JACKSON, Miss., July 29 /PRNewswire-FirstCall/ -- -- Funds from
Operations of $20.4 Million or $.80 Per Share, Same as the Second
Quarter of 2008 -- Net Income Available to Common Stockholders of
$7.2 Million or $.28 Per Share -- Same Property Net Operating
Income Decline of 2.6%; 2.3% Decrease Without Straight-Line Rent
Adjustments -- 92.6% Leased, 91.2% Occupied -- Customer Retention
Rate of 65% for the Second Quarter -- Paid 118th Consecutive
Quarterly Cash Dividend - $.52 Per Share -- Interest and Fixed
Charge Coverages of 3.6x for the Second Quarter -- Issued 737,000
Shares of Common Stock with Net Proceeds of $24.6 Million -- Closed
on a $67 Million Mortgage at 7.5% Fixed Interest Rate with a
10-Year Term -- 10 Development Projects with Estimated Costs to
Complete of $8 Million -- No Debt Maturities Requiring Balloon
Payments for the Remainder of 2009 or for 2010 -- Bank Line
Capacity of $131 Million as of June 30, 2009 EastGroup Properties,
Inc. (NYSE:EGP) announced today the results of its operations for
the three and six months ended June 30, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030519/EGPLOGO ) Commenting
on the Company's performance for the quarter, David H. Hoster II,
President and CEO, stated, "We continue to be pleased with our
operating results for 2009 to-date which have exceeded
expectations. Although industrial markets are anticipated to
deteriorate further through the balance of the year with decreasing
occupancy and lower rents, we are actively leasing space in all of
our major submarkets. "During the second quarter, we strengthened
an already strong balance sheet and are pursuing acquisition
opportunities which we believe will be long-term growth vehicles
for the future. So far, this type investment has been limited."
FUNDS FROM OPERATIONS For the second quarter ended June 30, 2009,
funds from operations (FFO) was $.80 per share, the same as the
second quarter of 2008. Property net operating income (PNOI)
increased 1.6% primarily due to additional PNOI of $1,151,000 from
newly developed properties and $63,000 from 2008 and 2009
acquisitions, offset by a decrease of $778,000 from same property
operations. Same property operating results decreased 2.6% for the
quarter; 2.3% without straight-line rent adjustments. Rental rates
on new and renewal leases (6.5% of total square footage) decreased
an average of 5.0% for the quarter; rental rates decreased 8.9%
without straight-line rent adjustments. For the six months ended
June 30, 2009, FFO was $1.63 per share, the same as the first six
months of 2008. PNOI increased 3.3% mainly due to additional PNOI
of $2,940,000 from newly developed properties and $542,000 from
2008 and 2009 acquisitions, offset by a decrease of $1,590,000 from
same property operations. For the first six months of 2009, same
property operating results decreased 2.8%; 2.3% without
straight-line rent adjustments. Rental rates on new and renewal
leases (11.4% of total square footage) decreased an average of 5.0%
for the six months; rental rates decreased 9.1% without
straight-line rent adjustments. FFO and PNOI are non-GAAP financial
measures, which are defined under Definitions later in this
release. Reconciliations of FFO and PNOI to Net Income, the most
directly comparable GAAP financial measure, are presented in the
attached schedule "Reconciliations of Other Reporting Measures to
Net Income." EARNINGS PER SHARE On a diluted per share basis,
earnings per common share (EPS) was $.28 for the three months ended
June 30, 2009, compared to $.37 for the same period of 2008.
