Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES (x) NO ( )

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES (x)   NO ( )

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.   (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ( ) NO (x)

The accompanying unaudited financial statements of EastGroup Properties, Inc. (“EastGroup” or “the Company”) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The financial statements should be read in conjunction with the financial statements contained in the 20152016 annual report on Form 10-K and the notes thereto. Certain reclassifications have been made in the 20152016 consolidated financial statements to conform to the 20162017 presentation.

The consolidated financial statements include the accounts of EastGroup Properties, Inc., its wholly owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest. At June 30, 2017 and December 31, 2015 and June 30, 2016, the Company had a controlling interest in twoone joint ventures:venture, the 80% owned University Business CenterCenter. The Company records 100% of the joint ventures' assets, liabilities, revenues and expenses with noncontrolling interests provided for in accordance with the joint venture agreements.  EastGroup previously owned 80% ownedof Castilian Research Center. During the second quarter of 2016, Castilian Research Center was sold, and the joint venture is in the process of beingwas subsequently terminated. The Company records 100% of the joint ventures’ assets, liabilities, revenues and expenses with noncontrolling interests provided for in accordance with the joint venture agreements. The equity method of accounting is used for the Company’s 50% undivided tenant-in-common interest in Industry Distribution Center II.  All significant intercompany transactions and accounts have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, and liabilities, and revenues and expenses during the reporting period and to disclose material contingent assets and liabilities at the date of the financial statements.  Actual results could differ from those estimates.

EastGroup has one reportable segment – industrial properties.  These properties are concentrated in major Sunbelt markets of the United States, primarily in the states of Florida, Texas, Arizona, California and North Carolina, have similar economic characteristics and also meet the other criteria permittingthat permit the properties to be aggregated into one reportable segment.

As discussed in Note 18, beginning with acquisitions after October 1, 2016, the Company follows the guidance in ASU 2017-01, which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, companies are received.  required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business. EastGroup has determined that its real estate property acquisitions in the first six months of 2017 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company has capitalized acquisition costs related to its 2017 acquisitions.

The FASB Codification also 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 respective fair values.  Goodwill for business combinations is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired.  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'smanagement’s determination of the value of the property as if it were vacant using discounted cash flow models. 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.  

Amortization expense for in-place lease intangibles was $1,035,000$1,233,000 and $2,146,000$2,354,000 for the three and six months ended June 30, 2016, respectively,2017, and $1,041,000$1,035,000 and $2,185,000$2,146,000 for the same periods of 2015.in 2016. Amortization of above and below market leases increased rental income by $124,000$141,000 and $249,000$277,000 for the three and six months ended June 30, 2016, respectively,2017, and $110,000$124,000 and $232,000$249,000 for the same periods of 2015.

The intangible assets, including in-place lease intangibles, above market leases and below market leases, are amortized over the remaining lives of the associated leases in place at the time of acquisition.

The Company does not consider its sales in 20152016 and the first six months of 20162017 to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity's operations and financial results.

DuringThe Company sold Stemmons Circle and Techway Southwest I-IV during the first quartersix months of 2017. The properties, which contain 514,000 square feet located in Dallas and Houston, were sold for $38.0 million and the Company recognized net gains on the sales of $21.9 million. The Company also sold 5 acres of land in Dallas for $850,000 and recognized a loss of $40,000.

During 2016, EastGroup sold the following operating properties in separate transactions:properties: Northwest Point Distribution and Service Centers, in Houston and North Stemmons III in Dallas. The properties contain a combined 292,000 square feetII and were sold for $18,850,000. EastGroup recognized gains on the sales of $11,332,000. Also during the first quarter of 2016, the Company sold a small parcel of land in Orlando for $673,000 and recognized a gain of $10,000.

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.

Specifically, the Company has entered into derivative instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative instruments, described below, are used to manage differences in the amount, timing and duration of the Company's known or expected cash payments principally related to certain of the Company's borrowings.

The Company's objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 

As of June 30, 2016,2017, the Company had seven interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans. All of the Company's interest rate swaps convert the related loans' LIBOR rate components to effectively fixed interest rates, for the entire terms of the loans, and the Company has concluded that each of the hedging relationships is highly effective.

Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with financial institutions the Company regards as credit-worthy.

The Company has an agreement with its derivative counterparties containing a provision stating that the Company could be declared in default on its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender.

As of June 30, 2016,2017, the Company had nofair value of derivatives in a netan asset position;position related to these agreements was $4,293,000, and the fair value of derivatives in a net liability position related to the Company's derivativethese agreements was $12,403,000.$1,890,000. As of June 30, 2016,2017, the Company has not posted any collateral related to these agreements.arrangements. If the Company had breached any of the contractual provisions of the derivative contracts, it could have been required to settle its obligations under the agreements at their termination value. The swap termination value of $12,850,000.derivatives in an asset position was an asset in the amount of $4,318,000, and the swap termination value of derivatives in a liability position was a liability in the amount of $1,925,000.

Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:

Stock-based compensation cost for employees was $651,000$952,000 and $3,665,000$3,633,000 for the three and six months ended June 30, 2016,2017, respectively, of which $250,000$383,000 and $607,000$869,000 were capitalized as part of the Company's development costs. For the three and six months ended June 30, 2015,2016, stock-based compensation cost for employees was $1,839,000$651,000 and $4,180,000,$3,665,000, respectively, of which $399,000$250,000 and $821,000$607,000 were capitalized as part of the Company's development costs.

Stock-based compensation expense for directors was $133,000$161,000 and $266,000$323,000 for the three and six months ended June 30, 2016,2017, respectively, and $124,000$133,000 and $248,000$266,000 for the same periods of 2015.2016.

In March 2017, the second quarterCompensation Committee of 2016, the Company’sCompany's Board of Directors approved an equity compensation plan for its executive officers based upon(the Committee) evaluated the Company's performance compared to certain annual performance measures (primarily funds from operations (FFO) per share and total shareholder return).  Any for the year ended December 31, 2016.  Based on the evaluation, 36,571 shares issued pursuantwere awarded to this compensation plan will be determined by the Compensation Committee in its discretion and issued in the first quarter of 2017.  The number of shares to be issued onCompany’s executive officers at the grant date could range from zero to 44,848.(March 2, 2017) fair value of $74.80 per share.  These shares would generally vestvested 20% on the date shares arewere determined and awarded and will vest 20% per year on each January 1 forin years 2018, 2019, 2020 and 2021.  The shares are being expensed on a straight-line basis over the subsequent four years.remaining service period.

Also in March 2017, the second quarter of 2016, EastGroup’s Board of Directors approved a long-term equity compensation plan forCommittee evaluated the Company’s executive officers. The awards will be based on the results of the Company's total shareholder return, both on an absolute basis for 2016 as well as on a relative basis compared to the NAREIT Equity Index, NAREIT Industrial Index and Russell 2000 Index overfor the five-year period endingended December 31, 2016.  Based on the evaluation, 33,289 shares were awarded to the Company’s executive officers at the grant date (March 2, 2017) fair value of $74.80 per share.  These shares vested 25% on the date shares were determined and awarded and will vest 25% per year on January 1 in years 2018, 2019 and 2020.  The shares are being expensed on a straight-line basis over the remaining service period.

Also in the second quarter of 2017, the Committee approved an equity compensation plan for certain of its executive officers based upon the achievement of individual goals for each of the officers included in the plan.  Any shares issued pursuant to the individual goals in this equity compensation plan will be determined by the Compensation Committee in its discretion and issued in the first quarter of 2017.2018.  The number of shares to be issued on the grant date for the achievement of individual goals could range from zero to 47,275.5,274.  These shares would generally vest 25%20% on the date shares are determined and awarded and 25%20% per year on each January 1 for the subsequent threefour years. The Company will begin recognizing the expense for any shares awarded on the grant date in the first quarter of 2018, and the shares will be expensed on a straight-line basis over the remaining service period.

