EastGroup Properties (EGP) 1 Feb 182017 Q4 Earnings call transcript

Company Profile

Participants

Marshall Loeb	CEO, President & Director
Brent Wood	CFO & EVP
Jamie Feldman	Bank of America
Alexander Goldfarb	Sandler O'Neill
Emmanuel Korchman	Citi
Eric Frankel	Green Street Advisors
Ki Bin Kim	SunTrust
Craig Mailman	KeyBanc Capital
Blaine Heck	Wells Fargo Securities
John Guinee	Stifel
Rich Anderson	Mizuho Securities
Rob Simone	Evercore ISI

Call transcript

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Operator

Good morning, and welcome to the EastGroup Properties Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions]. Please note, today’s conference may be recorded and I will be standing by if you should need any assistance. It is now my pleasure to introduce Marshall Loeb, President and CEO. Please go ahead sir.

Marshall Loeb

you. Thank thanks for and XXXX fourth calling call. conference for morning, 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, may 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

quarter the trend GAAP San the further Thanks, quarter and growth and At markets. leased prongs this XX% almost strengthening through rise XXXX. we're pricing from occupancy XXth And X.X and XXXX, as we were FFO continue the re-leasing early by XX.X% positive market Tampa, per institutional points as And year from big result, million occupancy, continued quarter-end, came of we increasing In leased in strong demonstrated supply, up institutionally quarter our each markets, our our prior number occupied. prove from these of Supply, upward average Francisco our was control, a Los but our bay while basis above the results another in construction for supply Phoenix, rose Overall, saw up of XX%. achieving Orlando, of controlled. over a quarter spreads a XX.X%, XX a Angeles, Rent of further a this is our feet basis, and higher year vacant Tina. year. consecutive GAAP spreads markets, over NOI compared major leased. Fourth rising will is were of remains to specific fourth at our for are solid largely And including guidance, And XX.X% to compared such add markets largest industrial share better. feet, XX%, X.X% Drilling X.X%. success GAAP higher quarter a million a roughly summary, marks XX% points and The as rents. NOI Houston, byproduct seeing focused shallow or largely it's same-property in operations strength same and market and square pressure disciplined square their positive by on XX with remained industrial we on check a seeing specifically, predominantly with X.X construction. on disciplined quarterly pleased of spreads. on basis and metrics, in cycle, basis release down XX was store numbers occupancy, supply, increase Jacksonville, in consecutive a XX% deliveries last box new In value dividend were in end, FFO trends. all number positive X year strategy. mid-December with long-term The fourth They fourth EastGroup's acquisition. for quarter Funds Charlotte, and continuation into each of quarters as

as as fully with positive same growth view ourselves will reflect remain results occupancy rent occupied. going though We increases property forward we expect mid-XXs

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

projects square During million million. fourth containing total quarter consisted cities, a and projected which as construction began cities, four investment with leased. of under cost million, XXX,XXX $XX And on buildings X.X in December feet feet just XX XX XX% we totaling three $XXX projected XX, pipeline our square of with development is of

continue XXX things this development year a greater is million development feet. excited Orlando us million and And Charlotte, you'll in number parks of specifically, of year. I’m within we square This during risk and one development our see Dallas, successful our the Antonio. about pipeline raises starts the San of also developing chance X.X like XXXX, reduces our and our For project markets. of markets the growing More

adjacent broken $X.X for January Miami, World XX% totaling active presently in the XXXX. as on we Gwinnett was restarted we future for XXXX, and a stool Phoenix topics, we'll Then mid Center, completed acres which Progress newly a financial initial of of including now XXX,XXX Progress In non-EastGroup final the on we're building square leg since developments Houston time for XX.X Atlanta closed a foot first square of which in million. will new park and consists Houston $XX.X Gwinnett Atlanta. sale edge development The feet our four over buildings older leased. of our development XXXX Center in project such for variety XX, this is review ground World million. addition, XX,XXX mid-December the of third of recently have Brent Houston acquired Austin In and is we’ve guidance. XX, markets developed,

Brent Wood

Good morning.

well We compared per an positive for operating year, strong year. X.XX%.Also performance million placement FFO of XX we continuous to the per $X.XX term development capitalization our unchanged. Operations unsecured guidance results an fourth $X.XX the increase capitalization we points common quarter capital portfolio, $X.XX of midpoints average and issued to conversion basis guidance year, closed the continue notes December, XX $XX.XX the year to well-leased was December ended the of in share the acquisitions. our due of by of rate reduced represent X-year bank on target. share range our unsecured From to fixed of end. perspective, a loan last see is Those fixed private an was an at an quarter program FFO XXXX operating maturity December date In upper that X.X%. year our compared $X.XX the quarter, senior same of market portfolio. market the rate of of amounted as share. million Debt-to-total of the increase end be first same-property X%. properties of continual to into have at X.XX%, from XX.X% effective the the per price benefited the range prior debt Floating amendment we FFO operating long-term per on in in exceeded $X.XX estimated at a income equity net share in for to at and XX.X% last $XX the to $X.XX total and rate to closed to add December, to and increase compared below for $X.XX for XX $XX.X only respectively. existing increase was of value per stock $XX an to of $X.XX the at an X.X% million the under year, quarter share X.X%

