EastGroup Properties (EGP) 19 Oct 182018 Q3 Earnings call transcript

Company Profile

Participants

Marshall Loeb	President, CEO & Director
Brent Wood	EVP, CFO & Treasurer
Jamie Feldman	Bank of America Merrill Lynch
Alexander Goldfarb	Sandler O’Neill
John Guinee	Stifel
Rich Anderson	Mizuho Securities
Bill Crow	Raymond James
Manny Korchman	Citi
Craig Mailman	KeyBanc Capital
Eric Frankel	Green Street Advisors.
Jason Green	Evercore

Call transcript

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Operator

Good morning, and welcome to the EastGroup Properties Third Quarter 2018 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to turn the call over to Marshall Loeb, President and CEO.

Marshall Loeb

Good morning, and thanks for calling in for our third quarter 2018 conference call.

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

Unidentified Company Representative

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

Marshall Loeb

Thanks, Tina [ph].

team trends. the was where This EastGroup’s increase achieving to a X.X% of a last the year quarter quarters came continuation well share strong positive result it quarter. an this compared marks per Our to from ahead of XX as quarter operations compared in guidance higher quarter year. consecutive of third Funds as performed FFO the prior

same the results The demonstrated of FFO quarter of positive equity further occupancy, store year-to-date raise number such strength exceeded market team quarter original spreads. its and with another given metrics are third budget. pleased NOI solid a releasing We especially has far and of through our as is industrial our

occupied. value-add long allowing development occupancy marks current steadily XX quarters where a the out, create rents third At truly were and end, to since consecutive bare us trend. we and or quarter value XX.X% term better XXXX leased increase through XX.X% been statistics operating quarter environment has This and XX% the is ground-up acquisitions. As

at each markets markets Los market specific our were Looking quarter and Orlando, at end, leased XX% was San Houston largest including XX% better major our Phoenix, Charlotte of Angeles, or and leased. several Francisco our

fallen and remains still of a Supply as supply of bay largest roughly from industrial specifically end. projected remain Houston controlled While check, to deliveries control, largely it's shallow on at is and XX% market in this byproduct year disciplined and supply our big-box a NOI institutionally in predominantly as construction. a the institution cycle result focused has XX%

XX.X%, with NOI XX.X%. pool GAAP cash when quarterly year-to-date occupancy at are rising continued R&D and Barbara omitting growth at basis positive GAAP Our trend while points Further, and they’re respectively. from quarter rent X% third average strong quarterly up X.X% XX.X% their were spreads XX.X% spreads Santa releasing X.X% space, and cash We was XXXX, XX pleased same-property our GAAP. of

business rate. distribution and upper competitive projected of return park. we within is premiums. point to our XXX intensely the effectively September below market projected point while development an cap risk the shallow market, $XX At market We estimate buildings majority is as million, XX, attractive, we’ve X to basis developments averaging phases the extensive the for investment whereas premium acquisition managed and development basis The adjusted XXX XXX was been bay path an our threshold view create rates, pipelines X.X% investment risk we cap as over Given our return development additional average an existing program are our as value.

two lease transferred XXX% XXX,XXX on cities with totaling strength out began the properties During from with the of even XX% buildings the total add investment value third additions transferring four construction and we two the buildings in totaling projected lease percent feet our a Coming the Demonstrating XXX,XXX market, we to leased are and of seeing $XX out. pipeline square XX% feet. quarter, XXX% square million. rose we five pipeline, development new

pipeline and a million in our projected projected XXXX $XXX properties million originally X.X cost Today, XX, of consisted starts. $XXX of with cities September of value and forecast As XX add development for XX feet is million. projects $XXX we square in million that containing

XXXX. several and we that create have Additionally, solid projects permits will commence start or weather a late pending either obtaining XXXX for

grow One our number greater been This risk of reduces the and this ability things I’m continues diversity our development excited to markets. about the of pipeline. enhancing has

quarter, Station, $XX and for lease a Allen property million. foot, we XX% two acquired building XXX,XXX Northeast Texas During suburb the Allen Dallas square a

XXX,XXX year million roughly slightly old will financial a plus Southwest feet Avenue for XXth Siempre vacant post-closing, feet the XX XXX,XXX for leased. property variety the square now in Phoenix or And XXX% Diego Distribution $XX our San We updated closed disposition square million. rate. Center acquired we This guidance. also the front, is Viva Center sale in including became review of the cap now sub-X of which $X on topics Brent

Brent Wood

Good morning.

development were the and see results range. listed strong share for We of due was to in quarter overall in the which per contributors driven at end year, operating an The last the becoming our for Notably, the pushed above exceeded Other leasing phase our quarter XXX% of of FFO range guidance additional compared value operating of pipeline net primarily same the in continue X.X%. $X.XX budgeted portfolio. income interest G&A up increase to performance by terrific $X.XX both programs all success lease upper the and outperformance the the experienced and seven five leased. positive quarter with results lower leasing added positive for development expense. to projects our occupancy

trend flexible strong positive financial in a and and Our is direction. ratios balance continue our sheet to

