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 2007 RESULTS
FOURTH QUARTER 2007 RESULTS
o Funds from Operations of $20.6 Million or $.86 Per Share, an Increase of
19.4%
o Net Income Available to Common Stockholders of $8.6 Million or $.36 Per
Share
o Same Property Net Operating Income Growth of 1.4%, 2.6% Before
Straight-Line Rent Adjustments
o 96.0% Leased, 95.4% Occupied
o Paid 112th Consecutive Quarterly Dividend - $.50 Per Share
o $40 Million Invested in Development and Acquisitions
YEAR 2007 RESULTS
o Funds from Operations of $74.2 Million or $3.12 Per Share, an Increase of
11.0%
o Net Income Available to Common Stockholders of $27.1 Million or $1.14 Per
Share
o Same Property Net Operating Income Growth of 3.6%, 4.4% Before
Straight-Line Rent Adjustments
o Paid Annual Dividends of $2.00 Per Share - Fifteenth Consecutive Year of
Dividend Growth With Average Annual Increase of 4.7%
o $171 Million Invested in Development and Acquisitions During the Year
o 22 Development Projects with Estimated Costs of $154 Million Under
Construction or In Lease-Up at Year-End
o Debt-to-Total Market Capitalization of 36.9% at Year-End
o Interest Coverage of 3.7x and Fixed Charge Coverage of 3.4x for the Year
JACKSON, MISSISSIPPI, February 13, 2008 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months and year
ended December 31, 2007.
EastGroup earned record high funds from operations (FFO) for both the fourth
quarter and the year. Commenting on the Company's performance, David H. Hoster
II, President and CEO, stated, "We are pleased with the solid operating results
achieved during 2007. We continued to generate growth in FFO per share with the
fourth quarter of 2007 representing our fourteenth consecutive quarter of
increased FFO per share compared to the previous year's quarter. It was also the
eighteenth consecutive quarter of same property net operating income (PNOI)
growth both with and without the straight-lining of rents, which illustrates the
ongoing strength of our property operations.
"The Company also experienced significant growth in its development program
during the year. This is a reflection of both the good leasing activity at our
development properties and the vibrancy of our
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P.O. Box 22728 - JACKSON, MS 39225 - TEL. 601-354-3555 - FAX 601-352-1441
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. 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.
"EastGroup continues to be in a strong financial position. We have an improved
credit facility, debt-to-total market capitalization was 36.9% at December 31,
2007, and we have maintained good coverage ratios. These factors position us
well for continued future growth."
FUNDS FROM OPERATIONS
For the quarter ended December 31, 2007, FFO was $.86 per share compared with
$.72 for the same period of 2006, an increase of 19.4% per share. PNOI increased
13.6% due to additional PNOI of $1,568,000 from newly developed properties,
$1,404,000 from 2006 and 2007 acquisitions and $352,000 from same property
growth.
A gain on the sale of land in lieu of condemnation at Arion Business Park was
recorded during the quarter, increasing FFO by $2,572,000. Excluding gain on
land sales of $2,579,000 in the fourth quarter of 2007 and $129,000 in the same
quarter of 2006, FFO per share increased 7.0% in the fourth quarter of 2007
compared to the previous year's quarter.
For the year ended December 31, 2007, FFO was $3.12 per share compared with
$2.81 per share for 2006, an increase of 11.0% per share. PNOI increased 14.4%
due to additional PNOI of $5,671,000 from newly developed properties, $4,813,000
from 2006 and 2007 acquisitions and $3,368,000 from same property growth.
The Company recognized gain on land sales of $2,602,000 in 2007 compared to
$791,000 in 2006. In addition, $1,149,000 in lease termination fees were
recognized in 2007 compared to $410,000 in 2006. Without termination fees and
gain on land sales for both years, the increase in FFO per share would have been
7.2%.
