EastGroup Properties (EGP) 7 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Marshall Loeb	President and Chief Executive Officer
Brent Wood	Chief Financial Officer
Joshua Dennerlein	Bank of America Merrill Lynch
Alexander Goldfarb	Sandler O'Neill
Bill Crow	Raymond James
Manny Korchman	Citi
Brendan Finn	Wells Fargo
Craig Mailman	KeyBanc Capital
Ki Bin Kim	SunTrust
Aaron Wolf	Stifel
Eric Frankel	Green Street Advisors

Call transcript

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Operator

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

Marshall Loeb

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

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

Unidentified Company Representative

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

Marshall Loeb

Tina. Thanks,

performed well ways, EastGroup. quarter, in year many what a record was for team Our finishing this

from of funds we FFO quarter. This to compared the XX quarter year. positive came in a trends increase saw prior fourth last were guidance, per compared of quarters share the higher consecutive marks X.X% at as Some year achieving to operations

same-store budget. given of the positive year, quarter equity metrics, original during of that strength results another growth, quarter raised solid X.X% occupancy, number our FFO annual spreads. and was and we're far the For demonstrated such FFO full is through The re-leasing further and fourth pleased of with industrial the XXXX a market as NOI exceeded

leased cycle create larger and confidence allowing up lack and economic turbulence current or XX slowdown. quarters steadily government but and This realize an the has slightly our controlled could year-end, XX% was bay out, create rents tenants and have byproduct not Supply shutdowns, We're on or add and better, has XX% wars we largest quarter of and XX.X% and Houston occupancy That Several to we're we economic roughly bear supply on focused us long-term our that leased. market, seeing remains XXXX, said, this development and below our acquisitions. markets been check value of the is XXXX. predominantly trade to construction. eventually market, our and for trend. largely where In mindful a marks in increase At And they XX.X% shallow XX% third for a not are institutionally statistics the result, as impact operating were XX% our it's institutional control, approximately specifically, as Houston, immune supply occupied. still industrial while since truly fallen NOI markets. the box largest environment XX.X% global to of ground deliveries of and the consecutive we a markets. is ground value As in from big disciplined exceeded remained

for the were with pleased same Santa rising also cash and fourth up GAAP X.X% and from GAAP, basis omitting quarterly at XX re-leasing growth Rent XX.X%. when average points pool cash XXXX. quarterly X.X% XX.X% continued and NOI XX.X% property GAAP was X.X% Our trend, positive space year spreads occupancy Barbara respectively. their we're XX.X%, were and spreads quarter the R&D

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

During square and XXX% the transferred square of began leased out XXX,XXX buildings, buildings totaling feet quarter on pipeline we the totaling coming two we fourth XXX,XXX feet. four construction

For properties, X.X over acquisition, XX into the these million in but portfolio different square year, XXX% feet we cities a XX transferred leased. value-add the of all and transferred totaling one to

of containing our year-end, XX in million of a cities, development projected consisted of feet X.X XX projects cost As $XXX with square pipeline million.

projecting starts. in XXX million we're XXXX, For

commentary, color was at addressing volatility that XXXX rate rate. a while of ways. maintaining pleased a are record forecast so And record million run economic for the several starts As run we to in in level, XXX we're heightened

roughly of our First, quarter. the will happen in first XX% XXXX starts

clarity, for so a projected Hopefully, starts. mid-year, we'll i.e. accounts of volume of and gain year for Second three our started we volume. economic about as half the revisit the the space, and have second will annual by annual that conservative we're we lease third around quarters quarter of being projected

XX% risk ability are prospects, out by over being we finally, are And greater existing, deliver mark. starts Next, an an number development forecast, pipeline. active the economic This start of that What is market. within markets. than into and means a is next that our successful rather pulled enhances the the active diversity to of our supply reduces in pushing

our we given to Greenhill Distribution North a market, square adjacent the acquisition development development competitive disciplined $X property acquisition project and more leased expensive Crossing is in and XXX% an acquisition for acquire to Settlers foot, suburb market Rock being overall, quarter Center, patient, chasing off transaction are starts. Greenhill million. out and market Round was fourth XX,XXX in Texas of Austin Our

and a variety our those and both hope a site now we two quarter, parcel financial will we XX-acre in in begin the land parcels topics, in fourth Towards construction XXXX Phoenix XX-acre San guidance. sites that Brent on review to XXXX. of acquired Antonio a including in end, of

Brent Wood

Good morning.

