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 2007 RESULTS
o Funds from Operations of $17.1 Million or $.72 Per Share, an Increase of
1.4%; Excluding Land Sales, the Increase was 5.9%
o Net Income Available to Common Stockholders of $5.9 Million or $.25 Per
Share
o Same Property Net Operating Income Growth of 4.4%, 6.1% Before
Straight-Line Rent Adjustments
o $68 Million Invested in Acquisitions and Development During the Quarter
o 21 Development Projects with Projected Costs of $121 Million Under
Construction or In Lease-Up
o Percentage Leased 96.7%, Occupancy 96.1% - Highest Levels Since 2000
o Paid 109th Consecutive Quarterly Dividend - $.50 Per Share, an Increase of
2% Compared to the Previous Quarterly Dividend
o Debt-to-Total Market Capitalization of 29.4% at Quarter End
o Interest Coverage of 3.9x and Fixed Charge Coverage of 3.5x
JACKSON, MISSISSIPPI, April 24, 2007 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months ended March
31, 2007.
FUNDS FROM OPERATIONS
For the quarter ended March 31, 2007, funds from operations (FFO) was $.72 per
share compared with $.71 for the same period of 2006, an increase of 1.4% per
share; excluding land sales, the increase was 5.9% per share. The three months
ended March 31, 2006 included a $.03 per share gain on land sales.
The increase in FFO was mainly due to higher property net operating income
(PNOI) of $2,782,000 (a 12.0% increase in PNOI). This increase in PNOI was
primarily attributable to $1,067,000 from newly developed properties, $1,013,000
from same property growth, and $727,000 from 2006 and 2007 acquisitions.
PNOI from same properties increased 4.4% for the quarter; 6.1% before
straight-line rent adjustments. Rental rate increases on new and renewal leases
(5.3% of total square footage) averaged 11.4% for the quarter; 4.0% before
straight-line rent adjustments.
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 pleased with our
increased occupancy of 96.1% at March 31, 2007, which is the highest occupancy
level since the third quarter of 2000. In addition, we continue to experience
growth in FFO per share with the first quarter of 2007 representing our eleventh
consecutive quarter of increased FFO per share compared to the previous year's
quarter. It was also the fifteenth consecutive quarter of positive same property
results both with and without the straight-lining of rents, which illustrates
the ongoing strength of our property operations."
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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 $.25 for both
of the three month periods ended March 31, 2006 and 2007. The three months ended
March 31, 2006 included $.05 per share gain on the sale of real estate
investments compared to none in the same period of 2007.
DEVELOPMENT
During the first quarter, EastGroup transferred two development properties to
the portfolio: an 85,000 square foot building in Chandler, Arizona and a 61,000
square foot one in Tampa, Florida, with a combined investment of $9,079,000.
Both properties are 100% leased.
In March, the Company purchased Centennial Park Distribution Center in Denver,
Colorado for $4,100,000. The property was built in 1990, contains 68,000 square
feet and is located near Centennial Airport in southeast Denver. The business
distribution property is currently vacant, and EastGroup plans to redevelop it
as a multi-tenant facility.
Also, during the first quarter, EastGroup started construction on: Southridge
VII (92,000 square feet) in Orlando and three buildings at Wetmore II (158,000
square feet) in San Antonio with a combined projected investment (not including
Centennial) of $17.5 million.
At March 31, 2007, EastGroup had 21 development properties containing 1,623,000
square feet with a projected total cost of approximately $121 million either in
lease-up or under construction. These properties were collectively 37% leased at
March 31, 2007 and 38% at April 24, 2007.
EastGroup recently executed a ten-year lease for a 404,000 square foot
build-to-suit development in its Southridge Commerce Park in Orlando. The
projected cost of this development is approximately $20 million, and
construction is expected to begin in July 2007 with occupancy projected in the
second quarter of 2008. Including this build-to-suit, EastGroup will have 22
development properties containing over two million square feet with a projected
total cost of approximately $141 million either in lease-up or under
construction.
Mr. Hoster stated, "EastGroup's development program is the strongest it has ever
been in the history of EastGroup. This is a reflection of both the strong
leasing activity at our development properties and the vibrancy of our
development submarkets. Our development program has been and, we believe, will
continue to be a creator of shareholder value and a major contributor to our
future growth in FFO."
PROPERTY ACQUISITIONS
EastGroup's acquisition activity was robust in the first quarter with the
purchase of four operating properties for a total of $43.8 million. These
properties are located in three different cities and contain over 900,000 square
feet.
In January, the Company purchased North Stemmons III (60,000 square feet) in
Dallas for $2,850,000. North Stemmons III is located in an existing EastGroup
submarket in Dallas and will complement EastGroup's current presence there. The
building is 100% leased to a single customer.
