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 2005 RESULTS
o Invested $64 Million in Acquisitions and Development
o Completed $29.4 Million Common Stock Offering
o Net Income Available to Common Stockholders of $4.9 Million or $.23 Per
Share
o Funds from Operations of $13.6 Million or $.64 Per Share, an Increase of
6.7%
o Percentage Leased 92.9%, Occupancy 91.2%
o Same Property Net Operating Income Growth of 3.7%
o Paid 101st Consecutive Quarterly Dividend - $.485 Per Share - Thirteenth
Consecutive Year of Dividend Growth
o Development Projects of $36.1 Million Under Construction or In Lease-Up
o Debt-to-Total Market Capitalization of 32.9% at Quarter End
o Interest Coverage of 3.4x and Fixed Charge Coverage of 3.1x
JACKSON, MISSISSIPPI, April 25, 2005 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months ended March
31, 2005.
FUNDS FROM OPERATIONS
For the quarter ended March 31, 2005, funds from operations (FFO) available to
common stockholders was $.64 per share compared with $.60 per share for the same
period of 2004, an increase of 6.7%. The increase in FFO for 2005 was primarily
due to higher property net operating income (PNOI) of $2,037,000 (a 10.3%
increase in PNOI). The increase in PNOI resulted from $1,011,000 attributable to
2004 and 2005 acquisitions, $298,000 from newly developed properties and
$728,000 from internal growth.
PNOI from same properties increased 3.7% for the quarter. Before straight-line
rent adjustments, the increase was 7.0%. Rental rate increases on new and
renewal leases averaged 1.8% for the quarter. Before straight-line rent
adjustments, rental rate decreases on new and renewal leases averaged 1.9%.
FFO and PNOI are non-GAAP financial measures, which are defined under
Definitions later in this release. Reconciliations of FFO and PNOI to Net
Income, the most directly comparable GAAP financial measure, are presented in
the attached schedule "Reconciliations of Other Reporting Measures to Net
Income."
David H. Hoster II, President and CEO, stated, "We are especially pleased with
our continuing growth in property operating results with the first quarter of
2005 being our seventh consecutive quarter of positive same property
comparisons. We see this operating track record as a strong confirmation that
our strategy is working."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.23 for the
three months ended March 31, 2005 compared with $.21 for the first quarter of
2004.
DEVELOPMENT
EastGroup's current development program and properties transferred during 2005
and 2004 to the portfolio increased PNOI by $298,000 in the first quarter of
2005. At March 31, 2005, EastGroup had eight development properties containing
584,000 square feet with a projected total cost of approximately $36.1 million
either in lease-up or under construction.
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
In January 2005, EastGroup transferred two development properties, both 100%
leased, to the portfolio: Santan 10 (65,000 square feet) in Chandler (Phoenix),
Arizona and Sunport Center V (63,000 square feet) in Orlando.
Also, in January 2005, EastGroup purchased 32.2 acres adjacent to its Southridge
development in Orlando for $1.9 million, which will increase the eventual
build-out of Southridge by approximately 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 million, which represents all the remaining undeveloped industrial
land in Oak Creek Business Park in which EastGroup currently owns two buildings.
Mr. Hoster stated, "We are expanding our development program in response to good
leasing activity at our development properties and an overall firming of our
development markets."
FIRST QUARTER ACQUISITIONS AND SALES
In January 2005, EastGroup acquired Arion Business Park in San Antonio, Texas
for a purchase price of $40 million. As part of the acquisition price, EastGroup
assumed the outstanding first mortgage balance of $20.5 million. This interest
only, nonrecourse mortgage has a fixed rate of 5.99% and matures in December
2006. For GAAP purposes, the Company adjusted the interest rate to a fair market
rate of 4.45%.
Arion is a master-planned business park containing 524,000 square feet in 14
existing 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 customers. The
acquisition is projected to generate an unleveraged cash return of 8.3% at
stabilized occupancy of 95%.
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."
In March 2005, EastGroup acquired Interstate Distribution Center in
Jacksonville, Florida for a purchase price of $7.9 million. Interstate contains
181,000 square feet in two multi-tenant business distribution buildings. Built
in 1990, the property is 100% leased to seven customers. Interstate is projected
to generate an unleveraged cash return of 9.3% at 100% occupancy.
