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 2007 RESULTS
o Funds from Operations of $17.5 Million or $.74 Per Share, an Increase of
7.2%
o Net Income Available to Common Stockholders of $5.5 Million or $.23 Per
Share
o Same Property Net Operating Income Growth of 3.5%, 5.2% Before
Straight-Line Rent Adjustments
o $30 Million Invested in Acquisitions and Development
o 17 Development Projects with Projected Costs of $132 Million Under
Construction or In Lease-Up
o $35 Million of Development Transferred to the Portfolio; Currently 98.5%
Leased
o Percentage Leased 97.6% - Highest Level Since 2000, Occupancy of 95.6%
o Paid 110th Consecutive Quarterly Dividend - $.50 Per Share
o Debt-to-Total Market Capitalization of 33.6% at Quarter End with a Stock
Price of $43.82 Per Share
o Interest Coverage of 3.6x and Fixed Charge Coverage of 3.3x
JACKSON, MISSISSIPPI, July 24, 2007 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three and six months ended
June 30, 2007.
FUNDS FROM OPERATIONS
For the quarter ended June 30, 2007, funds from operations (FFO) was $.74 per
share compared with $.69 for the same period of 2006, an increase of 7.2% per
share. The increase in FFO was mainly due to higher property net operating
income (PNOI) of $3,380,000 (a 14.4% increase in PNOI). This increase in PNOI
was primarily attributable to $1,325,000 from newly developed properties,
$1,287,000 from 2006 and 2007 acquisitions and $818,000 from same property
growth.
For the six months ended June 30, 2007, FFO was $1.46 per share compared with
$1.39 for the same period of 2006, an increase of 5.0% per share; excluding land
sales, the increase was 7.4% per share. The six months ended June 30, 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 $6,162,000 (a 13.2% increase
in PNOI). This increase in PNOI was primarily attributable to $2,421,000 from
newly developed properties, $2,014,000 from 2006 and 2007 acquisitions and
$1,802,000 from same property growth.
PNOI from same properties increased 3.5% for the quarter; 5.2% before
straight-line rent adjustments. Rental rate increases on new and renewal leases
(6.5% of total square footage) averaged 10.3% for the quarter; 3.2% before
straight-line rent adjustments.
For the six months ended June 30, 2007, PNOI from same properties increased
3.9%; 5.3% before straight-line rent adjustments. Rental rate increases on new
and renewal leases (11.6% of total square footage) averaged 10.8% for the six
months; 3.5% before straight-line rent adjustments.
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P. O. Box 22728 - JACKSON, MS 39225 - TEL . 601-354-3555 - FAX 601-352-1441
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 percentage leased of 97.6% at June 30, 2007, which is the highest
level since the third quarter of 2000. Occupancy was 95.6% at June 30, 2007
compared to 94.0% at June 30, 2006. In addition, we continue to experience
growth in FFO per share with the second quarter of 2007 representing our twelfth
consecutive quarter of increased FFO per share compared to the previous year's
quarter. It was also the sixteenth 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."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.23 for the
three-month period ended June 30, 2007 compared with $.22 for the same period of
2006. Diluted EPS was $.48 for the six-month period in 2007 compared to $.47 in
2006. The six months ended June 30, 2006 included $.05 per share gain on the
sale of real estate investments compared to none in the same period of 2007.
DEVELOPMENT
Since the beginning of 2007, EastGroup has transferred nine development
properties to the portfolio as detailed below:
Percent Projected
Real Estate Properties Transferred Date Leased Stabilized
from Development in 2007 Size Transferred Cost at 7/24/07 Yield (1)
- --------------------------------------------------------------------------------------------------------------------------------
(Square feet) (In thousands)
Santan 10 II, Chandler, AZ............... 85,000 01/01/07 $ 5,523 100% 9.4%
Oak Creek III, Tampa, FL................. 61,000 03/23/07 3,591 100% 9.3%
Southridge VI, Orlando, FL............... 81,000 04/01/07 5,326 100% 9.7%
Arion 16, San Antonio, TX................ 64,000 04/20/07 3,896 100% 10.2%
Southridge III, Orlando, FL.............. 81,000 04/20/07 5,362 100% 9.9%
Southridge II, Orlando, FL............... 41,000 05/01/07 4,239 100% 10.5%
World Houston 15, Houston, TX............ 63,000 05/01/07 5,482 88% 10.0%
World Houston 23, Houston, TX............ 125,000 05/01/07 7,836 100% 10.3%
Arion 17, San Antonio, TX................ 40,000 06/01/07 3,196 100% 10.2%
----------- ----------
Total Developments Transferred........ 641,000 $ 44,451
=========== ==========
(1) Based on 100% occupancy and rents computed on a straight-line basis.
