UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED SEPTEMBER 30, 2008          COMMISSION FILE NUMBER 1-07094

                           EASTGROUP PROPERTIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND                                                          13-2711135
(State or other jurisdiction                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)

300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI                                                    39201
(Address of principal executive offices)                              (Zip code)

Registrant's telephone number:  (601) 354-3555


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES (x) NO ( )

Indicate by check mark whether the Registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one)

 Large Accelerated Filer (x) Accelerated Filer ( ) Non-accelerated Filer ( )
                          Smaller Reporting Company ( )

Indicate by check mark whether the  Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES ( ) NO (x)

The  number of shares of common  stock,  $.0001  par  value,  outstanding  as of
November 4, 2008 was 25,070,518.



                           EASTGROUP PROPERTIES, INC.

                                    FORM 10-Q

                                TABLE OF CONTENTS
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2008


                                                                                              

                                                                                                    Page
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated  balance  sheets,  September  30,  2008  (unaudited)  and
          December 31, 2007                                                                           3

          Consolidated  statements of income for the three and nine months ended
          September 30, 2008 and 2007 (unaudited)                                                     4

          Consolidated statement of changes in stockholders' equity for the nine
          months ended September 30, 2008 (unaudited)                                                 5

          Consolidated  statements  of cash  flows  for the  nine  months  ended
          September 30, 2008 and 2007 (unaudited)                                                     6

          Notes to consolidated financial statements (unaudited)                                      7

Item 2.   Management's  Discussion and Analysis of Financial Condition and Results
          of Operations                                                                              13

Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                 24

Item 4.   Controls and Procedures                                                                    25

PART II.  OTHER INFORMATION

Item 1A.  Risk Factors                                                                               25

Item 6.   Exhibits                                                                                   25

SIGNATURES

Authorized signatures                                                                                26



                           EASTGROUP PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)



                                                                                       September 30, 2008        December 31, 2007
                                                                                     -----------------------------------------------
                                                                                                      (Unaudited)
                                                                                                                    
ASSETS
  Real estate properties........................................................     $        1,225,973                1,114,966
  Development...................................................................                145,074                  152,963
                                                                                     -----------------------------------------------
                                                                                              1,371,047                1,267,929
      Less accumulated depreciation.............................................               (299,658)                (269,132)
                                                                                     -----------------------------------------------
                                                                                              1,071,389                  998,797

  Unconsolidated investment.....................................................                  2,669                    2,630
  Cash..........................................................................                  1,265                      724
  Other assets..................................................................                 59,189                   53,682
                                                                                     -----------------------------------------------

      TOTAL ASSETS..............................................................     $        1,134,512                1,055,833
                                                                                     ===============================================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Mortgage notes payable........................................................     $          531,132                  465,360
  Notes payable to banks........................................................                137,527                  135,444
  Accounts payable and accrued expenses.........................................                 33,067                   34,179
  Other liabilities.............................................................                 15,076                   16,153
                                                                                     -----------------------------------------------
                                                                                                716,802                  651,136
                                                                                     -----------------------------------------------


Minority interest in joint ventures.............................................                  2,472                    2,312
                                                                                     -----------------------------------------------

STOCKHOLDERS' EQUITY
  Series C Preferred Shares; $.0001 par value; 600,000 shares authorized;
    no shares issued............................................................                      -                        -
  Series D 7.95% Cumulative Redeemable Preferred Shares and additional
    paid-in capital; $.0001 par value; 1,320,000 shares authorized and
    issued at December 31, 2007; stated liquidation preference of $33,000 at
    December 31, 2007; redeemed July 2, 2008....................................                      -                   32,326
  Common shares; $.0001 par value; 68,080,000 shares authorized;
    25,070,718 shares issued and outstanding at September 30, 2008 and
    23,808,768 at December 31, 2007.............................................                      3                        2
  Excess shares; $.0001 par value; 30,000,000 shares authorized;
    no shares issued............................................................                      -                        -
  Additional paid-in capital on common shares...................................                527,757                  467,573
  Distributions in excess of earnings...........................................               (112,396)                 (97,460)
  Accumulated other comprehensive loss..........................................                   (126)                     (56)
                                                                                     -----------------------------------------------
                                                                                                415,238                  402,385
                                                                                     -----------------------------------------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................     $        1,134,512                1,055,833
                                                                                     ===============================================


See accompanying notes to consolidated financial statements (unaudited).


                           EASTGROUP PROPERTIES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)


                                                                                   Three Months Ended          Nine Months Ended
                                                                                      September 30,               September 30,
                                                                                ----------------------------------------------------
                                                                                   2008          2007          2008          2007
                                                                                ----------------------------------------------------
                                                                                                                  
REVENUES
  Income from real estate operations...................................         $  42,904        39,005       124,415       111,795
  Other income.........................................................                16            20           232            65
                                                                                ----------------------------------------------------
                                                                                   42,920        39,025       124,647       111,860
                                                                                ----------------------------------------------------
EXPENSES
  Expenses from real estate operations.................................            12,193        10,441        34,559        30,613
  Depreciation and amortization........................................            13,436        12,158        38,428        35,185
  General and administrative...........................................             2,250         1,993         6,349         5,868
                                                                                ----------------------------------------------------
                                                                                   27,879        24,592        79,336        71,666
                                                                                ----------------------------------------------------

OPERATING INCOME.......................................................            15,041        14,433        45,311        40,194

OTHER INCOME (EXPENSE)
  Equity in earnings of unconsolidated investment......................                80            65           239           214
  Gain on sales of non-operating real estate...........................               301             9           313            23
  Gain on sales of securities..........................................                 -             -           435             -
  Interest income......................................................               125            38           189            94
  Interest expense.....................................................            (7,596)       (7,086)      (22,478)      (20,162)
  Minority interest in joint ventures..................................              (169)         (133)         (462)         (441)
                                                                                ----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS......................................             7,782         7,326        23,547        19,922
                                                                                ----------------------------------------------------

DISCONTINUED OPERATIONS
  Income from real estate operations...................................                 7            88           130           211
  Gain on sales of real estate investments.............................                83           300         2,032           300
                                                                                ----------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS....................................                90           388         2,162           511
                                                                                ----------------------------------------------------

NET INCOME.............................................................             7,872         7,714        25,709        20,433

  Preferred dividends-Series D.........................................                14           656         1,326         1,968
  Costs on redemption of Series D preferred shares.....................               682             -           682             -
                                                                                ----------------------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS............................         $   7,176         7,058        23,701        18,465
                                                                                ====================================================

BASIC PER COMMON SHARE DATA
  Income from continuing operations....................................         $     .29           .28           .88           .76
  Income from discontinued operations..................................               .00           .02           .09           .02
                                                                                ----------------------------------------------------
  Net income available to common stockholders..........................         $     .29           .30           .97           .78
                                                                                ====================================================

  Weighted average shares outstanding..................................            24,908        23,562        24,362        23,548
                                                                                ====================================================

DILUTED PER COMMON SHARE DATA
  Income from continuing operations....................................         $     .29           .28           .88           .76
  Income from discontinued operations..................................               .00           .02           .09           .02
                                                                                ----------------------------------------------------
  Net income available to common stockholders..........................         $     .29           .30           .97           .78
                                                                                ====================================================

  Weighted average shares outstanding..................................            25,069        23,778        24,517        23,767
                                                                                ====================================================

Dividends declared per common share....................................         $     .52           .50          1.56          1.50


See accompanying notes to consolidated financial statements (unaudited).


                           EASTGROUP PROPERTIES, INC.
                        CONSOLIDATED STATEMENT OF CHANGES
                             IN STOCKHOLDERS' EQUITY
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
                                   (UNAUDITED)


                                                                                                               Accumulated
                                                                               Additional    Distributions        Other
                                                      Preferred     Common      Paid-In        In Excess      Comprehensive
                                                        Stock        Stock      Capital       Of Earnings         Loss        Total
                                                      ------------------------------------------------------------------------------
                                                                                                             
BALANCE, DECEMBER 31, 2007........................... $  32,326          2        467,573       (97,460)           (56)     402,385
  Comprehensive income
    Net income.......................................         -          -              -        25,709              -       25,709
    Net unrealized change in fair value of
      interest rate swap.............................         -          -              -             -            (70)         (70)
                                                                                                                            --------
      Total comprehensive income.....................                                                                        25,639
                                                                                                                            --------
  Common dividends declared - $1.56 per share........         -          -              -       (38,637)             -      (38,637)
  Preferred dividends declared - $1.0048 per share...         -          -              -        (1,326)             -       (1,326)
  Redemption of 1,320,000 shares of Series D
    preferred stock..................................   (32,326)         -              -          (682)             -      (33,008)
  Stock-based compensation, net of forfeitures.......         -          -          2,438             -              -        2,438
  Issuance of 1,198,700 shares of common stock,
    common stock offering, net of expenses ..........         -          1         57,197             -              -       57,198
  Issuance of 25,720 shares of common stock,
    options exercised................................         -          -            526             -              -          526
  Issuance of 4,667 shares of common stock,
    dividend reinvestment plan.......................         -          -            212             -              -          212
  4,519 shares withheld to satisfy tax withholding
    obligations in connection with the vesting of
    restricted stock.................................         -          -           (189)            -              -         (189)
                                                      ------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2008.......................... $       -          3        527,757      (112,396)          (126)     415,238
                                                      ==============================================================================


See accompanying notes to consolidated financial statements (unaudited).


                           EASTGROUP PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


                                                                                                          Nine Months Ended
                                                                                                             September 30,
                                                                                                 -----------------------------------
                                                                                                      2008                  2007
                                                                                                 -----------------------------------
                                                                                                                      
OPERATING ACTIVITIES
  Net income..................................................................................   $    25,709               20,433
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization from continuing operations..................................        38,428               35,185
    Depreciation and amortization from discontinued operations................................            71                  277
    Minority interest depreciation and amortization...........................................          (151)                (121)
    Amortization of mortgage loan premiums....................................................           (90)                 (87)
    Gain on sales of land and real estate investments.........................................        (2,345)                (323)
    Gain on sales of securities...............................................................          (435)                   -
    Amortization of discount on mortgage loan receivable......................................           (52)                   -
    Stock-based compensation expense..........................................................         1,668                1,476
    Equity in earnings of unconsolidated investment, net of distributions.....................           (39)                  36
    Changes in operating assets and liabilities:
      Accrued income and other assets.........................................................         2,442                5,318
      Accounts payable, accrued expenses and prepaid rent.....................................         4,061                4,555
                                                                                                 -----------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES.....................................................        69,267               66,749
                                                                                                 -----------------------------------

INVESTING ACTIVITIES
  Real estate development.....................................................................       (58,357)             (78,747)
  Purchases of real estate....................................................................       (46,282)             (51,711)
  Real estate improvements....................................................................       (10,705)             (10,236)
  Proceeds from sales of land and real estate investments.....................................        11,720                  323
  Advances on mortgage loans receivable.......................................................        (4,994)                   -
  Repayments on mortgage loans receivable.....................................................           863                   23
  Purchases of securities.....................................................................        (7,534)                   -
  Proceeds from sales of securities...........................................................         7,969                    -
  Changes in other assets and other liabilities...............................................       (11,991)              (5,863)
                                                                                                 -----------------------------------
NET CASH USED IN INVESTING ACTIVITIES.........................................................      (119,311)            (146,211)
                                                                                                 -----------------------------------

FINANCING ACTIVITIES
  Proceeds from bank borrowings...............................................................       251,197              252,466
  Repayments on bank borrowings...............................................................      (249,114)            (186,880)
  Proceeds from mortgage notes payable........................................................        78,000               75,000
  Principal payments on mortgage notes payable................................................       (12,138)             (23,445)
  Debt issuance costs.........................................................................        (1,686)                (658)
  Distributions paid to stockholders..........................................................       (40,319)             (37,439)
  Redemption of Series D preferred shares.....................................................       (33,008)                   -
  Proceeds from common stock offerings........................................................        57,198                    -
  Proceeds from exercise of stock options.....................................................           526                1,365
  Proceeds from dividend reinvestment plan....................................................           212                  209
  Other.......................................................................................          (283)                (941)
                                                                                                 -----------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES.....................................................        50,585               79,677
                                                                                                 -----------------------------------

INCREASE IN CASH AND CASH EQUIVALENTS.........................................................           541                  215
  CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............................................           724                  940
                                                                                                 -----------------------------------
  CASH AND CASH EQUIVALENTS AT END OF PERIOD..................................................   $     1,265                1,155
                                                                                                 ===================================

SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid for interest, net of amount capitalized of $5,044 and $4,425
    for 2008 and 2007, respectively...........................................................   $    22,122               19,363
  Fair value of common stock awards issued to employees and directors, net of forfeitures.....         1,248                1,441


See accompanying notes to consolidated financial statements (unaudited).