As part of the acquisition price, EastGroup assumed the outstanding first
mortgage balance of $4.7 million. This nonrecourse mortgage has a fixed interest
rate of 6.91% and matures in 2013. For GAAP purposes, the Company adjusted the
interest rate to a fair market rate of 5.64%.
Mr. Hoster stated, "Interstate Distribution is strategically located along I-95
approximately one-quarter mile from our Lake Pointe Distribution Center in
Jacksonville's Southside submarket. This acquisition increases our cluster of
assets in this submarket to 890,000 square feet and our ownership in
Jacksonville to 1,765,000 square feet."
In February 2005, the Company sold Delp Distribution Center II (102,000 square
feet) in Memphis, Tennessee for $2.2 million and generated a gain of $377,000.
The sale of Delp II reflects the Company's strategy of reducing ownership in
Memphis, a noncore market, as market conditions permit.
CAPITAL TRANSACTIONS
On March 31, 2005, EastGroup closed the sale of 800,000 shares of its common
stock to Citigroup Global Markets Inc. The net proceeds from the offering of the
shares were approximately $29.4 million after deducting the underwriting
discount and other offering expenses. The Company intends to use the net
proceeds from this offering for general corporate purposes, including possible
acquisition or development of industrial properties and repayment of fixed rate
debt maturing in 2005. Pending such transactions, the Company used the proceeds
to reduce its outstanding variable rate debt.
EastGroup has signed an application for a nonrecourse first mortgage loan
secured by Industry Distribution Center II in Los Angeles. The Company has a 50%
undivided tenant-in-common interest in the 309,000 square foot warehouse. The
$13.3 million loan is expected to close at the end of May and will have a fixed
interest rate of 5.31%, a ten-year term and an amortization schedule of 25
years. As part of this transaction, the expected loan proceeds payable to the
co-owner ($6.65 million) will be paid to EastGroup to reduce the $6.75 million
note that EastGroup advanced to the co-owner in November 2004 as part of the
acquisition. Accordingly, the total proceeds of $13.3 million will be paid to
EastGroup and will be used to reduce EastGroup's outstanding variable rate bank
debt.
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 32.9% at March 31, 2005. For the quarter, the Company
had an interest coverage ratio of 3.4x and a fixed charge coverage ratio of
3.1x. Total debt at March 31, 2005 was $420.9 million with floating rate bank
debt comprising $95.5 million of that total.
DIVIDENDS
EastGroup paid dividends of $.485 per share of common stock in the first quarter
of 2005, which was the 101st consecutive quarterly distribution to EastGroup's
common stockholders. This dividend represented an increase of 1% over the
previous quarter's distribution and made 2005 the thirteenth consecutive year of
dividend increases. The annualized dividend rate of $1.94 per share yields 5.3%
on the closing stock price of $36.40 on April 22, 2005.
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on April 15, 2005 to stockholders of record as of March 31,
2005.
OUTLOOK FOR 2005
FFO guidance for 2005 has been narrowed from our previous guidance on an FFO per
share basis to a range of $2.59 to $2.69. Earnings per share for 2005 should be
in the range of $.95 to $1.00. The table below reconciles projected net income
to projected FFO.
Low Range High Range
Q2 2005 Y/E 2005 Q2 2005 Y/E 2005
------------------------------------------------------
Net income $ 5,068 23,397 5,508 24,377
Dividends on preferred shares (656) (2,624) (656) (2,624)
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Net income available to common stockholders 4,412 20,773 4,852 21,753
Depreciation and amortization 9,310 37,182 9,310 37,182
Gain on sale of depreciable real estate - (1,577) - (377)
------------------------------------------------------
Funds from operations available to common stockholders $ 13,722 56,378 14,162 58,558
======================================================
Diluted shares 22,011 21,804 22,011 21,804
Per share data (diluted):
Net income available to common stockholders $ 0.20 0.95 0.22 1.00
Funds from operations available to common stockholders $ 0.62 2.59 0.64 2.69
The following assumptions and completed transactions were used for 2005:
o Average occupancy of 90% to 92.5%.
