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 2004 RESULTS
FOURTH QUARTER 2004 RESULTS
o Paid 100th Consecutive Quarterly Dividend - $.48 Per Share
o Net Income Available to Common Stockholders of $5.0 Million or $.23 Per
Share
o Funds from Operations of $13.6 Million or $.64 Per Share, an Increase of
3.2%
o Percentage Leased Increased to 94.4%, Occupancy Increased to 93.2%
o Same Property Net Operating Income Growth of 6.9% and Before Straight-Line
Rent Adjustments 8.4%
o $16 Million Invested in Acquisitions and Development Program
YEAR 2004 RESULTS
o Total Shareholder Return of 25% for 2004 and Average Annual Total Returns
of 26% for 3 Years, 24% for 5 Years and 22% for 10 Years
o Net Income Available to Common Stockholders of $20.7 Million or $.98 Per
Share
o Funds from Operations of $52.6 Million or $2.49 Per Share, an Increase of
5.5%
o Same Property Net Operating Income Growth of 3.5% and Before Straight-Line
Rent Adjustments 3.6%
o Paid Annual Dividends of $1.92 Per Share - Twelfth Consecutive Year of
Dividend Growth With Average Annual Increase of 5.6%
o $48 Million Invested in Acquisitions and Development Program During the
Year
o Development Projects of $29.7 Million Under Construction or In Lease-Up at
Year End
o Debt-to-Total Market Capitalization of 31.7% at Year End
o Interest Coverage of 3.7x and Fixed Charge Coverage of 3.3x
JACKSON, MISSISSIPPI, February 15, 2005 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months and year
ended December 31, 2004.
FUNDS FROM OPERATIONS
For the quarter ended December 31, 2004, funds from operations (FFO) available
to common stockholders was $.64 per share compared with $.62 for the same period
of 2003, an increase of 3.2% per share.
For the year ended December 31, 2004, FFO was $2.49 per share compared with
$2.36 per share for 2003, an increase of 5.5% per share. FFO per share for 2003
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. In
addition, there were no gains on securities in 2004 compared with $.02 per share
in 2003.
Property net operating income (PNOI) from same properties increased 6.9% for the
fourth quarter and 3.5% for the year. Before straight-line rent adjustments, the
increase was 8.4% for the quarter and 3.6% for the year. Rental
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
rate increases on new and renewal leases averaged 1.0% for the quarter; the
year-to-year results were essentially unchanged. Before straight-line rent
adjustments, rental rate decreases on new and renewal leases averaged 3.6% for
the quarter and 5.8% 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, "We are especially pleased with
our continuing growth in same property operating results. The fourth quarter was
our sixth consecutive quarter of positive same property comparisons. We see this
operating track record as a strong confirmation that our strategy is working.
"In addition, we are maintaining our track record of creating value for our
shareholders over both the short- and long-term. Total shareholder returns for
one, three, five and ten year periods all average above 20% per year."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.23 for the
three months ended December 31, 2004 compared with $.20 for the same period of
2003. Diluted EPS for 2004 was $.98 compared with $.70 for 2003. The current
year included a $.07 per share gain on sale of real estate properties ($.01 in
2003). The year 2003 included a $.10 per share reduction of EPS due to the
write-off of the original issuance costs on the Series A Preferred Stock
redemption and a $.02 per share gain on securities.
DEVELOPMENT
The incremental growth of EastGroup's current development program and properties
transferred during 2004 and 2003 to the portfolio increased PNOI by $550,000 in
the fourth quarter of 2004 and $1,989,000 for the year. At December 31, 2004,
EastGroup had seven development properties containing 467,000 square feet with a
projected total cost of approximately $29.7 million either in lease-up or under
construction. These properties were collectively 30% leased at December 31,
2004. Two of the properties in lease-up at December 31, 2004 transferred to the
portfolio in January 2005. These properties are both 100% leased.
In December 2004, the Company purchased 7.05 acres of land for future
development in Phoenix, Arizona for a price of $691,000. This site is projected
to accommodate a 90,000 square foot warehouse distribution center with an
estimated cost of approximately $4,500,000.