During the second quarter, we began construction of Beltway Crossing V (83,000
square feet in northwest Houston), Sky Harbor (a five building complex with
261,000 square feet in Phoenix) and Southridge 12 (a 404,000 square foot
build-to-suit in Orlando). These three have a projected total investment of $48
million. For the full year, we expect to have development starts of over $110
million with a total of approximately 1.8 million square feet.
At June 30, 2007, EastGroup had 17 development properties containing 1,876,000
square feet with a projected total cost of approximately $132 million either in
lease-up or under construction. These properties were collectively 36% leased at
June 30, 2007 and 40% at July 24, 2007.
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. We are not a merchant builder. Our goal is to add quality,
state-of-the-art investments to our portfolio and thereby increase total returns
to our shareholders in both the short and long term."
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P. O. Box 22728 - JACKSON, MS 39225 - TEL . 601-354-3555 - FAX 601-352-1441
PROPERTY ACQUISITIONS
In May 2007, the Company purchased Country Club Distribution Center II (45,000
square feet and 100% leased to one of our top ten customers) and 10 acres of
land for future development of two additional properties in Tucson for $5.5
million. The building and the land are contained within a business park known as
Country Club Commerce Center in which EastGroup already owns a building. This
park is located in the Airport submarket between Tucson International Airport,
Interstate 10 and Interstate 19.
In June, EastGroup acquired Industry Distribution Center III (28,000 square feet
and 100% leased to a single customer) for $3 million. The purchase of Industry
III complements our presence in our existing submarket in City of Industry,
California and offers a potential redevelopment opportunity.
David H. Hoster II, President and CEO stated, "These property and land
acquisitions during the second quarter illustrate our continued pursuit of both
acquisition and potential development opportunities that we believe will enhance
our portfolio as they become available."
DIVIDENDS
EastGroup paid dividends of $.50 per share of common stock in the second quarter
of 2007, which was the 110th consecutive quarterly distribution to EastGroup's
common stockholders. The annualized dividend rate of $2.00 per share yields 4.6%
on the closing stock price of $43.67 on July 23, 2007.
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on July 13, 2007 to stockholders of record as of June 29, 2007.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 33.6% at June 30, 2007. For the quarter, the Company
had an interest coverage ratio of 3.6x and a fixed charge coverage ratio of
3.3x. Total debt at June 30, 2007 was $542.5 million with floating rate bank
debt comprising $145.5 million of that total.
In May 2007, the Company signed an application on a $75 million, nonrecourse
first mortgage loan secured by properties containing 1,448,000 square feet. The
loan is expected to close in mid August 2007 and will have a fixed interest rate
of 5.57%, a ten-year term and an amortization schedule of 20 years. The proceeds
of this mortgage will be used to reduce variable rate bank borrowings.
OUTLOOK FOR 2007
FFO per share for 2007 is estimated to be in the range of $2.99 to $3.03. The
midpoint was increased from $2.98 per share to $3.01 per share. Diluted EPS for
2007 is estimated to be in the range of $.98 to $1.02. The table below
reconciles projected net income to projected FFO.
Low Range High Range
Q3 2007 Y/E 2007 Q3 2007 Y/E 2007
--------------------------------------------------------
(in thousands except for per share data)
--------------------------------------------------------
Net income $ 6,253 25,999 6,729 26,951
Dividends on preferred shares (656) (2,624) (656) (2,624)
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Net income available to common stockholders 5,597 23,375 6,073 24,327
Depreciation and amortization 12,000 47,721 12,000 47,721
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Funds from operations available to common stockholders $ 17,597 71,096 18,073 72,048
========================================================
Diluted shares 23,780 23,778 23,780 23,778
Per share data (diluted):
Net income available to common stockholders $ 0.24 0.98 0.26 1.02
Funds from operations available to common stockholders $ 0.74 2.99 0.76 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 95.0% to 96.0%.
o Same property NOI increase of 3% to 4.5%.
o Non-same property NOI:
o Development properties not transferred to the portfolio as of
January 1, 2006 contributing PNOI of $.36 per share.
o Dispositions of operating properties totaling $3 million over the
remainder of 2007.
o Lease termination fees of $51,000 through June 30, 2007 and net
termination fees of $796,000 in the fourth quarter.
o No sales of nondepreciable real estate.
o Floating rate bank debt at an average rate of 6%.
o New fixed rate debt of $75 million in August 2007 at 5.57%.
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
second quarter and review the Company's current operations on Wednesday, July
25, 2007, at 11:00 A.M. Eastern Time. A live broadcast of the conference call is
available by dialing 1-800-895-0198 (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, July 25, 2007. The telephone replay will be available
until Wednesday, August 1, 2007, and can be accessed by dialing 1-800-934-7693.