Also in January, EastGroup continued its expansion into the Charlotte market and
acquired three additional business distribution buildings for a purchase price
of $9,300,000. Westinghouse Distribution Center, which was constructed in 1983,
contains 104,000 square feet and is 100% leased to three customers. Lindbergh
Business Park I and II, built in 2001 and 2003, have 77,000 square feet in two
buildings and are 69% leased to five customers. In total, the buildings are 87%
leased.
In March, EastGroup also acquired Nations Ford Business Park in Charlotte, North
Carolina for a purchase price of $21,125,000. Nations Ford consists of four
buildings containing a total of 456,000 square feet and was built in two phases
in 1988 and 1994. The multi-tenant complex is currently 100% leased to 15
customers.
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P.O.Box 22728-JACKSON,MS 39225-TEL.601-354-3555-FAX 601-352-1441
David H. Hoster II, President and CEO stated, "The acquisition of Nations Ford
Business Park is EastGroup's third multi-building purchase in Charlotte over the
past three months and increases our ownership there to 959,000 square feet. We
plan to continue pursuing both acquisition and potential development
opportunities as Charlotte's market conditions permit."
Also in March, EastGroup acquired four buildings in the Fairgrounds Business
Park in San Antonio for $10,550,000. The buildings, which were constructed in
1985 and 1986, contain a total of 231,000 square feet and are currently 80%
leased to six customers.
David H. Hoster II, President and CEO stated, "The acquisition of Fairgrounds
Business Park is EastGroup's fourth investment in San Antonio and increases our
ownership to 1,533,000 square feet including four properties under development.
Fairgrounds is in the northwest submarket of San Antonio and complements our
Alamo Downs Distribution Center (253,000 square feet, 100% leased) which is in
the same business park."
DIVIDENDS
EastGroup paid dividends of $.50 per share of common stock in the first quarter
of 2007, which was the 109th consecutive quarterly distribution to EastGroup's
common stockholders. This dividend represented an increase of 2% over the
previous quarter's distribution and made 2007 the fifteenth consecutive year of
dividend increases. The annualized dividend rate of $2.00 per share yields 3.9%
on the closing stock price of $50.86 on April 23, 2007.
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on April 16, 2007 to stockholders of record as of March 30,
2007.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 29.4% at March 31, 2007. For the quarter, the Company
had an interest coverage ratio of 3.9x and a fixed charge coverage ratio of
3.5x. Total debt at March 31, 2007 was $518.5 million with floating rate bank
debt comprising $104.3 million of that total.
OUTLOOK FOR 2007
FFO per share for 2007 is estimated to be in the range of $2.93 to $3.03.
Diluted EPS for 2007 is estimated to be in the range of $1.00 to $1.10. The
table below reconciles projected net income to projected FFO.
Low Range High Range
Q2 2007 Y/E 2007 Q2 2007 Y/E 2007
----------------------------------------------------
Net income $ 6,660 26,490 7,136 28,868
Dividends on preferred shares (656) (2,624) (656) (2,624)
----------------------------------------------------
Net income available to common stockholders 6,004 23,866 6,480 26,244
Depreciation and amortization 11,350 45,795 11,350 45,795
----------------------------------------------------
Funds from operations available to common stockholders $ 17,354 69,661 17,830 72,039
====================================================
Diluted shares 23,773 23,758 23,773 23,775
Per share data (diluted):
Net income available to common stockholders $ 0.25 1.00 0.27 1.10
Funds from operations available to common stockholders $ 0.73 2.93 0.75 3.03
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P.O.Box 22728-JACKSON,MS 39225-TEL.601-354-3555-FAX 601-352-1441
The following assumptions were used:
o Average occupancy of 94.0% to 96.5%.
o Same property NOI increase of 1% to 4%.
o Non-same property NOI:
- Development properties not transferred to the portfolio as of
January 1, 2006 contributing PNOI of $.36 per share.
- Dispositions of operating properties totaling $10 million over
the remainder of 2007.
- Additional operating property acquisitions of $15 million over
the remainder of 2007.
o No additional lease termination fees other than those recorded in first
quarter ($15,000).
o No sales of nondepreciable real estate.
o Floating rate bank debt at an average rate of 6%.
o New fixed rate debt of $50 million in August 2007 at 5.7%.
DEFINITIONS
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
available to common stockholders (FFO). EastGroup defines FFO consistent with
the National Association of Real Estate Investment Trusts' definition, as net
income (loss) computed in accordance with U.S. generally accepted accounting
principles (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. FFO as
defined by the Company refers to FFO available to common stockholders as it
excludes dividends on preferred stock.
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 Wednesday, April
25, 2007, at 11:00 A.M. Eastern Time. A live broadcast of the conference call is
available by dialing 1-800-895-1715 (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 on Wednesday, April 25, 2007. The telephone replay will be available
until Wednesday, May 2, 2007, and can be accessed by dialing 1-800-839-3740.
