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 2008 RESULTS
o Funds from Operations of $19.8 Million or $.83 Per Share, an Increase of
15.3%
o Net Income Available to Common Stockholders of $7.4 Million or $.31 Per
Share
o Same Property Net Operating Income Growth of 2.6%, 2.7% Before
Straight-Line Rent Adjustments
o $68 Million Invested in Development and Acquisitions During the Quarter
o 20 Development Projects with Estimated Costs of $128 Million Under
Construction or In Lease-Up at Quarter-End
o 94.9% Leased, 94.4% Occupied
o Paid 113th Consecutive Quarterly Dividend - $.52 Per Share, an Increase of
4% Compared to the Previous Quarterly Dividend
o Debt-to-Total Market Capitalization of 37.1% at Quarter-End with a Stock
Price of $46.46 Per Share
o Interest Coverage of 3.8x and Fixed Charge Coverage of 3.5x
JACKSON, MISSISSIPPI, April 22, 2008 - EastGroup Properties, Inc. (NYSE-EGP)
announced today the results of its operations for the three months ended March
31, 2008.
Commenting on EastGroup's funds from operations (FFO) per share for the quarter,
David H. Hoster II, President and CEO, stated, "We are pleased with the solid
operating results achieved during the first quarter of 2008 in spite of the
slowing of the U.S. economy. We were able to combine good property operating
results with a number of one-time items to exceed the high point of our first
quarter guidance.
"We continued to generate growth in FFO per share with the first quarter of 2008
representing our 15th consecutive quarter of increased FFO per share compared to
the previous year's quarter. It was also the 19th consecutive quarter of same
property net operating income growth both with and without the straight-lining
of rents."
FUNDS FROM OPERATIONS
For the quarter ended March 31, 2008, FFO was $.83 per share compared with $.72
for the same period of 2007, an increase of 15.3% per share. Property net
operating income (PNOI) increased 13.3% primarily due to additional PNOI of
$1,676,000 from newly developed properties, $1,098,000 from 2007 and 2008
acquisitions and $668,000 from same property growth.
The Company recorded gains on sales of securities of $435,000 during the first
quarter of 2008. Lease termination fees, net of bad debt, increased PNOI and FFO
by $421,000 for the first three months of 2008 compared to the same quarter in
2007. In the first quarter of this year, the Company also recorded a gain on
involuntary conversion of $175,000 due to insurance proceeds that exceeded the
basis of the asset. These transactions increased FFO in the first quarter of
2008 by $.04 per share compared to the same period of 2007.
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
FFO for the quarter increased $.06 per share compared to the Company's midpoint
guidance of $.77 per share. The increase was due to strong property results
combined with the items discussed above.
Same property operating results increased 2.6% for the quarter; 2.7% before
straight-line rent adjustments. Rental rate increases on new and renewal leases
(4.4% of total square footage) averaged 13.3% for the quarter; 6.4% 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 $.31 for the
three months ended March 31, 2008, compared to $.25 per share in the same period
of 2007. The Company recognized gains on sales of securities, gain on
involuntary conversion, and lease termination fee income during the first
quarter of 2008. These transactions increased EPS in the first quarter of 2008
by $.04 per share as compared to the same quarter of 2007.
DEVELOPMENT
During the first quarter of 2008, EastGroup transferred four development
properties to the portfolio as detailed below:
Percent Projected
Real Estate Properties Transferred Date Leased Stabilized
from Development in 2008 Size Transferred Cost at 04/22/08 Yield (1)
- --------------------------------------------------------------------------------------------------------------------------------
(Square feet) (In thousands)
Beltway Crossing IV, Houston, TX............ 55,000 01/21/08 $ 3,436 100% 9.7%
Beltway Crossing III, Houston, TX........... 55,000 02/01/08 3,023 87% 9.7%
Southridge XII, Orlando, FL................. 404,000 03/20/08 19,108 100% 10.1%
Arion 18, San Antonio, TX................... 20,000 03/31/08 2,593 91% 9.2%
------------ ----------
Total Developments Transferred........... 534,000 $ 28,160
============ ==========
(1) Based on 100% occupancy and rents computed on a straight-line basis.
