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
SECOND QUARTER 2004 RESULTS
o Net Income Available to Common Stockholders of $4.6 Million or $.22
Per Share
o Funds from Operations of $12.9 Million or $.61 Per Share
o Percentage Leased 92.6%, Occupancy 91.4%
o Same Property Growth of 1.4% on a Cash Basis and 2.5% Including
Straight-Line Rent Adjustments
o Paid 98th Consecutive Quarterly Dividend - $.48 Per Share - Twelfth
Consecutive Year of Dividend Growth
o Development Projects of $25.4 Million Under Construction or In
Lease-Up
o Debt-to-Total Market Capitalization of 32.5% at Quarter End
o Interest Coverage of 3.7x and Fixed Charge Coverage of 3.3x
JACKSON, MISSISSIPPI, July 19, 2004 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three and six months ended
June 30, 2004.
FUNDS FROM OPERATIONS
For the quarter ended June 30, 2004, funds from operations (FFO) available to
common stockholders was $.61 per share, which was the same as last year's second
quarter FFO per share. There were no gains on securities for the second quarter
of this year compared to $.005 per share in the same period of 2003.
For the six months ended June 30, 2004, FFO was $1.20 per share compared with
$1.21 per share in the first half of 2003. There were no gains on securities for
the first six months 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 1.4% for the quarter. PNOI from same properties including
straight-line rent adjustments increased 2.5%. Rental rate decreases on a cash
basis on new and renewal leases averaged 6.6% for the quarter. Rental rate
decreases including straight-line rent adjustments on new and renewal leases
averaged .4% for the quarter.
For the six months ended June 30, 2004, PNOI from same properties on a cash
basis increased 1.2%; including straight-line rent adjustments, the increase was
2.5%. Rental rate decreases on a cash basis on new and renewal leases averaged
8.2% for the six months; including straight-line rent adjustments, the decrease
was 1.5%.
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 second quarter results
represent the fourth consecutive quarter of improvement in same property
operations when compared to the previous year's quarter. This continuing
improvement is the result of increase in occupancy more than offsetting the
decrease in rental rates experienced with lease renewals and new leasing. Our
goal is to maintain this positive momentum for the foreseeable future.
"All of our markets are experiencing increased leasing interest and activity
from real prospects as compared to a year ago. To-date, this has not yet
translated into regaining significant pricing power, but we are experiencing a
slight improvement on rent roll-downs."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.22 for the
three months ended June 30, 2004 compared with $.20 for the same period in 2003.
For the six months, EPS was $.43 compared with $.38 for the same period of 2003.
DEVELOPMENT
The incremental growth of EastGroup's current development program and properties
transferred during 2004 and 2003 to the portfolio increased PNOI by $596,000 in
the second quarter of 2004. At June 30, 2004, EastGroup had six development
properties containing 458,000 square feet with a projected total cost of
approximately $25.4 million either in lease-up or under construction. Of this
total, approximately 33% of the space was leased as of July 19, 2004.
Five properties with total costs of $19,802,000 were transferred from
development to the portfolio during the second quarter:
Property Location Square Feet Total Costs
-----------------------------------------------------------------------------------------------------------
Executive Airport Commerce Ctr I & III Fort Lauderdale, FL 85,000 $ 6,136,000
Expressway Commerce Center Tampa, FL 103,000 6,265,000
World Houston 17 Houston, TX 66,000 2,318,000
World Houston 19 Houston, TX 66,000 2,789,000
World Houston 20 Houston, TX 62,000 2,294,000
---------------------------------
Total 382,000 $ 19,802,000
=================================
In May 2004, the Company began construction of World Houston 16 with projected
costs of $5,100,000. This 94,000 square foot property is located in EastGroup's
World Houston International Business Center development and, when completed,
will increase the Company's World Houston ownership to 1,425,000 square feet.
ACQUISITIONS AND SALES
In July 2004, the Company purchased Interstate Distribution Center IV (46,000
square feet) in Dallas, Texas for a price of $3,030,000. The multi-tenant
business distribution building was constructed in 2002 and is 100% leased to
nine tenants. The property is projected to generate an unleveraged yield of
approximately 9.3%.