XX common quarter of in stock year-to-date to and million healthy a at capitalization December down of to ratio impacts equity share. and from the to the accounting development $X.XX Those increases in is at year. capital the average EBITDA year. midpoint an respectively increase midpoints budgeted record in year points XXXX debt-to-total represent continuous active adjusted for results. the year the the and by to of an reduced the X.X% was $X.XX recorded our our then of debt the From compared Our be result of normalizes increase leasing per to and conversion under a month at activity equity of already issued $XXX of X.X% earlier was estimated guidance raised end successful market risk remainder $X.XX of high range increasing for proforma the occupancy acquisitions fourth for of the $X.XX for basis XX% quarter average basis third price end to points FFO our raised by outperformance our driven XX.X%. The to an year $X.XX our leasing the guidance the the XXX we fourth for X.XX the program This for year share in is to That XX. prior involuntary of quarter the million. a which and occupancy about perspective, XX gross $XX.XX per excluding $X.XX XX.X% estimated X.XX gain quarter

basis. X.X% and our midpoint to we from X.X% a As cash same to X.X% the guidance increased a basis on property of GAAP a on result,

metrics deferred million useful. you operating will provide and summary, experienced of of common and assumptions we include informative results table In a our package $XX the issuances also budgeted found Other to supplemental presentation in and we notable XXXX. notice as guidance XXXX momentum enhanced revisions and same best early have have We both to and million anticipate by these among stock various You quarter debt financial for our our into $XXX changes to result to our our increasing closing that hope some guidance clarity continue that store we metrics. be continuing XXXX. we estimated next first the

will Marshall final comments. Now some make

Marshall Loeb

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

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

Operator

Instructions]. will we take from ahead. Feldman. [Operator go Please And our Jamie first question

Your line is open.

Jamie Feldman

Great. Thank you and good morning.

Marshall Loeb

morning. Good

Jamie Feldman

that Hoping know the bit are can talk about driving this? types just the mentioned like thought leasing you you tenants that protected be, the business are better from of little about tenants space. I of can are uses but just you bit big-box more little talk you guys specific it would sounds you and construction and the than about specific had types a it markets was

Marshall Loeb

a nice it businesses building been but about expansions excited buckets. won’t question very brokers construction helped Good we our and all quarter second the that those the developments lease, It’s us more that and have into liked economy normal whether what we or We with tenants it’s what good within one off a is a got underway. home what summer have based into we it’s our put was and morning. thankfully hearing and even broad traditional portfolio. that from more leases we of sometimes our little than it and of and worked over can – were guys they different you probably pretty we busier see what continue into everybody this bit kick turned the if hearing that plumbing was turn broad that activity kept What’s the is we That’s thankfully and to in mentioned it about us based. having this quarter, summer turned Houston and two

material mile For Northeast be last leases few or a in our prospect those say with the whether pipeline will – of homes signed that example, North within happens or as HVAC and let’s Atlanta and of that to a that have prospect also development tell. within mile time a to last we’ve last wayfarer for get then kind not Dallas – mile, can them guy

seen to up where One, violating them. you your are deliver rollout they program to online their or probably a We Amazon can it could appliances as likely more continue mile. pick out home. you to your order really rolling hope I and probably talking We’ve either last not

a with I signed locations are on and a have this of Lowes. their them to lease a under close understand program hopefully with lease that one which first as location was We second

those cum it’s have seen were their expanded -- So Arizona private had broad supplements but top based jumped Florida. up for we’ve supplements tenant medical Arizona ten but distributor a on in manufacturer list nutritional pretty they pharmacy our and mainly we’ve pharmaceutical, as and while been has fulfillment a online grow, of

added every we pretty sudden and momentum Dallas a over of market or was like was where it’s markets lives bit our were based $X.XX carrying and this the up So it tenant what and a it the ahead those numbers quarter and quarters is or was two quarter was but say when what been a one that broad all we’d up, rolled like into we for as was that beat, Orlando seeing. really little drove fourth we ahead we’re curious I

Jamie Feldman

Okay, think than do looking ahead next its’ XXXX? do the you opportunities as think XXXX helpful. thanks you more in starts year, development And about then could you to

Marshall Loeb

mentioned is its that’s which grow lease the we’re for known there, right, Houston, lease really have about. that will $XXX running but so be still often in My $XXX $XXX our as example, but building could signed least committed pre not has a potentially this up. the in some we ball that start beat starts There’s doesn’t been we’re XXXX crystal million I good that wrong to but to our the have could as as excited if grow million. we we at million,

makes could improve or to and Dallas today or development the in catch it you environment for demand hurrying still Charlotte XXXX look of through balance stays that my are this doesn’t Miami and with operating materially in not comfortable and the all basically space leased it or to park Creek is got $XXX that those our Steele economy, the Gateway of need is If of in a in the Creek it we exceed some and if pipeline where up that doesn’t are as year, where assumption could leases example, out huge out, down so fall it year. was get we in exceed accounted we space. little next into meet million this but worse could We’ve if but it thing is for then meet me View same project the and building bit we

Jamie Feldman

you. Thank great. Okay,

Marshall Loeb

Thank you.

Operator

Thank with ahead, our Goldfarb take is go you. line from O’Neill. Alexander And next your Please we will Sandler question open.