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1)  BASIS OF PRESENTATION

     The accompanying  unaudited financial  statements of EastGroup  Properties,
Inc.  ("EastGroup"  or "the Company") have been prepared in accordance with U.S.
generally   accepted   accounting   principles   (GAAP)  for  interim  financial
information and with the  instructions to Form 10-Q and Rule 10-01 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by GAAP for complete financial statements. In management's opinion, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The financial statements should be read in
conjunction with the financial statements contained in the 2007 annual report on
Form 10-K and the notes thereto.

(2)  PRINCIPLES OF CONSOLIDATION

     The  consolidated  financial  statements  include the accounts of EastGroup
Properties,  Inc., its wholly-owned subsidiaries and its investment in any joint
ventures in which the Company has a controlling  interest.  At December 31, 2007
and  September  30, 2008,  the Company had a  controlling  interest in two joint
ventures:  the 80% owned University  Business Center and the 80% owned Castilian
Research  Center.  The  Company  records  100% of the  joint  ventures'  assets,
liabilities,  revenues  and expenses  with  minority  interests  provided for in
accordance with the joint venture agreements. The equity method of accounting is
used for the  Company's  50%  undivided  tenant-in-common  interest  in Industry
Distribution Center II. All significant  intercompany  transactions and accounts
have been eliminated in consolidation.

(3)  USE OF ESTIMATES

     The  preparation of financial  statements in conformity  with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and revenues and expenses  during the reporting  period,
and to disclose  material  contingent  assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.

(4)  REAL ESTATE PROPERTIES

     EastGroup  has  one   reportable   segment-industrial   properties.   These
properties  are  concentrated  in major  Sunbelt  markets of the United  States,
primarily in the states of Florida, Texas, Arizona and California,  have similar
economic  characteristics  and also  meet the other  criteria  that  permit  the
properties to be aggregated  into one reportable  segment.  The Company  reviews
long-lived  assets for impairment  whenever  events or changes in  circumstances
indicate  that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future undiscounted net cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized in the amount by which the
carrying  amount of the asset  exceeds the fair value of the asset.  Real estate
properties  held for investment are reported at the lower of the carrying amount
or fair value.  Depreciation  of  buildings  and other  improvements,  including
personal  property,  is computed using the  straight-line  method over estimated
useful  lives  of  generally  40  years  for  buildings  and 3 to 15  years  for
improvements and personal property. Building improvements are capitalized, while
maintenance and repair expenses are charged to expense as incurred.  Significant
renovations  and  improvements  that  extend the useful  life of or improve  the
assets are  capitalized.  Depreciation  expense for continuing and  discontinued
operations was  $10,953,000  and $31,473,000 for the three and nine months ended
September 30, 2008,  respectively,  and $10,040,000 and $29,289,000 for the same
periods in 2007. The Company's real estate  properties at September 30, 2008 and
December 31, 2007 were as follows:


                                                                      September 30, 2008    December 31, 2007
                                                                     -----------------------------------------
                                                                                   (In thousands)
                                                                                               
        Real estate properties:
           Land................................................       $       188,407              175,496
           Buildings and building improvements.................               846,727              763,980
           Tenant and other improvements.......................               190,839              175,490
        Development............................................               145,074              152,963
                                                                     -----------------------------------------
                                                                            1,371,047            1,267,929
           Less accumulated depreciation.......................              (299,658)            (269,132)
                                                                     -----------------------------------------
                                                                      $     1,071,389              998,797
                                                                     =========================================





(5)  DEVELOPMENT

     During  the  period  in  which  a  property  is  under  development,  costs
associated with development (i.e., land,  construction  costs,  interest expense
during  construction and lease-up,  property taxes and other direct and indirect
costs  associated with  development)  are aggregated into the total  capitalized
costs of the property.  Included in these costs are  management's  estimates for
the  portions  of internal  costs  (primarily  personnel  costs) that are deemed
directly or indirectly related to such development  activities.  As the property
becomes  occupied,  costs are  capitalized  only for the portion of the building
that remains  vacant.  When the property  becomes 80% occupied or one year after
completion of the shell construction (whichever comes first),  capitalization of
development  costs  ceases on  properties  developed  for  lease and  properties
developed for sale.  Properties developed for lease are then transferred to real
estate properties,  and depreciation commences on the entire property (excluding
the land).  Properties  developed  for sale  remain  classified  as  development
properties  until the criteria for  classifying the properties as held for sale,
as discussed in Note 7, have been met. During this period, costs associated with
the  properties  developed  for  sale  (i.e.,  property  taxes,  insurance,  and
utilities) are expensed as incurred, and these properties are not depreciated.

(6)  BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES

     Upon  acquisition  of real  estate  properties,  the  Company  applies  the
principles  of  Statement  of  Financial  Accounting  Standards  (SFAS) No. 141,
Business  Combinations,  to determine the allocation of the purchase price among
the individual  components of both the tangible and  intangible  assets based on
their  respective  fair values.  The Company  determines  whether any  financing
assumed is above or below  market  based upon  comparison  to similar  financing
terms  for  similar  properties.  The  cost of the  properties  acquired  may be
adjusted based on indebtedness  assumed from the seller that is determined to be
above or below market rates.  Factors considered by management in allocating the
cost of the properties acquired include an estimate of carrying costs during the
expected  lease-up periods  considering  current market  conditions and costs to
execute  similar leases.  The allocation to tangible assets (land,  building and
improvements)  is based  upon  management's  determination  of the  value of the
property as if it were vacant using discounted cash flow models.
     The  remaining  purchase  price is  allocated  among  three  categories  of
intangible  assets consisting of the above or below market component of in-place
leases,  the value of in-place  leases and the value of customer  relationships.
The  value  allocable  to the above or below  market  component  of an  acquired
in-place lease is determined based upon the present value (using a discount rate
which reflects the risks  associated with the acquired leases) of the difference
between (i) the  contractual  amounts to be paid  pursuant to the lease over its
remaining term, and (ii) management's estimate of the amounts that would be paid
using fair  market  rates over the  remaining  term of the  lease.  The  amounts
allocated  to above and below  market  leases are  included in Other  Assets and
Other  Liabilities,  respectively,  on the  consolidated  balance sheets and are
amortized to rental income over the remaining  terms of the  respective  leases.
The total amount of  intangible  assets is further  allocated to in-place  lease
values and to customer relationship values based upon management's assessment of
their respective values. These intangible assets are included in Other Assets on
the consolidated balance sheets and are amortized over the remaining term of the
existing  lease,  or the  anticipated  life  of the  customer  relationship,  as
applicable. Amortization expense for in-place lease intangibles was $927,000 and
$2,630,000 for the three and nine months ended September 30, 2008, respectively,
and $732,000 and $2,325,000 for the same periods in 2007.  Amortization of above
and below market leases was immaterial for all periods presented.
     The Company acquired five operating properties and 9.9 acres of developable
land in a single  transaction  during the first  quarter  of 2008.  In the third
quarter,  EastGroup acquired one property for  redevelopment,  one non-operating
property  (which  was also sold  during  the third  quarter),  and 12.2 acres of
developable  land. The Company  purchased  these real estate  investments  for a
total cost of  $52,844,000,  of which  $44,242,000  was allocated to real estate
properties  and  $6,562,000 to  development.  In  accordance  with SFAS No. 141,
intangibles  associated  with the  purchase  of real estate  were  allocated  as
follows:  $2,143,000 to in-place lease  intangibles and $252,000 to above market
leases (both  included in Other Assets on the  consolidated  balance  sheet) and
$355,000  to  below  market  leases  (included  in  Other   Liabilities  on  the
consolidated  balance sheet). These costs are amortized over the remaining lives
of the associated leases in place at the time of acquisition.
     The Company  periodically reviews (at least annually) the recoverability of
goodwill and (on a quarterly basis) the  recoverability of other intangibles for
possible impairment. In management's opinion, no material impairment of goodwill
and other intangibles existed at September 30, 2008, or December 31, 2007.

(7)  REAL ESTATE HELD FOR SALE/DISCONTINUED OPERATIONS

     The Company considers a real estate property to be held for sale when it is
probable  that the  property  will be sold  within a year.  A key  indicator  of
probability  of sale is whether  the buyer has a  significant  amount of earnest
money at risk. Real estate properties that are held for sale are reported at the
lower of the carrying  amount or fair value less estimated costs to sell and are
not depreciated  while they are held for sale. In accordance with the guidelines
established  under SFAS No. 144,  Accounting  for the  Impairment or Disposal of
Long-Lived Assets, the results of operations for the properties sold or held for
sale during the reported periods are shown under Discontinued  Operations on the
consolidated  income statements.  Interest expense is not generally allocated to
the  properties  that are held for sale or whose  operations  are included under
Discontinued  Operations unless the mortgage is required to be paid in full upon
the sale of the property.
     During the second quarter of 2008,  EastGroup received a condemnation award
from the State of Texas for its North Stemmons I property in Dallas. The Company
was awarded  $4,698,000  as payment for the  building  and a portion of the land
associated  with the  property,  and a gain of  $1,949,000  was  recognized as a
result of this transaction.
     During the third quarter of 2008,  EastGroup  sold one operating  property,
Delp  Distribution  Center III in Memphis.  The Company sold this 20,000  square
foot warehouse for $635,000 and recognized a gain of $83,000.
     In March 2007,  EastGroup entered into a contract with United Stationers to
acquire  a  128,000  square  foot  warehouse  in  Tampa  as part of the  Orlando
build-to-suit  transaction  between the two parties.  In August 2008,  EastGroup
purchased  the building  through its taxable REIT  subsidiary.  The Company then
sold the  builing  and  recognized  an  after-tax  gain of  $294,000,  which was
included in  earnings  per share (EPS) and funds from  operations  available  to
common  stockholders  (FFO). In connection with the sale,  EastGroup  financed a
portion  of the sales  proceeds.  At  September  30,  2008,  the  mortgage  loan
receivable, net of discount of $147,000, was $4,003,000.
     In addition, EastGroup sold 41 acres of residential land in San Antonio for
$841,000,  with no gain or  loss.  This  property  was  acquired  as part of the
Company's Alamo Ridge industrial land acquisition in September 2007.



     The Company had no real estate  properties  that were considered to be held
for sale at September 30, 2008.

