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
FIRST QUARTER 2004 RESULTS
o Net Income Available to Common Stockholders of $4.4 Million or $.21 Per
Share
o Funds from Operations of $12.6 Million or $.60 Per Share
o Percentage Leased 93.5%, Occupancy 91.9%
o Same Property Growth of 1.8% on a Cash Basis and 3.5% Including
Straight-Line Rent Adjustments
o Paid 97th Consecutive Quarterly Dividend - $.48 Per Share - Twelfth
Consecutive Year of Dividend Growth
o Development Projects of $42.6 Million Under Construction or In Lease-Up
o Debt-to-Total Market Capitalization of 31.3% at Quarter End
o Interest Coverage of 3.7x and Fixed Charge Coverage of 3.3x
JACKSON, MISSISSIPPI, April 19, 2004 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months ended March
31, 2004.
FUNDS FROM OPERATIONS
For the quarter ended March 31, 2004, funds from operations (FFO) was $.60 per
share compared with $.61 per share in the same period of 2003, a decrease of
1.6% per share. There were no gains on securities for the first quarter of this
year compared to $.02 per share in the same period of 2003.
Property net operating income (PNOI) from same properties on a cash basis
increased 1.8% for the quarter. PNOI from same properties including
straight-line rent adjustments increased 3.5%. Rental decreases on a cash basis
on new and renewal leases averaged 9.7% for the quarter. Rental decreases
including straight-line rent adjustments on new and renewal leases averaged 2.5%
for the quarter.
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, "We are pleased with our trend of
achieving positive same property operating results. Our first quarter results
represent the third consecutive quarter of improvement in same property
operations when compared to the previous year's quarter. This continuing
improvement is the result of higher occupancy more than offsetting the decrease
in rents experienced with lease renewals and new leasing. We are working hard to
maintain this positive momentum."
"In March, we increased our common share dividend 1.1% to $.48 per share ($1.92
per share annually), making 2004 the twelfth consecutive year of dividend
growth. This payout represented our 97th consecutive regular quarterly dividend
to shareholders."
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.21 for the
three months ended March 31, 2004 compared with $.17 for the same period in
2003. The increase in EPS was primarily a result of the positive effect on the
EPS calculation of the conversion of the convertible preferred stock as such
securities were antidilutive in the same period of 2003. The increase in EPS
would have been higher except for increased depreciation and amortization
expense primarily due to acquisitions and properties transferred to real estate
operations from development.
DEVELOPMENT
The incremental growth of EastGroup's current development program and 2003
property transfers to the portfolio increased PNOI by $341,000 in the first
quarter of 2004. At March 31, 2004, EastGroup had ten development properties
containing 746,000 square feet with a projected total cost of approximately
$42.6 million either in lease-up or under construction. Of this total,
approximately 41% of the space was leased as of April 19, 2004.
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.
In March 2004, the Company began construction of two new development projects,
the 79,000 square foot Palm River South I building in Tampa with estimated costs
of $4,300,000 and the 63,000 square foot Sunport Center V building in Orlando
with projected costs of $3,800,000.
Mr. Hoster stated, "Our development program is well positioned to take advantage
of the opportunities offered by an improving U.S. economy. We plan to begin
construction of site improvements and the first two buildings at our South Ridge
development in Orlando this summer and also hope to start additional buildings
in the third quarter at World Houston and at Executive Airport Commerce Center
in Fort Lauderdale."
ACQUISITIONS
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%.
In March 2004, the Company purchased Kirby Business Center in Houston, Texas for
a price of $4,210,000. Kirby is a 125,000 square foot business distribution
facility constructed in 1980. The property, which is 100% leased to two tenants,
is projected to generate an unleveraged yield of approximately 9.5%.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 31.3% at March 31, 2004. For the quarter, the Company
had an interest coverage ratio of 3.7x and a fixed charge coverage ratio of
3.3x. Total debt at March 31, 2004 was $354.2 million with floating rate bank
debt comprising $71.4 million of that total.
DIVIDENDS
EastGroup paid dividends of $.48 per share of common stock in the first quarter
of 2004, which was 80% of funds from operations per diluted share for the
quarter. This dividend was the 97th consecutive quarterly distribution to
EastGroup's common stockholders and represents an annualized dividend rate of
$1.92 per
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P.O. BOX 22728-JACKSON,MS 39225-TEL. 601-354-3555-FAX 601-352-1441
share, which yields 6.5% on the closing stock price of $29.60 on April 16, 2004.
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on April 15, 2004 to stockholders of record as of March 31,
2004.
OUTLOOK FOR REMAINDER OF 2004
Guidance for 2004 remains the same as our original guidance on an FFO per share
basis with a range of $2.42 to $2.54. Earnings per share for 2004 should be in
the range of $.86 to $.98. The table below reconciles projected net income to
projected FFO for the second quarter and the year 2004.