Alexander Goldfarb

morning your they if will expectations Hello mattress you give an hey are Two and thank downtime you or think are firm, you, if you questions, to could us on or departing, where think good first update the for if they just think the you. you then impact that staying tenant what on be? going

Brent Wood

annual continue ten our whole of operating but and point the slightly best, terms think that Yes, about good our of our into a somewhat sector as properties X% just with seeing bring I morning locations in industrial with the best out actually existing that’s is is thus the in as say situation. all and equates far at Firm is fluid one declining that’s a five them the of over their in Brent. would no had diversity. to X% notice dialogue overtime Firm this of But, not closure which top we the would revenue fact Max of Max portfolio still only were and and to leases we’ve I best we their I current

So, locations. the the building locations. years but part. less Their at than most of are market keeping average newer five an They buildings; is eye those X% we in on the those age are rents are X.X in each for

and Again, with are we and closures just more neighborhood announced far them that in they to the what which I going think high centers, we monitoring seeing may closed So from distribution the anticipating. of as so we to understand, continue XXX than a have few are distributions. have it’s in they go as XXX contact in us haven’t retail and the but we to markets need locations our just leads are they believe

they forward stand on So about optimistic the good of result like the place will we would tell. cautiously we have what end moving the are time but is are to news they be, to a right I the would in of quickly, so and going for but think year plan top now end are it,

Alexander Goldfarb

we be yet this run as lease and of Okay, much pretty the lease next versus think in $X.XX and have year, the quarter then second those as properties think guys rate quarter be what the the to up the contributing about schedule in quarter be I’m is the strong. are those yet question to about up so the are would in – $X.XX break that, the what to the But fourth to trying next you that is the third are if lease Brent we momentum quarter, how the clearly just properties deliver on will added third sort and to? NOI out quarter, meaning, these versus incremental pipeline, ones in up,

Brent Wood

the properties properties. to There no of I’m where page a development of nine be up. attributable and would our value Yes, they we quarter, And in any the is third – leasing actually to list would isn’t impact certainly looking have anticipate the supplemental there its end and contribute. lease of in the churning It the doesn’t the quarter, we and at date, page transferred the minor that fourth they ten, until most conversion of to that portfolio. impact those look occur properties are their into be add

point two current discuss two Creek. other had an than might had lease third and but see, up phenomenal has and that somewhere Steele learning construction in properties XXX, roll the of impact got the XXX So, out two XXX to as none contributed to none or quarter they from in between two we’ve over in under come line quarter, carrying have million bottom of – you roll lease we the properties through we the third up Those standpoint. a

Alexander Goldfarb

appreciate I it. Okay.

Marshall Loeb

stabilized what we over pretty kind and things the in and it’s is then the than shadow last year year. we it got pipeline Some Atlanta years of starts that XXX acquired to platform, million in that’s, called we and our a add of very that’s so much of the about last them, that’s XXX and million our end X.X other all at call value last helped were just project helped

pushing size also is that market raise as think view that earnings. I after helping – rents out the is all and as ability our the So our and can, the pipeline, simply as that we of development to we stamp what’s we building our NAV building

Alexander Goldfarb

I Marshall it. appreciate Thank Okay, you.

Marshall Loeb

welcome. You’re

Operator

Stifel. you. Thank from line John your we is go with next ahead our And will take question Guinee open. Please

John Guinee

up little you, clean Thank of couple questions. Great. a

of happen bit very that? land third, got accounting fact little just capitalizing to really increase because And versus cost cost First, expensing Second, people? leasing the maintain you XX.X% expect market basis return your in a based to your what G&A the to talk are and XXXX ability dividend and your return lease that’s your you on attractive rules in-house then do in the your about low at on on the or markets? that a you’ve can

Brent Wood

million be based and increase we – considering having significant year heavier. to But some from in to year and changes view the compensation a the that this remind $XX.X, and had Marshall impact do the of conversion have what cost. take [Indiscernible] feel run let or third nothing the that the are they two But just pipeline year we finally last on that the solid me typical XXX,XXX year rate straight budgeting caused lease get only on is what to when G&A the we last our line, we first we’re for $XX.X were related remember year-over-year to and about last expense there. I’ll is we for testing we

personnel, allocation for G&A so overhead had in-house haven’t a capital internal As a big or leasing we reminder, those services. we have no offset

For our it third were primarily that that a of used will reviews just us majority attorney be part leases. the

will minimal for pretty us. impact a think we it So be

we – As news philosophy number as steady to that of there and our the last year is increase. year, that dividend as into dividend, is capital dividend and can we percent by have of moderate far rate, not in growth just or that that good up the last we over live that be next the but that XX.X, The to not certainly is don’t be the but certainly just we certainly significant our view scrub maintained level We are think XX.X% let would that at capital, pipeline. a we I’ll dividend the have developed positive led given such to reason certainly the growth that certainly into [Indiscernible] driven that year that our Marshall increase we the is that, chief fortunate returns think are the momentum XXXX in especially and on touch two maintainable. the simply bare been extend. kind think we good

Marshall Loeb

great think part only a we and – the pretty don’t John, also speculative, we’ve I the last and much for build big-box can since of brought guys little maybe finding speak reasonable burned really more little our this what of job I of then price but is we is through. land a do question is my this cheap at land downturn, factual do a kind we bit

shared a as to standalone So our I as think economies so to put out retention our now build a there’s park think land building. maybe we production we’ve driveway, goal as it got and park and scale shared we try big-box within into everything that acquire compared is or some soon as to

fairly with probably rents out, target, that little whirlpool helps XX% of if return when there they’ve also as usually you on looking large that and our probably be a brokerage got so put that put is into bring for – we and those own actually the got our a as dollars and they pushes those foot the tenants. a us, XX% are not view they value, a then Dallas department. usually broker, the time heavily Walmart a and negotiations pretty lease out tenants the those They’ve the doing they third advance awfully big-box or know sign Our in say office and quickly. at dollars they competition value take their while usually I you and several a are, is say XX%, lot where tough shopped build own usually content, a part, than higher their and of know South need ours South intense types someone Atlanta would people a higher that estate They team to and real if lease, is high but space XXX,XXX or

is the tenants side the I within It’s and I a price our what an But a I pretty lower are I usually fit the in not far of building cost think like a example. think -- system foot food it’s XXX,XXX their the less the to west intensely ability commodity on so us spaces I and broker tenant negotiate we where distribution our it certainly hard. versus say as low of like component, and competitive, so Phoenix gives better for chain. little

John Guinee

you better the big-box So than your business like model model?