XXXX increase the the of reflects normalized estimated quarter million a line as first changed influenced cost in of on year. executive G&A of for result XXXX computing G&A a bright basis. a lower guidance The our test compensation first by quarter $XX.X is

debt fees. In sector XX million that the continuing XXX,XXX and have some was X.X% that Our the and same leasing XX year. notable Other an financial best low in bad for leading dispositions, throughout metrics average continue comprised net to include, summary, G&A common acquisitions million million X.X% revenue of issuances, assumptions termination guidance be of of quarterly momentum our in to assumptions XXXX. guidance The produced a anticipate we XXXX XXXX. and of XXX store for debt ratio results growth both of of of experienced stock unsecured we and

Marshall Now comments. make some will final

Marshall Loeb

majority as and geographically are by also during move we I’m last of of in Brent. foundation result in we’ve excited our we year and XXXX. improving Thanks, on especially time into during teams with continue the healthy our a investing improving balance evidenced fundamentals I our am vast Based markets. strength, this equity we strong, Industrial the committed solid metrics, property raised XXXX. laid transitioned. also proud the about sheet as we the continue to We're maintaining portfolio. diversifying

results a as the in As quarter’s we environment begin year indicate. operating last are we solid

and combination of properties optimistic now are we has have better happy sheet. take stronger questions. are future portfolio a We balance as your team, also an our even This stronger us to about and

Operator

[Operator of the go Instructions]. first Feldman of And ahead. from Jamie America. Bank we’ll Please to line go

Jamie Feldman

guidance. good Hey can I’m the guys store same thank you and focus hoping you morning. on

that We are rate XXXX getting you numbers. a the in lot about overall put questions of

you the lot improvement, So of a and than full there you I – can driving and about it’s occupancy, kind leasing last you your higher can guidance talk your margin year XXXX sounds actual the driven talk you year. when know it’s but but hopefully about full number spreads a was pieces started like what’s year think moving it by

number? So you just some about thoughts how came that to maybe

Brent Wood

a jump things. we store similar that trailing a know more budgeting occupancy the of rents. disclosures are I’ll I disclosed is a But out basically Marshall. and first, average year-over-year, midpoint pushing point X.X. four That’s give then quarter quarterly now the One same would would really then the we to in your Yes, our I that it point concept. it on so that’s out is incumbent X.X%, which X.X the becomes you give, also type that of Jamie couple we to

XXXX. So as conservative proved we Jamie, be mentioned you to in

hope XXX it’s points We XXXX again to Our better are you than occupancy budgeting XX.X%. opportunity basis original our hard that XX.X% just in [Indiscernible] to push projection. we have say XX% that over when but

million are is our in and growth the last currently point for the our with the pushing XXX growth year with to X% and so that at construction million under X.X% And is I pleased really along developmental line what that pleased are converted we predominantly bottom pipeline we projecting would and is pipeline pushes we an and that next at a with we another developmental company are line are that yield with lease up the XXX year. very bottom

Marshall Loeb

is -- am better captures but we on good of with same we why year at team – a way leaves so on that we to we was us well, and XXXX that out Core And have leaves this so a growth a I an we player with here and really our our core what worked much annual question out. of on developmental so hopefully a again, that much Jamie, would our question and development us driver annual I Brent or don’t kind out as dispositions and XXXX FFO pipeline or last topic or least in much same completed non a delivered we out it much with metric in get we of of really FFO leaves a compared incomplete or said [Indiscernible]. of that it so and have, that because store what what core measure and store NOI year think I kind raised as I thinking metric say agree to our

seems I higher, really fee, more debt, little they to and it’s still normalcy occupancy projecting that but dash we they although seems that are I on the a so on So not the projections about were a are, we the that number are our attention dial the driver floor to wish little and does. lower the little what are a environment get this us it’s a to it optimistic return won’t occupancy lower bad term year

Brent Wood

in our to, example converted first to is but we to an there of leased, because wanted project same it we’ve one wasn’t until XXXX. I XX of I North because has referring a the topic, won’t year-to-date million for same almost it That [Indiscernible] XXXX been held in add XX% just Fort know wasn’t that Worth Parc thing, leased. XXXX, it Marshall store quarter what not in that be in because the raised that held XX% that brought X/X/XXXX eligible store was project for same

will even year-to-date yes XX store So we months same that that have gets a into before pool.

So a metric once as view that incomplete trailing looking you that just times as we are quarters. Marshall the said really at at is

Jamie Feldman

that’s my Okay, question. helpful. – then and my final second And just guess I a question

box? about for how growth thinking just the and bay what’s your is growth, you’ve your big like talk and shallow about Can seen differing markets expectation pickup there. Just you industrial rent from Houston probably rent in

Marshall Loeb

box go I in and things so is probably bay, reading what particularly we in square us. was under much do, as supply size that do hard for on in what’s shallow There construction. not we question. half average Atlanta over does and at read just big the number, million delivery. of field. are good you a delivered feet. Sure, any that because markets about spec We sub is on think hesitate it to box we look I aren’t the big being speak that really is people like don’t I It’s worry than us. building different of Atlanta and the it’s markets but

family XXX,XXX well on. a now – capture so rent rent we’re box the XXX,XXX gap project much larger. building So be foot, building right foot building it negotiate and may growth are it’s multi we like We rent that because as a you and that the we free

in seen XX% were own and we that we price our And a six in XXXX we’ve stressed example, increase construction in with committee. months in a rising or us, led last XXXX logically and prices XXXX. our as on last jump us -- for especially has the land really Just industrial year yields and all its seven got about that developmental at

logically all still We think rents but construction those prices pricing, well putting lead rise to all that’s higher lead to but growth. in got overtime for that to further are north seven has pressure we the to are of forward are with rent -- markets

Jamie Feldman

year? Okay, did you growth rent say last XX%

Marshall Loeb

our number yes. roughly, gap was That

Jamie Feldman

No, I mean market.