Diluted EPS was $.59 for the first six months of 2009, compared to
$.68 for the same period of 2008. EastGroup recognized gain on
sales of real estate investments, gain on sales of securities, and
a gain on involuntary conversion totaling $2.6 million ($.11 per
share) during the six months ended June 30, 2008. DEVELOPMENT At
June 30, 2009, EastGroup's development program consisted of 10
properties containing 1,063,000 square feet with a projected total
cost of approximately $80 million either in lease-up or under
construction. As of June 30, 2009, the Company had spent $72
million of the $80 million, and a portion of the remaining costs
will be spent only when leased. These properties were collectively
31% leased at June 30, 2009 and 33% leased at July 28, 2009. During
the second quarter, EastGroup completed shell construction on two
properties, which are located in Texas and Florida. World Houston
28 (59,000 square feet) is currently 100% leased and was
transferred to the real estate portfolio in the second quarter.
Blue Heron III contains 20,000 square feet and is currently in
lease-up with projected total costs of $2.6 million. The only
buildings undergoing shell construction are World Houston 29 and
30, which contain 158,000 square feet and were collectively 72%
leased at July 28, 2009. These buildings have projected total costs
of $11 million. There have been no construction starts in 2009, and
none are planned for the remainder of the year. During the first
six months of 2009, EastGroup transferred seven development
properties to the portfolio as detailed below: Real Estate Size
Date Cost Percent Projected Properties Transferred Leased
Stabilized Transferred at Yield (1) from 7/28/09 Development in
2009
-------------------------------------------------------------------------
(Square feet) (In thousands) 40th Avenue, Phoenix, AZ 90,000
01/01/09 $6,715 100% 7.1% Wetmore II, Building B, San Antonio, TX
55,000 02/01/09 3,662 55% 8.8% Beltway Crossing VI, Houston, TX
128,000 04/01/09 6,150 50% 7.1% World Houston 28, Houston, TX
59,000 04/24/09 4,583 100% 8.8% Oak Creek VI, Tampa, FL 89,000
05/01/09 5,642 61% 9.0% Southridge VIII, Orlando, FL 91,000
06/01/09 6,376 74% 8.1% Techway SW IV, Houston, TX 94,000 06/01/09
6,166 100% 7.2% ------- ------- Total Developments Transferred
606,000 $39,294 ------- ------- (1) Based on 100% occupancy and
rents computed with straight-line adjustments. PROPERTY ACQUISITION
In May, EastGroup acquired Arville Distribution Center in Las
Vegas, Nevada, a new market for the Company, for $11,050,000.
Arville was constructed in 1997 and is a two-building, business
distribution complex located in the close-in southwest submarket of
the city. The complex contains 142,000 square feet and is currently
68% leased to seven customers. Dividends EastGroup paid cash
dividends of $.52 per share of common stock in the second quarter
of 2009, which was the 118th consecutive quarterly cash
distribution to the Company's common shareholders. The Company's
dividend payout ratio to funds from operations was 65% for the
quarter. The annualized dividend rate of $2.08 per share yields
5.7% on the closing stock price of $36.69 on July 28, 2009.
FINANCIAL strength and flexibility EastGroup closed on a mortgage,
issued new common equity and continued to achieve good debt ratios
during the second quarter. Debt-to-total market capitalization was
45.2% at June 30, 2009. For the quarter, EastGroup had interest and
fixed charge coverage ratios of 3.6x. Total debt at June 30, 2009
was $706.5 million comprised of $612.4 million of fixed rate
mortgage debt and $94.1 million of floating rate bank debt. During
the second quarter, the Company issued approximately 737,000 shares
of common stock at an average price of $33.92 per share through its
continuous equity program with net proceeds to the Company of $24.6
million. The Company used the proceeds to reduce variable rate bank
borrowings. The purpose of the equity program was to better
position the Company for growth through future acquisitions while
maintaining a strong balance sheet. EastGroup closed on a $67
million, limited recourse first mortgage loan on May 5, 2009. The
loan, which is secured by properties containing 1.7 million square
feet, has a fixed interest rate of 7.5%, a 10-year term, and a
20-year amortization schedule. The Company used the proceeds to
reduce variable rate bank borrowings. On June 1, 2009, EastGroup
repaid the remaining $205,000 balance on a mortgage loan with an
interest rate of 8.875%. The Company has no debt maturities that
require balloon payments for the remainder of 2009 or for 2010.
