EastGroup Properties (EGP) 20 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Marshall Loeb	President, CEO & Director
Brent Wood	EVP, CFO & Treasurer
James Feldman	Bank of America Merrill Lynch
Emmanuel Korchman	Citigroup
William Catherwood	BTIG
Craig Mailman	KeyBanc Capital Markets
Ki Bin Kim	SunTrust Robinson Humphrey
Eric Frankel	Green Street Advisors
John Guinee	Stifel, Nicolaus & Company
William Crow	Raymond James & Associates
Blaine Heck	Wells Fargo Securities
Zachary Silverberg	Mizuho Securities United States

Call transcript

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Operator

Good morning, and welcome to the EastGroup Properties Second Quarter 2018 Earnings Conference Call. [Operator Instructions].

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

Marshall Loeb

Thank you. Good morning, and thanks for calling in for our second quarter 2018 conference call.

your appreciate we always, interest. As disclaimer. CFO, Brent call you participating following the also since Wood, listen we'll the that our and ask make in we is forward-looking to statements,

Unidentified Company Representative

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

Marshall Loeb

Thanks, Tina.

of number releasing pleased our our second of a another The given further spreads. metrics year, strength and increase of second in as a XX proceeds. quarters prior such EastGroup's marks achieving we're positive especially strong raise. of per above FFO quarter quarter equity guidance, results saw operations X.X% of Funds is This from solid through with occupancy, compared trends. to NOI year, demonstrated excluding to came The second consecutive quarter last insurance a share the and higher FFO compared the quarter market as continuation same-store industrial positive

our Orlando, markets, XX to with current value quarters, and second supply, has our remains leased On number the we Francisco each value-add a occupancy San Antonio, or largely at our end, through And XX.X% byproduct is major Jacksonville, were and a this In supply trend. as San XX% cycle, quarter remain Houston at statistics roughly us truly were leased predominantly ground-up result, deliveries in market bare in XX% a controlled, quarter big-box As operating XXXX, rents fallen has environment and marks market, while check institution In of the specifically specific our long-term markets. was along to and focused out, create occupied, leased. this from is our year-end. still largest better, since institutionally into and Charlotte, a controlled, where leasing, including Phoenix, projected the approximately and largest consecutive XX% shallow a acquisitions. it's development of or increase better. the industrial steadily disciplined, been construction. XX.X% and NOI Drilling L.A. markets Supply, bay or XX% on XX% this allowing as Houston, of

versus is an remains rise and The XX.X%. removing our whereas below space an being majority our our and X.X% the X.X% strong believe existing quarter. Our at within same-property developments as average The at an buildings Rent we basis releasing and quarters. for occupancy effectively these NOI continuing had GAAP. target quarterly and the a quarterly also to average XX.X%, risk competitive we expensive the R&D XX, we're takeaway simply was GAAP cash, several mix points development rate phases the investment Barbara, view X.X% value. this upper And the Xs. the that albeit in pace of an see projected at was Further, unusual as GAAP point R&D are this unmuting cap cash program XX%, basis XXX XXXX. our property rents. given After on in positive return second projected prior $XX path figures Further, acquisition X.X%, slower was quarter compression industrial year-to-date in our cap this the with XX.X% spreads and XXX to premium create investment our estimate and from with Santa trend, million, market, market markets. development continue Rents their attractive are to adjusted market spreads pipeline rising rates. over we X.X% June of we're We At park. we return minimum managed market respectively. our growth intensely solid cap risk pleased additional business rate up distribution We quarter

feet feet, on high-volume of our feet. our out was investment During XXX%, for and into previous million. the completions million. second pipeline. feet cities change XX percent we're of of we acquisition. a totaling into context, the And square X cost removed In of at $XX market. total XX transition XX, of million rolled Four as in million. the quarter's square projected This XX% XXXX, added totaling sum, same development leased of with this our and square to pipeline state an development containing buildings At $XXX June December the construction of the value-add as our is transferred of X projects XXX,XXX million square projects reflective from it $XXX X.X than projected investment early a progress pipeline million raising approximately we volume for one quarter, we starts the XXX,XXX exception began XX% dropped pipeline of in the rather current consisted of the we and stage Atlanta, projected as to XX%, our had and was a we properties pipeline $XX five coming anticipated with portfolio XXXX center fluid development X which And

this development This our One about of our grow we of year excited where projected terms ability stand is development enhancing I'm about excited greater risk number things I'm the markets. to starts. reduces also the a pipeline. our and in is of diversity

projects, drive that forecast pleased progresses. already and as the XX of we've starts. We'll what for starts, of starts our results the and $XXX are XX I'm projected in either have our leasing year approval begun continue our As a XX revisiting million reminder, or these separate consists

In off-market terms guidance. also $XX after of is of Siempre Gwinnett Later was property the in And quarter-end, Eucalyptus foot San of building million. finally, Distribution these foot acquired June, foot Center $X.X And XXX% Chino, XX,XXX closed million. updated including variety Brent Diego California square April, XXX,XXX acquired financial we leased. XXX% will Center XXX,XXX in square review an square we for a now our in for Viva in acquisitions, transaction. Each $XX.X on This Distribution in XXX, Atlanta we leased late million. for a topics,