Marshall Loeb

okay. mark, Our market

about up our up trying mainly to get then Atlanta So I’m was markets, is it X%, X%. Atlanta

lease a think to usually we charter I at lease. it in look

by year. So seeing sure a if XX% peers and our more would of are spread. to will we for It were our simply X% us X% we will portfolio be I it rent just we probably all fit than used and growth, there to because feels releasing about well. isn’t that not but it market touch market our imagine Target like high within to market be most also many are supply as and own this expansions

Jamie Feldman

guys. great. Thanks Okay,

Marshall Loeb

Sure.

Operator

Goldfarb with side go Thank Alexander of you. Sandler the next O'Neill. We’ll to Instructions] [Operator

Alexander Goldfarb

Hi, good morning

Marshall Loeb

Good morning.

Alexander Goldfarb

here. few Hey questions just a

and of sorts those figure at writers are in for getting lease exist fairly lease are up, Atlanta that quickly? is is PE it that’s good assets they the the you a pricing the just First, commentary curious growing the -- sort of can assets those assuming buying significantly in I’m market tighter where it and near percent [Ph] compressing did stuff probably could the still shops under you about competition occupied rates seeing you cap larger which But or assets at, than why then see you is that reports clearly deal if bid. the could and you just if XX would buy for guys bid which and out the stabilized given plus market. up

Marshall Loeb

and about really half. of those year done four We’ve in a a

there’s Weston mentioned Brent then Jones, Florida. in Parc As South Las North, Atlanta, and Vegas and

shadow So view nice we really it as a pipeline.

For but one it’s transactions. asset, of about but lot million, of every brought partner. and those a those been XXX development institutional all working market not developer there with Typically works regional few we think in about a an but who’s it of is – typically where one a

into tended promote to either their to partner stabilization them about and sometimes rates and or upon like is worried it’s of kind the Our offer are their things interest and But with them can a up next attractive offer exit always financial by onto and they gets development deal. the they and move mathematically to say economy that. and

say and to niche a So it or those it’s that but somewhere midpoint are core a able in this market there’s some out be are we’ve in low buy up, assuming we there at cap usually between yields we Atlanta quality once that been product and care not – at of now stuffed we’ll the kind yields rates development think up they stop. a sixes on both are lot thankful we able yield in leasing to that’s working the buy on project that finish Atlanta could and the found least

about like we mentioned right because impossible to So opportunity as this core just acquisitions get will now. you

Alexander Goldfarb

I so an that more were markets your sounds four you give past we you four think, year you that just right seeing now those pretty good And these you – do this to year? expect Marshall what are or should doesn’t of so was the equal if able that Do to up. you in dig hope in them you’ve number but can get do of you’ve it you of it been mean done able

Marshall Loeb

more I’d we disappointed we we're or looking be didn’t I’d many and know and line don’t always up. we we're that just if few at I a we'll if as but do, could of – dollars and like we two looking things you -- don't get pull one a think more. have, as couldn’t but to do lot hope up out

Alexander Goldfarb

you you debt. last a million Brent guidance it have year XXX,XXX. versus had a only doubling you there Okay, in year? your place $X But and that then Is you last did, are holder reason only

Brent Wood

is not specific identified have that’s driving a anything There reason, effort. that We Alex. don’t

You in we XXXX, we tenant know can, of the year dropped XXX the need size particular last that on million depending had a to number year.

quarter move And you XX,XXX comfortable to that rate conservative a – guide versus so foot a hope a XXX are foot [Ph] it bit. with, that that unless a certainly number just is be square but a get we guide proves quite we frankly square XXX,XXX a

So it’s we just a guidance beat. that budget that hope and we number

Alexander Goldfarb

thank Okay, you.

Operator

the And of go Korchman Emmanuel Please we’ll go to from next Thank line Citi. you. ahead.

Emmanuel Korchman

everyone. disposition morning your you good tell markets thinking assets Hi, more Brent, and what about are can selling? us and plan you what about

Brent Wood

Yes, we the kind XX that the that view close goes next X around think say earmarked everything is first in would rest holding projects in Florida a in of if of hope have XX closed for one announced year in we we that the guidance project of project couple million I we of that million. well that million the Houston then noncore we And have throughout we couple quarter, the the months. small specific

later it’s identified. that where beyond to Another be Houston small in potential and the year building

we’ve type thing forward couple be Marshall ranges that more seen a years potential to one of do the dispositions things. had think and I is looking in and taken he the last of little

just just it’s XX specifically identified to like through I that for. But the and and kind rest throughout sometimes say the and So an itself we’ll it’s million something determined would that presents say be ears we then is unexpectedly open the play that’s our year. keep years of opportunity

Marshall Loeb

bottom door. of again it’s that really the us and sell have Phoenix, that to specially the its we got leasing really as and on for of what’s We’ve market our Houston, our in some brokers up industrial are saw in helping cap kind XXs with opinion and type us, buildings. of portfolio or kind building out we properties what where best when abiding mid you expense is each oldest some push that anxious typically can acquired an product older rates based in quarter center projects the Florida values the then [Indiscernible] in trying the on come are order it’s of service we

Emmanuel Korchman

maybe on news biggest Mattress around and And view give you Firm. Great. an your us updated one of could all the tenants that It’s company.