Low Range High Range
2Qtr04 Y/E 2004 2Qtr04 Y/E 2004
--------------------------------------------------
Net income $ 5,112 20,752 5,532 23,278
Dividends on preferred shares (656) (2,624) (656) (2,624)
--------------------------------------------------
Net income available to common stockholders 4,456 18,128 4,876 20,654
Depreciation and amortization 8,275 33,235 8,275 33,235
Share of joint venture depreciation and amortization (36) (144) (36) (144)
--------------------------------------------------
Funds from operations available to common stockholders $ 12,695 51,219 13,115 53,745
==================================================
Diluted shares for funds from operations and earnings per share 21,164 21,154 21,164 21,154
Per share data (diluted):
Net income available to common stockholders $ .21 .86 .23 .98
Funds from operations available to common stockholders .60 2.42 .62 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 One-half year of PNOI on acquisitions (net of sales) of $10 million.
o No significant 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 first
quarter and review the Company's current operations on Tuesday, April 20, 2004,
at 2:00 P.M. Eastern Time. The number for the conference call is 1-800-251-6529,
ID #429176. A taped recording of the call can be accessed 24 hours a day through
Tuesday, April 27, 2004 by dialing 1-888-266-2081; the pass code is 429176.
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 with a special
emphasis in the states of Arizona, California, Florida and Texas. The Company's
goal is to maximize shareholder value by being a leading provider of functional,
flexible, and quality business distribution space for location sensitive tenants
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
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P.O. BOX 22728-JACKSON,MS 39225-TEL. 601-354-3555-FAX 601-352-1441
currently includes 19.5 million square feet with an additional 746,000 square
feet of properties under development. EastGroup Properties, Inc. press releases
are also available on the Company's website.
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, plans, 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, increases in real property tax rates and risks
relating to the Company's development program, including weather, delays in
construction schedules, contractor's failure to perform, increases in the price
of construction materials or the unavailability of such materials, difficulty in
obtaining necessary governmental approvals and other matters outside the
Company's control. The success of the Company also depends upon the trends of
the economy, including interest rates and the effects to the economy from
possible terrorism and related world events, 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
March 31,
----------------------------
2004 2003
----------------------------
REVENUES
Income from real estate operations $ 27,631 26,487
Other 32 356
----------------------------
27,663 26,843
----------------------------
EXPENSES
Operating expenses from real estate operations 7,672 7,960
Interest 4,919 4,698
Depreciation and amortization 8,263 7,687
General and administrative 1,676 1,239
Minority interest in joint ventures 121 99
----------------------------
22,651 21,683
----------------------------
INCOME FROM CONTINUING OPERATIONS 5,012 5,160
DISCONTINUED OPERATIONS
Loss from real estate operations - (2)
Gain on sale of real estate investments - 106
----------------------------
INCOME FROM DISCONTINUED OPERATIONS - 104
----------------------------
NET INCOME 5,012 5,264
Preferred dividends-Series A - 970
Preferred dividends-Series B - 1,532
Preferred dividends-Series D 656 -
----------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,356 2,762
============================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.16
Income from discontinued operations - 0.01
----------------------------
Net income available to common stockholders $ 0.21 0.17
============================
Weighted average shares outstanding 20,687 15,924
============================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.16
Income from discontinued operations - 0.01
----------------------------
Net income available to common stockholders $ 0.21 0.17
============================
Weighted average shares outstanding 21,114 16,282
============================
EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
------------------------------
2004 2003
------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 27,631 26,487
Operating expenses from real estate operations (7,672) (7,960)
------------------------------
PROPERTY NET OPERATING INCOME (PNOI) (A) 19,959 18,527
Other income 32 356
General and administrative expense (1,676) (1,239)
------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) 18,315 17,644
Loss from discontinued operations (before depreciation and amortization) - (2)
Interest expense (B) (4,919) (4,698)
Minority interest in earnings (before depreciation and amortization) (156) (139)
Dividends on Series A preferred shares - (970)
Dividends on Series D preferred shares (656) -
------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS (A) 12,584 11,835
Depreciation and amortization from continuing operations (8,263) (7,687)
Share of joint venture depreciation and amortization 35 40
Gain on sale of depreciable real estate investments - 106
Dividends on Series B convertible preferred shares - (1,532)
-----------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 4,356 2,762
Dividends on preferred shares 656 2,502
-----------------------------
NET INCOME $ 5,012 5,264
=============================
DILUTED PER COMMON SHARE DATA: (C)
Income from continuing operations $ 0.21 0.16
Income from discontinued operations 0.00 0.01
-----------------------------
Net income available to common stockholders $ 0.21 0.17
=============================
Weighted average shares outstanding 21,114 16,282
=============================
Funds from operations available to common stockholders $ 0.60 0.61
=============================
Weighted average shares outstanding for FFO purposes 21,114 19,464
=============================
(A) The Company's chief decision makers use two primary measures of operating
results in making decisions, such as allocating resources: 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' 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 $500,000 and $486,000 for the three months
ended March 31, 2004 and 2003, respectively.
(C) Assumes dilutive effect of common stock equivalents.