(8)  OTHER ASSETS

     A summary of the Company's Other Assets is as follows:


                                                                                    September 30, 2008    December 31, 2007
                                                                                   -----------------------------------------
                                                                                                 (In thousands)
                                                                                                          
     Leasing costs (principally commissions), net of accumulated amortization...    $        20,977               18,693
     Straight-line rent receivable, net of allowance for doubtful accounts......             14,598               14,016
     Accounts receivable, net of allowance for doubtful accounts................              2,671                3,587
     Acquired in-place lease intangibles, net of accumulated amortization
       of $5,552 and $5,308 for 2008 and 2007, respectively.....................              4,982                5,303
     Mortgage loans receivable, net of discount of $147 and $0 for 2008 and
       2007, respectively.......................................................              4,115                  132
     Goodwill...................................................................                990                  990
     Prepaid expenses and other assets..........................................             10,856               10,961
                                                                                   -----------------------------------------
                                                                                    $        59,189               53,682
                                                                                   =========================================


(9)  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     A summary of the  Company's  Accounts  Payable and  Accrued  Expenses is as
follows:


                                                                                    September 30, 2008    December 31, 2007
                                                                                   -----------------------------------------
                                                                                                 (In thousands)
                                                                                                            
        Property taxes payable..................................................    $        15,437                9,744
        Development costs payable...............................................              7,430               13,022
        Dividends payable.......................................................              1,982                2,337
        Other payables and accrued expenses.....................................              8,218                9,076
                                                                                   -----------------------------------------
                                                                                    $        33,067               34,179
                                                                                   =========================================


(10) OTHER LIABILITIES

     A summary of the Company's Other Liabilities is as follows:


                                                                                    September 30, 2008    December 31, 2007
                                                                                   -----------------------------------------
                                                                                                 (In thousands)
                                                                                                             
        Security deposits.......................................................    $         7,600                7,529
        Prepaid rent and other deferred income..................................              5,905                6,911
        Other liabilities.......................................................              1,571                1,713
                                                                                   -----------------------------------------
                                                                                    $        15,076               16,153
                                                                                   =========================================


(11) REDEMPTION OF SERIES D PREFERRED SHARES

     On July 2,  2008,  EastGroup  redeemed  all  1,320,000  shares of its 7.95%
Series D Cumulative  Redeemable  Preferred Stock at a redemption price of $25.00
per share plus  accrued and unpaid  dividends  of $.011 per share for the period
from July 1, 2008,  through and including the redemption  date, for an aggregate
redemption  price of $25.011 per Series D  Preferred  Share.  Original  issuance
costs of  $674,000  and  additional  redemption  costs of  $8,000  were  charged
againste net income  available to common  stockholders  in conjunction  with the
redemption of these shares.

(12) COMPREHENSIVE INCOME

     Comprehensive  income is comprised of net income plus all other  changes in
equity from non-owner sources. The components of accumulated other comprehensive
income (loss) for the nine months ended  September 30, 2008 are presented in the
Company's  consolidated statement of changes in stockholders' equity and for the
three and nine months ended September 30, 2008 and 2007 are summarized below.


                                                                                   Three Months Ended        Nine Months Ended
                                                                                      September 30,             September 30,
                                                                                ----------------------------------------------------
                                                                                   2008          2007        2008         2007
                                                                                ----------------------------------------------------
                                                                                                   (In thousands)
                                                                                                               
        ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
        Balance at beginning of period......................................    $   (99)          362         (56)         314
            Change in fair value of interest rate swap......................        (27)         (216)        (70)        (168)
                                                                                ----------------------------------------------------
        Balance at end of period............................................    $  (126)          146        (126)         146
                                                                                ====================================================




(13) EARNINGS PER SHARE

     Basic EPS  represents  the amount of earnings  for the period  available to
each  share of  common  stock  outstanding  during  the  reporting  period.  The
Company's  basic EPS is  calculated  by dividing net income  available to common
stockholders by the weighted average number of common shares outstanding.
     Diluted EPS represents  the amount of earnings for the period  available to
each share of common stock  outstanding  during the reporting period and to each
share that would have been  outstanding  assuming the issuance of common  shares
for all  dilutive  potential  common  shares  outstanding  during the  reporting
period.  The Company  calculates diluted EPS by dividing net income available to
common  stockholders by the weighted average number of common shares outstanding
plus the dilutive effect of nonvested restricted stock and stock options had the
options  been  exercised.  The  dilutive  effect  of  stock  options  and  their
equivalents  (such as  nonvested  restricted  stock)  was  determined  using the
treasury stock method which assumes  exercise of the options as of the beginning
of the period or when issued,  if later,  and assumes proceeds from the exercise
of options are used to purchase  common stock at the average market price during
the period.
     Reconciliation  of the numerators and denominators in the basic and diluted
EPS computations is as follows:


                                                                                   Three Months Ended        Nine Months Ended
                                                                                      September 30,             September 30,
                                                                                ----------------------------------------------------
                                                                                   2008          2007        2008         2007
                                                                                ----------------------------------------------------
                                                                                                  (In thousands)
                                                                                                               
        BASIC EPS COMPUTATION
          Numerator-net income available to common stockholders.............    $    7,176         7,058      23,701       18,465
          Denominator-weighted average shares outstanding...................        24,908        23,562      24,362       23,548
        DILUTED EPS COMPUTATION
          Numerator-net income available to common stockholders.............    $    7,176         7,058      23,701       18,465
          Denominator:
            Weighted average shares outstanding.............................        24,908        23,562      24,362       23,548
            Common stock options............................................            56            81          60           95
            Nonvested restricted stock......................................           105           135          95          124
                                                                                ----------------------------------------------------
              Total Shares..................................................        25,069        23,778      24,517       23,767
                                                                                ====================================================


(14)  STOCK-BASED COMPENSATION

Management Incentive Plan
     The  Company  has a  management  incentive  plan which was  approved by the
shareholders  and adopted in 2004.  This plan  authorizes  the issuance of up to
1,900,000  shares of common  stock to  employees  in the form of options,  stock
appreciation  rights,  restricted  stock (limited to 570,000  shares),  deferred
stock  units,  performance  shares,  stock  bonuses,  and  stock.  Total  shares
available for grant were 1,685,794 at September 30, 2008. Typically, the Company
issues new shares to fulfill stock grants or upon the exercise of stock options.
     Stock-based compensation was $929,000 and $2,195,000 for the three and nine
months ended  September 30, 2008,  respectively,  of which $310,000 and $666,000
were capitalized as part of the Company's  development  costs. For the three and
nine months ended September 30, 2007, stock-based  compensation was $845,000 and
$2,041,000,  respectively,  of which  $246,000 and $681,000 were  capitalized as
part of the Company's development costs.

Restricted Stock
     In the second  quarter of 2008,  the Company  granted  shares to  executive
officers  contingent  upon the attainment of certain annual  performance  goals.
These goals are for the period  ending  December 31, 2008,  so any shares issued
upon  attainment  of these goals will be issued  after that date.  The number of
shares to be issued could range from zero to 44,802.  These shares will vest 20%
on the date shares are determined and awarded and 20% per year on each January 1
for the subsequent four years.
     Following is a summary of the total  restricted  shares granted,  forfeited
and delivered (vested) to employees with the related weighted average grant date
fair value share prices.  The table does not include shares granted in 2006 that
are  contingent  on  market  conditions  and  shares  granted  in 2008  that are
contingent on the  attainment of certain  annual  performance  goals.  As of the
vesting  date,  the fair value of shares that vested during the first quarter of
2008 was  $1,161,000.  There were no shares  that  vested in the second or third
quarters of 2008.






Restricted Stock Activity:                 Three Months Ended         Nine Months Ended
                                           September 30, 2008         September 30, 2008
                                        ---------------------------------------------------
                                                      Weighted                   Weighted
                                                       Average                    Average
                                                     Grant Date                 Grant Date
                                          Shares     Fair Value       Shares    Fair Value
                                        ---------------------------------------------------
                                                                        
Nonvested at beginning of period....      149,167    $   33.42        144,089   $   31.65
Granted (1).........................            -            -         34,668       49.14
Forfeited...........................         (500)       20.50         (2,320)      24.81
Vested..............................            -            -        (27,770)      44.33
                                        ----------                  ----------
Nonvested at end of period..........      148,667        33.46        148,667       33.46
                                        ==========                  ==========


(1) Represents  shares issued in March 2008 that were granted in 2007 subject to
the satisfaction of annual performance goals.

Directors Equity Plan
     The Company has a directors  equity plan that was approved by  shareholders
and adopted in 2005 and was  further  amended by the Board of  Directors  in May
2008,  which  authorizes  the  issuance of up to 50,000  shares of common  stock
through awards of shares and restricted shares granted to non-employee directors
of the Company.  Stock-based  compensation expense for directors was $61,000 and
$139,000 for the three and nine months ended  September 30, 2008,  respectively,
and $39,000 and $116,000 for the same periods in 2007.

(15) RECENT ACCOUNTING PRONOUNCEMENTS

     In September  2006, the FASB issued SFAS No. 157, Fair Value  Measurements,
which provides  guidance for using fair value to measure assets and liabilities.
SFAS No. 157 applies  whenever  other  standards  require (or permit)  assets or
liabilities  to be  measured  at fair  value but does not expand the use of fair
value in any new circumstances.  The Statement requires  disclosure of the level
within  the fair value  hierarchy  in which the fair  value  measurements  fall,
including  measurements  using  quoted  prices in active  markets for  identical
assets or liabilities (Level 1), quoted prices for similar instruments in active
markets or quoted  prices for identical or similar  instruments  in markets that
are not active (Level 2), and  significant  valuation  assumptions  that are not
readily  observable  in the market (Level 3). The  provisions of Statement  157,
with the exception of nonfinancial  assets and  liabilities,  were effective for
financial  statements issued for fiscal years beginning after November 15, 2007,
and interim  periods  within those fiscal years.  The FASB deferred for one year
the Statement's fair value measurement  requirements for nonfinancial assets and
liabilities that are not required or permitted to be measured at fair value on a
recurring  basis.  These provisions will be effective for fiscal years beginning
after  November 15, 2008,  and the Company is in the process of  evaluating  the
impact that the adoption of these provisions will have on the Company's  overall
financial  position and results of  operations.  As required under SFAS No. 133,
the Company  accounts  for its  interest  rate swap cash flow hedge on the Tower
Automotive mortgage at fair value. At the end of each quarter, the fair value of
the swap is determined  by  estimating  the expected cash flows over the life of
the swap using the mid-market rate and price  environment as of the last trading
day of the quarter.  This market  information  is  considered a Level 2 input as
defined by SFAS No. 157. The application of Statement 157 to the Company in 2008
had an immaterial impact on the Company's overall financial position and results
of operations.
     In December  2007,  the FASB issued SFAS No. 141 (Revised  2007),  Business
Combinations,  which retains the  fundamental  requirements  in SFAS No. 141 and
requires the identifiable  assets  acquired,  the liabilities  assumed,  and any
noncontrolling  interest  in the  acquiree  be  measured at fair value as of the
acquisition  date.  In addition,  Statement  141(R)  requires  that any goodwill
acquired in the business combination be measured as a residual,  and it provides
guidance in  determining  what  information  to disclose to enable  users of the
financial  statements  to  evaluate  the  nature  and  financial  effects of the
business combination. The Statement also requires that acquisition-related costs
be recognized as expenses in the periods in which the costs are incurred and the
services  are  received.  SFAS No.  141(R)  applies  prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
first annual  reporting  period beginning on or after December 15, 2008, and may
not be applied before that date.
     Also in  December  2007,  the  FASB  issued  SFAS No.  160,  Noncontrolling
Interests  in  Consolidated  Financial  Statements,  which  is an  amendment  of
Accounting  Research  Bulletin (ARB) No. 51. Statement 160 provides guidance for
entities that prepare consolidated financial statements that have an outstanding
noncontrolling  interest in one or more  subsidiaries  or that  deconsolidate  a
subsidiary.  SFAS No. 160 is effective  for fiscal  years,  and interim  periods
within those fiscal years,  beginning on or after December 15, 2008, and may not
be applied  before  that date.  The  Company  anticipates  that the  adoption of
Statement  160 on  January  1,  2009,  will  have an  immaterial  impact  on the
Company's consolidated financial statements.
     In March 2008, the FASB issued SFAS No. 161,  Disclosures  about Derivative
Instruments and Hedging Activities,  which is an amendment of FASB Statement No.
133. SFAS No. 161 requires all entities with derivative  instruments to disclose
information regarding how and why the entity uses derivative instruments and how
derivative  instruments  and related hedged items affect the entity's  financial
position,  financial  performance,  and cash flows.  The  Statement is effective
prospectively for periods beginning on or after November 15, 2008.