NotwithstandingAlso in the foregoing, any shares issuedsecond quarter of 2017, the Committee approved a long-term equity compensation plan for certain of the Company’s executive officers that includes three components based on total shareholder return and one component based only on continued service as of the vesting dates.

The three long-term equity compensation plan components based on total shareholder return are subject to bright-line tests that will compare the Company's total shareholder return to the Company’s Chief Financial Officer, N. Keith McKey, under these plansNAREIT Equity Index and to the Company's industrial REIT peer group. The first plan will become fully vestedmeasure the bright-line tests over the one-year period ending December 31, 2017. During the first quarter of 2018, the Committee will measure the Company's performance for the one-year period against bright-line tests established by the Committee on the grant date of May 10, 2017.  The number of shares to be earned on the measurement date could range from zero to 4,730.  These shares would vest 100% on the date the earned shares are determined. On the grant date of May 10, 2017, the Company began recognizing expense for this plan based on the grant date fair value of the awards which is expectedwas determined using a simulation pricing model developed to occurspecifically accommodate the unique features of the award.

The third plan will measure the bright-line tests over the three-year period ending December 31, 2019. During the first quarter of 2020, the Committee will measure the Company's performance for the three-year period against bright-line tests established by the Committee on the grant date of May 10, 2017.  The number of shares to be earned on the measurement date could range from zero to 18,917.  These shares would vest 75% on the date the earned shares are determined in the first quarter of 2020 and 25% on January 1, 2021. On the grant date of May 10, 2017, the Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award.

Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to participants with the related weighted average grant date fair value share prices.  Of the shares that vested in the first six months of 2016,2017, the Company withheld 57,316

33,695 shares to satisfy the tax obligations for those participants who elected this option as permitted under the applicable equity plan.  As of the vesting dates, the aggregate fair value of shares that vested during the first six months of 20162017 was $10,013,000.

The state of the overall economy can significantly impact the Company’s operational performance and thus impact its financial position.  Should EastGroup experience a significant decline in operational performance, it may affect the Company’s ability to make distributions to its shareholders, service debt, or meet other financial obligations.

EastGroup has evaluated all ASUs recently released by the FASB through the date the financial statements were issued and determined that the following ASUs apply to the Company.

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 5,00010,000 to 50,000 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 Florida, Texas, Arizona, California and North Carolina.

The Company’s primary revenue source is rental income; as such, EastGroup’s greatest challenge is leasing space.  During the six months ended June 30, 2016,2017, leases expired on 3,648,0004,077,000 square feet (10.7%(11.1% of EastGroup’s total square footage of 34,176,000)36,774,000), and the Company was successful in renewing or re-leasing 87% of the expiring square feet.  In addition, EastGroup leased 1,063,0001,269,000 square feet of other vacant space during this period.  During the first six months of 2016,2017, average rental rates on new and renewal leases increased by 12.0%15.9%.  Property net operating income (PNOI) from same properties, defined as operating properties owned during the entire current period and prior year reporting period, increased 2.7%2.6% for the quarter ended June 30, 2016, as compared to the same quarter in 2015. For the six months ended June 30, 2016, PNOI from same properties increased 2.3%2017, as compared to the same period in 2015.2016.

stockholders (FFO), defined as net income (loss) attributable to common stockholders computed in accordance with U.S. generally accepted accounting principles (GAAP), excluding gains or losses from sales of depreciable real estate property and impairment losses, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  The Company calculates FFO based on the National Association of Real Estate Investment Trusts’ (NAREIT) definition.

PNOI is a supplemental industry reporting measurement used to evaluate the performance of the Company’s real estate investments. The Company believes the exclusion of depreciation and amortization in the industry’s calculation of PNOI provides a supplemental indicator of the properties’ performance since real estate values have historically risen or fallen with market conditions.  PNOI as calculated by the Company may not be comparable to similarly titled but differently calculated measures for other real estate investment trusts (REITs).  The major factors influencing PNOI are occupancy levels, acquisitions and sales, development properties that achieve stabilized operations, rental rate increases or decreases, and the recoverability of operating expenses.  The Company’s success depends largely upon its ability to lease space and to recover from tenants the operating costs associated with those leases.