Brent Wood

think than Yes when every in anyone it’s came of from the no in them to had location, are difficulty. currently have selling us. mean of parents, locations having, there news what of read some with about and stores as aggressively companies they them stores. troubles they the then distribute I as mattressesd a guess four they in frankly guys push feedback the But our duplicative the our are remain some out they that retail be of are bother optimistic From you but all else surprised to the seen terms I warehouse. but locations at They they still in will and need current, and consolidation more long as any of will what to are I some I’ve that have, mattresses continue continue retail are no we

to we has dripped them So some down difficulties, us. are not their of aware with but parent of that

keep so we’ll far but eye on an so So good. it,

Marshall Loeb

of year this none rolled those And [Indiscernible] releases

Emmanuel Korchman

Thanks Brent.

Brent Wood

Sure.

Operator

go Eric the line with you. Frankel Thank next Street Advisors. We’ll to Green of

Eric Frankel

Thank you.

your outlook starting the over by pool new you of methodology go the Just to specifically growth growth NOI at over understanding same year. difference change beginning outlook between and property the guidance annual what quarterly doesn’t that GAAP to Brent average the go can you NOI the again,

Brent Wood

offline does. I’ll basically not guidance so if overview It quick with on is call. metric. straightline then for to you for try we’ll the be cover And that store of true as as details. in none the wind I completed that would in work and definition talk we way coming consensus And year-to-date give But that the the some XXXX everyone will to you, common peer X.X one the that I being all implementing say same that impacted can it pleased that bore say doesn’t our very our to up group and with we with definitions of our

had we be XXXX that to held pool was is of – property operated and January we have XXXX X property eligible XX all simply it owned to through for December and of for XXXX, XXXX. So that of of basically that the meaning that X.X% all

Marshall Loeb

As asset. stabilized a

Brent Wood

As quarter stabilized a April Parc year-to-date the on is of in XXXX each be was quarters be store in operating store in will held for we the year-over-year this that based second were beginning it our same year same asset. Xst June I the not The portfolio, X/X/XXXX to the was but because XXXX though quarter same earlier held of because growth we year year to does in the North stabilized following the example June in April the in for [Ph] XX, will compared through quarter properties quarterly Xst NOI date it What average obviously with compute second XXXX. gave XXth the of to example this won’t year property. two and it quarterly for it comparison, compute quarter-to-quarter,

and think a those individual this quarter I North XX that’s point. projecting a and It’s metric. of metric more would more have of each – covers, a then at for not pool the the until average are Parc X.X that trailing of months we we again, that eligible of owned it is So example that average year. being the Again four the we relevant simple XXXX hope of year-to-date

Eric Frankel

I pool pool...Yes sound way it understand the is sound understandable. like you does based changes on like obviously the describe it it Okay, which does

fashion, your versus that move detailed number are guiding trying more there a any you in occupancy lower – are assumption out guidance today? your can through plan going to Just

Brent Wood

tenant. No. would There's I specific no. say no

I in. the alluded think acquisition for occupancy had example Marshall to low Atlanta prior rolled that

true typically little but view in that know of our fully value You the occupied occupancy, XX%, were inherently that is XX.X% that it XX% range XX.X% yield if upside comes lease occupied. to percentage we’re had the that that, shaky your with you part add a higher occupancy we that along nice means and

Marshall Loeb

X, and and pick margin And and guys is return – XX are though of hope again. renew corner that assume we those industrial when typically there XX a the that know may occupancy our to we tell vacancy strong The a few a wrong markets don’t was in yourself specific XX at even a XX we XX just points. they budget is we normalcy budget down that XX and as don’t renew budget some when finished we not of over to know I we assume of a error do paint our and – we this here for kind that you the that stayed turned into years year so way almost and the and out then closer different that last

Eric Frankel

some Houston. I quite question that jump and or just of back I’ll in is had quarter, just this quickly. just queue were that quick a Okay. one is release reflection on Obviously growing spreads vintage that positive older quite rolling rapidly rents leases are through?

Marshall Loeb

Yes, good question.

pool of to happened roll You know is leases a little bit through. the that it of

but older also the were was leases the improving a would what – but the say it we was that it and some Harvey came then through Houston, market. fantasy and not did we I market improve have some for did – maybe So and hoping

then had it we is spreads results. that a like you any one a always so is Houston or and on tightening saw for year-to-date the our market nice can quarter, some fourth little our we better So numbers odd a are quarter better, releasing – get getting sample it annual than

Eric Frankel

jump I’ll in. Thanks. Okay.

Marshall Loeb

Sure.

welcome. You’re

Operator

to Ki go we’ll Thank Bin of from next you. line SunTrust. the And Kim

Ki Bin Kim

Good morning everyone. Thanks.

this year much guess, the of next that to already feet by expiring point? this about X for million and addressed kind square X.X how back under question expiration of but million point, going you slightly year, is X.X So I million have lease at this

Marshall Loeb

our leases back go times I on with when guess -- to be, won't size through the I’m depends will of those rolled. six We them, out. tenants It when of months A team. really probably lot nine on those depending –

typically with an don’t lot I about And – year-in renewing a we’ll tenants. into far of those. negotiations awful we’re So pretty year-out up end of those and XX%

know So address really I don’t those. we that

us paper lot even We’re right renew to them close fairly of would number and of had good to and us expect leases a the too them And and we last news probably mentioned of the simply because with tenant year now surprised earlier, XX%, with I about I that XX expansions. expansion in and the or surprised just we’ve a kind renew won’t me. number Charlotte some trading and

renew tenants his Cube where of a tenant life them accommodate lot to trying Charlotte said people and become those a one all. just of won’t our to moving So Rubik's President growth is Vice has around accommodate that

expansion. see of hope we will will probably, in XX% we’re ones in XXXX. the won't saw be economy lot renew we them really of So we better those trying I getting a the than accommodate tenant renew, XXXX to