(16) SUBSEQUENT EVENT

     EastGroup  is under  contract  to  purchase  130 acres of land in  Orlando,
Florida,  for  approximately  $15 million,  and plans to  construct  1.2 million
square  feet on this  development  land.  The  first  phase of this  acquisition
(approximately  $9,750,000)  is expected to close  during the fourth  quarter of
2008.  The second  phase  (approximately  $5,250,000)  is  scheduled to close 12
months after the closing of the first phase.



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW
     EastGroup'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  tenants  primarily  in the 5,000 to
50,000  square  foot  range.  The  Company   develops,   acquires  and  operates
distribution  facilities,  the  majority  of which are  clustered  around  major
transportation  features  in  supply  constrained  submarkets  in major  Sunbelt
regions. The Company's core markets are in the states of Florida, Texas, Arizona
and California.
     The  Company's  primary  revenue  is rental  income;  as such,  EastGroup's
greatest challenge is leasing space.  During the nine months ended September 30,
2008,  leases on  3,439,000  square feet  (13.6%) of  EastGroup's  total  square
footage of  25,326,000  expired,  and the Company was  successful in renewing or
re-leasing 2,874,000 square feet, representing 83.6% of that total. In addition,
EastGroup leased 1,024,000 square feet of other vacant space during this period.
During the nine months ended September 30, 2008, average rental rates on new and
renewal leases increased by 12.7%.
     EastGroup's  total  leased  percentage  was 95.1% at  September  30,  2008,
compared to 97.0% at  September  30,  2007.  Leases  scheduled to expire for the
remainder of 2008 were 1.9% of the portfolio on a square foot basis at September
30, 2008, and this figure was reduced to 1.1% as of November 4, 2008.
     Property net operating  income from same properties  decreased 2.5% for the
quarter as compared to the same period of 2007. Excluding termination fee income
for both periods,  same property  operating  results  increased  0.3%.  Property
results  for the third  quarter of 2007  included  $966,000 of  termination  fee
income mainly from one tenant's early  termination,  and lease  termination  fee
income for the third  quarter of 2008 was  $186,000.  For the nine months  ended
September 30, 2008,  property net operating income decreased 0.1% as compared to
the same period of 2007. Excluding termination fee income for both periods, same
property operating results increased 0.2% for the nine months.
     The  Company   generates  new  sources  of  leasing   revenue  through  its
acquisition  and  development  programs.  During the first nine  months of 2008,
EastGroup  purchased  five  operating  properties  (669,000  square  feet),  one
property for  re-development  (150,000 square feet), one non-operating  property
(which  the  Company  also sold  during  the third  quarter)  and 22.1  acres of
developable  land  for a  total  cost  of  $52.8  million.  The  five  operating
properties  and 9.9  acres of  developable  land  are  located  in  metropolitan
Charlotte,  North  Carolina,  where the Company now owns over 1.6 million square
feet. The property acquired for re-development (12th Street Distribution Center)
is located in Jacksonville, Florida, and the remaining 12.2 acres of developable
land are located in San Antonio,  Texas. The non-operating  property acquired by
EastGroup is a 128,000 square foot vacant warehouse  located in Tampa,  Florida.
EastGroup  purchased  this  property in connection  with the  Company's  Orlando
build-to-suit  transaction  with  United  Stationers.  EastGroup  purchased  the
building  through  its taxable  REIT  subsidiary  for $5.2  million and sold the
building, recognizing an after-tax gain of $294,000.
     EastGroup  continues to see targeted  development as a major contributor to
the Company's  growth.  The Company  mitigates risks associated with development
through  a  Board-approved  maximum  level of land held for  development  and by
adjusting development start dates according to leasing activity. During the nine
months  ended  September  30,  2008,  the  Company   transferred  11  properties
(1,105,000  square feet) with  aggregate  costs of $63.9  million at the date of
transfer from development to real estate  properties.  These  properties,  which
were  collectively  94% leased as of November 4, 2008, are located in Fort Myers
and Orlando, Florida; Phoenix, Arizona; and Houston and San Antonio, Texas.
     The  Company  primarily  funds its  acquisition  and  development  programs
through its  four-year,  $225 million lines of credit (as discussed in Liquidity
and Capital  Resources).  As market conditions permit,  EastGroup issues equity,
including  preferred  equity,  and/or  employs  fixed-rate,  non-recourse  first
mortgage debt to replace the short-term bank borrowings.
     EastGroup  has  one   reportable   segment-industrial   properties.   These
properties are primarily  located in major Sunbelt regions of the United States,
have similar  economic  characteristics  and also meet the other  criteria  that
permit  the  properties  to be  aggregated  into  one  reportable  segment.  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),  defined 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.  The  Company  calculates  FFO  based on the
National Association of Real Estate Investment Trusts' (NAREIT) definition.
     PNOI is a supplemental  industry reporting measurement used to evaluate the
performance of the Company's real estate investments.  The Company believes that
the exclusion of depreciation and amortization in the industry's  calculation of
PNOI provides a supplemental  indicator of the property's performance since real
estate values have historically risen or fallen with market conditions.  PNOI as
calculated  by the  Company  may  not be  comparable  to  similarly  titled  but
differently calculated measures for other real estate investment trusts (REITs).
The major factors that influence  PNOI are occupancy  levels,  acquisitions  and
sales,  development properties that achieve stabilized  operations,  rental rate
increases  or  decreases,  and the  recoverability  of operating  expenses.  The
Company's success depends largely upon its ability to lease space and to recover
from tenants the operating costs associated with those leases.
     Real estate income is comprised of rental income,  pass-through  income and
other real estate income including lease  termination fees.  Property  operating
expenses  are  comprised of property  taxes,  insurance,  utilities,  repair and
maintenance  expenses,  management  fees,  other  operating  costs  and bad debt
expense.  Generally,  the  Company's  most  significant  operating  expenses are
property taxes and insurance. Tenant leases may be net leases in which the total
operating  expenses are recoverable,  modified gross leases in which some of the
operating  expenses  are  recoverable,  or gross leases in which no expenses are
recoverable  (gross leases represent only a small portion of the Company's total



leases).  Increases in property  operating  expenses are fully recoverable under
net leases  and  recoverable  to a high  degree  under  modified  gross  leases.
Modified gross leases often include base year amounts and expense increases over
these  amounts are  recoverable.  The Company's  exposure to property  operating
expenses is primarily due to vacancies and leases for occupied  space that limit
the amount of expenses that can be recovered.
     The Company believes FFO is a meaningful  supplemental measure of operating
performance for equity REITs. The Company  believes that excluding  depreciation
and  amortization  in the  calculation of FFO is  appropriate  since real estate
values have historically increased or decreased based on market conditions.  FFO
is not considered as an alternative to net income (determined in accordance with
GAAP) as an  indication  of the  Company's  financial  performance,  nor is it a
measure of the Company's  liquidity or indicative of funds  available to provide
for the Company's cash needs,  including its ability to make distributions.  The
Company's key drivers  affecting  FFO are changes in PNOI (as discussed  above),
interest  rates,  the amount of  leverage  the  Company  employs and general and
administrative  expense. The following table presents on a comparative basis for
the three and nine months ended September 30, 2008 and 2007  reconciliations  of
PNOI and FFO Available to Common Stockholders to Net Income.


                                                                                   Three Months Ended           Nine Months Ended
                                                                                      September 30,               September 30,
                                                                                ----------------------------------------------------
                                                                                   2008          2007          2008          2007
                                                                                ----------------------------------------------------
                                                                                       (In thousands, except per share data)
                                                                                                                
Income from real estate operations...........................................   $  42,904        39,005       124,415      111,795
Expenses from real estate operations.........................................     (12,193)      (10,441)      (34,559)     (30,613)
                                                                                ----------------------------------------------------
PROPERTY NET OPERATING INCOME................................................      30,711        28,564        89,856       81,182

Equity in earnings of unconsolidated investment (before depreciation)........         113            98           338          313
Income from discontinued operations (before depreciation and amortization)...          10           171           201          488
Interest income..............................................................         125            38           189           94
Gain on sales of securities..................................................           -             -           435            -
Other income.................................................................          16            20           232           65
Interest expense.............................................................      (7,596)       (7,086)      (22,478)     (20,162)
General and administrative expense...........................................      (2,250)       (1,993)       (6,349)      (5,868)
Minority interest in earnings (before depreciation and amortization).........        (220)         (175)         (613)        (562)
Gain on sales of non-operating real estate...................................         301             9           313           23
Dividends on Series D preferred shares.......................................         (14)         (656)       (1,326)      (1,968)
Costs on redemption of Series D preferred shares.............................        (682)            -          (682)           -
                                                                                ----------------------------------------------------

FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS.......................      20,514        18,990        60,116       53,605
Depreciation and amortization from continuing operations.....................     (13,436)      (12,158)      (38,428)     (35,185)
Depreciation and amortization from discontinued operations...................          (3)          (83)          (71)        (277)
Depreciation from unconsolidated investment..................................         (33)          (33)          (99)         (99)
Minority interest depreciation and amortization..............................          51            42           151          121
Gain on sales of depreciable real estate investments.........................          83           300         2,032          300
                                                                                ----------------------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS..................................       7,176         7,058        23,701       18,465
Dividends on Series D preferred shares.......................................          14           656         1,326        1,968
Costs on redemption of Series D preferred shares.............................         682             -           682            -
                                                                                ----------------------------------------------------

NET INCOME...................................................................   $   7,872         7,714        25,709       20,433
                                                                                ====================================================

Net income available to common stockholders per diluted share................   $     .29           .30           .97          .78
Funds from operations available to common stockholders per diluted share.....         .82           .80          2.45         2.26

Diluted shares for earnings per share and funds from operations..............      25,069        23,778        24,517       23,767




The Company analyzes the following performance trends in evaluating the progress
of the Company:

o    The FFO change per share  represents  the  increase  or decrease in FFO per
     share from the same quarter in the current year compared to the prior year.
     FFO per  share for the third  quarter  of 2008 was $.82 per share  compared
     with $.80 per share for the same  period of 2007,  an  increase of 2.5% per
     share.  PNOI increased 7.5% primarily due to additional  PNOI of $2,105,000
     from  newly   developed   properties   and  $782,000  from  2007  and  2008
     acquisitions,  offset by a decrease of $708,000 from same  property  growth
     resulting from a large  termination  fee in last year's third quarter.  FFO
     for this  quarter  also  included  the  expensing  of  $674,000 of original
     issuance  costs due to the  redemption  of  EastGroup's  Series D Preferred
     Stock. The third quarter of 2008 was the seventeenth consecutive quarter of
     increased FFO per share as compared to the previous year's quarter.