Brent Wood

morning. Good

range gain, to was strong share $X.XX portfolio. $X.XX an conversion performance exceeded results for the to attributable positive storm. of see same of continue due end quarter of the We for our result quarter roof to quarter our involuntary hail year. to the guidance the overall a upper compared FFO $X.XX recognized last second FFO at the from as of per damage

operating at an conversion have conversion value-add increase the upper acquisitions. properties per and per at guidance share Operations into range our same portfolio, increase continual well-leased of over last from was gain, Excluding end development year. operating net the involuntary income quarter the benefited an of the same FFO $X.XX property of in X.X% the share,

a is In remained our of an of issued perspective, notes capacity to April, to X.XX%. their The XXXX. for From increased pleased average also active They a now and private of our prior on per on points. respectively, we estimated were Our unsecured the $XX.XX June, in we and and million XXXX the and strong date third represent facilities. compared borrowing program maturity gain. $XXX Those revolver XXXX positive to equity mature of at the million placement revolver were be $XX price we a million of from involuntary fixed levels. at direction. The year. an X.X% capacity flexible million. increased remained for LIBOR in common the share year, scheduled XXX at XX expanded closed $X.XX mature had of participation $X.XX We July ratios $X.XX midpoints only was trend excluding FFO that an group $XXX increase basis under rate but $X.XX senior our X to banks the In accounting quarter in share. the extended is balance conversion X.X% rate the sheet to We the plus total quarter. of July XX-year in not and and capital to same continuous financial in our range of guidance stock to continue per interest

In guidance. comprise continued first with an the growth increase results, our the points starts with from $XXX This leasing quarter's million, we has budget XXXX development our is assumption guidance, X.X% the remainder to include, million notable of Other in optimism last the basis XX metrics the million throughout by million, financial to results our by estimated to projected momentum increasing projected experienced, property $XX anticipate have best XXXX. $XX $XX million acquisitions continuing by which and $XX increasing executed. million produced average the Our for second along stock combined million, assumptions common year, the for that $XXX already summary, $XX continue same-store X-quarter quarterly operating year. issuance to of of be that of and been guidance expectations of for and outperforming revisions increasing quarter, our result an we of some

Now, Marshall some will comments. final make

Marshall Loeb

solid are fundamentals continue diversifying in our majority operating markets. and investing this geographically and the property of in, strength, Industrial improving Brent. Thanks, portfolio. continue Based we Okay. vast on our

with of manage has our issuance. on for environment. we combination questions. balance strategy We opportunities, open we're strong opportunities and optimistic while our year-to-date As a markets our risk about pursuing maintaining as an view us it healthy current the metrics, operating as capitalizing to committed our our also up improving the continually by strategy, effective future, balance The while demonstrated sheet this to operating we'll team and sheet equity strong of now pursue improving mix

Operator

time we Lynch. with [Operator Instructions]. ahead and will America at first this of question And our Jamie Merrill Feldman take Bank from go

James Feldman

to does process the, you competitive I did market, seem a pricey expansion it and comment the guess, yields some in you. for us return, those a and size to market than Marshall, you doing market, the So go and then on acquisitions like returns want acquisition your back pretty help just and aggressive understand larger for typical thought about markets it's quarter, the the your acquisitions when guys I just the deals in a of you. the very acquisition Can

Marshall Loeb

trying once to terms Thanks, brokers, and all them really I'm What appealed about us bit. The the of of leasing we yield. XX through years it's about found brokered X with or single-tenant X to good none transactions. we on in acquisitions at in so were, in and fully one, kind answer to acquisition the question, left low building And it's all little liked a a were mid-Xs Atlanta, lease.

cost our given time, submarket, the Broadmoor So Atlanta of it targeted property, in was our of it's the Atlanta. capital kind submarket in fit near Northeast at our it iXX

was an with family-owned that and And of the lease it. sold have today, So the we trade -- acquired pricing just market foot. it we one." the And high marked building per So exit is next saw a think Xs. will low that one low Eucalyptus, helps, kind property "We out the sellers pointed We they business Chino and and own to that they building if one can the -- to a is looking Signed with the really, said, There's in lease we view one tenant then in the the mid-Xs. of the you good it which prior trade liked Eucalyptus. chance so a And the it could three-year acquire kind that arriving a expiration. and as they that a it and acquisition. in you square would was seller. different if that it a our to literally, And asset be we business prior were the at we Xs, broker, the this where opportunity, would in building, to

a better sub-X%. get really that So Empire investment vacancy another good when we current Inland last it's long-term a and return, [indiscernible]

holds, like is the South we border. -- good we're market today. Diego. the This was And off-market. on the tenant the literally have Siempre We building vacate it. reserve we And through their then So Viva term on It is will San the yield think in upside or either early. if

them. there's we building there. of Southern probably we to really But need the and backfill sum strategy talked, and with that patient we're to, We Ocean I of parts and grow than, expansion to the some moving I have signed value. do at into building. probably is low little like the and this hard returns that, is we market marketing point medium lease. we've market, is of found kind probably agree at want that We the get Diego and this. you, this and rates, we're like kind we're anything building. things and we that's And X be distant things out that before and the that's actually And have a like bit to we stable have that to like majority -- value-add X like the other great as to we're California project would get a seller value groups going our with all CBRE rather going -- vacate or California View talking each, X like value on tenants the nearby of the do we in at California low trade other would tariffs a Cap Xs disciplined of more cycle think, And leased to find create of Xs. fully We space. short-term They've job to on uncertainty of and us a up kind our this the in this But high full and the San certainly these point. market, but prospects

James Feldman

Okay.