Also, 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 Wednesday, May 2, 2007.
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 an
emphasis in the states of Florida, Texas, Arizona and California. The Company's
goal is to maximize shareholder value by being the leading provider in its
markets 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 generally clustered near major transportation features in
supply-constrained submarkets. EastGroup's portfolio currently includes 23.1
million square feet with an additional 1,397,000 square feet of properties under
development. EastGroup Properties, Inc. press releases are also available on the
Company's website.
FORWARD-LOOKING STATEMENTS
The Company's assumptions and financial projections in this release are based
upon "forward-looking" information and are being made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are inherently subject to known and unknown risks and
uncertainties, many of which the Company cannot predict, including, without
limitation:
o changes in general economic conditions;
o the extent of tenant defaults or of any early lease terminations;
o the Company's ability to lease or re-lease space at current or anticipated
rents;
o changes in the supply of and demand for industrial/warehouse properties;
o increases in interest rate levels;
o increases in operating costs;
o the availability of financing;
o natural disasters and the Company's ability to obtain adequate insurance;
o changes in governmental regulation, tax rates and similar matters; and
o other risks associated with the development and acquisition of properties,
including risks that development projects may not be completed on schedule
or that development or operating costs may be greater than anticipated.
Although the Company believes that the expectations reflected in the
forward-looking statements are based upon reasonable assumptions at the time
made, the Company can give no assurance that such expectations will be achieved.
The Company assumes no obligation whatsoever to publicly update or revise any
forward-looking statements.
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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,
-----------------------------
2007 2006
-----------------------------
REVENUES
Income from real estate operations $ 36,086 32,178
Other income 25 19
-----------------------------
36,111 32,197
-----------------------------
EXPENSES
Expenses from real estate operations 10,084 8,958
Depreciation and amortization 11,195 10,321
General and administrative 2,029 1,808
-----------------------------
23,308 21,087
-----------------------------
OPERATING INCOME 12,803 11,110
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated investment 76 74
Interest income 22 22
Interest expense (6,171) (6,335)
Minority interest in joint ventures (150) (137)
-----------------------------
INCOME FROM CONTINUING OPERATIONS 6,580 4,734
-----------------------------
DISCONTINUED OPERATIONS
Income from real estate operations - 359
Gain on sale of real estate investments 7 1,068
-----------------------------
INCOME FROM DISCONTINUED OPERATIONS 7 1,427
-----------------------------
NET INCOME 6,587 6,161
Preferred dividends-Series D 656 656
-----------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 5,931 5,505
=============================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.25 0.19
Income from discontinued operations 0.00 0.06
-----------------------------
Net income available to common stockholders $ 0.25 0.25
=============================
Weighted average shares outstanding 23,531 21,881
=============================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.25 0.19
Income from discontinued operations 0.00 0.06
-----------------------------
Net income available to common stockholders $ 0.25 0.25
=============================
Weighted average shares outstanding 23,769 22,208
=============================
Dividends declared per common share $ 0.50 0.49
EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
-----------------------------
2007 2006
-----------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 36,086 32,178
Expenses from real estate operations (10,084) (8,958)
-----------------------------
PROPERTY NET OPERATING INCOME (PNOI) 26,002 23,220
Equity in earnings of unconsolidated investment
(before interest and depreciation) 197 196
Interest income 22 22
Other income 25 19
General and administrative expense (2,029) (1,808)
-----------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 24,217 21,649
Income from discontinued operations (before depreciation and amortization) - 645
Interest expense (1) (6,171) (6,335)
Interest expense from unconsolidated investment (88) (89)
Minority interest in earnings (before depreciation and amortization) (188) (174)
Gain on sale of nondepreciable real estate 7 649
Dividends on Series D preferred shares (656) (656)
-----------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS 17,121 15,689
Depreciation and amortization from continuing operations (11,195) (10,321)
Depreciation and amortization from discontinued operations - (286)
Depreciation from unconsolidated investment (33) (33)
Minority interest depreciation and amortization 38 37
Gain on sale of depreciable real estate investments - 419
-----------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 5,931 5,505
Dividends on preferred shares 656 656
-----------------------------
NET INCOME $ 6,587 6,161
=============================
DILUTED PER COMMON SHARE DATA: (2)
Income from continuing operations $ 0.25 0.19
Income from discontinued operations 0.00 0.06
-----------------------------
Net income available to common stockholders $ 0.25 0.25
=============================
Funds from operations available to common stockholders $ 0.72 0.71
=============================
Weighted average shares outstanding for EPS and FFO purposes 23,769 22,208
=============================
(1) Net of capitalized interest of $1,440,000 and $919,000 for the three months
ended March 31, 2007 and 2006, respectively.
(2) Assumes dilutive effect of common stock equivalents.