$X.XX share to fourth for portfolio. the fourth per due per at We performance FFO of positive results $X.XX, of continue midpoint compared of XXXX the X.X%. of to see the quarter share overall strong an quarter increase met our guidance to our

FFO occupancy development compared XXXX was year, last to share for $X.XX in XX.X% of both experience for to continue per share Average an operating We was leasing X.X%. and per per terrific XXXX increase the share $X.XX results programs. and

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

Our equity at per From active common debt-to-total already we down market for the an capitalization for was XX% issued normalizes XXXX, raise to to ratio at our was year-end $XXX forma XXXX XX.X capital equity and EBITDA a and FFO be million debt-to-pro the $X.XX $X.XX program perspective, $X.XX price our average quarter continuous stock during from of of healthy XXXX. a the under which high guidance acquisitions of adjusted $X.XX impacts of share development share record our an is $XX.XX That per the and XXXX for range million. first year. $X.XX $X.XX to quarter. to for the of in estimated increased gross of

the same a notable in range we gain $XX XX.X% in XXXX, at leasing in our increase In and debt, over $XXX,XXX in combine involuntary casualties debt momentum guidance million two claim Other in conversion a stock Excluding for into an midpoint of related in to occupancy X.X% dispositions, of non-operating for and bad insurance million by gain $XX gains private of XXXX cash be for roof summary, ever have include of XXXX, $XX aircraft debt, of year acquisitions we to that the XXXX. The a continue continuing issuances; of million results fees. a the assumptions per and sale assumptions represents on net for property repayment; produced common FFO and best will anticipate be financial and The of XXXX. of of termination in interest experienced comprise and X.X%. XXXX. operating the X.X% and average increase on metrics XXXX FFO that share the partnership some $X.XX $XXX offset unsecured million to million guidance which $XXX that

Now Marshall some make comments. final will

Marshall Loeb

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

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

Operator

Bank [Operator from Dennerlein of America question will Joshua ahead. Please with Merrill Lynch. our go Instructions] And first come

Joshua Dennerlein

Hey, guys. good morning,

Brent Wood

morning. Good

Joshua Dennerlein

get much Could then the maybe this these through way? of projects you when development the is you the timing what’s million of walk pipeline, can and identified starts us how year under of XXX

Marshall Loeb

and a second north first question, Hey, of a again, almost are little Marshall. Good Good I Josh, start morning. little identified XX% really all say, probably first and XX% it’s would quarter quarter. and second we'll quarter, north of really

So infill a we five RFPs Creek the we peers, be $XXX Charlotte are edge the on it out midyear of it and it's say it, active end in compared of XXX,XXX-foot Steele we delivery started retail, and that call public market. love in our of a months, of Dallas, What by private, and we'll that Creekview and space which Most my mind. usually, the – have prospects is pulls is we and the million. I've less of it's inventory building there. six quarters our to if in When about really to moment, the three next model where for town, is deliver would I demand think is, almost run

the gets pull restock the then is ready have year three we be some or half leased It where half we'll of and million up we'll second $XXX really so little identified. is year of quarters is think But cloudier. inventory. Ours first buildings to that's the the of a

of $XXX budget. call opportunities could more this top we so our and year. turn those one properties into it, of have another, if we the We're of development shadow bit the leases five running but we those in Texas, on of get really kind of think win a and of into only pipeline – that We luck, couple those, we we have then a in little that million. a And seven pulled that, chasing several that there's pre-lease $XXX in to with hope million in

gate in, the we the didn't how hoping number I of we'll projecting the could economy we ended by out $XXX So come like year-end. last year beat that's but if – million that and up hope I'm and year, holds

Joshua Dennerlein

on development inventory million starts starts? or? six how excluding in Like good already Like kind to assumption, pretty development your five that's of sounds that shadow side. big the $XX Okay, of say what one There's the projects, those? another are maybe