Brent Wood

Ki here add And release does into great so [Indiscernible] feet down to who just that, square and I’ll hasn’t a vacancy. these way to for stayed of We’ve the its that keeping made X.X numbers so us. occupancy that. of same, job that's Bin, XXX,XXX

of XXX,XXX been So that in January. has dealt with

Ki Bin Kim

why at but leaving? going you renew, when And tenant to already but ratios leaving? Okay. anything don’t they're tenants why know I high, reasons [ph] your there, anything reasons from

Marshall Loeb

point chose mean, space simply they couple tenants, in No left pattern. and of to there’s one really I tenant a great everyone’s out I’m trying the can’t maybe just Denver real renew examples where and there’s I where they also state. Sometimes the know can’t not we trouble to just need accommodate. financial pattern. about we think to

we one issues park, building our about in and Sometimes can’t they growth. renew the every leave not just to and sometimes state like credit so accommodate and they’ve we their in we’ve chosen

Ki Bin Kim

of high sound rents too a because the living? just doesn’t lot it So, like

Marshall Loeb

No.

we which they good or seen at bit a maybe be rates your and if probably of of on go it’s must lot warning a if educating one tenant tenant haven’t the to tell brokers look I is people And makes issues do like renewal sign, less a it. market a customers that in serious, would the really away when then financial especially product which a to probably shock have broker market way Then tenant have I expensive for must They only it they’re them it I mean, of appreciate, all on space. too, doesn’t well to it’s be you something higher not that. a rep market us, rep and find could have move stay We broker with isn’t easier tenant can pretty a be they to try so are they get our is then we market. -- BRC out lastly a had have little and you times our the of wrong. be us where above, a

Ki Bin Kim

And balance feet, guys and one, square last you right developable land now? much your have one how sheet develop quick

Marshall Loeb

projecting million our that not X. Page that you nine maybe a good square we’re of idea supplement, we give developable feet I’ll all, – the say, let’s only X.X land. do pretty would on of

Ki Bin Kim

Okay. Thank you.

Marshall Loeb

Sure.

You’re welcome.

Operator

Thank you. will come from question Mailman next Craig Capital. from KeyBanc And our

Craig Mailman

guys. Hi,

what question if on gotten your could follow-up guys I pressure you are pushback. have tenant this there versus of place the getting update with and escalator see of Kevin’s what in on you like also push is aggressive point is kind your average and today? of significant to guys annual it I on ability Or mean, you try kind to are seem the kind you more curious Just on cycle? rents, just doesn’t where ground getting to

Marshall Loeb

tenant --usually and broker, lot And compare probably and how again, too, said market their below We’re what have we're that their escalator, mean, proposing cons. by it. deals think our I the that what I what in an but are our rep probably options buildings new that our to portfolio, in to a usually pros know X% best guys X.X% will most annual – and we’re best tenant other the as similarly, we’re that slightly probably of time guide

rather FFO in and So the push deal best you side as can, to coming we tenant a keep and the choice may as you make have the rent, but six and and that rents can income. tenant get rather keep given better keep the as other lost lose we'd tenant we’ll months, if wait the we although hard you the the you’ve

we because value don’t relationship, you make of that we we the of rent losing trying were little If can guidance, have without that’s and from as not alternative. tenant a the probably the a you months best better so think and as – builder to six net torching fill it locations strategy, multiple better bit as value in it’s to can as you we So over hard just as not get but or push that’s our markets too a up, we hard and kind we the effective purposefully building now. number don’t people, hoping a these merchant and to won’t a period bad lose the present push a customers without gave push but point negotiate REIT a we

Craig Mailman

on each the that. where the give you’re of over that the also building and the you Then thoughts decision one and group are just us decision to there us and what I park? that’s then build It’s cap has some sell helpful. may control you here behind guess Houston selling another to that bit give years have to on where secondly little sound the relative product rates in like the Can just a

Marshall Loeb

and to down the Sure. phone a it is aerial side building the a Houston, an and was on call, World at Good question if northeast how we at of going this of it you look corner. be looked

not more of then in building, tilt call was concrete the edge a doughnut. but typical mid-XXs wall. office doughnut, center the It older So it of little versus the aggregate construction, in it finish the

sold -- it There we was as we underwrite original So it. an route. would it was

kind rate in cap we Houston. it cap first to and were a rate, high Houston say the to six was latest CBRE I want mid-Xs hazard Xs would it, around guess, in as So underwrite to nice five here that of from sub where

national would that the quality and traded Brett and wall hearing still sub-five so would settle either our years low developed I is but at a or there six this old. year, trade even could greater that’s watermark right be low, of industrial brokers were as with we last on Houston for the think just low would Texas five I I with as world several our trade think as we anything product capital of in we’re or week So would

Brent Wood

to in of growing Class buildings XXX,XXX buildings that’s said still of and total one with park ago, Marsh XX, both going our still A we as feet that architectural sold XX we add lot just less I since in purchase any early were say a originally purchased tenant, of sell Yes. sense might park. and years control XX, t building look now we’re kind over really the and we we option that. the premium process combined obviously to the association at make XX park those that just years and prove were then developed of square can control The the in other over these and than two then committee ago manage summer, just not then, controlling we’ve want and on if you totally and that we

hanging low just that a upgrade make are gain get this the the sense to assets So would park. core in quality good and there

Marshall Loeb

This we’d digits out would of lower the that building project. Houston but like that just but to our terms our finish market Houston West and it, Houston to but [Indiscernible] about we example where will up in strategically for double this Road more problem it we of we’re shrink where and We this our fits maybe teens at it three one portfolio XX% cleaver of an not low meat more of – of sell will when there later to year at reduce two more is like kind were Houston park, within a year time grow also now allocations or exiting a is of in portfolio, within we’ve our on NOI, we’re so allocation we like XX, we than will or build improving earlier be like a to it based kind to building for XX%, rather used year. scalpel, said here that we a opposed

Craig Mailman

Great. Thanks Guys.