EastGroup has revolving credit facilities of $200 million and $25
million, of which $131 million was available to borrow as of June
30, 2009. These credit facilities mature in 2012. OUTLOOK FOR
REMAINDER OF 2009 FFO per share for 2009 is estimated to be in the
range of $3.09 to $3.17. Diluted EPS for 2009 is estimated to be in
the range of $.96 to $1.04. The table below reconciles projected
net income to projected FFO. Low Range High Range Q3 2009 Y/E 2009
Q3 2009 Y/E 2009 ------------------------------------------ (In
thousands, except per share data) Net income available to common
stockholders $5,213 24,522 5,731 26,566 Depreciation and
amortization 13,952 54,543 13,952 54,543
----------------------------------------- Funds from operations
available to common stockholders $19,165 79,065 19,683 81,109
----------------------------------------- Diluted shares 25,873
25,558 25,873 25,558 Per share data (diluted): Net income available
to common stockholders $0.20 0.96 0.22 1.04 Funds from operations
available to common stockholders $0.74 3.09 0.76 3.17 The following
assumptions were used: -- Average occupancy of 90.0% to 92.0% for
the year. -- No operating property acquisitions or dispositions
during the remainder of 2009. -- No development construction starts
during the year. -- Bad debt, net of termination fees, of $.02 per
share for the remainder of the year. -- Floating rate bank debt at
an average rate of 1.5% for the remainder of 2009. DEFINITIONS The
Company's chief decision makers use two primary measures of
operating results in making decisions: property net operating
income (PNOI), defined as income from real estate operations less
property operating expenses (before interest expense and
depreciation and amortization), and funds from operations available
to common stockholders (FFO). EastGroup defines FFO consistent with
the National Association of Real Estate Investment Trusts'
definition, as net income (loss) computed in accordance with U.S.
generally accepted accounting principles (GAAP), excluding gains or
losses from sales of depreciable real estate property, plus real
estate related depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. FFO as defined
by the Company refers to FFO available to common stockholders as it
excludes dividends on preferred stock. PNOI and FFO 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 industry's 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.
CONFERENCE CALL EastGroup will host a conference call and webcast
to discuss the results of its second quarter and review the
Company's current operations on Thursday, July 30, 2009, at 11:00
a.m. Eastern Time. A live broadcast of the conference call is
available by dialing 1-800-894-5910 (conference ID EastGroup) or by
webcast through a link on the Company's website at
http://www.eastgroup.net/. If you are unable to listen to the live
conference call, a telephone and webcast replay will be available
on Thursday, July 30, 2009. The telephone replay will be available
until Thursday, August 6, 2009, and can be accessed by dialing
1-800-283-4783. Also, the replay of the webcast can be accessed
through a link on the Company's website at
http://www.eastgroup.net/ and will be available until Thursday,
August 6, 2009. SUPPLEMENTAL INFORMATION Supplemental financial
information is available by request by calling the Company at
601-354-3555, or by accessing the report in the Reports section of
the Company's website at http://www.eastgroup.net/. COMPANY
INFORMATION EastGroup Properties, Inc. is a self-administered
equity real estate investment trust focused on the development,
acquisition and operation of industrial properties in major Sunbelt
markets throughout the United States with an emphasis in the states
of Florida, Texas, Arizona and California. The Company's goal is to
maximize shareholder value by being the leading provider in its
markets of functional, flexible, and quality business distribution
space for location sensitive customers primarily in the 5,000 to
50,000 square foot range. The Company's strategy for growth is
based on ownership of premier distribution facilities generally
clustered near major transportation features in supply-constrained
submarkets. EastGroup's portfolio currently includes 27 million
square feet. EastGroup Properties, Inc. press releases are
available on the Company's website. FORWARD-LOOKING STATEMENTS The
Company's assumptions and financial projections in this release are
based upon "forward-looking" information and are being made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are not
in the present or past tense and can be identified by the words
"will," "anticipates," "expects," "believes," or other words or
phrases that indicate future trends or events. All statements that
address operating performance, events or developments that the
Company expects or anticipates will occur in the future, including
statements relating to rent and occupancy growth, development
activity, the acquisition or sale of properties, general conditions
in the geographic areas where the Company operates and the
availability of capital, are forward-looking statements.