Marshall Loeb

will they be half not to $XXX things, if expecting And probably say of those volume. again fall million. happen, there’s two-thirds But Its in we're just could annual annual volume. half two-thirds again, they – your all to or you way, volumes probably to of those

too, a happen just we some always two there $XXX building of placeholders, they're nice not that get as million bit, And we’ve or little you There's a I'm now, that annual may one hedging can volume – the leased tell. that's gotten may because don't our up.

so some them million. $XXX but may make still, it replacements And us be does about of better net-net,

Joshua Dennerlein

end kind what to there? you high of the high your What's get do the In end? – low best end assume of case kind and to

Marshall Loeb

– Or sure… I can one end don’t end know of high development? if low and get not I'm I

Brent Wood

for repeat that? We lost second, Josh. a Can you you

Joshua Dennerlein

what NOI get end growth to your same-store you your To assuming are low or in end XXXX, high sorry. Yes, guidance there? for your of

Brent Wood

Brent, good Josh. is This morning,

press look it's they supplemental. If the reflect assumptions, basically That of reflects also in the the the the chart basically midpoint. back individual release, – in you at basically

compare. basically and the then basis, new a driven. essence, on driven in in lesser that assumptions and that so to cash any so say, most do, of the place X%, that, XX.X% then then we're there. cash other rental But are that mind see and to for Keep driven by of would run you of pool rate, leasing extent, it be may rate much those basically it that's So mid-range to the get same-store at of in how whatever you existing the leases all side, occupancy bumps rent

– So we range. that basically, have we year, if solid another occupancy feel it's good about

Joshua Dennerlein

Okay.

guys. you Thank awesome. Okay,

Brent Wood

welcome. You’re

Operator

[Operator you. next Our Alexander Goldfarb will with question Please O'Neill. ahead. Thank from come go Instructions] Sandler

Alexander Goldfarb

down there. good morning, Hey,

is year I more guidance less year first, than issue to So last two correctly, this well. guys read cost at if cost, your the if obviously, look are than you And your stock did the quite yet looking debt I you and is your this Brent, doing it like up looks conversely, last. and equity debt questions,

why through sort walk of capital you're you last? can this year of reversing for So just the sources versus

Brent Wood

debt pretty morning, we're neutral much good showing to year We're we year, year. what basically a last Yes, identical wouldn't had this reversing. say I Alex.

we're XXXX. XXXX Our $XXX in we'll projecting and basically $XXX debt basically versus We're same issuance repayments And issue saying we're the breakeven. were million. a million repaying thing for

basically, So saying we're debt's neutral.

So via ATM. sales, Via operating cash our we're property via funding growth flow. free

you, $XXX million year. with think agree $XX million. we current we last did budgeted, we at So year, this price, I we down $XX million, got – We've our

If me the I you'd would've upper if do not million, we were asked December, late we I'm told in could you XXs. trading sure $XX

in price is it but it. now, the we So where like there's been certainly, some volatility

cap. down for we're that we're today's down The uses capital to debt somewhere total I XX% market other price, thing into is around already – on having think the good to

is heavy keeps year which balance but we because check the this by year driven slower free you've happier at compared got being Part it's bit to it it's has and So ATM growth issuance, point, ATM, sheet very It not a do of does. record to clean little last up some our just impact. issue not a are free. to FFO it some to

but So to if debt We're certainly way can field and But fund aggressively looking ATM is to the we the in pay we issue down. will budgeted. our unearth will to go would more got neutral. guys hitting ATM which it debt the use projects, not are operations, certainly, we the we've forecasting be more

Alexander Goldfarb

years tenants? Marshall, mentioned is growth, stabilized the seems double-digit Or to prior that at now. market the factor into rate It any of same shun equation? just [ph] obviously, one, second the increases? years? from You rent how volatility, were the are then and projects like impacting it have successive this year-end. at are we – things Okay, on tenant committing you new pushback have sensing and on almost tenants their just doesn't taking rent They're the they the space But