So think versus stabilized yields about you how do cost your of your capital?

Marshall Loeb

we're in of he'd I'll -- call debt. today like X/X below it rounding Usually cost our if versus and to. jump at look Brent of and let equity, X/X kind We'll capital, it

X debt. And -- a can it I'm X/X you math we that Southern through the run so long-term, above in And you then the really call -- XX-year about debt the California, Eucalyptus, And that were X if Xs, may as long-term, of our it gets we just And And into Southern these the X of rounding today -- land cost we'll get like X kind and what range. that place on for will it's the on Southern the it. of and as much but years, it there because rest the -- world, kind industrial of California like and long there. of space. our simply we of -- like lack take the get of higher above market really for as capital that growth

James Feldman

and the to just you or then -- about a think Okay. And thinking they Brent, how don't watch, were reserving credit talk taken Can that? question you can for you reason I we any should about about you XXs haven't your think any so talk Top about just have far. any, just but really see taken

Brent Wood

They're Mattress with third or that on And market. us. distribution standpoint. of because our we bad they're their debt on to a warehouse XX they're again, there a a and had the real then year us their lack to caused The no reminder, are months retail other that they're more remain the particular one we X busy, so of bad is And X We've in centers still had is be are, footprint reserved very a and consolidation in very they're our this diminishing hear quarter. where from distribution current, facilities debt nothing list. tenant in past with a retail recovery looked what where top -- they a current. debts questions with we net. which there's lot in bought chains their they're active, really obviously any Firm, basically effectively Yes, We the bad over that We actually pleased have X quarter prior Houston balance for fielded thereof. is

wood, to on -- tenant continue been be good. So collections knock very have very our

Operator

take [Operator Instructions]. with our from Manny next And we Korchman question will Citi.

Emmanuel Korchman

anything Marshall, Could touched might just tenants your as Or how you you're you either on thoughts us your or positive hearing global their affect give trade. negative businesses? more from generally? to it

Marshall Loeb

internally, renewal Chicago impact, tenants But an at nervous been wood, admit REITs. today, like fire. -- one knock our and more smoke all Any much and admittedly, got affect a to the then from and Jersey, I'd any along and one's on that we us, not to we're tariffs we're more all question. Sure, it Northern discussion down seeing trade are little -- protective, lease believe our not it's out of chain New I'd little our or overseas, it's consumers -- guess kind and No a where leasing. of think and we're really relative. this really isn't been anyone much and then I'll expansion We've good China point. any industrial Yes, for or bit I are the it's with it logistics example. kind and all buildings has -- it. so and a that's really of slow for it's good like on felt the about

So we're last we're really going. more mile -- and where end are based products much

certainly than up not peers, So in I our and And perspective, the today, certainly Texas came felt we're it. we're leasing in last Brent about at and watching relatively we're with. week, all. it. more talking but really several we some discussions guys of never those our but working impact, insulated from were brokers And the we're have markets think that the

Emmanuel Korchman

Great. your turning topic Houston. favorite Maybe to back was

ago? year you going made to where would all as think doing your the were pushed were hadn't of that You notwithstanding the like well exposure's a much focused so it you as comments would mentioned and to of of that reasonably And hadn't that sort exposure XX%? going Houston your if hard, reaction? be, down. sort things had, market do still that a Or that exposure we If more on was

Marshall Loeb

don't XX% disagree me, it's to, market to guess for I a lot. was the exactly. with I that hard dissect No. it

So I pushback the justified. was think probably

think did would I hope Houston actually all I Houston I'm get performed. X% never to well through the how -- agree vacant. we and downturn surprised

-- And assets would a our to ago. market. had have year we gone would sold of in number that and in then good the would California and that didn't of our in Houston of Houston were we markets sell number that twists mid- be and have way In we projected long-term. Dallas we terms there'll Houston as and meetings, in as that one we that even topic as beyond was market, purposefully Miami certainly, would along -- terms of a Houston growing think We Charlotte, and lower we our that excited I to -- But the turns gone any in thought got a into we out percent sell we really, the XXXX, I'm denominator older market calculation down buildings regardless every of XX%. like things regret in I of the a in.

in I feel can finding value. of new in growing percent, go and you'd I like we have of our a runway, last was XX%. just We've were So time. have to creating as couple #X love -- I keep I runway with been long to grow mentioned, which in at one create to team every of for lived in have up or a Brent ahead there. be and we needed market opportunities value. market. hundred week basis now. we major It no X -- your now. maybe long-term, for And think hard ideally, as more We good Texas talking create a you'd points at than back XX-plus markets kind your years. Houston feel to find to like of We're there Houston we

drift was we of it there projects. pleased think I out number for we're now. will the to drifting looking So see in think But develop a opportunities But still. And we other we're as down. Miami I keep continues ran as Houston to in how it I projections, our down and

Operator

with next BTIG. will And we Tom from our Catherwood take question

William Catherwood

for Brent. question A

in mentioned straight-line year the the look your guiding X% on if NOI you're But at prepared growth. to remarks same-store still growth cash You side, we side. full