At the end of June, EastGroup sold the Getwell Distribution Center (26,000
square feet) in Memphis, Tennessee for a price of $790,000, resulting in a gain
of approximately $61,000. Sample 95 Business Park III (18,000 square feet) in
Pompano Beach, Florida sold at the beginning of July for a price of $2,000,000,
generating a gain of approximately $1,280,000.
Mr. Hoster stated, "The purchase of Interstate Distribution Center IV is a good
complement to our Dallas portfolio and increases our cluster of assets in the
Walnut Hill/Stemmons Freeway submarket to seven properties with approximately
640,000 square feet. The sale of the Getwell Distribution Center reflects our
strategy of reducing our ownership in Memphis as market conditions permit. The
Sample 95 disposition represented an opportunity to recycle capital on a highly
favorable basis into an investment with greater anticipated upside."
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 32.5% at June 30, 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 June 30, 2004 was $356.5 million with floating rate bank
debt comprising $75.5 million of that total.
On May 17, 2004, the Company signed an application on a $30.3 million,
nonrecourse first mortgage loan secured by six properties. The note is expected
to close in September and will have a fixed interest rate of 5.68%, a ten-year
term, and an amortization schedule of 30 years. The proceeds of the note will be
used to reduce floating rate bank borrowings.
DIVIDENDS
EastGroup paid dividends of $.48 per share of common stock in the second quarter
of 2004, which was 79% of funds from operations per diluted share for the
quarter. This dividend was the 98th consecutive quarterly distribution to
EastGroup's common stockholders and represents an annualized dividend rate of
$1.92 per share, which yields 5.7% on the closing stock price of $33.62 on July
16, 2004. EastGroup also paid quarterly dividends of $.4969 per share on its
Series D Preferred Stock on July 15, 2004 to stockholders of record as of June
30, 2004.
OUTLOOK FOR REMAINDER OF 2004
FFO guidance for 2004 has been narrowed from our previous guidance on an FFO per
share basis with a range of $2.45 to $2.50. Earnings per share for 2004 should
be in the range of $.93 to $.97. The table below reconciles projected net income
to projected FFO for the third quarter and the year 2004.
Low Range High Range
3Qtr04 Y/E 2004 3Qtr04 Y/E 2004
-----------------------------------------------------
Net income $ 6,591 22,393 6,954 23,227
Dividends on preferred shares (656) (2,624) (656) (2,624)
-----------------------------------------------------
Net income available to common stockholders 5,935 19,769 6,298 20,603
Depreciation and amortization from continuing operations 8,565 33,543 8,622 33,657
Depreciation and amortization from discontinued operations - 45 - 45
Share of joint venture depreciation and amortization (36) (143) (36) (143)
Gain on sale of depreciable real estate (1,280) (1,340) (1,280) (1,340)
-----------------------------------------------------
Funds from operations available to common stockholders $ 13,184 51,874 13,604 52,822
=====================================================
Diluted shares for funds from operations and earnings per share 21,165 21,152 21,165 21,152
Per share data (diluted):
Net income available to common stockholders $ .28 .93 .30 .97
Funds from operations available to common stockholders .62 2.45 .64 2.50
The following assumptions were used for 2004:
o Average occupancy of 90% to 92%.
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 Gains on sale of depreciable real estate of $.06 per share (for
earnings per share only).
o No significant lease termination fees.
o Floating rate bank debt at 3%.
o New fixed rate debt of $30.3 million on September 15, 2004 at 5.68%.
o Dilution from November 2003 $25 million common stock offering of $.02
per share.
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 Tuesday, July 20,
2004, at 2:00 P.M. Eastern Daylight Time (EDT). A live broadcast of the
conference call is available by dialing 1-800-223-9488 (conference ID EastGroup)
or by webcast through a link on the Company's website at www.eastgroup.net. If
you are unable to listen to the live conference call, a telephone and webcast
replay will be available after 4:00 PM EDT on Tuesday, July 20, 2004. The
telephone replay will be available until 5:00 PM EDT on Tuesday, July 27, 2004,
and can be accessed by dialing 1-888-566-0194. The replay of the webcast can be
accessed through a link on the Company's website at www.eastgroup.net and will
be available until 5:00 PM EDT on Tuesday, July 27, 2004.