PNOI from same properties increased 1.4% for the quarter; 2.6% before
straight-line rent adjustments. Rental rate increases on new and renewal leases
(4.2% of total square footage) averaged 17.3% for the quarter; 7.9% before
straight-line rent adjustments.
For the year, PNOI from same properties increased 3.6%; 4.4% before
straight-line rent adjustments. Rental rate increases on new and renewal leases
(21.5% of total square footage) averaged 12.4% for the year; 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."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.36 for the
three months ended December 31, 2007 compared to $.46 per share in the same
period of 2006. Gain on sales of real estate was $.14 per share in the fourth
quarter of 2007 compared to $.20 per share in the same period of 2006. Diluted
EPS was $1.14 in 2007 compared to $1.17 in 2006, and gain on sales of real
estate was $.15 per share in 2007 compared to $.26 per share in 2006.
DEVELOPMENT
During 2007, EastGroup transferred 14 development properties to the portfolio as
detailed below:
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Percent Projected
Real Estate Properties Transferred Date Leased Stabilized
from Development in 2007 Size Transferred Cost at 02/13/08 Yield(1)
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(Square feet) (In thousands)
Santan 10 II, Chandler, AZ.................. 85,000 01/01/07 $ 5,523 100% 10.0%
Oak Creek III, Tampa, FL.................... 61,000 03/23/07 3,591 100% 9.7%
Southridge VI, Orlando, FL.................. 81,000 04/01/07 5,323 100% 10.7%
Arion 16, San Antonio, TX................... 64,000 04/20/07 3,899 100% 10.6%
Southridge III, Orlando, FL................. 81,000 04/20/07 5,445 100% 9.9%
Southridge II, Orlando, FL.................. 41,000 05/01/07 4,230 100% 10.5%
World Houston 15, Houston, TX............... 63,000 05/01/07 6,100 100% 10.0%
World Houston 23, Houston, TX............... 125,000 05/01/07 7,920 100% 10.3%
Arion 17, San Antonio, TX................... 40,000 06/01/07 3,809 100% 10.2%
Beltway Crossing II, Houston, TX............ 50,000 09/01/07 3,159 100% 9.7%
SunCoast II, Fort Myers, FL................. 63,000 10/10/07 5,667 100% 9.6%
Castilian Research Center,
Santa Barbara, CA....................... 37,000 10/15/07 8,919 82% 6.5%
Oak Creek V, Tampa, FL...................... 100,000 11/01/07 5,877 93% 9.8%
World Houston 22, Houston, TX............... 68,000 12/31/07 4,642 100% 9.6%
------------ -----------
Total Developments Transferred........... 959,000 $ 74,104
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(1) Based on 100% occupancy and rents computed on a straight-line basis.
During the fourth quarter, EastGroup began construction of three additional
developments with a total of 279,000 square feet. These buildings, which are
located in Ft. Myers and Houston, have a projected total investment of $19.7
million.
For the year, the Company had development starts of over $120 million with a
total of approximately 1.8 million square feet. EastGroup also acquired 102
acres of land for new development in Houston, San Antonio and Tucson for a
combined cost of $12.3 million.
At December 31, 2007, EastGroup had 22 development properties containing
2,290,000 square feet with a projected total cost of approximately $154 million
either in lease-up or under construction. These properties were collectively 39%
leased at December 31, 2007 and 42% at February 13, 2008.
ACQUISITIONS AND SALES
In October, EastGroup sold Delp Distribution Center I (152,000 square feet) in
Memphis for $3,275,000 and realized a gain of $603,000. This transaction reduces
the Company's investment in Memphis to approximately $2.2 million and 112,000
square feet.
In December, the Company acquired Concord Distribution Center in Denver for $6.1
million. The building, which contains 78,000 square feet, is 100% leased to
three customers. The property is expected to generate a cash yield of 6.9% and a
GAAP yield of 7.4% at its current occupancy of 100% in 2008.