X.X%. this year, done you've about far So

back items growth? could half than imply would pretty same-store some less here? down of slow growth. on the a of onetime second missing just Are that Or kind half side market that straight-line drag internal down something year, the to So we are the X% there

Brent Wood

at average frustrating reminder, picked a That's annual I a show increasing out in a is pool X.X aren't bit just we've annual for would is because XX, Jones of -- that that being for there. held in that Parc particular for lot and same-store X.X, pool current, and point of up there's that oriented a all guidance. projects our from you included like that that an in to they're or we it's assets our has question. $XXX average X.X% and a value-add guidance that assets pool. there's of example, pool, it North are million our particular us to year 'XX, of What quarter-to-quarter, the show not the value-add to one of other and A for operating just quarterly good Tom, begun now static the reason question pool, It's same-store some our as where meaning added, more or actually same-store look over of January those that Western 'XX properties to X the it's period. December through That's way X-year be we've internally so

I and our it. down a budget Our what static Part That's outperform quarter internal included it of point show we this of beat pool. that's within slow But we assumptions. part last $XXX,XXX had small fee do just out, we not fourth termination But is it. just a that in assumptions hope that's year. it a certainly our we're would disclosing and have to year

you to everything, fortunate challenging more expect we're do but corner. rightly and than guess, away conservative, come analyze an very do. might accused, and unneeded being occupancy been and underwriting, budget we just just of budget to that. maybe puts but view to difficult it we've that say, a to I of in get try so, far, would to And we But so or our and so enough maybe nothing bit yourself, just at little I slowdown leased is feeling. it's XX% as It it's

through the as we'll hopefully, we year continue to have. So outperform

William Catherwood

Got much Marshall, your question all cap a cap question of multipart it. are across bidder seeing? And continuing you're rate shifted deals? Is compression. to it markets? has at that. but all much And rate here, I appreciate mentioned you the then, see Kind pool how you for

Marshall Loeb

probably to markets some XX, X The we rates and rates have like to call markets, that in to #X we've continue Houston at so major chasing the bidder I don't I'm the listing Tampa, surprising brokers, wasn't that's and know is seen there in lot the us the that bidder X/X, value. that going forward couple right, pool, and come that I [indiscernible]. XXs a like that I some for we a well mean, that to that hard but at potentially we quantity later the are would growth the was the rent And seeing, it down. getting we global great portfolios we're in within feedback, -- brokers, we're then on -- and in say, rent hearing I a to leased cap Denver of is underwrite, Xs, Phoenix, probably shifting into chasing. retail wrong. point, than estate markets, a Houston, Denver, say but lot. even but more feel a too, they couple And than cap with upper real we're looking IRRs of top underwriting same bidders The is it, in logistics large portfolios is compress people of you're they looked now, which a people and what We're -- the is going at pretty the been compression. a continue type to last slightly other X% is been what then it's that higher may within pool early the bidders be to especially of our rent XX-year be maybe growth -- could which to X in product. we're the and through and pool early But to going probably on buildings cycle, where and But of are is still e-commerce, the the this the underwriting capital X.X which mile, portfolio there's find guess, our XX-something in bidder the people over some within industrial we're Charlotte, like one-off forward. dozen late acquisitions. guessing unique, then higher seeing listing the constructive has a really shift awfully getting fit usually that growth not cycle. thought,

last had they their give us things. target large make we're is they our out for the stretch the one we what bad considered comment demand there's and our And good about the The chasing last had They pricing that So try thresholds, of people from had. all went is news sales -- they'll -- a above brokers, type pricing. we usually half-dozen stretch there it. pool assets, news when we to it, buy

Operator

take next from with Capital Mailman will our we Craig KeyBanc Markets. And question

Craig Mailman

do commentary the kind Marshall, than bit in the mix leasing unusual XQ just were to relative there's expectations? of of out given trending? little on your rent a And how going as thought at kind how of you that in contemplated come Or budget? I half the that see you to your have have back kind that we leases stripped Santa back I was an what that of new year, lease that if of what mean spreads you even been in does spreads drove look would mean, kind guys Barbara, there. doing. peers of softer the

Marshall Loeb

Good question.

suburban And quarter. describe four would perfect had time storm rents XXs second Barbara. probably -- almost Barbara. tenant XX% rents The have rents really You're we in finish I we probably our building where be XX We of hard, had rent. exceptions a Santa storm, of a and all is of perfect are little X-story the it's And But vacated good right a net. Barbara, peak. again construction that pretty in a and low kind Santa in Barbara. market a last good bit way, on Santa building, was by in now we're a the buildings two pushed of do XX,XXX-foot It current would that it's a we news new would the the year. their leased at tenant tenant Santa -- big it in was that And

XX,XXX X then feet market say get rents footages I'd amplified kind doesn't when like rents Houston it average when square at the to looking are it the looking not are is our the Xx came stats. it. portfolio. at greater rents, you're at amplifies -- within industrial peak So -- its And peak but much, CBRE than sound the hit that other of that

deal our It stretched XXXX, also. they a especially XXX,XXX square had at back Houston, that they're that it ones We a and dropped wanted. back, rolling. without but they're feet. there XX% few building, the We're leased and made all this about During little bit we leases one in they a of the we hit larger single-tenant Houston not prospect was And did. climbing where than was and lot quarter, us, World were. building talked But

Houston -- And leasing good and got of roll. the news so much hurt good and that our in pretty releasing done did lot spreads. Santa And we we we perfect it's that without say storm leasing is and is I'd full news Barbara, a in

second of exposure those we have we that quarter. won't the markets to two year, the So did in balance

slowdown We're that's within So I on Achilles' lot our of Barbara, of Houston heels had think, rebound see and I We normal it more rates. a quarter unusual mix and think a lot where not portfolio. markets. of to this our a an you'll knock in our seeing Santa wood, are

Craig Mailman

Got you. back And That's just helpful. circling then to Chino.

sounds Does a it So XX% right? deal below that's you for guys like rent with XX% to the that about a sound struck seller market.