     For the nine  months  ended  September  30,  2008,  FFO was $2.45 per share
     compared  with $2.26 for the same  period of 2007,  an increase of 8.4% per
     share.  PNOI  increased  10.7% mainly due to additional  PNOI of $5,963,000
     from  newly  developed   properties  and  $2,863,000  from  2007  and  2008
     acquisitions, offset by a decrease of $110,000 from same property growth.

o    Same property net operating  income change  represents the PNOI increase or
     decrease for operating  properties  owned during the entire  current period
     and prior year reporting  period.  Excluding the termination fees mentioned
     above, PNOI from same properties  increased 0.3% for the three months ended
     September  30, 2008,  and 0.2% for the nine months.  Excluding  termination
     fees, the third quarter of 2008 was the twenty-first consecutive quarter of
     improved results of this measure.

o    Occupancy is the  percentage of leased  square  footage for which the lease
     term has commenced as compared to the total  leasable  square footage as of
     the close of the reporting  period.  Occupancy at September  30, 2008,  was
     94.4%.  Occupancy  has  ranged  from  94.4% to 95.7% in the  previous  four
     quarters.

o    Rental rate change  represents  the rental rate increase or decrease on new
     and renewal leases  compared to the prior leases on the same space.  Rental
     rate  increases on new and renewal  leases  (6.3% of total square  footage)
     averaged 15.8% for the third quarter.  For the nine months ended  September
     30, 2008,  rental rate  increases on new and renewal leases (15.4% of total
     square footage) averaged 12.7%.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The Company's  management  considers the following  accounting policies and
estimates to be critical to the reported operations of the Company.

Real Estate Properties
     The Company  allocates  the purchase  price of acquired  properties  to net
tangible and identified intangible assets based on their respective fair values.
Factors  considered  by  management  in  allocating  the cost of the  properties
acquired  include an estimate of carrying  costs  during the  expected  lease-up
periods  considering  current  market  conditions  and costs to execute  similar
leases. The allocation to tangible assets (land,  buildings and improvements) is
based upon management's determination of the value of the property as if it were
vacant  using  discounted  cash flow models.  The  remaining  purchase  price is
allocated among three categories of intangible assets consisting of the above or
below market component of in-place leases,  the value of in-place leases and the
value of  customer  relationships.  The  value  allocable  to the above or below
market  component of an acquired  in-place  lease is  determined  based upon the
present value (using a discount rate which  reflects the risks  associated  with
the acquired leases) of the difference between (i) the contractual amounts to be
paid  pursuant  to the lease  over its  remaining  term,  and (ii)  management's
estimate  of the  amounts  that would be paid using fair  market  rates over the
remaining  term of the lease.  The amounts  allocated  to above and below market
leases are included in Other Assets and Other Liabilities,  respectively, on the
consolidated  balance  sheets  and are  amortized  to  rental  income  over  the
remaining terms of the respective  leases. The total amount of intangible assets
is further  allocated  to in-place  lease  values and to  customer  relationship
values based upon  management's  assessment of their  respective  values.  These
intangible  assets are  included  in Other  Assets on the  consolidated  balance
sheets and are amortized over the remaining term of the existing  lease,  or the
anticipated life of the customer relationship, as applicable.
     During the industrial  development stage, costs associated with development
(i.e.,  land,  construction  costs,  interest  expense during  construction  and
lease-up,  property  taxes and other direct and indirect costs  associated  with
development)  are  aggregated  into the total  capitalization  of the  property.
Included in these costs are management's  estimates for the portions of internal
costs (primarily personnel costs) that are deemed directly or indirectly related
to such development activities.
     The Company  reviews its real estate  investments  for  impairment of value
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be  recoverable.  If any real estate  investment  is considered
permanently  impaired,  a loss is recorded to reduce the  carrying  value of the
property to its estimated fair value. Real estate assets to be sold are reported
at the lower of the  carrying  amount or fair  value  less  selling  costs.  The
evaluation  of real estate  investments  involves  many  subjective  assumptions
dependent  upon future  economic  events that affect the  ultimate  value of the
property.  Currently,  the Company's  management is not aware of any  impairment
issues nor has it experienced any significant impairment issues in recent years.
In the event of  impairment,  the  property's  basis  would be  reduced  and the
impairment  would  be  recognized  as a  current  period  charge  on the  income
statement.

Valuation of Receivables
     The  Company is  subject to tenant  defaults  and  bankruptcies  that could
affect the  collection of  outstanding  receivables.  In order to mitigate these
risks, the Company  performs credit reviews and analyses on prospective  tenants
before  significant  leases are  executed.  On a  quarterly  basis,  the Company
evaluates  outstanding  receivables  and  estimates  the  allowance for doubtful
accounts.   Management   specifically   analyzes  aged   receivables,   customer
credit-worthiness,  historical  bad  debts  and  current  economic  trends  when
evaluating  the adequacy of the  allowance  for doubtful  accounts.  The Company
believes  that  its  allowance  for  doubtful   accounts  is  adequate  for  its
outstanding  receivables  for the  periods  presented.  In the  event  that  the
allowance  for  doubtful  accounts  is  insufficient  for  an  account  that  is
subsequently  written off,  additional bad debt expense would be recognized as a
current period charge on the income statement.

Tax Status
     EastGroup,  a  Maryland  corporation,   has  qualified  as  a  real  estate
investment trust under Sections 856-860 of the Internal Revenue Code and intends
to continue to qualify as such. To maintain its status as a REIT, the Company is
required  to  distribute  at least  90% of its  ordinary  taxable  income to its
stockholders.  The Company has the option of (i)  reinvesting the sales price of
properties  sold  through  tax-deferred  exchanges,  allowing  for a deferral of
capital  gains on the sale,  (ii) paying out capital  gains to the  stockholders
with no tax to the Company,  or (iii)  treating the capital gains as having been
distributed to the stockholders,  paying the tax on the gain deemed  distributed
and  allocating  the tax  paid as a  credit  to the  stockholders.  The  Company
distributed  all of its 2007 taxable income to its  stockholders  and expects to
distribute  all of its taxable  income in 2008.  Accordingly,  no provision  for
income taxes was necessary in 2007, nor is it expected to be necessary for 2008.



FINANCIAL CONDITION

     EastGroup's  assets were  $1,134,512,000 at September 30, 2008, an increase
of  $78,679,000  from December 31, 2007.  Liabilities  increased  $65,666,000 to
$716,802,000  and  stockholders'  equity  increased  $12,853,000 to $415,238,000
during the same period.  The  paragraphs  that follow  explain  these changes in
detail.

ASSETS

Real Estate Properties
     Real estate properties increased  $111,007,000 during the nine months ended
September 30, 2008,  primarily due to the purchase of five operating  properties
in a single  transaction and the transfer of eleven properties from development,
as detailed  below.  These  increases  were offset by the sale of two  operating
properties,  North Stemmons I and Delp Distribution  Center III, during the nine
months. In addition, EastGroup sold 41 acres of residential land in San Antonio,
Texas,  for $841,000 with no gain or loss. This property was acquired as part of
the Company's Alamo Ridge industrial land acquisition in September 2007.


                                                                                             Date
        Real Estate Properties Acquired in 2008        Location              Size          Acquired        Cost (1)
        --------------------------------------------------------------------------------------------------------------
                                                                         (Square feet)                  (In thousands)
                                                                                                
        Airport Commerce Center I & II,
        Interchange Park, Ridge Creek
        Distribution Center and Waterford
        Distribution Center....................      Charlotte, NC          669,000         02/29/08     $    39,018


(1)  Total cost of the properties acquired was $41,913,000, of which $39,018,000
     was allocated to real estate properties as indicated above and $855,000 was
     allocated to development. Intangibles associated with the purchases of real
     estate were allocated as follows: $2,143,000 to in-place lease intangibles,
     $252,000 to above  market  leases  (both  included  in Other  Assets on the
     consolidated  balance sheet) and $355,000 to below market leases  (included
     in Other Liabilities on the consolidated balance sheet). All of these costs
     are amortized over the remaining lives of the associated leases in place at
     the time of acquisition.


        Real Estate Properties Transferred from                                            Date
                  Development in 2008                  Location            Size         Transferred       Cost at Transfer
        --------------------------------------------------------------------------------------------------------------------
                                                                       (Square feet)                       (In thousands)
                                                                                                     
        Beltway Crossing IV....................      Houston, TX            55,000       01/21/08         $        3,365
        Beltway Crossing III...................      Houston, TX            55,000       02/01/08                  2,866
        Southridge XII.........................      Orlando, FL           404,000       03/20/08                 18,521
        Arion 18...............................      San Antonio, TX        20,000       03/31/08                  2,593
        Southridge VII.........................      Orlando, FL            92,000       04/01/08                  6,500
        Wetmore II, Building C.................      San Antonio, TX        69,000       05/29/08                  3,682
        Interstate Commons III.................      Phoenix, AZ            38,000       06/01/08                  3,093
        SunCoast I ............................      Fort Myers, FL         63,000       07/01/08                  5,225
        World Houston 27.......................      Houston, TX            92,000       07/01/08                  4,248
        Wetmore II, Building D.................      San Antonio, TX       124,000       08/01/08                  7,950
        World Houston 24.......................      Houston, TX            93,000       09/01/08                  5,904
                                                                       ------------                      -------------------
              Total Developments Transferred...                          1,105,000                        $       63,947
                                                                       ============                      ===================


     The Company  made  capital  improvements  of  $10,705,000  on existing  and
acquired properties (included in the Capital Expenditures table under Results of
Operations).  Also,  the Company  incurred  costs of $2,616,000  on  development
properties subsequent to transfer to real estate properties; the Company records
these  expenditures as development costs on the consolidated  statements of cash
flows during the 12-month period following transfer.

Development
     The  investment  in  development  at September 30, 2008,  was  $145,074,000
compared to  $152,963,000  at December  31,  2007.  Total  capital  invested for
development  during  the  first  nine  months  of 2008  was  $58,357,000,  which
primarily  consisted  of costs of  $56,058,000  as detailed  in the  development
activity  table and costs of  $2,616,000  on  developments  transferred  to real
estate properties during the 12-month period ended September 30, 2008.
     During 2007,  the Company  executed a ten-year  lease for a 404,000  square
foot build-to-suit  development in its Southridge  Commerce Park in Orlando.  In
March 2008,  construction on this project was completed,  and the tenant, United
Stationers  Supply  Company,   occupied  the  space.  In  connection  with  this
transaction, EastGroup entered into contracts with United Stationers to purchase
two of its existing  properties in  Jacksonville  and Tampa,  Florida.  In July,
EastGroup  acquired  12th  Street  Distribution  Center,  a 150,000  square foot
building  in  Jacksonville.



The Company  purchased the vacant property for $3,776,000 and plans to redevelop
it for  multi-tenant  use for a projected total  investment of $4,700,000.  Also
during  the third  quarter,  EastGroup  closed on the  acquisition  of a 128,000
square foot warehouse in Tampa through its taxable REIT subsidiary.  The Company
then sold the building, recognizing an after-tax gain of $294,000.
     During the nine months ended September 30, 2008,  EastGroup  purchased 22.1
acres of developable land for $2,786,000. Costs associated with this acquisition
are included in the  development  activity  table.  The Company  transferred  11
developments to real estate properties during the first nine months of 2008 with
a total investment of $63,947,000 as of the date of transfer.