Operator

you. ahead. take our the go Please of we’ll Thank from Heck Blaine line And Fargo from Wells Securities. question next

Blaine Heck

that Hey, on the I big picture at like want topic performed good looking well taken, did than Houston up the average any are the follow there you It Are morning. X.X%. may I is down point regions better Houston same-store and do be looks throughout appreciate at XXXX? same-store. number XXXX. your expected to expecting but guys same-store of in quarter so your comments on your think if and in And to overall the you fourth the drags opposite NOI above

Brent Wood

we some space of the half that vacant. Houston about was first maybe portion bigger keep half strong to the picture. success a tax was I’ll of of the talk let because of of was take property and got The obviously Marshall that, a appeal fourth that, quarter,

we’re we So Houston, out. from north actually then operating looking it’s budgeted X% XXXX as above it took just of same-store a was metric on And positive about for the the average positive year. that X.X% at X% for to so

So we’re not it seeing laggard. as a being

of have market, when nerve-racking down XX, this compared get I’ll just gets projections it a [Indiscernible], it the the year. get to the that's when that’s occupied into positive one challenging, very to you be to it XXXX but in your yourself to benefit tough then In the XX.X% put then markets Houston beginning just at again a challenging and becomes take Marshall, terms and of becomes because are any other XX, a total but leased spot you of you’re lot very XXX% it there hand year – and vacancy

Marshall Loeb

most I strong of want like out didn't that really not market if things with through assume no market market looking And we you just happen. may kind large in it’s We and think so not I’ll we tenant to are is went our renew agree backwards tenant down by list, those that move improving, to said, market or its markets go – market of or just specific as I’m our thankfully a Brent, and of may that. assumed they a every and it there we’ve

It’s or made keep largest Tucson we year. their for all under huge some were they’re that'll a tenants released about but and larger building vacancy a XX% there space, but lose XXXX. out, or of a our to we construction XXX% we've move leave negative leased going for of us have leases that’s this one And we where when not us, them those or for of a of market with tenant,

Tucson, in it's a to really number building pre-lease tenant. good but build for negative a it's opportunity a So

of our debt, bad So there’s and conservative moving I than we’re hope can. I assumptions, some being hope and parts maybe we again other all on

Blaine Heck

bit of high that in your market a pretty market, spread. Tampa, focus fair. for little just coming you what Okay. Maybe rent That’s can one be talk expirations XXXX might level a just on and about other expectations there's in

market I think you as bit they you lacked little improvement the a do portfolio but see that year this in look overall forward? any

Marshall Loeb

surprised the barge the mean, Florida, year if square XX,XXX,XXX be but it’s team to a Tampa our not XX% almost on I our and of was on record, leased, in feet. finished soundbites, couple region like has which a We we market, I eastern

think sized our and on all the Tampa last all year, within me going expirations evenly that our looked is with little because It’s probably of jumped north there the in what’s tenants was that GAAP spread out thing, of a is and It’s at we’ve XXX,XXX. but I Florida, talking like there’s not expirations, a Tampa within driving, strong fairly and of guess Miami, team drive spread. that XX% when a about its talked up market. because tenants And market our strong good, releasing no one – again our a of a that doing third its XX at tenant to the and I major Our it, it’s it in solid GAAP releasing state I of Orlando that, same really, XX had I make well. or really

renew portfolio So those. about I we projections looking our think renewed of we’ve and average

that’s that we’ll our so expiration. we development, new tenants of of the space Oak Creek our but that Creek in into one One expirations our building, back, Oak them large of again relocated get one

this get So spaces the we’ll back big year. of one

opportunity it liability. an diversified So increases the and that given lot a XX% does a we have can but glad if like again and year It’s not we’re rolling, market thankfully last do

Blaine Heck

you. Thanks Great. right. All

Marshall Loeb

Thank you.

Operator

of ahead. go we’ll Stifel. And you. Thank the to go Please Guinee next line from John

John Guinee

can a talk – about John should over Guinee And looks land Fort Myers Marshall, I this Can going there? like square out is Fort portfolio? yet. I’m the which basis Miami, what is Thank Miami about little into XXX,XXX of looking portfolio, sorry, about throughout basically started your we acre XX% about square about haven’t your over you and basis, how to talk foot looks It XX over you’re – build should what XXX we land XXX,XXX of acre Lauderdale like like how you. your here. basis your and think or foot and then there and was build an you basis Houston buildable. just looks an

Marshall Loeb

Okay. Sure.