Marshall Loeb

steps it year. up each Yes,

deal early, the could the that part So X-year it's with was family lease building. and a our they chance exit owned that of

below we kind their It's stepped up. rent So of market.

in in Xs starts it will So and Xs. low the end

Craig Mailman

Diego San have what because to are you guys you're say to then a in And classified did going as spend value-add? you

Marshall Loeb

Yes. million for spend $XXX,XXX I you, all TI I the and building we'll $XXX,XXX under in, tell bought we did, can another commissions. but I between just don't probably know the to and about $XX that

Craig Mailman

you of you rate newbuild assets and think kind expect big think the on shots relates know we've have West kind capital, at that kind what lower guys think seen for much two-question the kind L.A., question and as you of a guys in from the and some cushion want the kind I'm and into of maybe about lower market take the from and acquisitions? also to thought overall I'm of blend X% developing but to look my from cap how markets cost cushion of how other you you to ability there maybe to get which market it of you your you I is of maybe here, the Jamie's growth you gives limit, close potential cap Coast of with about and a get picture, going but get curious, here over just just about would better rate how if almost how that just think you what cost some more capital. to than

Marshall Loeb

in -- Florida for time, I'm how current Yes. in it's that? a Carolina North good look yields assets, lot went certainly tried the lost California. and a mix. we we and We've peak going add, at like done like mix years enough I question in as Carolina, it Houston, value the guess right, like be at of be in we're the mean, on to Texas. next and -- it we earlier prior California. to quarter, California, And year a in over the the think we in to going I And glad portfolio, you insulation, same of we're just Manny's question kind patient. than to it portfolio we our that's in and the getting we've you're about with realized, more that I a in limit, And won't and several gives back always combined chased diversity done the find We've this pricing

where powder that when does you all dry at know to the cycle for all more today is time have too. an that. better, in up turn, the hopefully add cycle like and load all turn, heavily the few and California, things add But balance like point maybe office, that assets long-term, again, are the markets that sheet wait little debt that when a we'll that in open the below can't value someone, -- hire to get brokers today, point, we'll our get some know and a we So our we're in eventually, targets and cycles

of that think leases we or to helped, last Area, they of continue capital. California we of the be these wish allow our I on XX rolled below knowing I years really buildings our in we'll own you slightly portfolio as there going the I'm bigger years, and at other us the of it's When But mix do said, couple the road So cost assets, the cushion. there. in some Southern and Bay really we And down glad California, were it's to in the parts great.

And so how years -- a there'll lot long-term Ryan's hope more than is -- -- and he'll runs us we're years, about, be California with who what XX thinking others. buys he I whole of that's for kind

X, at excited we're we'll about looking be right so and And just few a these more now, patient. and

Operator

next take And SunTrust. our we from Ki Kim will with Bin question

Ki Bin Kim

values kind are Just has trended one of today? or that quick And to so? question the versus yields. on developing year how you development past over guys exit What

Marshall Loeb

under is construction. and average a between blended of X, X Kind up leased

under As see, you a construction can little is lower. bit

in to some project are it. up, been Miami But part market added fully mix that's And X we're parts. rates that and and then Some built so of costs cap One, it saying are or driven where the some call today. if X that's the were put X, is just that marketed it's construction we've developing by Xs, upper a probably gateway an pressure. Miami, that our in we and of X probably -- with

XXX and cap rates so the call building it, there. market mid-Xs in we're So to XXX basis points above

closer a mixed been -- cap basis of XXX to is market over try to and we've of points. basis XXX rule to bit thumb kind in premium thankfully, point XXX rates, So We little composition. our

back I'll in team, a use kind project we'll rents our today's say we're X. other X within it's We'll don't look from usually, -- and we The prices, within we construction hear seeing, forward. leases building of park. signed but the our building thing We'll look at

So be the typically, have, to past in proven our rising few have years in rents conservative. rent market, a

But other we're back, looking forward, conservative we're the thing because hope our that's pushed rent us too. not projections I bit. probably with that's little So a

we Our rents pricing, they'll I denominator has picked out, where them. but that's and up how construction think pushed with we underwrite haven't ultimately come

Ki Bin Kim

bank, bit land your last do probably kind of given And think normal above little for that you longer? spread a Okay.