Marshall Loeb

rate a little sticker for – tell our years shock few your if in double-digit there's rental when with sure overall, really, we've a probably – a flag lease like market, and four for basis, last tenant all a – almost good a broker a me in new I'm renewal, rolls. The maybe bit doesn't had someone rep GAAP tenants, and been rising of news on the it's broker. of have a red

XXs the has and their situation we’re the gotten shock has are of may with in hopefully for the there had about good in rents and little tenant, with couple probably of initial they I so the But pending they've the the think being we're and how by lower, other options, their low mean, they allows. the last to above it years, in and but a in broker, where rate the may we're retention usually, So be look on meeting are at keeping be space expensive pace XX% renewal time our and – ahead the own and through been shock I quarter. headache of because market market the moving cost our not things we're slightly a

and cost overall, their things like – low we and a structure. bit that, shock little but there's over employees, to I thankfully from all rent So a a of it's cost almost compared low of our are overall tenants, of labor

and out he his were was complaint when hiring his are double we good and – basically We about this was then met finding to workers. about not more California with us one just and in tenants, was with complaining rent

Alexander Goldfarb

helpful. That’s

Okay, thank you.

Marshall Loeb

welcome. You’re

Operator

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

Bill Crow

other does going and demand, one economy know proportion line, day and there's carry a slow way shifting tenant Marshall, separate what down a good user on little economy into anticipate or economy pressure blurred increased change any morning. Thanks, of kind leasing new old to perspective? in the kind be a you base that the new I that but the and to from to into were bit, it's of economy, of your the if your you base

Marshall Loeb

Wayfair and predominantly with, question. a of have to supplier, names different or to those see morning, Amazon the we'll felt continue or hadn't within there's it wasn't a an Good Good or we up dealt them. several someone years trying years, then one, old prospect expanding two with answer deal has question. well a Tesla Bill. and kind or your a just ago – like past – Amazon divisions economy. it show every doing I'm quarter, or and is then few chasing three new still tenants well We're me, we're now And done that And

Lowe's, couple with signed but that your one of tenants call I a type leaves backseat. economy with trunk an You no tenant the have an just store of in leases recently we’ve the car your would old or appliance

and in So they've opening sure what up us, this exact, I'm the not store done are several announced they've but it's and with closures distribution facilities. meantime,

when buy afternoon St. an to having rent you if can higher So home or than – a your appliance, that they it rather get order Pete in location. at a refrigerator you

I work. the tenants footprint out their slow they building omni-channel, distribution figure and it we're like economy a network so they're me old So still little seeing the how If out of think economy even retailing down sense rapidly. bit. makes new But some because that's would to economy going would to their bumps,

a other XPLs seen evolves – really and mix out pickup logistics. a this of one, even The third-party tenant we've as much seen late, space. leading pickup their of so year never in we We've

interesting an one been that's So as well.

Bill Crow

been closings, your tenant Is to all? you new were All from a mentioned watchlist? it anybody active more – getting then added right, and at store it

Marshall Loeb

a slightly a bad been and have the the the it's for us. retailer how in had budgeted averages reserved printing there's just that's year, where furniture majority think our year, issues, quarter We end historical hit of of they worry had below multiyear them but there of balance furniture. At it's last – debt had its I we few that's that – debt then a year, company. always with We've working was X,XXX in year, business, And where we a There's how average. and out that for a our example in our furniture including related one always this we nature few – came the bad a that tenants, fourth nature in we've some the seen by the one straight-line Phoenix, was Tampa. are to the

So it Firm. seems It headlines be – location economy that any or slowing more to one almost Jacksonville – that. the than was or another like anything Mattress industry-specific was Houston down or in seems

Bill Crow

That’s it. appreciate it me. right, All from Thanks.