In February, the Company purchased 9.9 acres of development land in conjunction
with a portfolio of properties in Charlotte, North Carolina. Also during the
first quarter, EastGroup began construction of World Houston 26 with 59,000
square feet and a projected total investment of $3.3 million.
For the full year, EastGroup expects to have development starts of $60 to $70
million with a total of approximately 1.2 million square feet.
At March 31, 2008, EastGroup had 20 development properties containing 1,815,000
square feet with a projected total cost of approximately $128 million either in
lease-up or under construction. These properties were collectively 24% leased at
March 31, 2008 and 30% leased at April 22, 2008.
PROPERTY ACQUISITIONS
In February, EastGroup acquired a portfolio of properties in metropolitan
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
customers and
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
are projected to generate a 6.4% yield at current occupancy and a 7.5%
stabilized cash yield at 100% occupancy. This acquisition increased EastGroup's
total ownership in Charlotte to over 1.6 million square feet.
DIVIDENDS
EastGroup paid dividends of $.52 per share of common stock in the first quarter
of 2008, which was the 113th consecutive quarterly distribution to the Company's
common shareholders. This dividend represented an increase of 4% over the
previous quarter's distribution and made 2008 the sixteenth consecutive year of
dividend increases. The annualized dividend rate of $2.08 per share yields 4.3%
on the closing stock price of $48.02 on April 21, 2008.
EastGroup also paid quarterly dividends of $.4969 per share on its Series D
Preferred Stock on April 15, 2008, to shareholders of record as of March 31,
2008.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with debt-to-total
market capitalization of 37.1% at March 31, 2008. For the year, the Company had
an interest coverage ratio of 3.8x and a fixed charge coverage ratio of 3.5x.
Total debt at March 31, 2008 was $672.3 million comprised of $539.6 million of
fixed rate mortgage debt and $132.7 million of floating rate bank debt.
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 total liability to total asset value ratios, with
an annual fee of 15-20 basis points.
Under this facility, EastGroup's interest rate is currently LIBOR plus .70%
(3.396%) with an annual 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 new line of credit replaced the expiring three-year, $175
million line.
In March 2008, the Company executed a $78 million, non-recourse first mortgage
loan secured by properties containing 1.6 million square feet. The loan has a
fixed interest rate of 5.50%, a seven-year term and an amortization schedule of
20 years. The proceeds of this mortgage were used to reduce variable rate bank
borrowings.
OUTLOOK FOR REMAINDER OF 2008
FFO per share for 2008 is estimated to be in the range of $3.26 to $3.36 ($.06
per share more than our previous estimate). The midpoint was increased from
$3.25 per share to $3.31 per share. Diluted EPS for 2008 is estimated to be in
the range of $1.07 to $1.17. Guidance was increased due to strong property
results as well as the following transactions recorded in the first quarter:
o Gains on sales of securities of $435,000
o Termination fees, net of bad debt, of $287,000
o Gain on involuntary conversion of $175,000
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
The table below reconciles projected net income to projected FFO.
Low Range High Range
Q2 2008 Y/E 2008 Q2 2008 Y/E 2008
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(in thousands, except per share data)
---------------------------------------------------
Net income $ 6,547 28,198 7,023 30,582
Dividends on preferred shares (656) (2,624) (656) (2,624)
---------------------------------------------------
Net income available to common stockholders 5,891 25,574 6,367 27,958
Depreciation and amortization 12,561 52,023 12,561 52,023
---------------------------------------------------
Funds from operations available to common stockholders $ 18,452 77,597 18,928 79,981
===================================================
Diluted shares 23,835 23,835 23,835 23,835
Per share data (diluted):
Net income available to common stockholders $ 0.25 1.07 0.27 1.17
Funds from operations available to common stockholders $ 0.77 3.26 0.79 3.36
The following assumptions were used:
o Average occupancy of 93.5% to 95.5% for the year.
o Same property NOI increase of 0% to 2.5% for the year.
o Non-same property NOI:
o Development properties not transferred to the portfolio by
January 1, 2007, contributing PNOI of $.50 per share for 2008.
o Acquisitions of operating properties of $10 million in the second
half of 2008.
o Dispositions of operating properties of $20 million on July 1,
2008.
o Termination fees, net of bad debt, of zero for the remainder of the
year.
o No sales of land or other nondepreciable real estate.
o No gains on sales of securities for the remainder of the year.
o Floating rate bank debt at an average rate of 5.4%.
o New fixed rate debt of $70 million in the third quarter of 2008 at
6.0%.