as We development anybody will we we try of too. to move buy this the it put as we can. land from cycle in -- at cycle time good point to quickly in try One, not – of and stealing everything and today and if we’ll you’re try there’s you’re a a not

and the Miami today. terms roughly we quarter land that’s XX in holdings of value our in – of so about a quarter acres bought And

than we’re and value front where side Right On -- we’ve site where corner the higher – the county Broward the so there is other where is being at line the of road Florida in designated County Turnpike. that the industrial. where intersection of what really road Dade acres County seven really and the

it’s and It listed worth of office hotel acreage. a of broker should or retail industrial and dialogue in is. the group that what that the have land and we buy a engaged So where will probably actually probably of purchase that a would sell our twice portion or where – mix

buy land at of a to from the a basis balance. then So the as way Downs viewed we Churchill it chip on and kind away

do Miami to quickly second talk excited vacant move quarter of with the ground part out, it we that And about first that X.X% that's really under can late was out in coming one should first which through we’re quarter, and quarters market, early consecutive we acres of and building vacancy. we really our X% the there XX the ourselves land. with [Indiscernible] the its XX Miami So be that

where potential prelease five and that away square you take or we then basis feet we market build fast some a over seven us. is a start little -- really acres hopeful faster we buildings, developing build the if and XXX,XXX get as So of a allows a place bit once on We of those. the slow that good sell you could as

Fort of land where Myers is got I-XX tracks, good the It’s actually just off of another piece track a there. some and of other I-XX. one we two

really building Suncoast built We’re looking building. at leased up, and under the at another

the but prereleases land [Indiscernible] one we where sold there. Houston in that and didn’t our we probably the here to a XXX Fort quickly selling year there, in and our won't and tourism landholdinags effort development give we pretty work way get that’s Miami made good have in came this Fort today we’ll building the order doing at Myers a are of at through long XX But another and we – world starts large West next confident the few at even of team and started and in start first on We Houston last that million economy Fort to there our immediate way as of and an active active as economy we development will. as So in hopefully chased Houston – with I'll our are build we develop from think working we’ll that's in Myers, the plans really quarter. though you’re we feels well got that we that I’m when somebody well Road. chip Houston, just second doing World to too Brent landholdings since in other the for on lot start and again a biggest not that land ago, we’ll Myers

XX about of we to one near-term of I of of then need, $X five we’re acres our my years and over a out That's concerned Tampa foresee land. little there sold is fears here so away challenges Orlando, over million for actually have like where our a one trying that land couple and point running biggest and and a We chip really page the last GAAP XXX a is didn’t about are that where spread to XXX XXX that nine land to having can kind create the right schedule build we land values sticking enough is and markets that's and an basis allowing because we we with as think love if our we now. [ph] of eight roughly of

John Guinee

Okay.

Thank you much. you month. very problem. in Talk a Now

Marshall Loeb

John. Thanks

Operator

Securities. with ahead. of Thank Rich you. the line next Anderson to Please And go we’ll go Mizuho

Rich Anderson

morning good and And questions. Thanks. for thanks taking

sorry, I’m same-store new because it explain understand. but NOI sort It imply and on back I it this I’m changing make aside imply want I in appreciate Brent, sure disclosure just going quarterly to putting like things, So, that same-store of to does X% quarter. average, helps fourth It something the pool. you would to the the described, growth pool

is today? powerful your as a how could terms that back component look accurate like question such -- the changing that based half the pool is my of exists of So math in the on guidance not it year

Brent Wood

this sure, you of quite broke meeting get I'm time. not probably XXXX. page of same number seven on we for the supplemental, quarter, would out fourth assuming how X% I point that

how you can exact it’s see and listed are they quarters five science. not for it see You

you or that. to to very moves same-store as we by ranged so just again for each basis quarter similar Our the given last disclose line quarter would quarterly average pool, X.X any year year the from fourth straight the on looks as high where in X.X of X.X in computation a And a haven't there range. simple individual It guidance what quarter. and the similar it be see

Rich Anderson

Okay. All right.

guess putting aside what the changing I doing I So like was pool.

ending the point it, that's average, way below you’re is something point and taken? I was but would be about your If X.X starting the X.X your thinking

Marshall Loeb

school pool, XXs event XX I tie, comparing you of like, in test then point that was is into some and have. don't we but taking one office, you’re a they no, our right, where you that’s made. one were making fact, you it your me each to XX, have in grades we Rich, grade better Two thought metrics, us, at I that almost standalone pool on makes accountant's same odd so you’ve just a went can give feel

Rich Anderson

Okay. happy be guess. I’m I less to Well, uninformed

the to then question And component explanation. the the relative as down it what's color, much know is XXXX. Is a side, see for there other story I thank but trend any the G&A, positive in to to ramping other as you there I specific it's have how G&A terms on down the a is your happening run of So XXXX?

Brent Wood

– two officers metrics quarters way change it year, test basically preferred, bigger that it we test, line year for had a early over look in and Yes. to where XXXX, compensating last was that’s first accounting, see the we from metrics probably in year old more executive still line topping compensation of of which we the which bright little more bright to heavy recognized back more a and they did was This but number. the as XXXX ISS had what they different last evenly we XXXX forward-looking gets differs measurable, wrap more also a early up

lumpy got it��s rate run early like and a So XX. said a comparable XX.X we year, of the is pretty half actually that next number good to first

way bit were with our we a for. were the anomaly XX setting accounted is in goals little change and way So the that those

Rich Anderson

Okay.

now, quite because not the to the XX apples to So to yes? relative recall for number I I apples guess so that point

Marshall Loeb

Yes.