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. For
the low range, gains on sale of depreciable real estate of $1.2 million in
remaining nine months in addition to $377,000 recorded in the first
quarter.
o Lease termination fees of $168,000 recorded in the first quarter.
o Floating rate bank debt at an average rate of 4.0%.
o New fixed rate debt of $25 million on July 1, 2005 at 6%.
o Common stock offering of $29.4 million completed March 31, 2005.
DEFINITIONS
The Company's chief decision makers use two primary measures of operating
results in making decisions: property net operating income, defined as income
from real estate operations less property operating expenses (before interest
expense and depreciation and amortization), and funds from operations. 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
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P.O. BOX 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
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 provides
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.
CONFERENCE CALL
EastGroup will host a conference call and webcast to discuss the results of its
first quarter and review the Company's current operations on Tuesday, April 26,
2005, at 11:00 A.M. Eastern Daylight Time (EDT). A live broadcast of the
conference call is available by dialing 1-800-362-0574 (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 replay will be available until Tuesday, May 3, 2005, and can be
accessed by dialing 1-800-839-4013. 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 Tuesday, May 3, 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.
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 the leading provider of
functional, flexible, and quality business distribution space for location
sensitive customers 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 clustered near major transportation features in supply-constrained
submarkets. EastGroup's portfolio currently includes 21.2 million square feet
with an additional 584,000 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,
---------------------------------
2005 2004
---------------------------------
REVENUES
Income from real estate operations $ 30,298 27,416
Equity in earnings of unconsolidated investment 162 -
Mortgage interest income 119 -
Other 75 32
---------------------------------
30,654 27,448
---------------------------------
EXPENSES
Operating expenses from real estate operations 8,461 7,616
Interest 5,970 4,919
Depreciation and amortization 9,070 8,198
General and administrative 1,898 1,676
Minority interest in joint venture 129 121
---------------------------------
25,528 22,530
---------------------------------
INCOME FROM CONTINUING OPERATIONS 5,126 4,918
DISCONTINUED OPERATIONS
Income from real estate operations 33 94
Gain on sale of real estate investments 377 -
---------------------------------
INCOME FROM DISCONTINUED OPERATIONS 410 94
---------------------------------
NET INCOME 5,536 5,012
Preferred dividends-Series D 656 656
---------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,880 4,356
=================================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.21
Income from discontinued operations 0.02 -
---------------------------------
Net income available to common stockholders $ 0.23 0.21
=================================
Weighted average shares outstanding 20,891 20,687
=================================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.21 0.20
Income from discontinued operations 0.02 0.01
---------------------------------
Net income available to common stockholders $ 0.23 0.21
=================================
Weighted average shares outstanding 21,196 21,114
=================================
Dividends declared per common share $ 0.485 0.480
EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
---------------------------------
2005 2004
---------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 30,298 27,416
Operating expenses from real estate operations (8,461) (7,616)
---------------------------------
PROPERTY NET OPERATING INCOME (PNOI) 21,837 19,800
Equity in earnings of unconsolidated investment (before depreciation) 199 -
Mortgage interest income 119 -
Other income 75 32
General and administrative expense (1,898) (1,676)
---------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 20,332 18,156
Income from discontinued operations (before depreciation and amortization) 34 159
Interest expense (A) (5,970) (4,919)
Minority interest in earnings (before depreciation and amortization) (164) (156)
Dividends on Series D preferred shares (656) (656)
---------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS 13,576 12,584
Depreciation and amortization from continuing operations (9,070) (8,198)
Depreciation and amortization from discontinued operations (1) (65)
Depreciation from unconsolidated investment (37) -
Share of joint venture depreciation and amortization 35 35
Gain on sale of depreciable real estate investments 377 -
---------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 4,880 4,356
Dividends on preferred shares 656 656
---------------------------------
NET INCOME $ 5,536 5,012
=================================
DILUTED PER COMMON SHARE DATA: (B)
Income from continuing operations $ 0.21 0.20
Income from discontinued operations 0.02 0.01
---------------------------------
Net income available to common stockholders $ 0.23 0.21
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Weighted average shares outstanding 21,196 21,114
=================================
Funds from operations available to common stockholders $ 0.64 0.60
=================================
Weighted average shares outstanding for FFO purposes 21,196 21,114
=================================
(A) Net of capitalized interest of $501,000 and $500,000 for the three months
ended March 31, 2005 and 2004, respectively.
(B) Assumes dilutive effect of common stock equivalents.