Exhibit 99.1
FOR MORE INFORMATION, CONTACT:
David H. Hoster II, President and Chief Executive Officer
N. Keith McKey, Chief Financial Officer
(601) 354-3555
EASTGROUP PROPERTIES ANNOUNCES
FOURTH QUARTER AND YEAR 2003 RESULTS
FOURTH QUARTER 2003 RESULTS
o Achieved Total Market Capitalization of Over $1 Billion
o Net Income Available to Common Stockholders of $4.1 Million and $.20 Per
Share
o Funds from Operations of $12.7 Million and $.62 Per Share
o Paid 96th Consecutive Quarterly Dividend, $.475 Per Share
o Percentage Leased Increased to 94.0%, Occupancy Increased to 92.0%
YEAR 2003 RESULTS
o Total Shareholder Return of 36% for 2003 and 19% Average Return for Ten
Years
o Net Income Available to Common Stockholders of $12.7 Million and $.70 Per
Share
o Funds from Operations of $47.1 Million and $2.36 Per Share
o Paid Annual Dividends of $1.90 Per Share--Eleventh Consecutive Year of
Dividend Growth
o $22.2 Million Invested in Development Program During the Year
o Development Projects of $33.5 Million Under Construction or In Lease-Up
o Debt-to-Total Market Capitalization of 32.3% at Year End
o Interest Coverage of 3.8x and Fixed Charge Coverage of 3.2x
JACKSON, MISSISSIPPI, February 11, 2004 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months and year
ended December 31, 2003.
FUNDS FROM OPERATIONS
For the quarter ended December 31, 2003, funds from operations (FFO) was $.62
per share compared with $.64 per share in the same period of 2002, a decrease of
$.02 or 3.1% per share.
For the year ended December 31, 2003, FFO was $2.36 per share compared with
$2.57 per share in 2002, a decrease of $.21 or 8.2% per share. FFO per share was
reduced by $.09 per share due to the write-off of the original issuance costs of
the Series A Preferred Stock which was redeemed on July 7, 2003. Gains on
securities were $.02 per share in 2003 compared with $.09 per share in 2002.
Income for 2002 also included a $.015 per share one-time item resulting from the
collection of a mortgage loan that had been written off in a prior period. There
were no impairment write-downs in either 2003 or 2002.
Property net operating income (PNOI) from same properties on a cash basis
increased 3.1% for the quarter and declined .6% for the year. PNOI from same
properties (including straight-line rent adjustments) increased .4% for the
quarter and declined .2% for the year. Rental decreases on a cash basis on new
and
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P.O. Box 22728-Jackson, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
renewal leases averaged 10.6% for the quarter and 7.2% for the year. Rental
decreases (including straight-line rent adjustments) on new and renewal leases
averaged 6.5% for the quarter and 4.0% for the year.
FFO and PNOI are non-GAAP financial measures. For definitions of FFO and PNOI
and reconciliations of FFO and PNOI to Net Income, the most directly comparable
GAAP financial measure, please see "Reconciliations of Other Reporting Measures
to Net Income," attached.
David H. Hoster II, President and CEO, stated, "The past year was one of
important accomplishments for EastGroup, ranging from shareholder value to
property operations to a strengthened balance sheet. In 2003, EastGroup
generated a total return (dividends plus share appreciation) to shareholders of
35.8%. Average total shareholder return over the last three years was 21.8%,
20.7% for five years and 18.6% for ten years."
"With improving occupancy, the comparisons for same property operations
including straight-line rent adjustments were positive in both the third and
fourth quarters of 2003. This is a trend that we hope to continue during 2004."
"During 2003, we took advantage of the attractive capital markets and improved
an already strong balance sheet with two direct placements of common stock for a
total of $40 million, a direct placement of $33 million of perpetual preferred
stock and the closing of a $45.5 million nonrecourse first mortgage. EastGroup
is in an excellent position to take advantage of future opportunities for new
acquisitions and development in an improving economy."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.20 for the
three months ended December 31, 2003 compared with $.18 for the same period in
2002. The increase in EPS was primarily a result of the positive effect on the
EPS calculation due to the conversion of the convertible preferred stock. The
increase in EPS would have been higher except for higher depreciation and
amortization expense in 2003 primarily due to acquisitions and properties
transferred to real estate operations from development.
On a diluted per share basis, EPS was $.70 for 2003 compared with $.84 for 2002.
Diluted EPS for 2003 was $.10 lower in 2003 due to the write-off of the original
issuance costs of the Series A Preferred Stock which was redeemed in July 2003.