The Company's 7.95% Series D Cumulative Redeemable Preferred Stock is redeemable
at the stated liquidation preference of $33 million on or after July 2, 2008. If
redeemed, the original issuance costs of $674,000 would be reported similarly to
a preferred dividend and would reduce net income and FFO available to common
stockholders by that amount. The redemption and related costs are not included
in guidance for 2008.
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
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P.O. Box 22728-JACKSON, MS 39225-TEL. 601-354-3555-FAX 601-352-1441
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
23, 2008, at 11:00 A.M. Eastern Daylight 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 Wednesday, April 23, 2008. The telephone replay will
be available until Wednesday, April 30, 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
Wednesday, April 30, 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 25.0
million square feet with an additional 1.7 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
March 31,
----------------------------
2008 2007
----------------------------
REVENUES
Income from real estate operations $ 40,245 35,970
Other income 195 25
----------------------------
40,440 35,995
----------------------------
EXPENSES
Expenses from real estate operations 10,880 10,055
Depreciation and amortization 12,418 11,149
General and administrative 2,081 2,029
----------------------------
25,379 23,233
----------------------------
OPERATING INCOME 15,061 12,762
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated investment 80 76
Gain on sales of land 7 7
Gain on sales of securities 435 -
Interest income 37 22
Interest expense (7,373) (6,171)
Minority interest in joint ventures (156) (150)
----------------------------
INCOME FROM CONTINUING OPERATIONS 8,091 6,546
----------------------------
DISCONTINUED OPERATIONS
Income from real estate operations - 41
----------------------------
INCOME FROM DISCONTINUED OPERATIONS - 41
----------------------------
NET INCOME 8,091 6,587
Preferred dividends-Series D 656 656
----------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 7,435 5,931
============================
BASIC PER COMMON SHARE DATA
Income from continuing operations $ 0.31 0.25
Income from discontinued operations 0.00 0.00
----------------------------
Net income available to common stockholders $ 0.31 0.25
============================
Weighted average shares outstanding 23,684 23,531
============================
DILUTED PER COMMON SHARE DATA
Income from continuing operations $ 0.31 0.25
Income from discontinued operations 0.00 0.00
----------------------------
Net income available to common stockholders $ 0.31 0.25
============================
Weighted average shares outstanding 23,829 23,769
============================
Dividends declared per common share $ 0.52 0.50
EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
----------------------------
2008 2007
----------------------------
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME:
Income from real estate operations $ 40,245 35,970
Expenses from real estate operations (10,880) (10,055)
----------------------------
PROPERTY NET OPERATING INCOME (PNOI) 29,365 25,915
Gain on sales of securities 435 -
Equity in earnings of unconsolidated investment
(before interest and depreciation) 198 197
Interest income 37 22
Other income 195 25
General and administrative expense (2,081) (2,029)
----------------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 28,149 24,130
Income from discontinued operations (before depreciation and amortization) - 87
Interest expense (1) (7,373) (6,171)
Interest expense from unconsolidated investment (85) (88)
Minority interest in earnings (before depreciation and amortization) (205) (188)
Gain on sales of land 7 7
Dividends on Series D preferred shares (656) (656)
----------------------------
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON STOCKHOLDERS 19,837 17,121
Depreciation and amortization from continuing operations (12,418) (11,149)
Depreciation and amortization from discontinued operations - (46)
Depreciation from unconsolidated investment (33) (33)
Minority interest depreciation and amortization 49 38
----------------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 7,435 5,931
Dividends on preferred shares 656 656
----------------------------
NET INCOME $ 8,091 6,587
============================
DILUTED PER COMMON SHARE DATA: (2)
Income from continuing operations $ 0.31 0.25
Income from discontinued operations 0.00 0.00
----------------------------
Net income available to common stockholders $ 0.31 0.25
============================
Funds from operations available to common stockholders $ 0.83 0.72
============================
Weighted average shares outstanding for EPS and FFO purposes 23,829 23,769
============================
(1) Net of capitalized interest of $1,705,000 and $1,440,000 for the three
months ended March 31, 2008 and 2007, respectively.
(2) Assumes dilutive effect of common stock equivalents.