EGP - Earnings call transcript Q3 2017 | EastGroup Properties, Inc.

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Operator

Good morning, and welcome to the EastGroup Properties Third Quarter 2017 Earnings Conference Call. [Operator Instructions].

Now it is my pleasure to introduce Marshall Loeb, President and CEO. Please go ahead.

Marshall Loeb

Thank you. for for thanks XXXX third and call. conference morning, calling our in quarter Good

appreciate Brent we'll your is we disclaimer. that always, As interest. the to on looking we following call. you forward listen also Wood, the And making since be statements, ask participating CFO, our

Unidentified Company Representative

impact the information the disclosed The uncertainties its statement describes news conference the be accurate materially company's quarterly the results release results the to news of harbor contains discussion for statements. time-sensitive that certain the included of may language call. this actual found Also, can on to to involves is GAAP refer forward-looking at in included that of company risk The from website the announcing that, and factors date this in reconciliations non-GAAP may this today has quarter in and supplemental harbor the results safe measures Please release, safe which www.eastgroup.net. call the as company's information, subject projected. future of only those company's content cause differ to

Marshall Loeb

Thanks, Kina.

quarter. percent increasing The all year results success was dividend of high and of metrics, controlled. for the of Los better. over per the percent highest at XX% to reaching Francisco we're the for A million or square our industrial when and end largest quarter-end the a as and X.X market third as including positive our San long-term in of of a continuation strength and first XX.X% Charlotte, were supply was leased into further over growth never our level FFO markets XX.X% Drilling share prongs Angeles, In This And is XX.X% institutionally quarters as number quarter NOI increase of decade, our The our summary, prove long. X.X% occupied. we've strategy. achieving market square seeing year This bay predominantly our down spreads. through In records positive excluding occupancy and of industrial market occupancy, and leased. quarterly last same-store compared is marks we leased at in actually this were our from Phoenix, re-leasing Jacksonville, guidance, leased, specifically, sales. each and XX. a of up third Orlando, high Houston, higher commentary, feet markets, leased high major X.X such Supply, number in X land FFO demonstrated quarter another from solid Funds At with September quarter-end, this a supply, specific our over quarter has this quarter feet, compared million a to consecutive XXXX, cycle, shallow of in remains markets. check trends. saw in operations EastGroup's X.X% been maintained prior XX record

on a a deliveries And As remained as byproduct box control, institutional result, construction. focused it's largely of big disciplined.

new rents. positive their showed And continued with CBRE rising quarter levels. overall, roughly basis, occupancy, a on for XXth on and a which pressure trend GAAP shallow bay XX%, below remained XX% a Rent study seeing prerecession markets fact, deliveries In record. high we represents the strengthening quarterly spreads consecutive continue upward disciplined approximately supply,

the points few occupancy leases margin sequentially, X.X%. third underway. of turning between full are leased XX.X%, from Average occupied. tenants. a into down quarter, which NOI begin quarterly XX basis will there these percent point rose was to basis same-property points quarter by impact occupancy build-out to It's a where was signings And basis was of is GAAP an signed rose last large It XX XXXX. occupying This XXX seeing a similar lease Also take driven quarterly several atypically still quarter permitting we're Third results. and margin. on while by months number to basis

same-property reflect positive expect to results We to remain going will increases The growth. rent forward. continue

ourselves we mid-XXs occupied. fully view with as occupancy, As

Given an our attractive cities as for whereas we to business We over park. manage market cap around within create of $XX Further, average the X%, market, develop is rate low be our and expensive buildings point basis existing additional value. we minimum We and are target compression continuing September acquisition our we're cap development the the return projected risk our cap investment we to of competitive as view in million. intensely development rates. to XXX numerous distribution states, developments market in risk-adjusted our program see the the an path for The majority believe majority effectively investment development on projected submarkets. finally, markets. in rate we to premium was estimate And pipeline properties the return mid-Xs. At XX, phases completed

began X feet the XXX,XXX we Horizon on in foot square transferred in of the And into construction end quarter other pipeline, third on building. each During XXX% properties leased. the Orlando square development XXX,XXX totaling pipeline, the portfolio, we our X

consisted As projects $XXX September square which leased. XX% cost containing of million projected of is with feet XX, X million, cities, X.X of our XX in a development pipeline

Antonio, XX-acre ultimately we XXX,XXX approximately San to quarter, X acquired site Finally, totaling plans develop during a with development buildings feet. square the in

feet. Charlotte, of reach markets Houston ahead no starts looking million X.X you'll development parks our I'm over And Antonio. starts. gratifying see and What's again Orlando like permitting, project us optimistic San successful XXXX ability level and development this in square with to XXXX, Dallas, million we then our market XXXX, continuing is that in For to within $XXX

and have we as In this Atlanta development. Houston of to development final Miami, third hoping and we'll such year, next new and leg developments restarted to restart The we're year. stool Austin midyear this be development is Phoenix in addition, markets able active

And over an coming NOI we've the declined with from the pricing. of we've pending Houston $XX a quality past sold as of rose. Year-to-date, portfolio capital, recycling portion while couple in few we're asset is Houston opportunities quarters, Our other our ongoing evaluating the million our of process. recycled assets

Today, with properties continue including XXXX's XXXX. still into topics, move XX% as X under Specifically, guidance. will and of Houston XX% declining we will our NOI early of now in development. Houston projected Brent updated our XXXX, variety review financial represented represents NOI, of a over

Brent Wood

Good morning.