In January 2005, EastGroup purchased 32 acres adjacent to its Southridge
development in Orlando for $1,900,000. It will increase the eventual build-out
of Southridge by 275,000 square feet to a total of over one million square feet.
In February, the Company acquired 65.8 acres in Tampa for $4,739,000. It
represents all the remaining undeveloped industrial land in the Oak Creek Park
in which EastGroup currently owns two buildings.
No properties transferred from development to the operating portfolio during the
fourth quarter of 2004. Seven properties with total costs at transfer of
$27,367,000 were added to the portfolio during the year.
FOURTH QUARTER 2004 ACQUISITIONS AND SALES
In November 2004, the Company acquired a 50% undivided tenant-in-common interest
in Industry Distribution Center II, a 309,000 square foot warehouse distribution
building in the City of Industry (Los Angeles), California for a price of
$9,040,000. The building was constructed in 1998 and is 100% leased for ten
years to a single tenant who owns the other 50% interest in the property. The
acquisition is projected to generate an unleveraged cash yield of approximately
8.3%.
Mr. Hoster stated, "The purchase of Industry Distribution Center II enhances our
cluster in the City of Industry to three buildings totaling 956,000 square feet
and increases our ownership position in the Los Angeles market to 2.1 million
square feet. The Los Angeles market is one of the healthiest industrial markets
for EastGroup and the nation. We are pleased to increase our holdings there with
such a high quality asset."
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
This investment is accounted for under the equity method of accounting and had a
carrying value of $9.256 million at December 31, 2004.
In connection with the closing of this property, EastGroup advanced a total of
$7.55 million in two separate notes to its co-owner, one for $6.75 million and
one for $800,000. The Company and its co-owner are currently in the process of
obtaining permanent financing. Expected proceeds from the permanent financing
will be used to repay the $6.75 million note. The principal amount of the
$800,000 note will be repaid in three equal annual installments beginning in
November of 2005. The interest rate on the $6.75 million is 6% and the interest
rate on the $800,000 note is 9%. Interest is paid monthly on both notes.
In October 2004, the Company sold a parcel of land in Tampa, Florida for
$422,000, generating a small gain.
2005 TRANSACTIONS
In January 2005, EastGroup acquired Arion Business Park in San Antonio, Texas
for a purchase price of $40,000,000. As part of the acquisition price, EastGroup
assumed the outstanding first mortgage balance of $20,500,000. This interest
only, nonrecourse mortgage has a fixed rate of 5.99% and matures in December
2006.
Arion is a master-planned business park containing 524,000 square feet in 14
industrial buildings and 15.5 acres of land for the future development of
approximately another 170,000 square feet. The buildings were constructed
between 1988 and 2000 and are currently 91.2% leased to 25 tenants. The
acquisition is projected to generate an unleveraged cash return of 8.3% at
stabilized occupancy of 95%.
Arion is well located one block north of San Antonio International Airport with
easy access to both US Highway 281 and Interstate Loop 410. This acquisition
increases EastGroup's ownership to 777,000 square feet in San Antonio, a market
in which the Company entered in August 2004.
Mr. Hoster stated, "Arion Business Park is an excellent strategic fit--highly
functional and flexible distribution buildings clustered near major
transportation features in an in-fill location. It offers a good mix of
different size spaces in modern buildings in a quality park environment."
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 31.7% at December 31, 2004. For the year, the Company
had an interest coverage ratio of 3.7x and a fixed charge coverage ratio of
3.3x. Total debt at December 31, 2004 was $390.1 million with floating rate bank
debt comprising $86.4 million of that total.
In December 2004, EastGroup renewed its three-year, $175 million unsecured
revolving credit facility with a group of nine banks which was arranged by PNC
Capital Markets, Inc. The interest rate on the facility is based on the LIBOR
index and varies according to debt-to-total asset value ratios, with an annual
facility fee of 20 basis points.
EastGroup's current interest rate is LIBOR plus .95%. The line of credit, which
matures in January 2008, can be expanded by $100 million and has a one-year
extension at EastGroup's option.