During the year, EastGroup acquired seven operating properties (1,079,000 total
square feet) for a total cost of $57.3 million and one property for
redevelopment (68,000 square feet) for $4.1 million. These properties are
located in Charlotte, Dallas, San Antonio, Denver, Tucson, and City of Industry
(Los Angeles), California.
The Company is currently under contract to purchase a portfolio of properties in
Charlotte for a total purchase price of $41.9 million. The portfolio consists of
five buildings with 669,000 square feet in four different locations and 9.9
acres of developable land. In total, the buildings are 86% leased to 14
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P.O. Box 22728 - JACKSON, MS 39225 - TEL. 601-354-3555 - FAX 601-352-1441
customers. This acquisition is expected to close during the first quarter of
2008 and will increase EastGroup's total ownership in Charlotte to over 1.6
million square feet.
DIVIDENDS
EastGroup paid dividends of $.50 per share of common stock in the fourth quarter
of 2007, which was the 112th 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 $43.09 on February 12, 2008.
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on January 15, 2008 to stockholders of record as of December 31,
2007.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 36.9% at December 31, 2007. For the year, the Company
had an interest coverage ratio of 3.7x and a fixed charge coverage ratio of
3.4x. Total debt at December 31, 2007 was $600.8 million with floating rate bank
debt comprising $135.4 million of that total.
In January 2008, EastGroup executed a four-year, $200 million unsecured
revolving credit facility with a group of seven banks which was arranged by PNC
Capital Markets LLC. 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 15-20 basis points.
Under this facility, EastGroup's interest rate is currently LIBOR plus .70%
(3.95%) with an annual facility fee of .20%. The line of credit, which matures
in January 2012, can be expanded by $100 million and has an option for a
one-year extension. This credit facility replaces the expiring three-year, $175
million credit facility.
Mr. Hoster stated, "We are pleased with the quality and depth of our bank group
and by the level of loan commitments, which resulted in the facility being
oversubscribed. With this new line of credit, we lowered our interest spread by
25 basis points as well as improving many other terms from our previous credit
line."
In December 2007, the Company signed an application on a $78 million,
non-recourse first mortgage loan secured by properties containing 1.6 million
square feet. The loan is expected to close in March 2008 and will have a fixed
interest rate of 5.50%, a seven-year term and an amortization schedule of 20
years. The proceeds of this mortgage will be used to reduce variable rate bank
borrowings.
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
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P.O. Box 22728 - JACKSON, MS 39225 - TEL. 601-354-3555 - FAX 601-352-1441
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
fourth quarter and review the Company's current operations on Thursday, February
14, 2008, at 10:00 A.M. Eastern Time. A live broadcast of the conference call is
available by dialing 1-800-862-9098 (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 Thursday, February 14, 2008. The telephone replay will be available
until Thursday, February 21, 2008, and can be accessed by dialing
1-800-695-0715. 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
Thursday, February 21, 2008.
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 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 23.8
million square feet with an additional 2.2 million square feet of properties
under development. EastGroup Properties, Inc. press releases are 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 not in the present or past tense and can be
identified by the words "will," "anticipates," "expects," "believes," or other
words or phrases that indicate future trends or events. 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 the availability of financing;
o changes in the supply of and demand for industrial/warehouse properties;
o increases in interest rate levels;
o increases in operating costs;
o natural disasters, terrorism, riots and acts of war, 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,
development or operating costs may be greater than anticipated or
acquisitions may not close as scheduled.