$X.XX continue excluding on last exceeded mentioned, to of to at We FFO ended same land to compared last $X.XX for an share our FFO increase see year, in XX.X% X.X% positive guidance income benefited quarter XX. conversion operating midpoint as our per due and, compared an capitalization same-property Operations was sales. from portfolio. net strong the have at development per portfolio, increase continual September per of the as months well-leased of was for properties the the X $X.XX gain X.X% operating to Debt increase, into represents market increase performance operating of and an to $X.XX acquisitions. quarter September X.X%. the year, share of a results XX Marshall total the share the the

price the $XX total ratio loan debt of quarter. retired quarter, The the to in a amounted and rose adjusted August, we quarter, at of to stock X.X% interest rate equity EBITDA of adjusted market per EBITDA third for million issued mortgage under Floating was ratios X.X pro charge interest in with coverage forma quarter-end. the common rate X.X. to we a fixed of was In bank For X.Xx debt only capitalization to From the $XX.XX million $XX capital an continuous program our an perspective, share. average X.X%. at debt

private per XX%. decreased past debt for by rate a by years, quarterly to In per XXXst stockholders. September, represented debt to dividend common has placement this We X-year paid in specific properties distribution of fixed share closing collateralized September, transaction we our X.X% of a cash Also a Over anticipate an a and unsecured commitment annualized term share. of letter million in X.XX%. $X.XX of mid-December. with secured X we executed dividend increase the The and equates $XX our $X.XX consecutive

is In X.X% respectively. compared from by be previous some by $XX issuances, potential our reducing million stock represent fourth increase X.X% range be per almost and operating $X.XX $X.XX dividend ratio $X.XX income. best the properties million metrics for amounts income include we the the XXX% offset NOI, so Guidance to results payout third our quarter. in $X.XX have FFO of be same-property year, changes of common projecting to for covered an guidance to Rental share prior acquisitions by which in to an revenues, the estimates from to of FFO Our and of for experienced. and financial XX% continue million an all executed in $XX net of midpoints the property Those increase was to the estimated quarter $XX continues and additional we our the to quarter. year. summary,

Now comments. Marshall will make some final

Marshall Loeb

issuance markets. evidenced Thanks, continue another by majority mean use our for XXXX solid equity I the to it's expectations solid I as in also our strong, year-to-date. improving Based strength, healthy our on it portfolio. the Brent. maintaining diversifying improving investing ways. XXXX. committed we into this geographically And in Overall, X holistic From with a about creating continue and are we're our metrics, pathway a property Industrial vast in holistically sheet are excited We're standpoint, year. as fundamentals balance and and of

each I value current the industrial in steady where food consistent fit chain I like we First, market. the like the creating and we're quarter.

moves in team earlier it playing their our use the role. We And made terms people. is This how people in into Thank questions. I your new year. We're has number now you. our results. and we'll with of take a everyone Secondly, settled into happy of positively

Operator

question comes [Operator from from Bank of Instructions]. Feldman Jamie first our And America.

James Feldman

starts and in think Houston. some gave in to more color development you Marshall, have Do of $XXX actually starts track 'XX than comment 'XX? in on your you're at ex you million into on point 'XX this XXXX

Marshall Loeb

there. $XXX we based little But restarting a time ago, Miami at our I'm next terms of and of we XXXX. first beat online back the we're again, thanks. out start days question, the cost per Phoenix we'll XX which higher starts market land half But run square Houston on in like think have up kind in I actually looking for optimistic, able higher coming We better our early and year which a fact. rate. bit certainly quarter detailed we'll of being years probably just a today indications, And in usual Market of Good is kind of foot, that few cost, picked roll permitting, did to the this million than development. with

hopeful give So I'm detail we'll next hangs market year. over in more that next beat the but we'll million, and $XXX call, the there assumes

James Feldman

then And Houston year. and with the sticking outlook for next kind Okay. of

think then can drove what are we And of you how Houston, about And this the print about that talk you still you pain. end you the end the I Can a if Houston. had that? look does how year? you about or for getting towards towards year next quarter if mean, this drag from pretty pain So talk drag had of - that negative you're - getting you're that -