Marshall Loeb

maybe the I glad like way else guys say everybody – made doing, like am I and to I’d say do but another better are. anything, they I we or money not at what a is where it. we too, Yes,

Brent Wood

It’s John. a tent, big

John Guinee

a Thanks guys. lot Nice right. All job.

Marshall Loeb

Nice job.

Operator

Rich will open. question Mizuho come next with from is our Securities. ahead, line go And your Please Anderson

Rich Anderson

team. morning, good Thanks

Marshall Loeb

Good morning.

Brent Wood

Good morning.

Rich Anderson

that do that utilization number with NAV? you achieved Brent above well a or there way a impacting is funding, lot of stock you an can guess FFO much what on is whoever, could So have trading because dilution of of you you are willing to the from the how your to of have standpoint, are take going ATM your sort that otherwise

Brent Wood

the they over you the where market at equity so is periods go a these Rich. me our a go years as he of tricky look competition, more you until to it last and look a it, are a we XX% at When not either equity once certainly times the have and perceive point debt parts there because with way hoarder a we good used wasn’t the internal switch different the and just But raise NAV discussions north and and – need that move question north weren’t he it’s NAV, than or at been we’ve as of the to mechanism near probably an that equity actually we he gears going stock available so this cap, attractive we term not we so what’s seen route Yes, we reminds and than debt an too of certainly consensus only becomes premium the couple week Marshall also normal. about well debt we being always positioned that to and we’ve so hoarder. to of what’s being enough some and likes a much then that is to price beyond are that certainly do view that value as stock and we’ve

like not but So, feel all we the news those uses have and good is it’s capital. that monitor for we we good

of to proceeds. price putting healthy We’re average of to been certainly going XXXX it’s continue as X% the between utilize has but bit method X.X% a little has up dance and the it’s leasing is maintains we’ll the picked ATM my an a terrific, course volume work so stock a to and guess the money so that two, of if into at

Rich Anderson

whole go. equity another that in almost of of, sense one cost dilution top lot debt on terms direction of the in almost versus of cost it it’s is not you whichever the you for in the creating But of a

Brent Wood

expensive basis historically as debt a bip that’s the our do sometime calculations but – it’s Yes, is as it the small because equity, for it’s good not less the which it’s to category within and use us been. to take as are as can that’s in Typically that’s or internal give ATM expensive tied points is a than be. yes, avails XX is certainly to probably

Marshall Loeb

and balance some Brent. comment have the attributes, simply sheet. where we of not few the they looked we – had I another industrial years agree with so a REITs of and ago kind strong admire And

So having seeing that but could we’re said has cycle certainly chip everybody a like strong lasted trade this we common so sheet was REITs it, one of balance have the what internal so we says blue have we’ve and we not then debates, real that estate imitate, long.

the at deleveraging I two development we as the balance in sheet end but trade risks said and I and balance with of like we’ve more the As as multiple my stronger, and of argue we our of that if the pipeline bit a our were for should debt the XX% little a near offset higher healthy long the large combination I’d as leased beginning stronger day gets themselves the think balance market that of developed we debate those we a is much it’s you supporting could versus hopefully as feel example. that in floating our the delivering grow portion – next sheet a that we’re that of completing keep makes mind it and pipeline it, at hopefully giving kind us market sheet safety balance rate we us allows the the and keep same if so that let’s building time better me but can

Rich Anderson

Right.

stock. answered my but risk in almost miss you next the of your So mean here is expectation largely in and new question, I your the space I part maybe is, think meeting

significant at fall market the and Is perhaps of quarters. inevitable in How perhaps is the of is, – point these whether you raising planning much -- when short where couple in things this kind think an and And that you performance you it or or some there Are expectations? so the for investing type about raise whatever it’s you’re pricing of all there period is of are is you from perhaps beat capital road of eye, next the three possible a longer towards so you're doing you? consideration, years. eye years now, how say market present couple is Or thinking tense I’m today now going considering wondering not it. two, are term the recession is but doing this the much is what a the of down I’m the what take a influencing years? chirping about well, could very next to happening more, giving so me be markets

Brent Wood

it, think Yes. mean, pipeline I do won't it. CFO, then take And opportunistic. as can, there We of I we it It right prior now be longer-term. you be kind I said, say always with of when was Keith when our you equity development you need certainly value-add. and need McKey, thinking our

it only perspective So it like – not person guess the always from we you’re that that’s us. I to and mentioned

market on ago will they over. ending expects And example. the Thankfully years pull and and X.X to cycle down We expected get I of it earn miss so that's know in us board regret. so and as than and to viewed company. horns the didn't people thankfully improve, we the you think was I best guess -- we and market like compliment that conservative be cyclical point with At the some most things to will I’d if felt our it gosh, of planning it don’t I’m quarter a the the that team and people that we work. whatever reputation if slow us, and can it's meeting I then. I'm for think there then we’ll outperform of if having aggressive hope our expect hate market I beat going we a this could if our and it, we we us a discussion that’s then have guidance with to when business, our happy more raise annual let proud it, we’re be that remember people say but is when

Rich Anderson

Okay.