Marshall Loeb

mean, our of to and manufacturing proven, XXX, out that at you create we but just process a being value where only should. at markets, that in that you bank it a be. worries goes we bank a our And to we as we've it's it XXX long-term to is keeping if the where thinner point, I music X us way too that's our said, on point. and ideally, the I of -- the whatever got don't buildings be bank hope long-term, will where you then little than same turning create NAV, for we kind by need value what tricky bank we it would bit land points you land Yes, to land basis where And base buildings, it balance like. to it's keep some land carry a yes, getting love and from shareholders, token, land stops some have need kind said that big we're that more have them, room finish because always in then it, market. I've for want

Operator

question we take will Capital. from Green Street with Eric our And next Frankel

Eric Frankel

about Brent, same-store bit calculations. I little question confusing. have your a It's quick

You second didn't X.X% of guidance same your was release numbers your imply store But quarter results quarter NOI about that for your year-to-date your actually your year, that X.X%. the said this first first same-store change same-store X.X%, really your growth was yet quarter -- obviously, cash are growth strong. and growth NOI quite would

same-store your how clarify calculate you you can numbers? So

Brent Wood

you in for so maybe a X, properties same-store, refer are Sure, on I'll guess, for which guidance in guidance, follow put at third X, to to basically try supplemental. X they're year XXXX through for in I We case, July X our calendar that cash X. for give 'XX, what third the The July Eric, in and guidance would We also for this chart. our example, a entire guidance the held the footnote, to look release assumptions would held that. at is Those our or of most quarter I footnote properties XXXX be the X, compared to also 'XX physical year-to-date the X for quarter. XXXX. that be are quarterly

just very pools is different X/X/XX the mentioned cutoff. And as pools virtually are So quarterly the than dated the annual pools. because annual get the I

we're So same-store guidance excited year, see the the board our a for from quarterly about. perspective. again, XX points raised operations on We'll average which we across our good basis continue to

in If you as not, weed and talk would that we hope can it. offline the as much I clarifies So it get like.

Eric Frankel

it so same-store sure across their quarter. REIT's do everyone every pool -- But the starting changing you I if and not all I I'm that now of same-store industrial to companies fine. terms -- pools the the little of tougher just just beginning calculating changes sector agreement REITs it the in that in at made year, so of other quarter. reasonably compare thought keep guess can that And in bit numbers well, was pool when that any made terms consistent makes that's everybody the the a to the every pool

think I that's a So challenge.

Brent Wood

X, We're from grab. people ranging we Yes. We way and that Obviously, same-store. to it. you can there's same with X. absolutely It's do within the same also X that under compute different periods disclosing definition,

Eric Frankel

But Right. the properties quarter, second into added for in correct? you pool same-store your

Brent Wood

same-store quarter, second the yes. For pool,

Eric Frankel

Yes.

year, kind So and pool of set I at that just... beginning you of the it stated thought as the so the

Brent Wood

Yes. annual That's the same annual same-store pool. that's --

there's can So that. can But What's in we included offline. again, I you walk it's through same. -- computed. all pool's talk the again, the

Eric Frankel

full is trade to Marshall, just a or -- consider probably to clarify, you've getting some in seems tariff of sure X% tariff probably like on negotiating now. just headlines or And of this that Mexico. upon goods, putting on our terribly And I'm then that's the a what morning tough NAFTA expand stance Chinese all okay. Okay, it consider read taking not X% just would a goods arguments. they're pretty President the

pretty markets of so it your to is on somewhat NAFTA heavily are nothing consumption, but and was I and the understand it like aren't repealed and place? dependent those suffer pretty activities at your Mexico markets last -- could portfolio be a component it's seems that wouldn't in lot put comparable a And if and least? And with mile leasing greatly based your on trade there's economies local

Marshall Loeb

markets. you A in won't driven degrees. will down number certainly where good in pick of and or have right, or some, leases Tucson, down, It long-term to China do I all place California parts in be all a shut whether of -- yes are global markets slow parts Southern so I'll if Arizona for we Mexico. or and really, greater us example, trade of parts -- lesser for one, -- these it's And number you're our mean, anybody. in Texas, markets,

like even if going bad, here have different always you state maybe trade people that, be -- focused go we're Tucson as we weather have as on can may there. capital or a an bankrupt, do example, on university gets not tenants you the storm the our some cases, major unless using at So the tourism, that than And or more consumer. in and least and a manufacturers

do into speculate negotiator. it on be economy a a be margins, that they it reelection thing to throw the recession, the -- resolve hurt. a Trump the at I can't would quickly. can for I -- won't worst I'm it of So he won't can will hopeful and wildcard imagine

have our markets why -- our We're the like down, the else. positioned of because and frankly, slowing portfolio some to So how more of our assets like I'm not date, consumer, all you're watching but not do plays out. end reasons And closer along do to we we'll one we border and we it are glad is the discussions. others. right, everyone we being is But leasing geographically-diversified. border, read the headlines, the have position some did -- on see it nervous than we're the that's that well but so

Operator

next take from will we our Guinee And Stifel. from question John

John Guinee

Two quick questions .

First, how of outside you buildings X-story X buy ever Santa Barbara? did

Marshall Loeb

acquired didn't, AEW part Copley believe I I We goes of We I back now. We to guess. 'XX. merged guess is part -- which REIT, to this -- is of have

California, within L.A. those kind So they assets, Florida R&D Santa of within REIT. or lot had in And properties REIT. and parts South of a a in they Northern mortgage Barbara X dozen buildings their we L.A. that acquired had

So there XX-plus for it's we've -- been years.

John Guinee

Interesting.

Okay.

Marshall Loeb

Yes, that's the anyway. history,

John Guinee

Got you.