Marshall Loeb

Sure. high drop into this would would. actually last I'll start in, We we about if Brent, you then, and In that thought year. up had We bumped XX%. expected occupancy move-outs our call, chime the XXs. the to

knew since maybe early kind going of I'll internally XX% percent third we of we that ended And expected later was as our occupancy we're and third leased, we is down, quarter. so ahead quarter, then speak be where about the over Thankfully, it's maybe XX%, internally, at But thankfully, look leased. stopped a over you at which So to and XX%, happened. quarter-end, externally, back not percent we month leased. quite a we're where if

we've with homes we've in We've the as I in seen Harvey. be Home from and we've Liquidators. homebuilders market a Lowes pickup Lumber active - on in Depot re-sign XXX,XXX seen guess activity. the XX,XXX about Houston were it, units. about numbers We've We early So still damaged, multifamily in we're lease that impacts thought seen the the think seen,

or the the Camden and in settled. once storage adjusters So and self-storage immediate once rebuilding and is impact sort multifamily be the insurance the Mid-America REITs an of mini some starts, will REITs of

we're than but seeing we've a we're on been of little activity, in years. bit more optimistic several Houston that So

it, we perspective for X/X our of numbers, years, internal our thing the I use tenants mean, lost and it, other on we've about I'll Houston, X/X. like ratio flipped, and retention last has XX% and about been, 'XX 'XX, expirations, call our where round couple The have and kept the think when of of you

of each rolling in XX% of or that's couple So each vacating years year the last Houston.

the quarter third to from to of from that down 'XX, end number about Looking drops X.X%, XX%.

XX% but So that Harvey, believe X% as may we over years. improving only was versus well, be Harvey ratio post last the pre that of and normalize would Houston couple

and months, vacates market over post the up is XX has our down and think [indiscernible] insurance. So Houston pick expiration in been next to improving exposure upon we lease Harvey, the way post may

Brent Wood

to Marshall, Yes. think, The - pleased. add I We're that only I thing would well said.

Looking and then back at at to Houston be the projected we've we've XX%, lease percentage we point. signaling quarter, for we're been to first third low actually we at then have the XX%. and XX%, we then started in We XX%, this thought come adjusted quarter,

compared team leases. signed job. I'd square done then and signed an Kevin in for out, great this So XX the year. the there additional almost feet has leases last to Houston. X leases of a we've square XX we That was million point short-term time year-to-date feet And XXX,XXX

over we roll if it not for just activity The as months, being a So stabilize just still us. would feel, they be for a is Houston positive us, good next with if said, at nothing. headwind even, And there. are indicators the over Even to XX the least, there. would X% Marshall

So good about have feel as in we we Marshall the said, there while. as market a as

Operator

question from Heck from our comes And Wells Blaine Fargo. next

Blaine Heck

bit the bit and delivered year to a X.X% more? higher quite projects on think properties your can lease-ups. a pipeline, bit little far development I under yield at the the yields a your X.X% generally increased on construction, little side, thus quarter construction costs in I which development this when look lot that's than down and on the have just hearing increasing been about yield brought this But properties Marshall, recently. a on you actually comment yields we've

a going driving the just else little it So of maybe yields. give higher on? Or mix? bit on can there you color what's Is market something is

Marshall Loeb

typically been that range. mix, Good my analysis. is think in And on I've most mental you X% to where hit thinking in of It's framework, of kind I X.X% at seem market our - we it. bit to least a probably projects little settle

at we've push than else's had And bids single guys the bids We we are the because these we're we driving what early and rents getting I we bit, saying have there. it's would been of and pace us probably higher buildings I got few and down on on There's construction last development that everybody that up now, in than through inexpensive have the chewed to developments going next hung It probably yields but digits. a buy that cost. [indiscernible] typically acquired that immediately up delivering on When onto those it's will that be seen for saying cost been just labor pretty in a thankfully, land also with cycle. also the Charlotte, that's the to in out a that the several in into kind it's there. expensive seen But that the land ultimately, try expected that's We are in Harvey longer side. yields seen up have more rise. frustrating shortage, We will time production it where our continue of talking people And for Eastern costs were but time, region nervous push talking to other round Coleman, ago. you're right. construction inflation, developing, we're mid- I they're our real the - mean, We we've in seeing We've Texas, that we've rising. [indiscernible] of little well, was there. construction as the years earlier, to mentioned were that John day. and rebuilding Florida

down. our come yield will So absolute probably

compression so also been even kind rate then XXX XX. major our that handily. markets, XX point we've we've in last to cap margin those in basis not XX days, in seen, really, the much compression cap Our but the rate And that target, beating markets - of we

were of forecast exceeded the we transactionally and acquisitions, we've as As able actually transactions. earnings be, capital. compress handful third quarter or came pulled summer than intended in broker our of cap good was be chased continued actually place to we any to hoping we little in pricing to $XX slower a of [indiscernible] number the were that But even guidance rates hurt more over bids on and a on we the second where we us the to kind million a that

Blaine Heck

that, talk second can It's helpful. market? revenue the Antonio But Houston. that's only San a Great, you've land about little And of to there then I is about you got your projects the rental this X point. bit banks X% in underway think, at

overall guess the to in percentage grow could I giving you what's you So a that do how we it of portfolio? And as confidence market? see think big

Marshall Loeb

Typically, as in building site city. Ridge quadrant obviously, numbers is northwest city and like the kind Antonio, San northeast infill We the lot. an Alamo the side of of been like is of a show we've the Eisenhauer

there've that So a northeast we it. far little that bought land as noncompeting two bit then submarkets, been call and the is northeast, in further they - out maybe