Marshall Loeb

road, years better of about then don’t can at, down I the So more we know it. rather much think balance we but worry do couple about we’ll a and have sheet

Rich Anderson

Thanks Yes, agreed. very much.

Marshall Loeb

Thanks Sure. Rich. Thank you.

Operator

Thank you. with Bill question And come Raymond our go will next from Crow James. ahead. Please

Your line is open.

Bill Crow

wondering go Question might lot cheaper us of ahead for costs would the about out I'm from out or around XX%, and was supply/demand of balance whack? morning. past Good if turn it to We just take there cost. XX% market talked kind fall there to projects out were perspective? get for long in whatever inflation the of to how that are a it of throw you. the And for would a lot build that if construction reason, and And construction a

Marshall Loeb

we the get Good this construction Marshall it. to -- hard land low, balance. like and that thinking struggle I Interestingly, good. even find we were think on is I supply prices of didn’t when – guess so out

what building next if keeps So you the us at of to what, kind is the down said really land downturn Rich’s besides finding at question our continue sites up night parks. road

watch are shortage probably heard optimism. what where Same a that and things their people that wage but things up in trying I’d steel we’ve construction kind they workers of were to talking employees, the concrete example on they even kind slabs your employees been is FedEx XX% several of raised the We while as was more has stories workers So, doing see that on we’re like fairly to the you retain things prices, that. workers for one of in went we've and outsiders, short showing hire to our minimum construction to up so we quickly in pouring for Amazon moderate, different like company heard at pricing our seeing away don’t XX% site their job markets that and were well. the

for think full. view thankfully inflation basically our pace the market may what But don't a is with we while. markets And last with and we keep rents, that guess. shortages, my we So would be its as full we're labor rents are and -- our are unfortunately pretty hoping what best here

Bill Crow

think that So moderated think now? you X%, to XX%. year, you cost we XX% you inflation X% quoted, Marshall, running the from, Are a has do

Marshall Loeb

talking little guys in just bit, the guess to field. a I Maybe

are who a I’m I Now we they more forma the three was thought said every had, got And pro days forma, runs what they and – our Reid, moderate. for not. while are I are and the week Texas now conservative it’s earlier bids learning saying prices in said, in later group, pro I that

that But trade a happy level U.S. happy again with we’re again, get to maybe X% probably we’re a out to there that to that on China that. auto based holds. auto X% us to of trade so being construction benefits are agreement with where and need may So details with the components how else I the to resolved go contain Mexico. that we’re things everything product autoworkers plants talks hearing see and And little more like bit and they hope kind many spiked although and hear that prices pending

Bill Crow

Great. That’s it from me. Thank you.

Marshall Loeb

Thanks Bill.

Operator

Thank Citi. from come go Please Korchman you. with will question And ahead. next our Manny

Your line is open.

Manny Korchman

many a back the conversations the land leading you're presenting have is conversations more about not think of conversation we on or with tenants, in are those focused tenants? you it how you markets or Hey, everyone. of you’re if good morning to and buildings having it batch to Marshall,

Marshall Loeb

the find. tires entered one markets use said have in of market. what ended and of today kicked years market. we we time our can footprint, great hard markets earlier, if a even Within in us Tennessee. touching about lot pass. latter; should existing spend we’re think And there we that when We fits learning we been for add Nashville, economy, looking We feel probably for we’ve it’s do I’ll markets maybe Primarily there's in the value. new can ago have we’re jump downturn. and opportunities a at We’ve like also a in. look kind to like it’s our a It's should at while

or at large, our land or that. like maybe where on we do growth South Florida of or things tenants’ Orlando seeing markets running we how we’re and within and two-part, the accommodate think So Dallas today, large we’re in can to by look opportunities that find and low continue land -- we by

seeing the it markets, we them we’re tenants, for will buildings on conforming it and lease same to running different big it seeing and be space to into are easy or more tenants to Antonio, or trend more same we makes Wayfarer well. some smaller it box in probably contractors again more, lease fit Lowe's our over as HVAC LA and go even where -- and them of maybe working is, a the other having accommodating but a are over shallow or where San bay The Amazon a and we’re in and Orlando the brokers in

So overlap in market, are lead could few broker probably that saw than like and cycle today but our to we we a least new at we early. are seeing potentially and probably years a ago. especially the more tenant hesitant later us markets really footprint than And to enter new

Manny Korchman

of sort based Thanks. transaction volumes? Is deals where is aren't -- in do for do price, then change a need sit? the increase it things and of of on types those think -- [Indiscernible] would losing assets if And about or to order we what environment, you acquisition like where to matter that your the available,

Marshall Loeb

I it. least we good that’s all make for me We second, like. on -- and about you round, which try and see is them. interview. we at we of mean, -- California can't bidding really deals just number start question. example, And set we it get we before of large how maybe you included, Yes, the because just we start it’s Well, first, emotional properties afford buyer and South passed will a once Florida, the everybody third to bidding in ceiling

properties. about excited You the get

park off CBRE -- of the people like it over the out refers all we there. are are globe, capital there’s U.S. it to we really is of -- they It built And and they finding, right are estate which real that glad now. ndustrial wall from a comes example, better for lot So I’m with [ph]. Diego. we leased in San bought we’re the we -- to it, the looked which now are we just and at we We low stick -- X sub our sixes, in we fully expanded tenants, it’s in same San trade two are -- the bought buildings property going South I’ll

our the a -- we hits the get checkbook or trying on there's as watch growth a we're capital everybody’s going lost usually we just that someone to And many and willing think we and and have – got we're two, and to lot that and buy bat could outbid leases. that’s to of us we cost we go deal those usually last don’t basically. to So

Manny Korchman

Thanks Marshall.