Forward-looking statements are inherently subject to known and
unknown risks and uncertainties, many of which the Company cannot
predict, including, without limitation: -- changes in general
economic conditions; -- the extent of tenant defaults or of any
early lease terminations; -- the Company's ability to lease or
re-lease space at current or anticipated rents; -- the availability
of financing; -- changes in the supply of and demand for
industrial/warehouse properties; -- increases in interest rate
levels; -- increases in operating costs; -- natural disasters,
terrorism, riots and acts of war, and the Company's ability to
obtain adequate insurance; -- changes in governmental regulation,
tax rates and similar matters; and -- other risks associated with
the development and acquisition of properties, including risks that
development projects may not be completed on schedule, development
or operating costs may be greater than anticipated or acquisitions
may not close as scheduled. Although the Company believes that the
expectations reflected in the forward-looking statements are based
upon reasonable assumptions at the time made, the Company can give
no assurance that such expectations will be achieved. The Company
assumes no obligation whatsoever to publicly update or revise any
forward-looking statements. See also disclosures contained in the
Company's reports filed or to be filed from time to time with the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934. EASTGROUP PROPERTIES, INC. CONSOLIDATED
STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) Three Months Ended Six Months Ended June 30, June 30,
-------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- REVENUES
Income from real estate operations $43,044 41,432 86,354 81,511
Other income 24 21 39 216 -------------------------------- 43,068
41,453 86,393 81,727 -------------------------------- EXPENSES
Expenses from real estate operations 12,670 11,526 25,261 22,365
Depreciation and amortization 13,310 12,617 26,354 24,992 General
and administrative 2,166 2,018 4,727 4,099
-------------------------------- 28,146 26,161 56,342 51,456
-------------------------------- OPERATING INCOME 14,922 15,292
30,051 30,271 OTHER INCOME (EXPENSE) Equity in earnings of
unconsolidated investment 82 79 163 159 Gain on sale of
non-operating real estate 7 5 15 12 Gain on sales of securities - -
- 435 Interest income 32 27 156 64 Interest expense (7,817) (7,509)
(15,318) (14,882) -------------------------------- INCOME FROM
CONTINUING OPERATIONS 7,226 7,894 15,067 16,059
-------------------------------- DISCONTINUED OPERATIONS Income
from real estate operations - 40 - 122 Gain on sale of real estate
investments - 1,949 - 1,949 -------------------------------- INCOME
FROM DISCONTINUED OPERATIONS - 1,989 - 2,071
-------------------------------- NET INCOME 7,226 9,883 15,067
18,130 Net income attributable to noncontrolling interest in joint
ventures (70) (137) (233) (293) --------------------------------
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. 7,156 9,746
14,834 17,837 -------------------------------- Dividends on Series
D preferred shares - 656 - 1,312 --------------------------------
NET INCOME AVAILABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS $7,156 9,090 14,834 16,525
-------------------------------- BASIC PER COMMON SHARE DATA FOR
INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. Income from
continuing operations $0.28 0.29 0.59 0.60 Income from discontinued
operations 0.00 0.08 0.00 0.09 -------------------------------- Net
income available to common stockholders $0.28 0.37 0.59 0.69
-------------------------------- Weighted average shares
outstanding 25,326 24,488 25,163 24,086
-------------------------------- DILUTED PER COMMON SHARE DATA FOR
INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. Income from
continuing operations $0.28 0.29 0.59 0.60 Income from discontinued
operations 0.00 0.08 0.00 0.08 -------------------------------- Net
income available to common stockholders $0.28 0.37 0.59 0.68