Mr. Hoster commented, "We are pleased with the quality and depth of the bank
group and by the level of loan commitments, which resulted in the facility being
significantly oversubscribed. We improved the facility's interest spread by 10
basis points as well as many other terms from our previous credit line."
DIVIDENDS
EastGroup paid dividends of $.48 per share of common stock in the fourth quarter
of 2004, which was 75% of FFO per share for the quarter. This dividend was the
100th consecutive quarterly distribution to EastGroup's common stockholders and
represents an annualized dividend rate of $1.92 per share, which yields 5.0% on
the closing stock price of $38.43 on February 14, 2005.
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
Mr. Hoster stated, "A major goal of EastGroup is to provide a consistent,
increasing dividend as part of the total return to our shareholders. In addition
to the 100 consecutive quarterly dividends, EastGroup has paid dividends in 34
of the 35 years of its existence, and we have increased the dividend in the last
12 years with an annual average increase of 5.6%. EastGroup is one of only 14
real estate investment trusts that have increased dividends annually for at
least 10 consecutive years. In paying its 100th consecutive quarterly dividend,
EastGroup also joins a select group of less than 6% of the existing public REITs
that have attained that milestone."
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on January 15, 2005 to stockholders of record as of December 30,
2004.
OUTLOOK FOR 2005
FFO per share for 2005 is estimated to be in the range of $2.59 to $2.71, an
increase from the Company's previously reported guidance. Earnings per share for
2005 should be in the range of $.86 to $.98. The table below reconciles
projected net income to projected FFO.
Low Range High Range
Q1 2005 Y/E 2005 Q1 2005 Y/E 2005
-----------------------------------------------------
Net income $ 4,933 20,761 5,353 23,287
Dividends on preferred shares (656) (2,624) (656) (2,624)
-----------------------------------------------------
Net income available to common stockholders 4,277 18,137 4,697 20,663
Depreciation and amortization 9,125 37,081 9,125 37,081
Share of joint venture depreciation and amortization (36) (140) (36) (140)
Gain on sale of depreciable real estate (340) (340) (340) (340)
-----------------------------------------------------
Funds from operations available to common stockholders $ 13,026 54,738 13,446 57,264
=====================================================
Diluted shares 21,158 21,166 21,158 21,166
Per share data (diluted):
Net income available to common stockholders $ 0.20 0.86 0.22 0.98
Funds from operations available to common stockholders $ 0.62 2.59 0.64 2.71
The following assumptions were used for 2005:
o Average occupancy of 90% to 92%.
o Same Store PNOI increase of 1.2% to 4.4%.
o Existing development contributing $.14 per share in PNOI.
o Acquisitions, net of dispositions, of $25-30 million during the year.
o No lease termination fees.
o Floating rate bank debt at an average rate of 4.0%.
o New fixed rate debt of $50 million on July 1, 2005 at 6%.
CONFERENCE CALL
EastGroup will host a conference call and webcast to discuss the results of its
fourth quarter and review the Company's current operations on Wednesday,
February 16, 2005, at 1:00 P.M. Eastern Standard Time (EST). A live broadcast of
the conference call is available by dialing 1-800-362-0571 (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 EST on Wednesday,
February 16, 2005. The telephone replay will be available until 5:00 PM EST on
Wednesday, February 23, 2005, and can be accessed by dialing 1-800-839-6136. 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 EST on Wednesday, February
23, 2005.
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.