Okay.

question. Second

of lot half a leases, end leases expire. signed 'XX over You short-term the your and so is result 'XX, between 'XX,

on are basis off basis on you market think XX% -- below market reasonable that's you do and GAAP a a leases Just ballpark, cash appreciably? do below think is X% number? those a Or

Marshall Loeb

at No. growth. embedded good We're not projecting

XX%. the up this we discussed, absent in -- up just up were if memory, year, I this year, can We were do we Last the XXXX in we GAAP X metrics buildings were Barbara from there. we trying have other shied to capture from which a maybe from of Just back, guess in we, and typically it. we all I When answer free like, But rents another because you that. we away perspective, way XX%. XXXX. XX% And we're and Santa look

am But So trade land, I was more probably the XX XX about the more absent fact. and the we more past year. a rent there's -- next I'm rent over cost this construction and to bullish war, do speculation growth, bullish, that martial growth rising months in probably with is scarcity embedded continued I feel than of

is. So felt where if and is anything, should we based going pricing be where forward construction on growth economy picking rent up the

John Guinee

are those cash? And numbers GAAP or

Marshall Loeb

GAAP.

Operator

Our with next Crow James. William is from Raymond question

William Crow

headwinds perspective? a are together, the sounds we light comments some any of There more there you there, there I'm your yellow your and Are costs. or to new is where rising Are underwriting -- new are in Marshall, a developments construction like differently? out construction a little on from you little economic more a you're bit out political it cycle. trying cautious put all

Marshall Loeb

We've mean, million. fairly on sound No. comparing raised me and about I'm to $XXX I to year, the to glad million $XX $XXX million and at equity recovering we the would've That as going million. year-to-date. year-to-date, you don't this pedal guess I cautious. heavily excited we're we upped really within CPA asked. maybe thought I from budget, starts that, I'm We mean our I stepped original our $XX am.

of point continue they the we yields those rates the the and the sheet so like where than seeing probably we are time underwriting rents a cap at It's the construction going I same mentioned buildings now, months, the And delevered close our spread this while it's or We're XX% fall, we're little opportunities. to thought and last them, balance costs pace So same up, there, bit. keep a greater with deleveraging pace. we the underwrite and in your piece. same compressed pursuing But either way cap XXX the call way in I'm XX projected keep kind also that stay we optimistic deals, to by basis to you internal the it, that policy. get leased, out but -- rates we XX% to we're our yields get have over them time, much the opportunities always will

oddly pleased and and that -- quoted side, had that another when a exact on same row it's just I'm XX% we're the XX.X% we've we third So enough, numbers. I'm in leased facts, those at pointing occupied, we quarter our

having has team usually, not past how is our that accounting which back raise, occupancy of the accused year-end, and we our pretty and went I've stayed But summer drift the from we the with years. so got we that's that's -- second that during So several calculating atypical partially especially it. equity hardcoded months, in flat ahead, in down as

I So we're it's maybe And think then bullish. probably good.

easy I'll fear all But would there in a watching go the little -- we're a bit to I You we'll then get of watch got developers always out the wants to and those, that they've want And crazy, I it's economy. that's there. team tenant and balance our Otherwise, hope -- suppose. from stays I'll just expand. a and and pessimistic, news in call get that the

Brent Wood

as to Yes, not activity, Houston. to quite This even Dallas, that, working all I while. with tagged activity in the XX week positive beginning, very Marshall level this Brent. really the XX the we've along been fun projected back feeling mentioned commenced was and in back Bill. Antonio, to them. remarks year, a I go But just last San I've and the markets, of Marshall The proposals, that. about the add and already deals starts in Texas, was to markets they're we've and And see is team. Texas impressed I've -- our in in It's impressed the written came his of very, was away with

are Now the board, velocity But the very across some in early the on. portfolio. with of very seeing them development leasing been we've we're pleased especially

William Crow

cost. construction on follow-up One Yes.

the in to XX% increases all that up the we're Has of margin, past steady a higher? changed push XX% over it years. few been progressed? that at know of has we rate the Or You as kind

Marshall Loeb

whether all of fairly a steady, our it's last I months. more industrial team, and subs are guess a everyone their there's talking choose property it's are and And jobs. guess developer, multifamily to materials. sometimes, a historic that's busy high pick hardwoods or the maybe I been price. And over at their ran and handful It's type, into little friend can any the -- I

make that are And and and where bidding so labor people a between just they and that jobs pricing, picking money. the

that down. to little I But unless So unfortunately, the rents. a to more year really slowing that seems should -- slows that don't help half we got push economy it the it's the of don't XX%, us down and see XX% back

Operator

our question Wells next And Fargo. is Heck with from Blaine

Blaine Heck

guys replenishing land you pro land to acceptable Just and kind targeting just becoming pipeline are getting whether follow-up markets to development markets bank? point issue an where grow there are at land Can look on the when forma on yield? specific are at you the this comment an the of a costs And topic. you which any

Marshall Loeb

to and the Sure. buildings. that are We near, A love there. -- last to example, good still love our Horizon couple have. Park but we problem But for we're active a down our Orlando, in few we're

in So in the Orlando Miami Myers. mind. come have and land to are We're Fort we're Tampa and that looking two we glad

land use Florida, there. got but runway, a bit little could we we've So Florida, more Central