Marshall Loeb

you. thank Okay,

Operator

Our from will Citi. come Please with next question ahead. Korchman Manny go

Manny Korchman

guys. the topic market, in the where Help of in more just what earlier, frothiness type? bit it maybe through morning, on given Is program? take or the growing little Marshall, faster, matter would and change of it a that. your touched us on product staying think it you the of a a you cost capital is? then which paying to use the for Good accelerate Is acquisition acquisitions, especially

Marshall Loeb

Good logos – a just of tried route pages brokers market question. and groups at U.S. it want international industrial. of with and We’ve couple groups just was was are to, that around it, around given of the I own world the where one these the to is looking piece

do would everybody product. would It's on add. up for I some about own that very we not Where good create us try we buy point, So The this. leased at to more news what pushed – to so competitive. we development. think or also we value trying to buildings pick quite want every package us,

those about us out and get at In bit acquiring everything terms in of cases. we look we more,

to I or cheap we're second and want it's will with want going end we guess, overpaid trying it’s the and to we back my own to to to our round mind, don't something for like don't list have I to or be just If capital. third years. a feel disciplined buy the something five not today. patient two – in want because of I I’ve in capital up You making

we trying be or say and would kind what's more do. start you we're to do line to sand. of to need it, need we of it try much our to in we line patient once property, middle drawn where – really you than the when probably, how up, I in because get like we bidding win just offer the you to So the feel ramp We we've the on bottom it typically,

for wanted our You get and you outbid emotional someone and shareholders to you that's to get competitive best want more. not that always

this cap beat down just bidding package So hope and willing we low are, for few to good and and pay always thousand in continued question trending somebody rates our a are every that's hundred like seems goal It than year. more the I acquisition at we there's least.

Manny Korchman

of talking sort done Houston we're while, thought that little topic. sounds I And it back but about for Thanks. to we're a

And sale you out can had you getting the Houston emblematic So on with you're asset? whether in what update of an or there? just of us give royalty, seeing an royalty bigger say particularly XQ is in

Marshall Loeb

Thanks.

last we a leased, rolled there. kind to long we to Houston, third-party out West the a bit building – Road And to We'll to that where into that's preleased of so. construction scheduled low not RFPs You’re and there but buildings after delivered building took be portfolio. the and an fourth our really in last or below then organically of Houston and XXX% quarter closed meaning, are, V pre-leasing, gotten year. sold in drifting or about drifted seems year would We've the if year older we in little logistics. got as the I a month quickly Houston, the this actually, our seeing come more roll we in everything the up three concerns we're that's from down lowest in are XX% to guys one Wall we've glad spec say where was field, projected and World XXs here Street portfolio of quarter where is Houston XX The pruning a and We keep we this started for a I'm it from right, we to broke we just Houston kind year. Houston couple like down. it World in, ground

it's the on of third leased we expansion building, and town, West tenant. XXX% So an was in of an started, existing side the it

about under So XX% that construction. of that's taken building they renewed and have

X% on way couple a long-winded a natural saying, of long, feels were vacant. I market's The economy. just Exxon saw, Houston but the feels down port $XX the ago. little It billion where the liquefied, ground plant by So good. the by where like like of years a we the disconnect gas but announced to port. We're help down not going that's bit

are we'll opportunities, it be eye little But certainly the a our and doing So Houston of bit. mindful oil even keeping are it we feels in is like Houston pretty with in an on well, economy locally. but prices still size we seeing down

Manny Korchman

Thanks Marshall.

Marshall Loeb

Sure, you’re welcome.

Operator

And our Please from Fargo. you. go Thank next question Brendan ahead. come with will Wells Finn

Brendan Finn

are course geographic to quickly looked for on good bidding morning. a development came Or guess, this little of expectations. the over throughout bit, for build-to-suits? something just prelease the percentage you looking of follow-up driven just there Is then year? it guys Hey certain want Was course stabilized the like you quarter, are the portfolio assumption guys mix? the Or I pipeline the seeing is that that down more quarter-over-quarter. your yield by maintain to And saw year? that I I guys, development the

Marshall Loeb

don’t Most so basis. and X Building the Building pro it buildings up And preleasing. a of X next the park are in spec. rapidly Good really leased a forma question, our deliver hit we we'll spec on have our

for low space in market. So a every part, RFPs do we're a most is we're opportunity running and getting it once in we'll on while, the the but pre-lease

flow ebb and rolls it depending on what and out. So will in

In a rate our this – in It's land cap the dropping gateway in. different too market the markets little Texas of little or to scheduled that we’re looking kind more a little Miami. quarter terms a compared markets of probably, bit expensive. is That bit, lower at