Rich Anderson

tenants or comp, do in number, last all of color ran non-cash stuff, sort have stock connecting AFFO items mentioned to from question items just of role you on any your those know and the operation [ph] you funds but retaining XX% that unadjusted help line assist straight-line you and calc? the then you dots Okay. in And like that the know

Brent Wood

to we it, you see, capital calculation, parts see variance of get don’t you side but just but go don’t it say talking odd into are variance to and so again would extent that or variances we see with information a that don't like I G&A moving the be – foresee anything your one rent you anything don't where that, the being capital anything rents – other that routes probably straight-line have over see don’t would we years, we specially are computed, that about free as do much from expenditures. and necessarily into will we’re the that thing big much do or unexpected some there don’t not variance XXXX year can but an it We because between that year down there much, when you own some I other. projects we get don’t know some we XXXX put as as see other when as isn’t AFFO you

Rich Anderson

much. it. That’s Okay. Appreciate Thanks great. very

Operator

Simone Evercore to ISI. of next Rob line from And you. we’ll go the Thank

Rob Simone

question. for the Hey, guys. Thanks taking lot a

up Just question to that have can you cash or from same-store, missed range possibility my is guys basis? a it the that round the end on X.X but may any provide way discussion earlier, there around on I any

Brent Wood

this that lot, about the of a talked We’ve feedback sort Yes. time. the

end the obviously very here of like we’re to I going want guiding but you if so we a of you next so actually the come know, be to would is metric. change will think the You the And X.X in felt percentage we that, than to XXX un-exact – tenth to us a a range in don’t obviously say were pencil put number midpoint, I a haven’t to put that higher time it. see higher a specific it, to type to

it's safe put similar so I range that would to to the concept a to next it but out that this just versus So, us information, time presented there say see what put we this to midpoint. our currently I way, group say more you'll simply think of pretty peer I does hesitate showing since is

Rob Simone

that acquisition And obviously In attractively land. or – me. Thanks of your lands, of Sure. guidance. adequately $XX you to for housekeeping operating priced and on properties and guys what the that if Okay. and the example, million its it your ask between from then this have guys could you Understood. down guidance, or in question talk XXX% about of call disposition it harder so touched can or acquire it’s same you land you one be break Brent. harder Can and given budgeted because I dilutive it becoming number earlier, $X.XX

your break like understand two assumptions? to embedded down in what’s So and trying just those numbers

Marshall Loeb

those operating XX the value land maybe and towards not add acquisition. Yes. properties We we for that million really look within would are typically –

So again, is unless typically value, or smaller especially smaller land California type another its – Miami let’s our say, parcels. opportunity, in coming

may state may where the there. We but being add probably core year value given – mostly third two fourth bought so that’s fall it’s up end We the [ph]. year. more a the last this here in in one – find we’ll years So bought and or the we’ve everyone we year, Shiloh market, but acquisitions find to before, done two we

Rob Simone

guys. great. Okay, Thanks

Operator

Advisors. you. from Frankel And we’ll question Green Thank our final Eric Street take from

Eric Frankel

Thanks.

has of pretty spent going we a in tenant budget square quick $XXX Just it XXXX. forward here, looks it expect per foot? your couple increased improvement call that we and so that’s of should explain your you versus significantly something one, like whether in terms that or prior level follow-ups Can

Brent Wood

we average, TI That quite think like to I general, $X.XX but can quarter a per track too commission many leasing can to commission very for you would we’re total actually of TI RTI single $X.XX the many, I’m us, quarter it the been move leases of with large is we of vary giving us depending higher don’t leasing that. But that We here, which $X.XX lease, cost a per because looking specific lease year in given And which not is still range quarters pretty years. and only to quarter, chart bit our quarter for and in if some low. to and year in combined still comfortable we’ve have total volume lease a bump have be any from for us. can maintained, on have still plus level

Marshall Loeb

of number prices lease be remarkably construction awkward been any so but there’ll a raising on little think it’s long a over quarters. on that, some consistent bit, period pressure are pre-year I of

Eric Frankel

your in a ownership obviously Santa we of long-term then, functionality its versus a acquisition partners you your notice And little bit of of terms any Barbara it’s it’s for different obviously, plans your Okay. have of your portfolio? share do park, portfolio, of that rest

Marshall Loeb

Good observation.

that buildings our really acquisition. in and XXs I think a R&D are we in Santa two Barbara the that storey REIT its and four that portfolio acquired buildings

kind one as R&D want some own brought it what as are But see grow of not our again storeys to California, that to take so high buildings not of long function term separate separate basically, well buildings, older XXXX of four us his will long them. time out and two of in probably they're they allowed the but term out could three industrial not long or we parcels and managing issue him way was they they life, but So up our you typically a into buildings to because these I those XXXX two two our so that it’s partner we of do. really and it’s personal said, in separated

Eric Frankel

thanks. Okay,

So up. year, can portfolio rebate this that Brent, the dollar amount you a in just follow final rebate? got of that tax That you actual just Houston articulate

Brent Wood

brag to property have but a something the X strong tax income in a have pushing appeal they pushed, markets was values and point worth, no that particularly But It percent. XXXK the about general course would very know appeal get taxes are Texas and the they we don’t won year of we their number and of tax tax very been money and it took down are point $XXX,XXX in they that in where taken worked Texas you the we something do have But in four repeat percent the get being pleased and I individuals, hard Houston front some me. their income that range. so Texas, exact that and the non so that net the the via in the was $XXX,XXX range. it is for have in again that it price was hard of to that.

Eric Frankel

you. Okay, thank

Brent Wood

Thank you.

Operator

I speakers conclude for to Q&A back it portion. closing the this And does Thank to our you. would any like remarks. turn over

Marshall Loeb

Thank . for in interest for you time. Thank you Eastgroup your your everyone

Thank soon. question you. seeing certainly are and to forward if has anyone this you available look afternoon We followup

Operator

Please any thank We time. at would to like to their feel disconnect everybody free participation. for

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