                                                                                        Costs Incurred
                                                                       ----------------------------------------------
                                                                           Costs           For the        Cumulative
                                                                        Transferred      Nine Months        as of        Estimated
DEVELOPMENT                                                 Size        in 2008 (1)     Ended 9/30/08      9/30/08      Total Costs
- ------------------------------------------------------------------------------------------------------------------------------------
                                                        (Square feet)                            (In thousands)
                                                                                                              
LEASE-UP
  Oak Creek A & B, Tampa, FL(2).......................        35,000    $        -                88          3,029          3,300
  Centennial Park, Denver, CO.........................        68,000             -               690          5,437          5,500
  World Houston 25, Houston, TX.......................        66,000             -               528          3,722          3,900
  Beltway Crossing V, Houston, TX.....................        83,000             -               897          4,643          5,000
  Wetmore II, Building A, San Antonio, TX.............        34,000             -               558          3,359          3,600
  40th Avenue Distribution Center, Phoenix, AZ........        89,000             -               453          5,600          6,100
  Wetmore II, Building B, San Antonio, TX.............        55,000             -               640          3,523          3,700
  Beltway Crossing VI, Houston, TX....................       127,000             -             1,754          5,277          6,400
  Oak Creek VI,  Tampa, FL............................        89,000             -             1,635          5,540          5,800
  Southridge VIII, Orlando, FL........................        91,000             -             1,845          5,885          6,700
  Techway SW IV, Houston, TX..........................        94,000             -             2,550          4,518          5,800
  SunCoast III, Fort Myers, FL........................        93,000             -             2,333          6,508          8,400
  Sky Harbor, Phoenix, AZ.............................       261,000             -             8,395         22,403         22,800
  World Houston 26, Houston, TX.......................        59,000         1,110             1,637          2,747          3,300
                                                        ----------------------------------------------------------------------------
Total Lease-up........................................     1,244,000         1,110            24,003         82,191         90,300
                                                        ----------------------------------------------------------------------------

UNDER CONSTRUCTION
  12th Street Distribution Center, Jacksonville, FL...       150,000             -             4,239          4,239          4,700
  Country Club III & IV, Tucson, AZ...................       138,000         2,552             2,936          5,488         11,200
  Oak Creek IX, Tampa, FL.............................        86,000         1,369             1,055          2,424          5,500
  Blue Heron III, West Palm Beach, FL.................        20,000           863               185          1,048          2,300
  Beltway Crossing VII, Houston, TX...................        95,000         2,123                 -          2,123          5,900
  World Houston 28, Houston, TX.......................        59,000           733               131            864          4,800
  World Houston 29, Houston, TX.......................        70,000           849                82            931          4,700
                                                        ----------------------------------------------------------------------------
Total Under Construction..............................       618,000         8,489             8,628         17,117         39,100
                                                        ----------------------------------------------------------------------------

PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
  Tucson, AZ..........................................        70,000        (2,552)              924            417          3,500
  Tampa, FL...........................................       249,000        (1,369)              555          3,763         14,600
  Orlando, FL.........................................       229,000             -             1,038          4,800         13,700
  West Palm Beach, FL.................................             -          (863)               52              -              -
  Fort Myers, FL......................................       659,000             -             1,893         14,712         48,100
  Dallas, TX..........................................        70,000             -               554            554          5,000
  El Paso, TX.........................................       251,000             -                 -          2,444          9,600
  Houston, TX.........................................     1,074,000        (4,815)            2,625         12,359         65,900
  San Antonio, TX.....................................       590,000             -             2,467          5,033         37,500
  Charlotte, NC.......................................        95,000             -               978            978          7,100
  Jackson, MS.........................................        28,000             -                 1            706          2,000
                                                        ----------------------------------------------------------------------------
Total Prospective Development.........................     3,315,000        (9,599)           11,087         45,766        207,000
                                                        ----------------------------------------------------------------------------
                                                           5,177,000    $        -            43,718        145,074        336,400
                                                        ============================================================================






                                                                                        Costs Incurred
                                                                       ----------------------------------------------
                                                                           Costs           For the        Cumulative
                                                                        Transferred      Nine Months        as of        Estimated
DEVELOPMENT                                                 Size        in 2008 (1)     Ended 9/30/08      9/30/08      Total Costs
- ------------------------------------------------------------------------------------------------------------------------------------
                                                        (Square feet)                            (In thousands)
                                                                                                              
DEVELOPMENTS COMPLETED AND TRANSFERRED
TO REAL ESTATE PROPERTIES DURING 2008
  Beltway Crossing IV, Houston, TX....................        55,000    $        -                 5          3,365
  Beltway Crossing III, Houston, TX...................        55,000             -                14          2,866
  Southridge XII, Orlando, FL.........................       404,000             -             3,421         18,521
  Arion 18, San Antonio, TX...........................        20,000             -               638          2,593
  Southridge VII, Orlando, FL.........................        92,000             -               414          6,500
  Wetmore II, Building C, San Antonio, TX.............        69,000             -               185          3,682
  Interstate Commons III, Phoenix, AZ.................        38,000             -                45          3,093
  SunCoast I, Fort Myers, FL..........................        63,000             -               149          5,225
  World Houston 27, Houston, TX.......................        92,000             -             1,765          4,248
  Wetmore II, Building D, San Antonio, TX.............       124,000             -             4,965          7,950
  World Houston 24, Houston, TX.......................        93,000             -               739          5,904
                                                        -----------------------------------------------------------------
Total Transferred to Real Estate Properties...........     1,105,000    $        -            12,340         63,947  (3)
                                                        =================================================================


(1)  Represents costs transferred from Prospective  Development (primarily land)
     to Under Construction during the period.
(2)  These buildings were developed for sale.
(3)  Represents cumulative costs at the date of transfer.

     Accumulated  depreciation on real estate properties  increased  $30,526,000
during the nine months ended  September 30, 2008,  primarily due to depreciation
expense on real estate properties, offset by accumulated depreciation related to
North  Stemmons I and Delp  Distribution  Center III, which were sold during the
same period.
     A  summary  of  Other  Assets  is  presented  in  Note  8 in the  Notes  to
Consolidated Financial Statements.

LIABILITIES

     Mortgage notes payable increased  $65,772,000  during the nine months ended
September  30, 2008,  as a result of a  $78,000,000  mortgage loan signed by the
Company  during  the first  quarter,  which was  offset by  regularly  scheduled
principal  payments of  $12,138,000  and mortgage loan premium  amortization  of
$90,000.
     Notes payable to banks  increased  $2,083,000  during the nine months ended
September 30, 2008, as a result of advances of $251,197,000 exceeding repayments
of $249,114,000. The Company's credit facilities are described in greater detail
under Liquidity and Capital Resources.
     See Note 9 in the Notes to Consolidated  Financial Statements for a summary
of  Accounts  Payable  and  Accrued  Expenses.  See  Note  10 in  the  Notes  to
Consolidated Financial Statements for a summary of Other Liabilities.

STOCKHOLDERS' EQUITY

     During the second quarter,  the Company sold 1,198,700 shares of its common
stock to Merrill Lynch,  Pierce,  Fenner & Smith Incorporated.  The net proceeds
were  $57.2  million.  The  Company  used the  proceeds  to  repay  indebtedness
outstanding  under its revolving credit facility and for other general corporate
purposes.
     On July 2,  2008,  EastGroup  redeemed  all  1,320,000  shares of its 7.95%
Series D Cumulative  Redeemable  Preferred Stock at a redemption price of $25.00
per share plus  accrued and unpaid  dividends  of $.011 per share for the period
from July 1, 2008,  through and including the redemption date, for an aggregated
redemption price of $25.011 per Series D Preferred Share.
     Distributions  in excess of earnings  increased  $14,936,000 as a result of
dividends  on  common  and  preferred  stock  of  $39,963,000  and  costs on the
redemption  of Series D Preferred  Shares of $682,000  exceeding  net income for
financial  reporting  purposes  of  $25,709,000.  See  Note 14 in the  Notes  to
Consolidated  Financial  Statements  for  information  related to the changes in
additional paid-in capital resulting from stock-based compensation.

RESULTS OF OPERATIONS
(Comments are for the three and nine months ended  September 30, 2008,  compared
to the three and nine months ended September 30, 2007.)

     Net income  available to common  stockholders for the three and nine months
ended September 30, 2008, was $7,176,000  ($.29 per basic and diluted share) and
$23,701,000  ($.97 per basic and diluted share) compared to $7,058,000 ($.30 per
basic and diluted share) and $18,465,000  ($.78 per basic and diluted share) for
the three and nine months ended September 30, 2007.
     PNOI  for  the  three  months  ended  September  30,  2008,   increased  by
$2,147,000,  or 7.5%,  as compared to the same period in 2007.  The increase was
primarily  attributable  to  $2,105,000  from  newly  developed  properties  and
$782,000 from 2007 and 2008 acquisitions,  offset by a decrease of $708,000 from
same property growth resulting from a large termination fee in last year's third
quarter.
     PNOI for the nine months ended September 30, 2008, increased by $8,674,000,
or 10.7%, as compared to the same period in 2007. The increase was mainly due to
$5,963,000  from newly  developed  properties and $2,863,000  from 2007 and 2008
acquisitions,  offset by a



decrease of $110,000  from same  property  growth.  The  increases  in PNOI were
offset by increased  depreciation  and  amortization  expense and other costs as
discussed below.
     Expense to revenue ratios for real estate  operations  were 28.4% and 27.8%
for the three and nine months ended  September  30, 2008,  compared to 26.8% and
27.4%  for the same  periods  in 2007.  The  Company's  percentages  leased  and
occupied were 95.1% and 94.4%, respectively,  at September 30, 2008, compared to
97.0% and 95.7%, respectively, at September 30, 2007.
     The following  table  presents the  components of interest  expense for the
three and nine months ended September 30, 2008 and 2007:


                                                                       Three Months Ended                  Nine Months Ended
                                                                         September 30,                       September 30,
                                                                --------------------------------------------------------------------
                                                                  2008       2007      Increase     2008       2007      Increase
                                                                                      (Decrease)                        (Decrease)
                                                                --------------------------------------------------------------------
                                                                              (In thousands, except rates of interest)
                                                                                                          
Average bank borrowings......................................   $ 126,113    108,221     17,892     125,051    94,893      30,158
Weighted average variable interest rates
  (excluding loan cost amortization) ........................       3.50%      6.48%                  3.99%     6.48%

VARIABLE RATE INTEREST EXPENSE
Variable rate interest (excluding loan cost amortization)....   $   1,111      1,767       (656)      3,737     4,602        (865)
Amortization of bank loan costs..............................          73         88        (15)        221       266         (45)
                                                                --------------------------------------------------------------------
Total variable rate interest expense.........................       1,184      1,855       (671)      3,958     4,868        (910)
                                                                --------------------------------------------------------------------

FIXED RATE INTEREST EXPENSE
Fixed rate interest (excluding loan cost amortization).......       7,931      6,661      1,270      23,067    19,312       3,755
Amortization of mortgage loan costs..........................         172        142         30         497       407          90
                                                                --------------------------------------------------------------------
Total fixed rate interest expense............................       8,103      6,803      1,300      23,564    19,719       3,845
                                                                --------------------------------------------------------------------

Total interest...............................................       9,287      8,658        629      27,522    24,587       2,935
Less capitalized interest....................................      (1,691)    (1,572)      (119)     (5,044)   (4,425)       (619)
                                                                --------------------------------------------------------------------

TOTAL INTEREST EXPENSE.......................................   $   7,596      7,086        510      22,478    20,162       2,316
                                                                ====================================================================


     Interest costs incurred  during  development of real estate  properties are
capitalized and offset against interest expense.  The Company's weighted average
variable  interest  rates in the first  nine  months of 2008 were  significantly
lower than in 2007.  Although  average bank  borrowings were higher for the nine
months  ended  September  30, 2008 as  compared to the same period in 2007,  the
Company  experienced  a decrease in variable  rate  interest  expense due to the
lower interest rates.
     The increase in mortgage  interest expense in the first nine months of 2008
as compared to the same period of 2007 was  primarily  due to the new  mortgages
detailed in the table below.


