-quarter-end. Year-to-date, $150 million in acquisitions have closed or are under contract, with $65 million in additional acquisitions projected for Q4 2026. • 2026 gross capital proceeds guidance was maintained at $300 million, unchanged from prior guidance. • Most of the strong Q2 2026 development leasing will contribute to FFO in 2027 rather than 2026, due to typical 2-5 month timelines for tenant delivery and occupancy, so the full benefit of record leasing will not be reflected in 2026 FFO.

East Group Properties operates as a single-sector industrial real estate portfolio with no separate product segments broken out in the call. Key overall performance metrics for Q2 2026: Funds From Operation (FFO) per share was $2.36, up 6.8% year-over-year and 2 cents above the prior guidance midpoint. Year-to-date FFO per share is up 7.6% year-over-year. Quarterly occupancy averaged 95.6% (down 30 basis points from Q2 2025), quarter-end same-store occupancy was 96.9%, and overall quarter-end leasing was 96.8%. Releasing spreads were 34% GAAP and 19% cash; year-to-date spreads are 35% GAAP and 19% cash. Cash same-store net operating income (NOI) rose 8.3% for the quarter and 8.8% year-to-date. The top 10 tenants contribute 6.6% of total rents, down 30 basis points year-over-year, reflecting ongoing diversification of the rent roll. Total signed leasing for the quarter hit a new quarterly record of 3.9 million square feet, with first-generation development leasing also reaching a quarterly record of 1.1 million square feet. Four fully-leased development projects totaling 669,000 square feet were transferred to the operating portfolio during the quarter.

• The primary risk management identifies is broader consumer weakness driven by persistent higher interest rates and elevated energy/fuel prices, which could lead to increased tenant credit issues and slower overall leasing demand. Management notes consumer weakness is the most likely source of a downturn for its portfolio. While no impact is seen to date, this is viewed as the key potential downside risk. • Permitting and site planning for new development has become significantly slower and more arduous post-COVID, due to local community opposition to industrial development and extended municipal review processes. This can delay project delivery timelines by multiple months, even when demand is strong. • Extended lead times for key construction inputs, including structural steel, electrical switchgear, and transformers, driven by strong demand from the data center sector, have also contributed to occasional project delivery delays of 1-2 months. • The Bay Area (San Francisco) market continues to lag other markets in terms of leasing activity and pricing power, due to its exposure to the tech sector. It remains the weakest performing market in the portfolio, and rental growth is expected to lag until market activity picks up. • While overall supply is currently in check across East Group's markets, over the longer term, sustained strong demand could lead to a cyclical increase in new supply development, which could pressure rental rates over time. Management notes it is well-positioned to capture a disproportionate share of new development growth due to its pre-permitted land pipeline. • The acquisition market is currently very competitive, with 2x the number of bidders for high-quality infill industrial buildings compared to one year ago, and cap rates now very close to risk-free 10-year Treasury rates. This has limited acquisition opportunities, as pricing implies aggressive rental growth assumptions that management is not willing to make.

Q: The analyst asks for quantification of data center adjacent leasing demand, and details on where this development is occurring. / A: Management states that 40% of Q1 2026 development leasing and 20% of Q2 2026 development leasing was from data center-related supplier tenants, a new demand stream for the portfolio. Major high-demand markets include Dallas, Phoenix, and Atlanta. East Group focuses on leasing standard industrial space to data center suppliers, not building tenant-specific data center facilities, limiting downside risk if demand slows. Management views this demand as being in early innings, with a large underbuilt pipeline of data center capacity in markets where East Group holds significant land positions.

Q: The analyst asks if East Group sees more weakness in San Francisco's rental pricing compared to other markets, and what the outlook is going forward. / A: Management confirms the Bay Area is the slowest market in the portfolio, with continued sluggish activity relative to other regions, and rental pricing power that lags the rest of the portfolio. Management notes that across nearly all other markets, vacancy is very tight and there has been no need to cut rental rates to execute leases. The Bay Area is expected to continue lagging until broader regional activity picks up, but it only represents a small share of the overall portfolio, so it does not materially impact overall results.

Q: The analyst asks what the normalized long-term run rate for cash releasing spreads should be, after the very high post-COVID spread levels the firm has reported. / A: Management notes that the 40-50% cash releasing spreads seen immediately post-COVID were a cyclical peak driven by pent-up pandemic demand, and the current 19% run rate represents a natural normalization after pulling forward that demand. Longer term, management expects spreads to stabilize and eventually see a new upward leg, driven by persistent supply constraints (slower permitting and higher development costs that limit new supply growth), continued strong demand absorption, and the favorable dynamic of infill shallow bay industrial properties that outperform broader industrial markets. Management expects the cycle will continue, with long-term average spreads supported by ongoing supply-demand imbalance.

Q: The analyst asks where the best risk-adjusted return profile is between development and acquisitions over the next few years, and if management is concerned about rapid supply growth in its markets. / A: Management states that development consistently generates the highest risk-adjusted returns for East Group, and the firm has a robust, diversified pipeline of permitted land holdings across 20+ submarkets, supporting sustained development growth. For acquisitions, the market is currently very competitive with compressed cap rates that require aggressive rental growth assumptions, so East Group is remaining strategic rather than opportunistic in acquiring assets. Overall supply growth is currently in check across most markets, especially for small multi-family buildings, and pre-permitted land positions allow East Group to ramp development quickly to capture market share as demand grows.