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, August 1,
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.
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
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P. O. Box 22728 - JACKSON, MS 39225 - TEL . 601-354-3555 - FAX 601-352-1441
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 23.4
million square feet with an additional 1,896,000 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 Six Months Ended
June 30, June 30,
----------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------
REVENUES
Income from real estate operations $ 37,165 32,765 73,251 64,942
Other income 20 15 45 34
----------------------------------------------------
37,185 32,780 73,296 64,976
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EXPENSES
Expenses from real estate operations 10,232 9,212 20,316 18,169
Depreciation and amortization 12,026 10,182 23,221 20,503
General and administrative 1,846 1,636 3,875 3,444
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24,104 21,030 47,412 42,116
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OPERATING INCOME 13,081 11,750 25,884 22,860
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated investment 73 65 149 139
Interest income 34 21 56 43
Interest expense (6,905) (6,397) (13,076) (12,732)
Minority interest in joint ventures (158) (136) (308) (273)
----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 6,125 5,303 12,705 10,037
----------------------------------------------------
DISCONTINUED OPERATIONS
Income from real estate operations - 257 - 616
Gain on sale of real estate investments 7 16 14 1,084
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INCOME FROM DISCONTINUED OPERATIONS 7 273 14 1,700
----------------------------------------------------
NET INCOME 6,132 5,576 12,719 11,737
Preferred dividends-Series D 656 656 1,312 1,312
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 5,476 4,920 11,407 10,425
====================================================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.23 0.21 0.48 0.40
Income from discontinued operations 0.00 0.01 0.00 0.08
----------------------------------------------------
Net income available to common stockholders $ 0.23 0.22 0.48 0.48
====================================================
Weighted average shares outstanding 23,550 21,932 23,541 21,907
====================================================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.23 0.21 0.48 0.39
Income from discontinued operations 0.00 0.01 0.00 0.08
----------------------------------------------------
Net income available to common stockholders $ 0.23 0.22 0.48 0.47
====================================================
Weighted average shares outstanding 23,776 22,237 23,761 22,222
====================================================
Dividends declared per common share $ 0.50 0.49 1.00 0.98
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,
----------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 37,165 32,765 73,251 64,942
Expenses from real estate operations (10,232) (9,212) (20,316) (18,169)
----------------------------------------------------
PROPERTY NET OPERATING INCOME (PNOI) 26,933 23,553 52,935 46,773
Equity in earnings of unconsolidated investment
(before interest and depreciation) 193 187 390 383
Interest income 34 21 56 43
Other income 20 15 45 34
General and administrative expense (1,846) (1,636) (3,875) (3,444)
----------------------------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 25,334 22,140 49,551 43,789
Income from discontinued operations (before depreciation and amortization) - 410 - 1,055
Interest expense (1) (6,905) (6,397) (13,076) (12,732)
Interest expense from unconsolidated investment (87) (89) (175) (178)
Minority interest in earnings (before depreciation and amortization) (199) (174) (387) (348)
Gain on sale of nondepreciable real estate 7 6 14 655
Dividends on Series D preferred shares (656) (656) (1,312) (1,312)
----------------------------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS 17,494 15,240 34,615 30,929
Depreciation and amortization from continuing operations (12,026) (10,182) (23,221) (20,503)
Depreciation and amortization from discontinued operations - (153) - (439)
Depreciation from unconsolidated investment (33) (33) (66) (66)
Minority interest depreciation and amortization 41 38 79 75
Gain on sale of depreciable real estate investments - 10 - 429
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 5,476 4,920 11,407 10,425
Dividends on preferred shares 656 656 1,312 1,312
----------------------------------------------------
NET INCOME $ 6,132 5,576 12,719 11,737
====================================================
DILUTED PER COMMON SHARE DATA: (2)
Income from continuing operations $ 0.23 0.21 0.48 0.39
Income from discontinued operations 0.00 0.01 0.00 0.08
----------------------------------------------------
Net income available to common stockholders $ 0.23 0.22 0.48 0.47
====================================================
Funds from operations available to common stockholders $ 0.74 0.69 1.46 1.39
====================================================
Weighted average shares outstanding for EPS and FFO purposes 23,776 22,237 23,761 22,222
====================================================
(1) Net of capitalized interest of $1,413,000 and $1,057,000 for the three
months ended June 30, 2007 and 2006, respectively; and $2,853,000 and $1,976,000
for the six months ended June 30, 2007 and 2006, respectively.
(2) Assumes dilutive effect of common stock equivalents.