We haven't Phoenix. we're running land. It's be closed. our in our would there. building great last We out We've that developed through

this quarter Antonio. Kind land of We there think that us we thing path. Dallas next San close tied have same that some give up will that and in will

the Almost story. percent it XX-plus of the Hayward land is in terms and industrial is On little they've repurposed I've about one per just and seen in of York. East in had probably where there's per under oversupply New guess bit but I a negative is where good in Orange almost they supply. -- parts not The single hard Bay $XX, San that high Francisco as side, of starts L.A., Seattle the square we've is gross In of same supply Area the actually the flip mid-XXs County, as and pricing thing everything building news -- per everything where foot. buildings awfully in square foot, seen per and

But the own is industrial you the lot can underwrite. to the inland that's it's priced news market, assets and Bay putting So upward because it far can out that's L.A. -- and in in in pushed good some now pressure. a Area -- of pretty we get can get and there hard

try to balance world. of, have perfect So we a again, a

You in and it sizes buildings. our X come those doesn't buildings for next major markets, always always X have those in room for next

our and long think land the a bit now. about we bank, X was probably as little -- also we for years thought We cycle

to acquire, this So not put leasing it and try into quickly goal, stealing anything so us allows it as we our point, run at to. as land production we're through we

It's buying anything in start the we'll -- saying, on production. immediately down usually and immediately in So this we're production road." "Hey, not always

Blaine Heck

in, to Okay. and That too. a Marshall, little bit, And chime this touched balance shape. you in But wants then great Brent maybe sense. makes on is sheet

guidance in assumption the throughout for growth You right it guys for rest year. little And now. are around could a your NOI the of and result like Xx asset recycling reduction looks

strong So cycle? of I having balance a between think versus earnings growth in higher little possibly the at about this a how guess, do leverage point more safety balance you with the the sheet

Brent Wood

equity then high the at amount has issued in. jump Marshall come that did, on And to excited we were in some. the have still I'll of touched and glad Yes. picked that We very of guidance. I'm end up. on you

I what Blaine, folks. put your think it the drag the to question, actually some still to answer have $X.XX projections. And or have very had is by projected feel that may right good NAV. this been $X.XX we -- 'XX a on daily on when to very lost capital at taking just almost is -- 'XX done, to to our again, high nice. just we've of the projecting what opportunities we end, relative a we which staring have to out. From what you're decrease the about now, at good and we're because we're the pricing, price and the we -- you're It's talk advantage keeping and market pulse on put price we we're

you grab you available. is while number And objective a cap. really XX% can. in to now, debt-to-market go continue not an It's of, to But it certain so that terms right equity we're to

And Sometimes, runway we've as it's it, to to grow pipeline. a turn room doesn't given that, the we that do could look of attractive, to the continue when we and get to not. market have ourselves if lot then go were and

one recently in is few select as primary opportunity looking of do up X And an we to what's just we're that's California. it. acquisitions act which gross, really freed value-add you itself, a on good So opportunity. and strategic at did us presents then our acquisition, When development, like all it

see if stays opportunities, active continue price ATM. the fairly you'll So we to I the remain see on the think there, us

Operator

today And Mizuho from Securities. is question Zach final our Silverberg with

Zachary Silverberg

or year? with for the conservatism same-store and remainder for Putting dialed in? the is now, a for the of flat it XQ pool change definition, 'XX down the aside occupancy Is what some bit or assumption sequentially

Brent Wood

assumptions. basically, from add being quarter, can for the we're -- we're what showing -- is in stress, at we average for FFO, think consists there, there. what's being are I that show from bit The a budget assumptions, in giving might our transparent to we're the of. and again, XX.X we're would little that projecting our those just one But that's Well, then what in guidance that fourth very XQ as assumptions. I quarter just up so range want. the And as guidance showing But in they then any or subtract

to we've like, a first of year, in the On like getting. activity. ground, what half we're the the end We feedback pretty or what the guys what like is feel seen in back feeling we're the the year. I We the that field comparable of

tenant, an tenant average XX,XXX so seeing impact all talk any size, at trade average rhetoric. the not or from we're Our

still we pretty the feel So about upbeat back the of year. half

Zachary Silverberg

any rents at Okay. you construction cost all? And outpacing seen instances of have

Marshall Loeb

Long-term, a there's example, limited short-term, out thinking pretty quickly. it's quickly; subs prices But can for it delivered. -- competition. there's construction supply loud, dangerous very or pretty rents, shallow said, are true rents, maybe that -- move moment is industrial on Antonio, -- so and many call. and which still bay San there's on it there's any always which at Probably being Maybe a Where escalate Charlotte, there given takes in yes. Construction, bit. is up pending out can how I'm think we

So rents. especially period -- the time. on rents up of available more given bullish construction rents can and about I me instance, makes than lack But stays think pricing longer construction pricing will, is, economy a with construction up the of outpace over given that if over the infill and where catch land, time, it

Operator

Mr. remarks. at this for have will we I so further questions time, turn call Loeb any no And to the closing back

Marshall Loeb

Catherine. I questions follow-up and a Thank We clarifications you, and have Thanks, may Brent your any have available or EastGroup. time. everyone, for in you weekend. good are certainly appreciate Thanks, interest everyone. your for

Brent Wood

you. Thank

Operator

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

You may a disconnect at time have any wonderful day. and

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