So President the seventh city [indiscernible], as email as usually, send in we on an as, in when because the or San world in that talking or it's the quietly, conferences largest Atlanta when it's our phone, it competitive of there. or mention Vice everybody Dallas handles don't and or the country, we're the, kind the Antonio, not say, me on have

with parts in much I've lot is mean, kind a you by Houston, overlooked, Texas, over always is been up thought other to that like get gets economy. I really population, market. want time, much a - people really a there. And the Dallas, we San us with create probably you insurance, industrial able Austin. market as of maybe size traffic based so be we've absolute focus certainly, we and would large light like country. - USAA in the my of on on good, have most solid internally XX% we've a Antonio we about a on growing mind, any lot it's market. at read, about got little for Size-wise, within Tourism, least we value the bit a numbers, quietly the in we've It's XX%, a economy that size good that So coming based in feel it's probably as each to of stable the Charlotte, there city is military, of market. and And created a

we've mean, be to seen want So capitalized mindful. but good day. We'll much larger. too to opportunities. Antonio We've every on the in don't has I And catch. San get there market its

has at Antonio if to So our portfolio. we want some San overexposed point, a be hiccup, don't within

Operator

our And from next question Korchman comes with Manny Citi.

Emmanuel Korchman

developments how to to lease of sort last, of or any Marshall, new especially might of or with might shorter, them to be desire that any the the of think long about sort just efforts in sort to efforts. leasing change lease at the been looking there? matching and how tenants the you're to make expect Has from to recovery change their they especially terms, long new out desires last the terms there doing, sort from Houston rebuilding rebuilding you term

Marshall Loeb

Early We've recovery, post happened measured of been, before, shorter-term airport. That's maybe early have what, we're big months. Day. and of it's weeks Harvey, X one signed mean, with not came the couple - block around say Labor in of and space office that's World [indiscernible] probably a Houston a the enough. on by leases, took the in, - we I post would still we're I kind

was like Lumber Harvey. signed a or was lease, another lease a that don't of anything But couple just rebuilding shorter terms. post the having and we've I from market by a shorter-term in, leases probably and that Liquidators So to large, that's The but normal-term that. came shifted lot see

much. which it's but happened Harvey which that to don't about ones exactly or are really it's have of of reaction think believe a know Harvey-related, I to So - leases, But signed those We a certainly anyway. ones ahead. go hard that parse may couple we have apart and short-term that are hard

Emmanuel Korchman

please. No,

Marshall Loeb

leases. us we X-month gas that's kind that us. I of XXX% lot that as development one-year on development still of of new hey, month-to-month lot little we step break with if to things of we're of think new one about it the there, six-month if your of we or if it our or lease - leases a thinking the a about much - to going thought the would a say I of in we're occupancy ground, If we We'd helps is versus, opportunities. a had of that kind lease certainly kind a make be how would short-term more pickup evaluate about, lot mean, is hesitant on

Emmanuel Korchman

of sort about? what seeing to to a trying try of term of sort lot billings trying grab you in by same the or target the activity, near Are type get out you're to of of to others same ground thinking land the whether do the as

Marshall Loeb

on Not where [indiscernible] the the just down guess been market, about Maybe in in quarters half - everything come planned I is, development It's Houston and kind side, occupancy north look it's a yet. the submarket tightened row. of southeast that is, up. as that's in we World Houston of X at port-related. X.X%

seen the in a there. market terms of that but of not X% supply. in supply, overall of bit we've new It's little about still So it's pickup much

the vacancy, focused thankfully, been supply us, much of there. We part, development for people compete But people institutionally port-related and up, northwest, what which building. buildings by think some, the little about doesn't controlled. new most I half in is it that more of And XXX,XXX-foot most a and what see are tenants. but market same large, really so the certainly, build we're it's for the isn't with Although the and

Brent Wood

with long-term generally would pickup I just Houston, but spec the view. add And bit we're a seeing development of Northwest little that that's

thinking, to or a few related get just type sign need let's really tenants that something. might a that short-term into rebuilding a don't hey, You requirement

point the I right it move think some little in the quicker, was of sub see of north I is out, the market where cautious trending to submarkets. World positive that absorption may things softer of a which there's spurred optimism to are would Houston within located direction. net feet but the is market, a in have it that which square been million and has I one And along X.X think general good,

So it's take to see a forward. that good step

Emmanuel Korchman

maybe Brent, one a you. And quick for

especially ATM of we about the the right development next Just to sort for or about if them, still maintain that? funding is you the think levels ramp way as even think year,

Brent Wood

to Yes, us. certainly, we pricing, I available currently, continue to remained capital And at capital, so mean, have is at to really, pricing that's yes, by low it's look the opportunities certainly avenues to our bottleneck Interest are finding keep feel doing the right But because that. right now, metrics about rates pretty current the there. those we both right capital low, now for more that our would now certainly something debt really, access thankfully. comfortable obviously, the

Operator

Sandler next Goldfarb our comes question And O'Neill. with from Alexander

Alexander Goldfarb

Just Houston. question the first on

as see You demand, expectations short-term movement your just in for guys is to that, Houston far your incremental in later any the take commentary until we're as supplement? the was view, that going versus Houston in the leasing guys as the getting time probably far stats not the was or subsequent Street seeing insurance like, really of quarter, a there The guys by as stats in see what Harvey. while, that some Marshall, commentary Or year. mentioned pickup some next proceeds that to expect to going fourth report we're you should material of did. sounded you But we you're when like It the