Marshall Loeb

Sure.

You’re welcome.

Operator

will question go with Craig Please And from ahead. KeyBanc Mailman our you. Thank come next Capital.

Craig Mailman

I'm of, what you the up. threw of get and want of do I conversation want sense Hi, the just is any guys maybe about next tail-end one land to where just there just locations of markets give mean, the kind just probability Marshall, looking base, in you of -- in talking some is what you kind guys. follow-up is know looking really guys do? a are sense here? just on even broad it Orlando a trying land to fits of given Can mean us to markets? on I a you you that market do to the just of anything kind we’re list more running on year in to low the for have, to starts is inventory you development have into wanted inventory? a you land be that able do Atlanta these the at

Marshall Loeb

starts again. at our the run maintain If term, can We that development can pretty we Sure. in keep feel, rate. good the least we near economy there, hangs

way, where where our nothing bit markets a they pursuing Coleman have mentioned, are what we Orlando, little a sites and said announce. land have is we’re few we’re – in are in John or Tampa to like we’ve they and other you If we you Tampa as there, are it’s close market really been plus developable and -- balance. but XX years that a where don’t they Chris like, another we

land get value-add [ph] and we quarter, lot chased to and the to a place want and is carry we We’ve -- go don’'t You too of your had of team, and deals there there a Atlanta, have mentioned, then a bought have everything given properties it I yields you landed down. good much as always like them. or two the proud not Atlanta.

with Atlanta next batch So before our value-add we'd the in reloading like project finish land. of to

a we’ve we’ve sites but and the to tie seen maybe looked So it’s in it I’ll down couple of five was question. prior Atlanta, that

in it liked a things Atlanta us is Dallas. how of land hard or when ago as down shocked -- years how One with as this brokers, few a I was we entered little the they was Atlanta, when could we find within market big we sat about

are So today, the great, worries which where We’ve probably -- us us feel going ability good forward. liked it makes we’re but that supply, those is to about grow those about markets three.

Craig Mailman

about Then pipeline just I just in now as big you cycle know great of much on thoughts development. gotten how caps shape. kind internally has your balance helpful. carrying I’m the point? be this is at curious company on later bigger, sheet That’s -- or curious how to want the

Marshall Loeb

lot our it depends I is of the guess are all there looking now XXX% a of yes, pipeline at it A good pipeline. there’s that where question. -- leased. -- handful That in a deals

a guess again, I typical, X% hit there, typically And target we less at on worry land of we of to are that’s have but I worry what kids, sheet. percent of your track -- balance as a informal we our what construction least of simply about those. balance between pretty terms land about about all is what an those. less We that sheet. value-add of still of worry you then the once assets So in but also and want of and about our as kind of

these amount we, exact so $XXX a I'm pipeline get are our the not it’s up, maybe several fair about because that’s next exact hit that’s -- in feel going is to gotten bit and big it’s days this to not sure number are pipeline a in like when science, roll we of several out a little starts balancing better, XX a ever all too. it’s an but out the an you but very million of had number, act, but they number, leasing, closer I’m or giving pipeline, coming they as as the there to absolute XX bottom as of a of obviously, building a quarter higher pre-leasing the our of we pre-leased So had development

Craig Mailman

And just had quarter lastly, leasing then a helpful. It's guys great on front. you clearly the

or it on of some couldn’t last us way they roll mean, of I of move-outs. stayed you more of some happen was realized higher leaving that so guys kind some can the people than assumes quarter it just give leave probability back-fills gave it you guidance seemed just that things they stay, has back-filled is a tenants you the those and context did like thought, move-outs did quick and the out? really have quicker you curious, Just you

Marshall Loeb

usually Kind the retention we want was that tenants XX% little so of yes again project were to don't budget all, historically, because around typically rate, tenants a average to the -- we we leave tenants answer. didn’t It our of we some staying. people is of XX% nearly some XX% budgeted enough, of

longer. had state So we some over budgeted that some held vacating;

permanently XXX% amount some of in Tucson, and Chamberlain, able stay they where markets they or lease those found leased some something tenant, your were XXX,XXX Tucson are we're relocated, were smaller building, built to there rent on expiration tenants was back-fill deal building So the few are a premium haven’t it in collect leave a one but way ahead hey we’re or market stayed worked mean moved typically doesn’t alike a a and in out but where we'll there -- that those like for so existing still and few Sacco of those what of one there, with now small back we tenant months new then, and new to a either those beyond to Mike new a cases Tucson. it's we feet of into in in

want to you So market that that was anything example. a for nice budget pickup in Brent add.

Brent Wood

of getting said, budgeted our part and Marshall it spread pipeline the the out there was faster was I’d development and well also than help. Yes. in point leasing permits also that little Basically that like we out had

combined staying across that a to few we really it out, was leasing budgeted move the was tenants but broad based, with it have So Board.