     NEW MORTGAGES IN 2007 AND 2008                                    INTEREST RATE        DATE            AMOUNT
     ------------------------------------------------------------------------------------------------------------------
                                                                                                     
     Broadway VI, World Houston 1 & 2, 21 & 23, Arion 16,
       Ethan Allen, Northpark I-IV, South 55th Avenue, East
       University I & II and Santan 10 II...........................       5.570%         08/08/07      $  75,000,000
     Beltway II, III & IV, Eastlake, Fairgrounds I-IV, Nations
       Ford I-IV, Techway Southwest III, Westinghouse,
       Wetmore I-IV and World Houston 15 & 22.......................       5.500%         03/19/08         78,000,000
                                                                       -------------                    ---------------
       Weighted Average/Total Amount................................       5.534%                       $ 153,000,000
                                                                       =============                    ===============


     These increases were offset by regularly  scheduled  principal payments and
the repayments of two mortgages in 2007 as shown in the following table:


                                                                 INTEREST         DATE            PAYOFF
     MORTGAGE LOANS REPAID IN 2007                                 RATE          REPAID           AMOUNT
     -------------------------------------------------------------------------------------------------------
                                                                                           
     World Houston 1 & 2....................................      7.770%        04/12/07     $    4,023,000
     E. University I & II, Broadway VI, 55th Avenue
       and Ethan Allen......................................      8.060%        05/25/07         10,197,000
                                                                ----------                   ---------------
       Weighted Average/Total Amount........................      7.978%                     $   14,220,000
                                                                ==========                   ===============


     Depreciation   and  amortization   for  continuing   operations   increased
$1,278,000  and  $3,243,000  for the three and nine months ended  September  30,
2008,  as compared to the same periods in 2007.  This increase was primarily due
to properties acquired and transferred from development during 2007 and 2008.
     NAREIT has recommended  supplemental  disclosures concerning  straight-line
rent,  capital  expenditures  and  leasing  costs.  Straight-lining  of rent for
continuing  operations  increased  income by $206,000 and $618,000 for the three
and nine months ended  September  30, 2008, as compared to $248,000 and $655,000
in the same periods of 2007.



Capital Expenditures
     Capital expenditures for the three and nine months ended September 30, 2008
and 2007 were as follows:


                                                                         Three Months Ended          Nine Months Ended
                                                                            September 30,               September 30,
                                                          Estimated   ----------------------------------------------------
                                                         Useful Life     2008           2007         2008          2007
                                                        ------------------------------------------------------------------
                                                                                          (In thousands)
                                                                                                     
        Upgrade on Acquisitions......................      40 yrs     $     13             32           63            91
        Tenant Improvements:
           New Tenants...............................    Lease Life      1,725          1,529        5,081         4,843
           New Tenants (first generation) (1)........    Lease Life          3             29          244           404
           Renewal Tenants...........................    Lease Life        173            793        1,335         1,623
        Other:
           Building Improvements.....................     5-40 yrs         484            409        1,788         1,167
           Roofs.....................................     5-15 yrs         276            485        1,107         1,446
           Parking Lots..............................      3-5 yrs          73            141          848           552
           Other.....................................       5 yrs          136             58          239           110
                                                                      ----------------------------------------------------
              Total capital expenditures.............                 $  2,883          3,476       10,705        10,236
                                                                      ====================================================


(1)  First  generation  refers  to space  that has  never  been  occupied  under
EastGroup's ownership.

Capitalized Leasing Costs
     The Company's leasing costs  (principally  commissions) are capitalized and
included  in Other  Assets.  The  costs  are  amortized  over  the  terms of the
associated  leases and are included in depreciation  and  amortization  expense.
Capitalized leasing costs for the three and nine months ended September 30, 2008
and 2007 were as follows:


                                                                         Three Months Ended          Nine Months Ended
                                                                            September 30,               September 30,
                                                          Estimated   ----------------------------------------------------
                                                         Useful Life     2008           2007         2008          2007
                                                        ------------------------------------------------------------------
                                                                                          (In thousands)
                                                                                                     

        Development..................................    Lease Life   $    667            827        2,796         2,457
        New Tenants..................................    Lease Life        676            500        1,765         1,924
        New Tenants (first generation) (1)...........    Lease Life          -             39           58           204
        Renewal Tenants..............................    Lease Life      1,290            611        2,175         1,509
                                                                      ----------------------------------------------------
              Total capitalized leasing costs........                 $  2,633          1,977        6,794         6,094
                                                                      ====================================================

        Amortization of leasing costs (2)............                 $  1,559          1,469        4,396         3,848
                                                                      ====================================================


(1)  First  generation  refers  to space  that has  never  been  occupied  under
EastGroup's ownership.
(2) Includes discontinued operations.

Discontinued Operations
     The results of operations,  including interest expense (if applicable), for
the properties sold or held for sale during the periods reported are shown under
Discontinued  Operations on the consolidated  income  statements.  The following
table  presents  the  components  of  revenue  and  expense  for  the  operating
properties  sold or held  for sale  during  the  three  and  nine  months  ended
September  30,  2008  and  2007.  EastGroup  sold  North  Stemmons  I  and  Delp
Distribution  Center  III during the first  nine  months of 2008,  as  described
below,  and Delp  Distribution  Center I during the fourth  quarter of 2007. The
Company has  reclassified  the  operations  of these  entities  to  Discontinued
Operations as shown in the following table.





                                                                            Three Months Ended      Nine Months Ended
                                                                               September 30,          September 30,
                                                                          ----------------------------------------------
Discontinued Operations                                                     2008          2007      2008         2007
- ------------------------------------------------------------------------------------------------------------------------
                                                                                          (In thousands)
                                                                                                     
Income from real estate operations...................................     $    12           245       276          705
Expenses from real estate operations.................................          (2)          (74)      (75)        (217)
                                                                          ----------------------------------------------
  Property net operating income from discontinued operations.........          10           171       201          488

Depreciation and amortization........................................          (3)          (83)      (71)        (277)
                                                                          ----------------------------------------------

Income from real estate operations...................................           7            88       130          211
  Gain on sales of real estate investments...........................          83           300     2,032          300
                                                                          ----------------------------------------------

Income from discontinued operations..................................     $    90           388     2,162          511
                                                                          ==============================================


     In May, EastGroup received a condemnation award from the State of Texas for
its North Stemmons I property in Dallas.  The Company was awarded  $4,698,000 as
payment for the building and a portion of the land associated with the property,
and a gain of $1,949,000  was  recognized as a result of this  transaction.  The
Company plans to develop a new business  distribution  building on the remaining
4.9 acres.
     In August,  EastGroup  sold Delp  Distribution  Center  III in Memphis  for
$635,000 and recognized a gain of $83,000 during the third quarter.
     A summary of gain on sales of real estate  investments  for the nine months
ended September 30, 2008 is as follows:


                                                                       Date           Net                      Recognized
       Real Estate Properties           Location         Size          Sold       Sales Price       Basis         Gain
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                               (In thousands)
                                                                                                 
North Stemmons I................      Dallas, TX      123,000 SF     05/12/08     $    4,633         2,684          1,949
Delp Distribution Center III....      Memphis, TN      20,000 SF     08/20/08            589           506             83
                                                                                 ------------------------------------------
                                                                                  $    5,222         3,190          2,032
                                                                                 ==========================================


RECENT ACCOUNTING PRONOUNCEMENTS

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards (SFAS) No. 157, Fair Value  Measurements,  which provides guidance for
using fair  value to  measure  assets  and  liabilities.  SFAS No.  157  applies
whenever  other  standards  require  (or  permit)  assets or  liabilities  to be
measured  at fair  value but does not  expand  the use of fair  value in any new
circumstances.   The   provisions  of  Statement  157,  with  the  exception  of
nonfinancial  assets and  liabilities,  were effective for financial  statements
issued for fiscal years  beginning  after November 15, 2007, and interim periods
within those fiscal years.  The FASB deferred for one year the Statement's  fair
value measurement  requirements for nonfinancial assets and liabilities that are
not  required or  permitted  to be measured at fair value on a recurring  basis.
These provisions will be effective for fiscal years beginning after November 15,
2008,  and the  Company is in the  process  of  evaluating  the impact  that the
adoption  of these  provisions  will  have on the  Company's  overall  financial
position and results of operations.  As required under SFAS No. 133, the Company
accounts  for its  interest  rate swap cash flow  hedge on the Tower  Automotive
mortgage at fair value.  The application of Statement 157 to the Company in 2008
had an immaterial impact on the Company's overall financial position and results
of operations.
     In December  2007,  the FASB issued SFAS No. 141 (Revised  2007),  Business
Combinations,  which retains the  fundamental  requirements  in SFAS No. 141 and
requires the identifiable  assets  acquired,  the liabilities  assumed,  and any
noncontrolling  interest  in the  acquiree  be  measured at fair value as of the
acquisition  date.  In addition,  Statement  141(R)  requires  that any goodwill
acquired in the business combination be measured as a residual,  and it provides
guidance in  determining  what  information  to disclose to enable  users of the
financial  statements  to  evaluate  the  nature  and  financial  effects of the
business combination. The Statement also requires that acquisition-related costs
be recognized as expenses in the periods in which the costs are incurred and the
services  are  received.  SFAS No.  141(R)  applies  prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
first annual  reporting  period beginning on or after December 15, 2008, and may
not be applied before that date.
     Also in  December  2007,  the  FASB  issued  SFAS No.  160,  Noncontrolling
Interests  in  Consolidated  Financial  Statements,  which  is an  amendment  of
Accounting  Research  Bulletin (ARB) No. 51. Statement 160 provides guidance for
entities that prepare consolidated financial statements that have an outstanding
noncontrolling  interest in one or more  subsidiaries  or that  deconsolidate  a
subsidiary.  SFAS No. 160 is effective  for fiscal  years,  and interim  periods
within those fiscal years,  beginning on or after December 15, 2008, and may not
be applied  before  that date.  The  Company  anticipates  that the  adoption of
Statement  160 on  January  1,  2009,  will  have an  immaterial  impact  on the
Company's consolidated financial statements.
     In March 2008, the FASB issued SFAS No. 161,  Disclosures  about Derivative
Instruments and Hedging Activities,  which is an amendment of FASB Statement No.
133. SFAS No. 161 requires all entities with derivative  instruments to disclose
information regarding how and why the entity uses derivative instruments and how
derivative  instruments  and related hedged items affect the entity's  financial
position,  financial  performance,  and cash flows.  The  Statement is effective
prospectively for periods beginning on or after November 15, 2008.



LIQUIDITY AND CAPITAL RESOURCES

     Net cash  provided by operating  activities  was  $69,267,000  for the nine
months ended  September  30, 2008.  The primary  other sources of cash were from
bank borrowings,  mortgage note proceeds,  proceeds from common stock offerings,
proceeds from sales of land and real estate investments, and proceeds from sales
of securities.  The Company distributed  $38,337,000 in common and $1,982,000 in
preferred stock dividends during the nine months ended September 30, 2008. Other
primary uses of cash were for bank debt repayments, construction and development
of properties,  purchases of real estate, the redemption of the Company's Series
D  Preferred  Stock,  principal  payments  on mortgage  notes  payable,  capital
improvements  at various  properties,  purchases of securities,  and advances on
mortgage loans receivable.
     Total debt at September  30, 2008 and December 31, 2007 is detailed  below.
The Company's bank credit facilities have certain restrictive covenants, and the
Company was in compliance  with all of its debt  covenants at September 30, 2008
and December 31, 2007.