Marshall Loeb

we're types, I And to yes. home explain unit you've it, where happens of find pick the were go within or XX% in leased as somewhere operators one large my our in Camden other in Maybe And which and We seen now occupied. picked XX% And your if multifamily, you've damaged, that certain basis your of markets Houston. point up. week. is like overnight maybe September, We to were of XXX the a difference, was And look multifamily we was some is literally a almost got end one And at damaged, apartment occupied. leased of and live. the mind, being between answer and my then north any up. you property there's

think is and So ball. And an a fourth I I'm it's in. rolling crystal - that optimist, income quarter

I large play ahead was. full, think fourth third next - of quarter the sequentially spike over think the think quarters. I and will out next we're quarter over than one rather several I it where But be several will

has think I and quarter next year shock Houston or will doesn't well, of in hopefully, in kind that. the then, and better be have like of first better global quarter fourth as some So assuming things second open market or does what year us this kind develop next the year. opportunity idea the good of that's And tinkering is of a with Phoenix earlier in for window like us to did just again Houston,

Alexander Goldfarb

more entry just is then a acquisitions opportunities? the of for - that you pricey. are wanted was talk sort a enter? are are at? like piece Atlanta sounds Okay. more an It seeing missing outright find there. made And some can stuff there's can about in guys acquisition last to you little Or be sort obviously, - next that question talk What Maybe bit the or sound of latest Atlanta? guys it's you just other then that to you markets that you the But going looking about you underwriting. it, you're And if You development? there

Marshall Loeb

Good million by Okay. it for quarter. stats square - year, the XX of of stones feet square of X we Atlanta, feet. more about like third a XX And over they've time things. couple this question. looking at end we turning kind spending last was like the million years, We absorbed What over, Atlanta

CBRE distribution year-to-year. has Atlanta strong stats, of a these So market. kind been Rents were X% up, are the and

our site plan with happy have do what have quarter bought We with there the ground the - year. year. we're we our next So first we'll to being in acquisition, break came Broadmoor so earlier in that with the

development. Atlanta have we'll our So first

grow of look it the of being we are out opportunities. for to I It closed, assets, them yield. of on round market, mentioned below as there. come acquisition ones one that - our I was we're last expectations, lost an underwrote is plans the in in to X% good going week. pricing in a below. second We continue in, one of but really, So already and it, handful well our to like guess hasn't a the We a submarket that - were we we

where bought Everybody laced triplets bids and in approach those So Worth one Las like kind some to not called year, project, long earning they last Florida, leased something remember term, above we Weston, the then we're are were those hard Mike if that like creation. we that We in just It's projects, Sacco the And newer or we've were either assets. where got hard. a yields we develop of are South Brent more assets the And in. partially and the core and but them Vegas, value-add one has checkbook, complete. win. Fort you bought that in it that's

days. up buyer it thankfully, we just cap as So in likes like. we model, rent feels there's brokers, a these growth there initial somewhere competitive. that, And asset in finish Atlanta, are be an buyer - our that our asset, buy wall tough we of of price a talk People avenue like win or with develop that August hear, when all are higher we're people core we it's in product And the but disciplined not And trying a just best market phrases they're as because markets either we'll buy almost in to to - so to willing shows like probably, well. a to it and awfully up disciplined out rates. industrial their Everybody a disagree, accept leasing our that to wouldn't, to stock and industrial. we capital don't on lower underwriting

Alexander Goldfarb

And markets? other Okay. any

Marshall Loeb

risk and some and - looking. we markets less see term. feel stones learned just We nothing market. yes, in in I Sorry, feel turning there's because a don't we go major opportunities for of can new my a existing mean, over rather preference, know those market markets. less I markets been markets, there's I'd compelled we find growth. good the be good we're Atlanta There's to near we is those pretty - well. Denver if number us But within opportunities in. - to any compelled don't certainly in our to California, we've that personal larger in the

Operator

KeyBanc. And our Mailman from comes question with next Craig

Craig Mailman

I first, XX% looks for and questions. guess, Maybe kind the hit like have you want of some X on to lease about the there. roll year, of I next here, Tampa tenants just roll larger

cash what think the the basis? mark-to-market curious roll think on to then on is on do broadly, Just what just your you viewpoint that retention on that is. maybe 'XX And and lease the you asset, what a is close more mark-to-market there

Marshall Loeb

two-part Maybe answer. Okay. a

in and like cash free channel added rent you the and manners Keith that. - the say, we things free McKey at And we I'll capture like inner GAAP You my end. think because numbers the

been is which Tampa, we've year-to-date, on north quarterly, Tampa. happy than Tampa. with XX% of We're but better So probably basis in X.X% year-to-date a to and measure way a cash GAAP

we've we - overall rent not for of seen in kind should said rent worried, months I those and good there. So will the we're of fair because just X the as a push just to estimate be be we the and rent opportunity we us in for that we market we've to numbers and able it able of there hard been it. another specifically mainly portfolio. we're to first Tampa, think roll in Florida push very year for as us the us. that abnormally within growth has that the And to the almost have kidded at what Tampa It's there. well strong and one gives Tampa, with But rolls very rents have been thankful amount do I'm No has thankfully,

optimistic. we're So

is first today. about are of out, months the of GAAP impact get we'll up. it Tampa 'XX, markets XX% where year the you to roll year, those the stays full just those increases the through market as, X think as going as of the kind assuming we one of how pointed It's year being As next rents well where much,