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
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 a special
emphasis in the states of Florida, Texas, California and Arizona. 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 21.1 million square feet with an
additional 439,000 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 Twelve Months Ended
December 31, December 31,
----------------------------------------------------
2004 2003 2004 2003
----------------------------------------------------
REVENUES
Income from real estate operations $ 29,590 27,239 114,051 106,925
Gain on involuntary conversion - - 154 -
Gain on securities - 32 - 421
Equity in earnings of unconsolidated investment 69 - 69 -
Other 179 72 410 249
----------------------------------------------------
29,838 27,343 114,684 107,595
----------------------------------------------------
EXPENSES
Operating expenses from real estate operations 8,323 7,908 32,142 31,429
Interest 5,424 4,878 20,481 19,015
Depreciation and amortization 8,602 8,561 33,288 31,774
General and administrative 1,781 1,220 6,711 4,966
Minority interest in joint venture 124 96 490 416
----------------------------------------------------
24,254 22,663 93,112 87,600
----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 5,584 4,680 21,572 19,995
DISCONTINUED OPERATIONS
Income from real estate operations 40 79 304 338
Gain on sale of real estate investments 1 - 1,451 112
----------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS 41 79 1,755 450
----------------------------------------------------
NET INCOME 5,625 4,759 23,327 20,445
Preferred dividends-Series A - - - 2,016
Preferred dividends-Series B - - - 2,598
Preferred dividends-Series D 656 656 2,624 1,305
Costs on redemption of Series A preferred - - - 1,778
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,969 4,103 20,703 12,748
====================================================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.24 0.21 0.91 0.69
Income from discontinued operations 0.00 0.00 0.09 0.03
----------------------------------------------------
Net income available to common stockholders $ 0.24 0.21 1.00 0.72
====================================================
Weighted average shares outstanding 20,845 19,986 20,771 17,819
====================================================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.23 0.20 0.90 0.68
Income from discontinued operations 0.00 0.00 0.08 0.02
----------------------------------------------------
Net income available to common stockholders $ 0.23 0.20 0.98 0.70
====================================================
Weighted average shares outstanding 21,157 20,608 21,088 18,194
====================================================
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,
----------------------------------------------------
2004 2003 2004 2003
----------------------------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 29,590 27,239 114,051 106,925
Operating expenses from real estate operations (8,323) (7,908) (32,142) (31,429)
----------------------------------------------------
PROPERTY NET OPERATING INCOME (PNOI) (A) 21,267 19,331 81,909 75,496
Gain on involuntary conversion - - 154 -
Gain on securities - 32 - 421
Equity in earnings of unconsolidated investment (before depreciation) 84 - 84 -
Other income 179 72 410 249
General and administrative expense (1,781) (1,220) (6,711) (4,966)
----------------------------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 19,749 18,215 75,846 71,200
Income from discontinued operations (before depreciation and amortization) 58 159 467 614
Interest expense (B) (5,424) (4,878) (20,481) (19,015)
Minority interest in earnings (before depreciation and amortization) (160) (131) (633) (561)
Gain on sale of nondepreciable real estate 1 - 1 6
Dividends on Series A preferred shares - - - (2,016)
Dividends on Series D preferred shares (656) (656) (2,624) (1,305)
Costs on redemption of Series A preferred - - - (1,778)
----------------------------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS (A) 13,568 12,709 52,576 47,145
Depreciation and amortization from continuing operations (8,602) (8,561) (33,288) (31,774)
Depreciation and amortization from discontinued operations (18) (80) (163) (276)
Depreciation from unconsolidated investment (15) - (15) -
Share of joint venture depreciation and amortization 36 35 143 145
Gain on sale of depreciable real estate investments - - 1,450 106
Dividends on Series B convertible preferred shares - - - (2,598)
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 4,969 4,103 20,703 12,748
Dividends on preferred shares 656 656 2,624 5,919
Costs on redemption of Series A preferred - - - 1,778
----------------------------------------------------
NET INCOME $ 5,625 4,759 23,327 20,445
====================================================
DILUTED PER COMMON SHARE DATA: (C)
Income from continuing operations $ 0.23 0.20 0.90 0.68
Income from discontinued operations 0.00 0.00 0.08 0.02
----------------------------------------------------
Net income available to common stockholders $ 0.23 0.20 0.98 0.70
====================================================
Weighted average shares outstanding 21,157 20,608 21,088 18,194
====================================================
Funds from operations available to common stockholders $ 0.64 0.62 2.49 2.36
====================================================
Weighted average shares outstanding for FFO purposes 21,157 20,608 21,088 20,008
====================================================
(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 $440,000 and $557,000 for the three months
ended December 31, 2004 and 2003, respectively; and $1,715,000 and $2,077,000
for the twelve months ended December 31, 2004 and 2003, respectively.
(C) Assumes dilutive effect of common stock equivalents.