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 currently includes 19.9 million square feet with an
additional 513,000 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.
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------------
2004 2003 2004 2003
----------------------------------------------------
REVENUES
Income from real estate operations $ 28,034 26,382 55,517 52,736
Other 79 145 111 501
----------------------------------------------------
28,113 26,527 55,628 53,237
----------------------------------------------------
EXPENSES
Operating expenses from real estate operations 7,968 7,614 15,602 15,536
Interest 5,023 4,643 9,942 9,341
Depreciation and amortization 8,277 7,696 16,492 15,334
General and administrative 1,568 1,261 3,244 2,500
Minority interest in joint ventures 123 114 244 213
----------------------------------------------------
22,959 21,328 45,524 42,924
----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 5,154 5,199 10,104 10,313
DISCONTINUED OPERATIONS
Income from real estate operations 66 60 128 104
Gain on sale of real estate investments 61 - 61 106
----------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS 127 60 189 210
----------------------------------------------------
NET INCOME 5,281 5,259 10,293 10,523
Preferred dividends-Series A - 970 - 1,940
Preferred dividends-Series B - 766 - 2,298
Preferred dividends-Series D 656 - 1,312 -
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,625 3,523 8,981 6,285
====================================================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.21 0.42 0.37
Income from discontinued operations 0.01 0.00 0.01 0.01
----------------------------------------------------
Net income available to common stockholders $ 0.22 0.21 0.43 0.38
====================================================
Weighted average shares outstanding 20,745 16,864 20,716 16,397
====================================================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.20 0.42 0.37
Income from discontinued operations 0.01 0.00 0.01 0.01
----------------------------------------------------
Net income available to common stockholders $ 0.22 0.20 0.43 0.38
====================================================
Weighted average shares outstanding 21,161 17,225 21,128 16,758
====================================================
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,
----------------------------------------------------
2004 2003 2004 2003
----------------------------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 28,034 26,382 55,517 52,736
Operating expenses from real estate operations (7,968) (7,614) (15,602) (15,536)
----------------------------------------------------
PROPERTY NET OPERATING INCOME (PNOI) (A) 20,066 18,768 39,915 37,200
Other income 79 145 111 501
General and administrative expense (1,568) (1,261) (3,244) (2,500)
----------------------------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 18,577 17,652 36,782 35,201
Income from discontinued operations (before depreciation and amortization) 111 108 221 201
Interest expense (B) (5,023) (4,643) (9,942) (9,341)
Minority interest in earnings (before depreciation and amortization) (159) (150) (315) (289)
Dividends on Series A preferred shares - (970) - (1,940)
Dividends on Series D preferred shares (656) - (1,312) -
----------------------------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS (A) 12,850 11,997 25,434 23,832
Depreciation and amortization from continuing operations (8,277) (7,696) (16,492) (15,334)
Depreciation and amortization from discontinued operations (45) (48) (93) (97)
Share of joint venture depreciation and amortization 36 36 71 76
Gain on sale of depreciable real estate investments 61 - 61 106
Dividends on Series B convertible preferred shares - (766) - (2,298)
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 4,625 3,523 8,981 6,285
Dividends on preferred shares 656 1,736 1,312 4,238
----------------------------------------------------
NET INCOME $ 5,281 5,259 10,293 10,523
====================================================
DILUTED PER COMMON SHARE DATA: (C)
Income from continuing operations $ 0.21 0.20 0.42 0.37
Income from discontinued operations 0.01 0.00 0.01 0.01
----------------------------------------------------
Net income available to common stockholders $ 0.22 0.20 0.43 0.38
====================================================
Weighted average shares outstanding 21,161 17,225 21,128 16,758
====================================================
Funds from operations available to common stockholders $ 0.61 0.61 1.20 1.21
====================================================
Weighted average shares outstanding for FFO purposes 21,161 19,797 21,128 19,634
====================================================
(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 $410,000 and $516,000 for the three months
ended June 30, 2004 and 2003, respectively; and $910,000 and $1,002,000 for the
six months ended June 30, 2004 and 2003, respectively.
(C) Assumes dilutive effect of common stock equivalents.