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P.O. Box 22728 - JACKSON, MS 39225 - TEL. 601-354-3555 - FAX 601-352-1441
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 Twelve Months Ended
December 31, December 31,
----------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------
REVENUES
Income from real estate operations $ 38,447 34,409 150,638 132,963
Other income 27 (73) 92 182
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38,474 34,336 150,730 133,145
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EXPENSES
Expenses from real estate operations 10,359 9,675 41,118 37,218
Depreciation and amortization 12,596 10,550 47,908 41,377
General and administrative 2,427 1,967 8,295 7,401
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25,382 22,192 97,321 85,996
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OPERATING INCOME 13,092 12,144 53,409 47,149
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated investment 71 74 285 287
Gain on sales of land 2,579 123 2,602 123
Interest income 212 31 306 142
Interest expense (7,152) (5,570) (27,314) (24,616)
Minority interest in joint ventures (168) (148) (609) (600)
----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 8,634 6,654 28,679 22,485
----------------------------------------------------
DISCONTINUED OPERATIONS
Income from real estate operations 8 287 95 1,022
Gain on sales of real estate investments 660 4,636 960 5,727
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INCOME FROM DISCONTINUED OPERATIONS 668 4,923 1,055 6,749
----------------------------------------------------
NET INCOME 9,302 11,577 29,734 29,234
Preferred dividends-Series D 656 656 2,624 2,624
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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 8,646 10,921 27,110 26,610
====================================================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.34 0.26 1.11 0.89
Income from discontinued operations 0.03 0.21 0.04 0.30
----------------------------------------------------
Net income available to common stockholders $ 0.37 0.47 1.15 1.19
====================================================
Weighted average shares outstanding 23,605 23,425 23,562 22,372
====================================================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.33 0.25 1.10 0.87
Income from discontinued operations 0.03 0.21 0.04 0.30
----------------------------------------------------
Net income available to common stockholders $ 0.36 0.46 1.14 1.17
====================================================
Weighted average shares outstanding 23,819 23,749 23,781 22,692
====================================================
Dividends declared per common share $ 0.50 0.49 2.00 1.96
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,
----------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 38,447 34,409 150,638 132,963
Expenses from real estate operations (10,359) (9,675) (41,118) (37,218)
----------------------------------------------------
PROPERTY NET OPERATING INCOME (PNOI) 28,088 24,734 109,520 95,745
Equity in earnings of unconsolidated investment
(before interest and depreciation) 190 195 764 773
Interest income 212 31 306 142
Other income (loss) 27 (73) 92 182
General and administrative expense (2,427) (1,967) (8,295) (7,401)
----------------------------------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 26,090 22,920 102,387 89,441
Income from discontinued operations (before depreciation and amortization) 8 451 245 1,862
Interest expense (1) (7,152) (5,570) (27,314) (24,616)
Interest expense from unconsolidated investment (86) (88) (347) (354)
Minority interest in earnings (before depreciation and amortization) (219) (186) (783) (751)
Gain on sales of land 2,579 129 2,602 791
Dividends on Series D preferred shares (656) (656) (2,624) (2,624)
----------------------------------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS 20,564 17,000 74,166 63,749
Depreciation and amortization from continuing operations (12,596) (10,550) (47,908) (41,377)
Depreciation and amortization from discontinued operations - (164) (150) (840)
Depreciation from unconsolidated investment (33) (33) (132) (132)
Minority interest depreciation and amortization 51 38 174 151
Gain on sales of depreciable real estate investments 660 4,630 960 5,059
----------------------------------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 8,646 10,921 27,110 26,610
Dividends on preferred shares 656 656 2,624 2,624
----------------------------------------------------
NET INCOME $ 9,302 11,577 29,734 29,234
====================================================
DILUTED PER COMMON SHARE DATA: (2)
Income from continuing operations $ 0.33 0.25 1.09 0.87
Income from discontinued operations 0.03 0.21 0.05 0.30
----------------------------------------------------
Net income available to common stockholders $ 0.36 0.46 1.14 1.17
====================================================
Funds from operations available to common stockholders $ 0.86 0.72 3.12 2.81
====================================================
Weighted average shares outstanding for EPS and FFO purposes 23,819 23,749 23,781 22,692
====================================================
(1) Net of capitalized interest of $1,661,000 and $1,240,000 for the three
months ended December 31, 2007 and 2006, respectively; and $6,086,000 and
$4,336,000 for the twelve months ended December 31, 2007 and 2006, respectively.
(2) Assumes dilutive effect of common stock equivalents.