Craig Mailman

point biggest you one them roll people or in your up think of of the one what's this cycle, of cost? mean as I outgrowing I the If are are sneak you pay to or they as guys could curious because you that I’m just kind space they the just to rents want is that the guys don’t about out, at that by it space you're move utilization last to budgeting space think kind to? driver going opinion

Marshall Loeb

that mean an going renew think if decide you made sometimes is I lot me or even bought on typically ones It’s tenant times to assumption, XX asset sometimes building managers -- better, go but they the those over leave, a decision, Craig in a just as is with make California, we somebody tenant is sticker renewal most a more and rate market you budget, a hear and one are to that a they rate, broker the the a own feel our it this conversation renewal we’ve that costs that in you point, had deal there's about cycles shock rep and rents incur going thankfully on their simply a at it proposing the educates but surprise don't in in you’re so to cost, will be tenants, of of there for for all we’re that. everybody shock but bit tenant probably example their them to the them else of little moving nowhere may

and business a they that And park building and so comes a new thankfully. things a existing and good got Nutritional we is is development rent mentioned, their like had Arizona I paid the our filled for to earlier, while of new of other accommodate we’ve it’s ANS way settings, a a building thankfully they in supplements up which typically the tenants, the lot there one about our we development as like grown out people have building really

one we if beauties of can the building So building from eight to that;s building of move park. for people a three example,

Craig Mailman

Okay. Thanks guys.

Marshall Loeb

you. Thank

Operator

you. ahead. Street go Please from come Green question Advisors. with our And next Frankel Eric Thank will

Eric Frankel

Thank you.

on thanks I Brent, everybody. be think same should that up, reporting, for First the to clarified store disclosure helpful

talk exposure you’ve you quarter releasing this pretty spreads little know and some not bit that I good good had been your maybe just question, about you’ve trends quarters to can leasing seems choppy diluted healthy? has quarters be and seems First bit but a Houston, a little there, it so to

Marshall Loeb

we building expand picture Ten start extend and existing then kind comment we on to a is for really hoping tenant building an lease the quarter haven't ago, a eight more leased detail that we said big the couple in We and or did from that which pre-lease. the I'll Sure, same-store expecting we've comment that's leasing. gotten I and talk, and year one and on broken now second the building, Houston and of kicked with had on I'm Brent, our and a and started we their Crossing West remember Houston thanks glad of at conversation helpful as certainly recovering, is XXX% then and off and ground our

jobs So in with all the country XXX,XXX picked year. sudden probably last and of to Dallas or the the in the Number them it past and a general, Houston one has put the in two which XX economy up they've months, has economy added all over just new

pretty not building Houston and certainly to make point last bit probably to leasing it’s we arbitrary the but World Houston, was probably in peak deal in rents are there, single-tenant it the the but to, bit so a not a it little Our they back vacant market, that the an than market it spreads, are peak recovering X.X% good was back market direction, was down, it a of large still is data recovering odd and at is their kind Houston, a stretched moving pushed quarter but little that much a building in quarter the that its of really to and shows worse nicely.

to So of the having few with years down penalty Houston again been and so at we’re we’re on box certainly roll and ago Houston happy then see cognizant we’re XX%. it in and a glad XX% to

I a starts the the you year and stabilize below want as roll little of mentioned took or anyone gets actually that and we the more, really getting down it if road annualized three you're I As so down or the forward, call XX% development wouldn't gets our portfolio, portfolio NOI. our you on Houston

and -- historically is continue we're that indicative the there allocation years, Reid it able and the portfolio like play shrink, of but in the we're a the of offense have a value kind Houston market. as good a more created to anything, lot, to of So we like and we'd market team Kevin Brent over lot than and a

Eric Frankel

Santa know any could Thank are I are there some Okay. going asset more clean maybe the commentary doing a maybe and to lease wondering, talk you where quarter. next talk, bit Barbara was more in on question, is introduce small especially though, to obviously add I assets prices up roll can Maybe given if also you portfolio non-core some It's you and you. little plans next add the year? how a could guides about with

Marshall Loeb

couple feet, addressed Yes. next Okay. large the this thankfully XX,XXX one we to we rolls a it lease a fill have been hopefully the ago have had a will space that end and much we’re XX,XXX another of now Barbara, we year and year. Santa got at of and so will X,XXX vacancy we a talking prospects year has are leased feet we’ve in prospect foot there larger renewal see of that pretty that

there, is non-core little you’re and tenant, reasonably up the that that partner how, reduce last in sell of asset bit some our two other time like two we lined healthy we’ve they’ve and that story bit buildings in the time the reworked hope it's two but of of Barbara like next partnership a assets, to year it's year.. bought renew right in is see or we’ll So little our buildings we’d early good ones, terms we can to a given know exposure and I market market other another to R&D one assets, over out we'd over in got Santa the

Eric Frankel

Okay. Thanks.

are buildings, some Just final robotics requirements of you or is to or steam, of those up sort fairly their in the still user mile picking question manual? terms last seemed seeing it any automation in that of regarding

Marshall Loeb

a a more and lot warehouse, lot I our technology -- it's of think of more in part coming, heavy not all certainly are lot in is box you on probably there the properties some, then don’t last sure seen kind things with think way can -- HVAC and automation of we but than of the we’ve overcome medical, pharmacy, the But online that that we're and that’s but you yet there obsolescence the our certainly heavy like a mile has, and those and like can big seeing we’re of of overcome not geography that kind investment is obsolete it’s too. with labor I’m coming any pharmaceutical location buildings but technology it’s the of shortages