The increase in depreciation and amortization of $.11 per share was primarily
due to acquisitions and properties transferred to real estate operations from
development. Also, gains on securities were $.02 per share in 2003 compared with
$.11 per share in 2002. There was a positive effect on the EPS calculation in
2003 of $.15 per share due to the conversion of the convertible preferred stock
during 2003.
DEVELOPMENT
The incremental growth of EastGroup's current development program and 2002
property transfers to the portfolio increased PNOI by $401,000 in the fourth
quarter of 2003. At December 31, 2003, EastGroup had eight development
properties containing 604,000 square feet with a projected total cost of
approximately $33.5 million either in lease-up or under construction. Of this
total, approximately 46% of the space was leased as of February 11, 2004.
During the quarter, the Company began construction of World Houston 17, a 66,000
square foot build-to-suit facility for Devon Energy Production Company, LP. The
distribution building, which has a projected total cost of approximately $3.4
million, is located on 4.22 acres in EastGroup's World Houston International
Business Center development in north Houston between Beltway 8 and George Bush
Intercontinental Airport. The initial term of the lease is 15 years.
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
In January 2004, the Company purchased for future development a 1.56-acre parcel
of land adjacent to the Blue Heron Distribution Center II building in West Palm
Beach, Florida for a price of $450,000. This site is projected to accommodate a
service center type development of approximately 25,000 square feet.
ACQUISITIONS
In October 2003, the Company purchased Crown Park Commerce Center (72,000 square
feet), which was renamed Expressway Commerce Center II, in Tampa, Florida for a
price of $4,850,000. Expressway II is located in the Tampa International Airport
submarket and is a multi-tenant business distribution building which was
constructed in 2001. The property, which is 100% leased to five tenants, is
projected to generate an unleveraged first year yield of approximately 9.5%.
In November 2003, EastGroup purchased Oak Creek Distribution Center (127,000
square feet) in Tampa, Florida for a price of $4,650,000. Oak Creek was built in
2001 and is located in the east Tampa/I-75 submarket. The property was 46%
leased when it was placed under contract but is currently 100% leased. It is
projected to generate an unleveraged stabilized yield of approximately 10.7%.
In January 2004, the Company purchased Blue Heron Distribution Center II
(100,000 square feet) in West Palm Beach, Florida for a price of $5,650,000.
Blue Heron II was built in 1988 and is adjacent to Blue Heron I (110,000 square
feet) which EastGroup has owned since 1999. The property is currently 50%
occupied and is projected to generate an unleveraged stabilized yield upon
lease-up of approximately 9.5%.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 32.3% at December 31, 2003. For the year, the Company
had an interest coverage ratio of 3.8x and a fixed charge coverage ratio of
3.2x. Total debt at December 31, 2003 was $338.3 million with floating rate bank
debt comprising $52.6 million of that total.
DIVIDENDS
EastGroup paid dividends of $.475 per share of common stock in the fourth
quarter of 2003, which represented 77% of funds from operations per diluted
share for the quarter. This dividend was the 96th consecutive quarterly
distribution to EastGroup's common stockholders and represents an annualized
dividend rate of $1.90 per share, which yields 5.4% on the closing stock price
of $35.50 on February 10, 2004. EastGroup also paid quarterly dividends of
$.4969 per share on its Series D Preferred Stock on January 15, 2004 to
stockholders of record as of December 31, 2003.
CAPITAL TRANSACTIONS
On November 18, 2003, EastGroup closed on the sale of 847,458 shares of its
common stock at $29.50 per share. The shares were sold to two institutional
buyers with A.G. Edwards & Sons acting as the exclusive placement agent for the
offering. The proceeds of the offering were approximately $24.5 million, net of
all expenses.
All of the Series B Convertible Preferred Shares have now been converted to
common shares. The holder of the Preferred Shares began converting the shares in
April 2003 and completed the conversion in November 2003. Since it was the
policy of the investor to not hold common stock, the common shares were sold in
the market throughout the year with the final shares being sold on December 15,
2003.
Keith McKey, CFO, stated, "We are pleased with this transaction and the
resulting increase in common equity. For the year 2003, total outstanding common
stock increased 4,749,000 shares primarily due to two common share offerings
totaling 1,419,000 shares and the conversion of the convertible preferred shares
to
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
3,182,000 common shares. The market value of the Company's total outstanding
common stock increased $264,584,000, or 64%, during 2003. Total market
capitalization (equity plus debt) is now over $1 billion, and the liquidity in
our common stock has increased."