-------------------------------- Weighted average shares
outstanding 25,413 24,647 25,244 24,238
-------------------------------- AMOUNTS ATTRIBUTABLE TO EASTGROUP
PROPERTIES, INC. COMMON STOCKHOLDERS Income from continuing
operations $7,156 7,101 14,834 14,454 Income from discontinued
operations - 1,989 - 2,071 -------------------------------- Net
income available to common stockholders $7,156 9,090 14,834 16,525
-------------------------------- Dividends declared per common
share $0.52 0.52 1.04 1.04 EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME (IN
THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended
Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009
2008 ---- ---- ---- ---- RECONCILIATIONS OF OTHER REPORTING
MEASURES TO NET INCOME: Income from real estate operations $43,044
41,432 86,354 81,511 Expenses from real estate operations (12,670)
(11,526) (25,261) (22,365) ----------------------------------
PROPERTY NET OPERATING INCOME (PNOI) 30,374 29,906 61,093 59,146
Gain on sales of securities - - - 435 Equity in earnings of
unconsolidated investment (before interest and depreciation) 198
198 395 396 Interest income 32 27 156 64 Other income 24 21 39 216
General and administrative expense (1) (2,166) (2,018) (4,727)
(4,099) ---------------------------------- EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) 28,462
28,134 56,956 56,158 Income from discontinued operations (before
depreciation and amortization) - 65 - 190 Interest expense (2)
(7,817) (7,509) (15,318) (14,882) Interest expense from
unconsolidated investment (83) (86) (166) (171) Noncontrolling
interest in earnings (before depreciation and amortization) (121)
(188) (335) (393) Gain on sale of non-operating real estate 7 5 15
12 Dividends on Series D preferred shares - (656) - (1,312)
---------------------------------- FUNDS FROM OPERATIONS (FFO)
AVAILABLE TO COMMON STOCKHOLDERS 20,448 19,765 41,152 39,602
Depreciation and amortization from continuing operations (13,310)
(12,617) (26,354) (24,992) Depreciation and amortization from
discontinued operations - (25) - (68) Depreciation from
unconsolidated investment (33) (33) (66) (66) Noncontrolling
interest depreciation and amortization 51 51 102 100 Gain on sale
of depreciable real estate investments - 1,949 - 1,949
---------------------------------- NET INCOME AVAILABLE TO
EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS 7,156 9,090 14,834
16,525 Dividends on Series D preferred shares - 656 - 1,312
---------------------------------- NET INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC. $7,156 9,746 14,834 17,837
---------------------------------- DILUTED PER COMMON SHARE DATA
FOR INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.: Income from
continuing operations $0.28 0.29 0.59 0.60 Income from discontinued
operations 0.00 0.08 0.00 0.08 ----------------------------------
Net income available to common stockholders $0.28 0.37 0.59 0.68
---------------------------------- Funds from operations available
to common stockholders $0.80 0.80 1.63 1.63
---------------------------------- Weighted average shares
outstanding for EPS and FFO purposes 25,413 24,647 25,244 24,238
---------------------------------- (1) Net of capitalized
development costs of $329 and $758 for the three months ended June
30, 2009 and 2008, respectively; and $675 and $1,717 for the six
months ended June 30, 2009 and 2008, respectively. (2) Net of
capitalized interest of $1,747 and $1,648 for the three months
ended June 30, 2009 and 2008, respectively; and $3,398 and $3,353
for the six months ended June 30, 2009 and 2008, respectively.
http://www.newscom.com/cgi-bin/prnh/20030519/EGPLOGO
http://photoarchive.ap.org/ DATASOURCE: EastGroup Properties, Inc.
CONTACT: David H. Hoster II, President and Chief Executive Officer,
or N. Keith McKey, Chief Financial Officer, both of EastGroup
Properties, Inc., +1-601-354-3555 Web Site:
http://www.eastgroup.net/
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