                                                            September 30, 2008    December 31, 2007
                                                           ------------------------------------------
                                                                         (In thousands)
                                                                                     
        Mortgage notes payable - fixed rate.........        $         531,132              465,360
        Bank notes payable - floating rate..........                  137,527              135,444
                                                           ------------------------------------------
           Total debt...............................        $         668,659              600,804
                                                           ==========================================


     EastGroup has a four-year, $200 million unsecured revolving credit facility
with a  group  of  seven  banks  that  matures  in  January  2012.  The  Company
customarily  uses this line of credit for  acquisitions  and  developments.  The
interest  rate on the facility is based on the LIBOR index and varies  according
to total  liability  to total  asset  value  ratios  (as  defined  in the credit
agreement),  with an annual facility fee of 15 to 20 basis points.  The interest
rate on each tranche is usually reset on a monthly basis and is currently  LIBOR
plus 70 basis points with an annual facility fee of 20 basis points. The line of
credit  can be  expanded  by $100  million  and  has an  option  for a  one-year
extension.  At September 30, 2008, the weighted average interest rate was 4.410%
on a balance of $121,000,000.
     The Company also has a four-year,  $25 million  unsecured  revolving credit
facility with PNC Bank,  N.A. that matures in January 2012. This credit facility
is customarily used for working capital needs. The interest rate on this working
cash line is based on the LIBOR index and varies according to total liability to
total  asset  value  ratios (as  defined in the  credit  agreement).  Under this
facility, the Company's current interest rate is LIBOR plus 75 basis points with
no annual facility fee. At September 30, 2008, the interest rate was 4.676% on a
balance of $16,527,000.
     As market conditions permit,  EastGroup issues equity,  including preferred
equity,  and/or employs fixed-rate,  non-recourse first mortgage debt to replace
the short-term bank borrowings.
     During the first  quarter of 2008,  the  Company  closed on a $78  million,
non-recourse  first  mortgage  loan secured by properties  containing  1,571,000
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 note were used to
reduce variable rate bank borrowings.
     During the second quarter of 2008,  EastGroup sold 1,198,700  shares of its
common stock to Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated.  The net
proceeds were $57.2 million after deducting the underwriting  discount and other
offering  expenses.   The  Company  used  the  proceeds  to  repay  indebtedness
outstanding  under its revolving credit facility and for other general corporate
purposes.
     Also during the second  quarter,  the  Company  called for  redemption  all
1,320,000  shares of its 7.95% Series D Cumulative  Redeemable  Preferred Stock.
The redemption  took place on July 2, 2008, at a redemption  price of $25.00 per
share plus  accrued and unpaid  dividends of $.011 per share for the period from
July 1, 2008,  through and  including  the  redemption  date,  for an aggregated
redemption  price of $25.011 per Series D  Preferred  Share.  Original  issuance
costs of $674,000 and additional redemption costs of $8,000 were charged against
net income  available to common  stockholders in conjunction with the redemption
of these shares.
     In September  2008,  EastGroup  executed an  application  on a $59 million,
non-recourse  first  mortgage loan secured by properties  containing 1.3 million
square  feet.  The loan is expected  to close in  December  2008 and will have a
fixed  interest  rate of 5.75%,  a  five-year  term and a  20-year  amortization
schedule.  The proceeds of this  mortgage  loan will be used to reduce  variable
rate bank borrowings.

Contractual Obligations
     EastGroup's fixed,  non-cancelable obligations as of December 31, 2007, did
not materially  change during the nine months ended  September 30, 2008,  except
for the increase in bank  borrowings and mortgage notes payable  discussed above
and the purchase of the properties in Charlotte.
     The Company  anticipates  that its current  cash  balance,  operating  cash
flows,  borrowings  under its lines of credit,  proceeds  from new mortgage debt
and/or proceeds from the issuance of equity instruments will be adequate for (i)
operating  and  administrative  expenses,  (ii)  normal  repair and  maintenance
expenses at its properties,  (iii) debt service obligations,  (iv) distributions
to stockholders,  (v) capital improvements,  (vi) purchases of properties, (vii)
development,  and (viii) any other normal  business  activities  of the Company,
both in the short- and long-term.



INFLATION AND OTHER ECONOMIC CONSIDERATIONS

     Most  of  the  Company's   leases   include   scheduled   rent   increases.
Additionally,  most of the Company's leases require the tenants to pay their pro
rata share of operating  expenses,  including  real estate taxes,  insurance and
common area maintenance, thereby reducing the Company's exposure to increases in
operating expenses resulting from inflation.
     EastGroup's  financial results are affected by general economic  conditions
in the  markets in which the  Company's  properties  are  located.  An  economic
recession,  or other adverse  changes in general or local  economic  conditions,
could result in the inability of some of the Company's  existing tenants to make
lease  payments and may impact our ability to (i) renew leases or re-lease space
as leases expire,  or (ii) lease  development  space.  In addition,  an economic
downturn or recession could also lead to an increase in overall vacancy rates or
decline in rents we can charge to re-lease properties upon expiration of current
leases. In all of these cases, our cash flow would be adversely affected.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company is exposed to interest  rate  changes  primarily as a result of
its lines of credit and long-term debt maturities. This debt is used to maintain
liquidity and fund capital  expenditures  and  expansion of the  Company's  real
estate investment portfolio and operations. The Company's objective for interest
rate risk management is to limit the impact of interest rate changes on earnings
and cash  flows  and to lower  its  overall  borrowing  costs.  To  achieve  its
objectives,  the Company  borrows at fixed  rates but also has several  variable
rate bank lines as discussed  under Liquidity and Capital  Resources.  The table
below presents the principal  payments due and weighted  average  interest rates
for both the fixed rate and variable rate debt.


                                          Oct-Dec
                                           2008        2009       2010       2011       2012    Thereafter    Total      Fair Value
                                          ------------------------------------------------------------------------------------------
                                                                                                      
Fixed rate debt (1) (in thousands).....   $ 4,317     47,696     16,477     82,977     60,201    319,464     531,132      532,500(2)
Weighted average interest rate.........     6.10%      6.52%      5.89%      6.95%      6.64%      5.51%       5.97%
Variable rate debt (in thousands)......   $     -          -          -          -    137,527          -     137,527      137,527
Weighted average interest rate.........         -          -          -          -      4.44%          -       4.44%


(1) The fixed rate debt shown  above  includes  the Tower  Automotive  mortgage,
which has a variable  interest rate based on the one-month LIBOR.  EastGroup has
an  interest  rate swap  agreement  that  fixes the rate at 4.03% for the 8-year
term.  Interest and related fees result in an annual effective  interest rate of
5.30%.
(2) The fair value of the  Company's  fixed rate debt is estimated  based on the
quoted market prices for similar issues or by discounting expected cash flows at
the  rates  currently  offered  to the  Company  for debt of the same  remaining
maturities, as advised by the Company's bankers.

     As the table above  incorporates  only those  exposures  that existed as of
September 30, 2008, it does not consider those exposures or positions that could
arise after that date. The ultimate impact of interest rate  fluctuations on the
Company will depend on the exposures that arise during  subsequent  periods.  If
the weighted average interest rate on the variable rate bank debt as shown above
changes by 10% or approximately 44 basis points, interest expense and cash flows
would increase or decrease by approximately $605,000 annually.
     The Company has an interest  rate swap  agreement  to hedge its exposure to
the variable  interest rate on the Company's  $9,365,000 Tower Automotive Center
recourse  mortgage,  which is  summarized  in the  table  below.  Under the swap
agreement,  the Company  effectively pays a fixed rate of interest over the term
of the agreement  without the exchange of the underlying  notional amount.  This
swap is designated as a cash flow hedge and is considered to be fully  effective
in hedging the  variable  rate risk  associated  with the Tower  mortgage  loan.
Changes  in the  fair  value of the swap are  recognized  in  accumulated  other
comprehensive  loss.  The Company does not hold or issue this type of derivative
contract for trading or speculative purposes.


                          Current        Maturity                                        Fair Value         Fair Value
      Type of Hedge   Notional Amount      Date       Reference Rate    Fixed Rate       at 9/30/08        at 12/31/07
      --------------------------------------------------------------------------------------------------------------------
                      (In thousands)                                                            (In thousands)
                                                                                             
           Swap           $9,365         12/31/10     1 month LIBOR       4.03%            ($126)             ($56)


FORWARD-LOOKING STATEMENTS

     Certain statements contained in this report may be deemed  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks,"  "estimates,"  variations  of such words and  similar  expressions  are
intended to identify such  forward-looking  statements,  which generally are not
historical in nature. All statements that address operating performance,  events
or  developments  that the  Company  expects  or  anticipates  will occur in the
future, including statements relating to rent and occupancy growth,  development
activity,  the  acquisition  or sale of  properties,  general  conditions in the
geographic areas where the Company operates and the availability of capital, are
forward-looking statements. Forward-looking statements are inherently subject to
known and unknown  risks and  uncertainties,  many of which the  Company  cannot
predict, including, without limitation:  changes in general economic conditions;
the extent of tenant defaults or of any early lease terminations;  the Company's
ability to lease or re-lease space at current or anticipated  rents;  changes in
the supply of and  demand  for  industrial/warehouse  properties;  increases  in
interest  rate  levels;  increases  in  operating  costs;  the  availability  of
financing;  natural  disasters  and the  Company's  ability  to obtain  adequate
insurance;  changes in governmental  regulation,  tax rates and similar matters;
and 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 that  acquisitions  may not close as  scheduled.  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. 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.

ITEM 4. CONTROLS AND PROCEDURES.

(i)  Disclosure Controls and Procedures.

     The Company  carried out an evaluation,  under the supervision and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive  Officer and Chief  Financial  Officer,  of the  effectiveness  of the
design  and  operation  of the  Company's  disclosure  controls  and  procedures
pursuant to Exchange  Act Rule  13a-15.  Based upon that  evaluation,  the Chief
Executive  Officer and Chief Financial  Officer  concluded that, as of September
30, 2008, the Company's  disclosure  controls and  procedures  were effective in
timely alerting them to material  information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's periodic
SEC filings.

(ii) Changes in Internal Control Over Financial Reporting.

     There  was no change  in the  Company's  internal  control  over  financial
reporting  during the Company's  third fiscal quarter ended  September 30, 2008,
that has materially affected,  or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

PART II. OTHER INFORMATION.

ITEM 1A. RISK FACTORS.

     There  have  been  no  material  changes  to the  risk  factors  previously
disclosed in EastGroup's Form 10-K for the year ended December 31, 2007,  except
as noted below.  For a full  description of these risk factors,  please refer to
Item 1A-Risk Factors,  in the 2007 Annual Report on Form 10-K. The following has
been added as a risk factor:

     The  current  turmoil  in the  credit  markets  may have an  impact  on our
business and financial  condition that we currently cannot predict.  The current
turmoil  in the  credit  markets  may have an  impact  on our  business  and our
financial condition. Currently these conditions have not impaired our ability to
access credit markets and finance our operations. However, our ability to access
the capital  markets may be restricted at a time when we would like, or need, to
raise financing,  which  could  have an  impact on our  flexibility  to react to
changing economic and business conditions.  Additionally, the economic situation
could have an impact on our lenders or  customers,  causing them to fail to meet
their  obligations  to us. No  assurances  can be given that the  effects of the
current  crisis  will  not  have a  material  adverse  effect  on our  business,
financial condition and results of operations.

ITEM 6. EXHIBITS.

(a)  Form 10-Q Exhibits:

     (10) Material contracts

          10.1 Amendment  No. 2 to EastGroup  Properties,  Inc.  2005  Directors
               Equity Incentive Plan  (incorporated by reference to Exhibit 10.1
               to the Company's Form 8-K filed June 3, 2008).

     (31) Rule  13a-14(a)/15d-14(a)  Certifications  (pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002)

          (a)  David H. Hoster II, Chief Executive Officer

          (b)  N. Keith McKey, Chief Financial Officer

     (32) Section   1350   Certifications   (pursuant  to  Section  906  of  the
          Sarbanes-Oxley Act of 2002)

          (a)  David H. Hoster II, Chief Executive Officer

          (b)  N. Keith McKey, Chief Financial Officer



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  November 5, 2008

                         EASTGROUP PROPERTIES, INC.

                         By:  /s/ BRUCE CORKERN
                              ------------------------------
                              Bruce Corkern, CPA
                              Senior Vice President, Controller and
                              Chief Accounting Officer


                         By:  /s/ N. KEITH MCKEY
                              ------------------------------
                              N. Keith McKey, CPA
                              Executive Vice President, Chief Financial Officer,
                              Treasurer and Secretary