OUTLOOK FOR 2004
On December 18, 2003, EastGroup announced its initial guidance for 2004 which
has not been changed. FFO per share for 2004 is estimated to be in the range of
$2.42 to $2.54. Earnings per share for 2004 should be in the range of $.85 to
$.97. The table below reconciles projected net income to projected FFO.
Low Range High Range
1st Qtr Y/E 2004 1st Qtr Y/E 2004
--------------------------------------------
Net income $ 4,802 20,437 5,222 22,963
Dividends on preferred shares (656) (2,624) (656) (2,624)
--------------------------------------------
Net income available to common stockholders 4,146 17,813 4,566 20,339
Depreciation and amortization 8,080 33,207 8,080 33,207
Share of joint venture depreciation and amortization (36) (144) (36) (144)
--------------------------------------------
Funds from operations available to common stockholders $ 12,190 50,876 12,610 53,402
============================================
Diluted shares for funds from operations and earnings per
share 21,036 21,048 21,036 21,048
Per share data (diluted):
Net income available to common stockholders $ 0.20 0.85 0.22 0.97
Funds from operations available to common stockholders $ 0.58 2.42 0.60 2.54
The following assumptions were used for 2004:
o Average occupancy of 89% to 91%.
o Same Store NOI change of 0% to 3.6%.
o Existing development contributing $.07 per share before interest expense.
o Acquisitions of $10 million on July 1, 2004.
o No lease termination fees.
o Floating rate bank debt at 3%.
o New fixed rate debt of $25 million on July 1, 2004 at 5.6%.
o Dilution from November 2003 $25 million common stock offering of $.02 per
share.
CONFERENCE CALL
EastGroup will host a conference call to discuss the results of its fourth
quarter and review the Company's current operations on Thursday, February 12,
2004, at 2:00 P.M. Eastern Time. The number for the conference call is
1-877-625-9192, ID #369239. A taped recording of the call can be accessed 24
hours a day through Friday, February 20, 2004 by dialing 1-888-852-5733; the
pass code is 369239.
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 www.eastgroup.net.
EastGroup Properties, Inc. is a self-administered equity real estate investment
trust focused on the acquisition, ownership and development of industrial
properties in major Sunbelt markets throughout the United States. Its strategy
for growth is based on its property portfolio orientation toward premier
distribution facilities clustered near major transportation centers. EastGroup's
portfolio currently includes 19.3 million square feet with an additional 604,000
square feet of properties under development. EastGroup Properties, Inc. press
releases are also available on the Company's website.
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
FORWARD-LOOKING STATEMENTS
In addition to historical information, certain statements in this release are
forward-looking, such as those pertaining to the Company's hopes, expectations,
intentions, beliefs, strategies regarding the future, the anticipated
performance of development and acquisition properties, capital resources,
profitability and portfolio performance. Forward-looking statements involve
numerous risks and uncertainties. The following factors, among others discussed
herein, could cause actual results and future events to differ materially from
those set forth or contemplated in the forward-looking statements: defaults or
nonrenewal of leases, increased interest rates and operating costs, failure to
obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, failure to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended,
environmental uncertainties, risks related to disasters and the costs of
insurance to protect from such disasters, financial market fluctuations, changes
in real estate and zoning laws and increases in real property tax rates. The
success of the Company also depends upon the trends of the economy, including
interest rates, income tax laws, governmental regulation, legislation,
population changes and those risk factors discussed elsewhere in this release.
Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect management's analysis only as the date hereof. The Company assumes
no obligation to update forward-looking statements. See also the Company's
reports to be filed from time to time with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------------------------------------
2003 2002 2003 2002
-------------------------------------------------------
REVENUES
Income from real estate operations $ 27,451 27,159 107,771 103,031
Interest 5 5 22 309
Gain on securities 32 - 421 1,836
Other 67 82 227 617
-------------------------------------------------------
27,555 27,246 108,441 105,793
-------------------------------------------------------
EXPENSES
Operating expenses from real estate operations 7,961 8,096 31,659 29,902
Interest 4,878 4,684 19,015 17,387
Depreciation and amortization 8,641 8,043 32,050 30,318
General and administrative 1,220 900 4,966 4,179
Minority interest in joint ventures 96 89 416 375
--------------------------------------------------------
22,796 21,812 88,106 82,161
--------------------------------------------------------
INCOME BEFORE GAIN ON SALE OF
REAL ESTATE INVESTMENTS 4,759 5,434 20,335 23,632
Gain on sale of real estate investments - - - 93
--------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 4,759 5,434 20,335 23,725
--------------------------------------------------------
DISCONTINUED OPERATIONS
Loss from real estate operations - (19) (2) (33)
Gain (loss) on sale of real estate investments - - 112 (66)
--------------------------------------------------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (A) - (19) 110 (99)
--------------------------------------------------------
NET INCOME 4,759 5,415 20,445 23,626
Preferred dividends-Series A - 970 2,016 3,880
Preferred dividends-Series B - 1,532 2,598 6,128
Preferred dividends-Series D 656 - 1,305 -
Costs on redemption of Series A preferred - - 1,778 -
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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,103 2,913 12,748 13,618
=======================================================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.18 0.71 0.87
Income (loss) from discontinued operations 0.00 0.00 0.01 (0.01)
-------------------------------------------------------
Net income available to common stockholders $ 0.21 0.18 0.72 0.86
=======================================================
Weighted average shares outstanding 19,986 15,906 17,819 15,868
=======================================================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.20 0.18 0.69 0.85
Income (loss) from discontinued operations 0.00 0.00 0.01 (0.01)
-------------------------------------------------------
Net income available to common stockholders $ 0.20 0.18 0.70 0.84
=======================================================
Weighted average shares outstanding 20,608 16,264 18,194 16,237
=======================================================
(A) In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," income (loss) from discontinued operations
represents the operations and gain (loss) on disposal for properties
classified to held for sale subsequent to 12/31/01. Prior period amounts
have been reclassified to be consistent with the 2003 presentation.
EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------------------------------------
2003 2002 2003 2002
----------------------------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 27,451 27,159 107,771 103,031
Operating expenses from real estate operations (7,961) (8,096) (31,659) (29,902)
----------------------------------------------------
PROPERTY NET OPERATING INCOME (PNOI) (A) 19,490 19,063 76,112 73,129
Interest income 5 5 22 309
Gain on securities 32 - 421 1,836
Other income 67 82 227 617
General and administrative expense (1,220) (900) (4,966) (4,179)
----------------------------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) 18,374 18,250 71,816 71,712
Income(loss)from discontinued operations(before depreciation and amortization) - (14) (2) 18
Interest expense (B) (4,878) (4,684) (19,015) (17,387)
Minority interest in earnings (before depreciation and amortization) (131) (130) (561) (545)
Gain on sale of nondepreciable real estate investments - - 6 -
Dividends on Series A preferred shares - (970) (2,016) (3,880)
Dividends on Series D preferred shares (656) - (1,305) -
Costs on redemption of Series A preferred - - (1,778) -
----------------------------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS (A) 12,709 12,452 47,145 49,918
Depreciation and amortization from continuing operations (8,641) (8,043) (32,050) (30,318)
Depreciation and amortization from discontinued operations - (5) - (51)
Share of joint venture depreciation and amortization 35 41 145 170
Gain on sale of depreciable real estate investments - - 106 27
Dividends on Series B convertible preferred shares - (1,532) (2,598) (6,128)
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 4,103 2,913 12,748 13,618
Dividends on preferred shares 656 2,502 5,919 10,008
Costs on redemption of Series A preferred - - 1,778 -
----------------------------------------------------
NET INCOME $ 4,759 5,415 20,445 23,626
====================================================
DILUTED PER COMMON SHARE DATA: (C)
Income from continuing operations $ 0.20 0.18 0.69 0.85
Income (loss) from discontinued operations 0.00 0.00 0.01 (0.01)
----------------------------------------------------
Net income available to common stockholders $ 0.20 0.18 0.70 0.84
====================================================
Weighted average shares outstanding 20,608 16,264 18,194 16,237
====================================================
Funds from operations available to common stockholders $ 0.62 0.64 2.36 2.57
====================================================
Weighted average shares outstanding for FFO purposes 20,608 19,446 20,008 19,419
====================================================
(A) 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
(FFO). EastGroup defines FFO consistent with the National Association of Real
Estate Investment Trusts' (NAREIT) definition, as net income (loss) (computed in
accordance with accounting principles generally accepted in the United States of
America (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.
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 provide
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.
(B) Net of capitalized interest of $557,000 and $441,000 for the three months
ended December 31, 2003 and 2002, respectively; and $2,077,000 and $2,061,000
for the twelve months ended December 31, 2003 and 2002, respectively.
(C) Assumes dilutive effect of common stock equivalents.