Craig Mailman

any specifically, little do those Mountain and X/X when the you indications Iron leases, roll? of kind Mattress of guess I that. Firm than it's Have more a had more

Marshall Loeb

specific. things, so in, have sprinkler Nothing as and that they'll lot again, put because systems a in-rack And many company, of a Mountain much Mountain so - that in we them they Firm, times, Iron finished historically, - Coleman locations, usually, is Iron sticky capital a a of took usually have aware building building it. the in And number that tenant. pretty was I'm Mattress not as a full but they John

those us So I to feel concerned but X pretty anything comfortable aware were they abnormally of acquired know that, that but not X early of fits their needs. I about tenants. either the that year, within say, has last

Craig Mailman

That's guess second big helpful. question, picture. I And

is shape. guys percentage good you the - in As lease

aren't basis. the You're level, like kind with the it you a be together spread just same are relative year. just I looks drag. a what the to curious, know X.X% on question headwinds of wouldn't would components mean, guys through to you I'm rent getting where cash giving I'm like but decent for 'XX be put escalators, trying 'XX? Houston of X% limit the next I would store out guidance, to acceleration that higher

Marshall Loeb

in. I it. chime Brent, and I like share your optimism,

since be - If I'm your some R&D question, I of persistent within Santa stickier April, would been to the kind one of backwards. bit - XX,XXX headwinds us more square buildings. that's It would vacancy. you been answering Barbara, to think and an we our have would shock same R&D vacancies, that That's that's makes of that's just store, Santa trying harder said Barbara what a building. where turn single-story in building economic guess be in appreciate been little vacant feet X-story a me a industrial Having lease. in

earlier. I find construction we we good mentioned worry see we So to so - rising, less prices and we sites as just struggle oversupply about because much

So in Brent, am the what headwinds? of I terms missing

Brent Wood

Yes.

I - said, that toward going next shown although end is even I would of think overall. of improvement as here we less that drag the if just a good Phoenix, the year. Houston of year, feel be moderate could what's in into about We've seen some

you'll those Parc have assets Our of the Marshall referred that entered portfolio, line. typical those bottom well they been would. and value-add a great. the add Also, rolled than to, those. them in They've some to next see California same-store the year, quicker pushes had pool into rent bought North, Jones, little of some see the developed, after because had you'll portfolio been a And development we they

good So that blocks the there. about building we feel are

the had down market other the going markets. You a be to look momentum when next an any we or headwind, but really at having maybe in The and year would be feel you get optimistic it, And the about good pause certainly stumble would less fairly particular leasing. rents about it now, little issue, from for feel drag. concern. But that maintaining hopefully into that, we apart if

Marshall Loeb

good And I very is news didn't question like I maybe the well. feel answer your

it's about to optimistic. another maybe and job year such thought be. days. as year next I'm bad hopeful. But us, for be why I we I'm like should a maybe we're I in I will it, - excited headwinds XX think our that's your did mean, answering what question positive As

Craig Mailman

an right guidance, that rational of lower to No, bad burn-off make at through just answer. done think thinking kind the That I and without headwinds? out way no. to of just the picture. thinking I expectation year, this of that there. the given giving well acceleration. least, of It The is a of I there. of, bigger guess up I'm sure kind X.X% part wasn't I it some I'm kind way, kind stock's mean, the the want of very about blocks that is kind to bound is building of of think X%

Brent Wood

months tell that? about looks, six that in We'll How's how you Craig.

Marshall Loeb

roll see I now and our the because think have be original mean, it, that all just hate I wrong. - I around to until there, I and rolling up hate to you're should hate pieces But I good a - get we it - I that gotten But arms like not granular right it our year. that budget are honestly, misspeak we're it. to Yes. be we up and

Operator

next Rob our ISI. comes question Simone with And from Evercore

Robert Simone

the Just one a on quick land banks.

kind have So and for - density it? of your about of looks general, was the restarting land about bank, get you land? on relates of in just like your in of terms that to development you the given you're there. I talking procure What are if trying wondering a Houston. with And it as about about ability industrial. landholdings it do potential to guys shallow Just ground kind seeing your any you just flooding had implications bay to feelings in million Harvey how feel X.X your