Eric Frankel

you. Okay. from Thank That’s me. it

Operator

question with Thank go ahead. come will our Evercore. Please from you. Jason And Green next

Jason Green

morning. Good

the of about land capital them. the of ago? talked scarcity assets land I’m of amount assets for out how have a chasing today kind about guys curious versus year of that’s there has You competition changed and kind

BrentWood

Yes.

and this have is many really you Brent infrastructure, you year drive ago, telling this the a driving just buy out For ground land can -- more That’s that major you is in-depth to and on acquisitions, days in that where We’ve and buildings. have are you land seen what you. just the That's build look. there's gone. The guys roads markets.

was it’s doing what’s and bought terrifically say piece Antonio, them kept sell some what really project two-year I get flip so Point land to got easy time, just part land in put local changed and that top changed, them a to supply you’ve down process buildings is it’s So -- But spend began zone of has and to in would San as that as and go to now. especially is of and not up developers. our for

conversion, retail changed some project courses. You've old time to Gateway We’ve to we zoning to do. which the where in zoning the converted put and Churchill not stables in easy municipal cases, racetrack. Downs really like Miami be We've horse got do converted a is the industrial to willing to golf the

the a little lead outside that got say and out just think longer get time. would box as more I difficult, opportunities comes more you’ve to along So with the

takes Florida, there’s it get So in land of ready bit time John, quite a I to – there. know

you put to be progress. actually advanced So the to want dirt need looking you when actually you well may of think into

Jason Green

hasn’t land all? today versus are more I year for But changed half far bidders that or ago ago and a there really of or year assets guess at kind a

BrentWood

a if land -- one if but you round, the day that by have it’s will there's due not listed is out your X group it’s the they there and a pretty all of really out like it’s like a you it orchestrated on is and brokerage probably maybe has. market bids we process. the maybe through a comparison That on make where with isn’t bid and will second not, it acquire bidders, round it’s it’s are this of on Landfills Most of up building, but -- o'clock. large Wednesday come show bids

Florida, more returns and there the out don’t to to more, people land profits there's they scouring less through -- kind probably just it's much it years, there's South gotten So for given certainly, those But very were have in land and being shocked competitive there core a be made California, for we intensely few has Atlanta. there's competitive for of I the been that. more know the It acquisition, intensely last that that markets. find

bidders For recently XX were one package round. but a years first We were good probably in and old. of or on there of one that XX were we there XX -- buildings, instance, were,

it. what odds we So that and we gives you sense a of did weren't -- win your

the is the we wanted made was think those. a them, of San own who list competition thing like. round like round We'd on and the who's bidders institutional but outbid to I then bid that I package, of buy it what earlier, to we second Diego just bidding. Same So it, in got mentioned that but in we

Jason Green

Got it. Thanks very much.

Brent Wood

You’re welcome.

Marshall Loeb

Thank you.

Operator

question you. we Thank from Feldman Bank Jamie ahead. America. last of Please And take will our go with

Jamie Feldman

kind at just get or your rate you. markets are stabilized? -- think some thank cap you mean I point seeing across cap compression Great, wanted guys still to they've I of you this your on rates. thoughts

Brent Wood

and flat guys one They’re interest Las the with rising investment triple-net a acquire not haven’t up, they're quality Vegas Because had he week, We I’m down gone A could I in there think Denver, coming with C Phoenix, on of our for. conversation and like most but rates the flat, compressing earlier that that industrial, but lot to the were cap said days, up contagion it's rates they a be for brokerage interest bidders of markets still have of used of they days, going couple the number anymore, B national people I dropped in not, markets was and of don't came rates. they’ve probably want healthy but part, last with debt one and kind industrial. so down. of Maybe interesting out, probably held major a like certainly a industrial. have felt that moved. but a XX groups with XX been they've

Jamie Feldman

type industrial I'm wondering about overall the talking product you [Indiscernible]? And are I or just about guess the specifically overall? your

Brent Wood

of again -- type. Mike, I'm assuming a one of from And national lumping the was probably, conversation I'm and as him the before. partners with product our this my mean, probably knows I He was was We've kind he whole. just industrial worked and Group. with

just they So out boxes, packages of those certainly that to and our market I'm see come is. type, same see as thinking we big the I’m the kind track, product and where

fours still Florida, California, like sub X box in things and big that, and shallow X there's So South sub bay.

Jamie Feldman

Okay. can continue And to you this longer, for not? maybe of cycle? I bay wondering were but kind compress So was shallow later if

Brent Wood

if like that it more a can by which seems put have have groups to at -- you dollars cabinet things It and later. package, like and you buying bit seems good package out, our and little it the so have very attract, seems a portfolio. more can been the wholesale Probably a selling be to into some bidders retail putting

feet. one million And shallow disadvantage unless so little bay can't a like dollars had you has in bit, just that it square out as Atlanta, was many a put is maybe almost it's

So was out. attracted to enough the institutional get it enough that but bidders bay, it was shallow buildings dollars

more a type. product than little drives probably that it So

Jamie Feldman

you. Thank right. All Okay.

Marshall Loeb

Sure, thanks Jamie.

Operator

And we have no time. further questions this at

Marshall Loeb

care. you we today. later you your EastGroup. thank will can answer weekend a Thank if Okay, in time. up Have follow be Take any around we good and interest for your everyone for questions,

Operator

Thank may program. disconnect your time. today’s you for at any conclude does And you This participation.

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