Marshall Loeb

the to within knowing We buildings one. will Harvey still, and fascinating first thought rush everything in if I valuable very Harvey, process and or what the timing those the of next with and really, think is and going now, the watch the over Houston. of of X permits in. try in of play think impact to different let's rebuilding, as go when spike ready that permits beat County, that Houston your delivery couple as line and and not us and and the lined went into in to Harris demand to be Maybe having - post of there's in went of the because with exactly, and different flows parks, Okay. city the being, you of kind kind and contractors we be be up will all much means of X parks a X quarters pulling out means kind we of are our the have But for in kind to long can as and kind that

through Road. - Katy, kind hopeful like the it out So Houston, we spread good also into airport, Ten have way so separated we chance. our West have is I land World up good. at our different It's of of Houston work kind parts. within We're but several by land that bank. West a Crossing, it Most to that's our our of

whatever - we're our possible. since full as land think point but VII, assets. about land. at in if one love kind production Tampa's market. X% find this also, as That's where right And I our bank, we development Try a internal everybody's piece cycle it the we of have wish of we we today. of as we'd retail of more into for earlier, the been I a mentioned some had Creek put think target good kind point at an today. the Tampa little We're buy, our land As in Oak we than as of more in got - And cycle. that below about of bank more we land quickly could this paying in to, we've land Atlanta no

X/X County Another really, about excited kind statistic land turnpike there on of about on our value of in at throw County. Dade And Line - just we're Coleman Miami that early We're of and team to bank bank, is and as which in Road. the in value next terms of the you And gateway, getting fairly it year. John right start that, take have the up it, the on of job to work will our teed through way we land quarter, that good down development first done a land quickly. our

as If biggest good you challenges we and keeping it's, what's say mentioned, one our a land long term, finding land of bank.

Operator

Anderson And our next question Mizuho with from Securities. comes Rich

Richard Anderson

Or be true-up year? the lease despite of of better still that situation? same-store the like lease implies a like still your that statistics - it being if a Could occupancy and been and back type we type does that downside the the said gotten percentage type readings expected better you've imply does originally start mean number come that than this despite you there'll that's Houston, So on negative fourth of quarter, at into call. guidance on fact everything XX% still, percentage

Brent Wood

in moderate I - what thankfully, well performed Houston. had very think, we some that is Rich, might

was we to year, the as roll-over a and against 'XX. pretty 'XX So with bar this high continue to deal still for vacates measure

will have there bit a - compare lowered Going 'XX, will into to 'XX bit bar as you a that little be little been 'XX.

hopefully, we for up better perform a to X.X%, X given a combination lower together months, the our XX those exposure, year. feel combined of to add like we're next what with So factors comparing year we'll better next

next similar numbers So I year. we disappointed would be if had

up, - it's that next be set should given the those way year. counting think on being better we're I

Richard Anderson

mean, mean, you year was in kind have you're the comp but got you start didn't Is that assumed it's number change. store the all right. Right. I'm a same-store to line occupancy, just - sure XX% discussion. Houston And and of mainly, trough want or same just saying to down implied correct? I never that I But make XX% I would conservative. my if XX% you bottom there, year-over-year I'm doing math for being

Marshall Loeb

the Rich. Each for kind quarter they're two-part Maybe of and answer, different pools. year, a

So make we sense. people everybody, year or the pool differently. don't have if but calculate know everybody calculates I it often that for - not a it

started That's There's third a I we've Green, that in Central one gave pool that signed. me quarterly positive. chance guess, for since one it and that quarter. our moved So he long-term Brent as hasn't gotten again, targeted our than does start, Houston roll got know some of fourth will our projections be that's looking pool. that I There's quarter, already. to are these in But November. look - different was annual leases talking, signed, lease we've to just at

again, numbers, Houston our a just Brent. So I'm quarter for - with

think And looks Houston in next for year of be positive. XXXX. it better I to more compared quarter, fourth XQ actually will

Brent Wood

X.X%. then add moderated quarter, a last that's And basis the Rich, in would to fees, page, line. termination just Houston on - were just a we're on We down cash already we've the excluding on - basis, looking I third cash And thing at that, some. down X%. straight supplemental Then

lower good numbers the are a we experienced bit quarter, year. what than the third So earlier in

Richard Anderson

in at looking question the then your pipeline, kind your And of second Okay. is development percentage XX%. just pre-leased

run But closer there off I is you going great, mechanism? a your is percentage kind is Just pipeline lease but higher bad you. of the number anything just development that year development looking on you protection sneak in is back was the ago, know deals. way pipeline I previous to about your of things up that XX%. everything a know can piggyback

targeting that now have of percentage do lease sort of you So elevated year any you're sort ago? a versus

Marshall Loeb

big us. part up. asset Probably a glad what I'm for drives that of it's -

the building the pre-leased it's As just that building, will quarter Tucson it's it, we're year around outgrew next Chamberlain where deliver tenant in XX-year kind look XXX,XXX-foot and in process and a been first of I at to them.

leased back a and have below I moved. a our for me XX% we I where - how we little Houston, sense our mechanism through started and stopped in liked of helps maybe of example, development quarter. We're at well year we got the as say overall, - third like - Phoenix, that And June for easier occupancy we market. newcomer, and average myself just it our XX% nervous that's looking over we we of, that, the I were relatively end how stopped the got percentage. we at this X-year call when in So and - Phoenix to was worked about XX%,

our to can done of another land but kind market's where leasing like responding. in land on dictates, land. sites. under and last so allowed step started development our gas that the say, And really, It's That's Phoenix we'd hey, We're we of corporate, out us, Phoenix as at some on now. market not but more building the are

answering markets. vacancy, where and So I right, Phoenix, question pretty to we've think worked our had your in think internal mechanism tap where couple it's a market-driven really it's based Houston looking on I the if well, I'm at brakes

we stepped corner haven't the turn We it in as but year. into on Houston the next certainly considering gas

Operator

our comes with question from Eric And Street next Advisors. Green Frankel

Christopher Darling

are Diego scattered comp today. also, for the little Eric drive there activity rent I'm and any can in This what hoping in of San discuss you triple-digit where a is quarter. throughout that recent I And drove Darling. opportunities kind like filling that was you bit portfolio just Chris the maybe this could anywhere? rents other leasing

Marshall Loeb

We're Yes. Diego. with San thrilled

when some the Mesa, on of at in , point and Chula of town done, of - low Vista, we're south the Otay those submarket. cycle, kind And it kind was depending that that our of

with rolled, when did about look year-to-date John over Diego, like look constrained that good, nice and - was it really Miami, and - Diego continue at you Travis of bump where rents. great I an basically, South And job, especially when pushing at lease that California then up. land in the it's it's construction San who's why a President but we - to that's it and market, is older markets, lot, everybody with rising, our Vice So We're San Florida. will costs a rents them. of but we excited California think Unfortunately, those, them in likes Florida developing - all XX%,

we've that's you leases we've got at acquired more see cycle, markets, to this usually, the on our growth leases in hate leases with hate really, the So rent FFO, seen, is in expire, - the had of but but those rolling that point you in built when kind where assets roll good that out where prove time. you you upside our or you

Operator

And our America. Feldman next question of Bank comes from Jamie with

James Feldman

of industrial Just for your appetite peers just hearing a We're some follow-up. quick build-to-suits. the higher from about

of be appetite style what to also, if then build-to-suit? of And was talk think you these want portfolio to more we'll just in tighten So start especially markets of - see very and of box, creep even a properties? for into do get of your big you is the kind more kind as it can more to your about specific more that just a

Marshall Loeb

- the to square serving question. - have probably market. Good tried not footage market. the by probably Dallas market a than bigger We Dallas Jacksonville certainly serving is

the said to target tenants typically some that. makes our we've We sense. creep bit So market, to so a market if maybe the the that more larger larger tenant, market, way We've larger try react served of style the their little larger. that be It's really [indiscernible]. could than had

Rubik's managers, and some build-to-suits number just Tampa underway. If echoed I tenant and kind call leasing President we and Studios like earlier last The it. I move internal I to of - It's in this just delivered tenant talking a building tenant for in our week. been Cube. We've that Charlotte Brent the that had were. couple comparing level, We get they a asset got of and I were and expansion, this week, can pre-leases. of of Chamberlain What's expansions, here, Vice for last have accommodated a Universal - interesting our We can within year. was hearing that another.

into and We're - our existing it's And more square So out another our really year. up think is more - growth and our zero-sum best about build-to-suits. developments and in asset feet. another. and expansions, to moving building a when is markets and And we're I game couple of this of the of seeing, not are think, - leads million of we're a Charlotte, We I our which in our for the someone went best we've quarter leased, talked building seen - those. we're added form ultimately, more we've It's that manager XXX% that prospects three tenants. certainly

We'll like probably, we - towards sounds we're subtle typically difference, it pre-leased. with a that maybe like pre-lease tenant. We We - up byproduct. more and make it's or a re-lease than be end but a a tend So build-to-suit, a rather will want try a a tailored a pre-lease to needle build-to-suit you sure to for we trying building what's and haystack like up it. lot vacates. the going and about you're end to customize tenant when that think We as a to in building a with be one, building

Brent Wood

will build-to-suit, World that out, term us. Jamie, would Marshall of add Houston some bigger And I assuming for example. the just the takes said, is a for some works That go good a of like long leasing we building obviously. again, risk that,

year past Over very some the large or X, build-to-suits. pursued we've

a given haven't bit like do inventory to that won the a there. But and and inventory, them we into big quite of box plays land yet. of that the size part We have any land of ability

tight, inventory work where foot we're type buildings, yes, hopeful a itself next just land. to buying for into order the other going we're track multi-tenant avenue something stay entertained, square fit But of a be markets is XXX,XXX the to that some configured that in large markets of we've So aren't to us box. quite It they through our and takes if we're hopeful that, that would great. that, shows It year. -

James Feldman

that said or you next - think if do think so [indiscernible]? I square year. much know, for I than be XXX,XXX, feet, you would XXX,XXX I for you the So about $XXX don't How million think greater mean, of

Marshall Loeb

none. but the envelope? I specific back on or our mean, kind we of it, Not initial what's wouldn't So answer. a it's right now, diagram None. say of to just do

Operator

questions have And more this at we time. no

Marshall Loeb

we certainly your Dallas. Thanks, EastGroup. time. to like people in and any I seeing Take I care. your I everyone, and and have, questions look probably, appreciate available follow-up are you for or NAREIT at around tomorrow, Brent in here forward interest may feel for

Brent Wood

you. Thank

Operator

program. does Thank This your conclude today's you for participation.

may time. You disconnect any at

EastGroup Properties (EGP) 20 Oct 172017 Q3 Earnings call transcript