And been of the at where X out to to north transferred just I actually down gone would pipeline, it properties an they construction in so that we've X.XX the pulled probably that it X.X looking prices the of we up. trend X.X, have think down, cap. came So then

So we that can below if able that. push we're can our to – is through thrilled and that be X, develop in with rolled year, how little the we pipeline. market to achieve and last to everything X probably And an much a

think about – we're it I the I kind pushed market think like that's it. of it again, pulled gets we rather helps, into if So than how and inventory by that out

Brendan Finn

signing And at the four That’s remarks, Santa going anticipate facility Marshall, facility prepared then that to about in R&D talked quick, be I real at think, helpful, guys. you your or there year. the leases – just Barbara are this you there leases again last year? that Is

Marshall Loeb

an that the anomaly. last we year, anticipate the expect I effects saying happy to as of I kind with get to yet be back which the ripple building - way or we X,XXX-foot But portfolio big building leasing to maybe it is don't that XXX% Barbara, Yes, just it. don't the signed in hit, leased. the we – one we'll this week. of don't think better to that within – the don't got we're CapEx lease have volume think have would Santa CapEx

Brendan Finn

Yes, exactly.

thank Okay, was helpful. a lot. That

Marshall Loeb

Sure, thanks Brendan.

Operator

Thank you.

Our next Please come Mailman Craig go with KeyBanc Capital. from ahead. question will

Craig Mailman

Marshall. guys, Hi

bit schedule leases XXXX, lighter bit versus to guess to kind what rents there. forward little expiration more mark-to-market from early Just kind Trying done. XXXX. curious I curious, in grab expiration, potential of market a guys a little pull it philosophy about a given of have here, out internally, the closer is, bringing I'm of you maybe have what to

Marshall Loeb

their good brokers. have Most A mentioned I own question, earlier, people Craig.

to the timing without tenants waiting market. we've is look and but so to. sometimes things quickly. to I the I they're me betting because to in but has on especially renew to little they talking deals rents put when our and times, to increasing. they market chicken And back And ask It on minute quickly. of It's person guess come so lot wanted up to closer nice turn when always a California, they not bit to could last tenant on speak renew being only or a a So have gone they far, That the them to we're we'll than to the heard are expiration smart owners the later. approach usually market ready tenants will renewal, gets may bed us some turn, renew, dictate more

forward – So ahead go But as market. will much than as bad will so us, and as allow quickly the usually, they'll will. we or leases the in or and timetable – of kind more bed pull good dictate a as to put we tenants them

Craig Mailman

just time, park. I is you again park, kept would? Okay, you better they rent higher. get to Or they're then just tenants worked in for how you've guess, development willing the construction how wants what a be temperament, just market mean, that’s though over new tenant guys is that, out And and benefits than such are just your availability? versus your on yields helpful. reason given just and to putting building you're existing over because you that your talking that the in of new of land you are And this guys, pace it's pay kind good mentioned the I and a yields the have build left market willing don't more been are what thought premium that. is, of market you to got have take kind out product have anything rent you, costs of here, in able the drilling to to been premium viewing in, if into whatever park even costs yields And part

Marshall Loeb

on space first and we – you're bit push you it's we'll new an of building whether developer as rents to that the residential we've thing park the kind like the generation can a you back or a in buying an with is to and gets momentum a our bit, a building, economy compared new how building think I I rents we about, existing And have leasing as this other have especially half existing half you've that sense many Once tenants once push I'm compared can, wanted to rent, it a or think helped just up brand on. rolling little that's expand. sure and seems can of created us it of hard subdivision. the is park and advantage benefited what of little it's where part the do when a us I've place, where front and picks that love you we're

XX need term space, from existing or it's their much park build, move with Again, last aren't And a someone from amount building to the them taking left. fair operating happen that nine we're of park. to seeing three building they that costs great two activity. type we've rents months. in in be years over And able So to two their an a had of and more that a of if building, still

So – that And is yields yields. helps us this about our think I maintain the too.

XXX% in rolled XX our not being of the developments of underwrite. also full have develop year, built Most those last cost we with that leased. carry We using the year a the up that carry and yields ended into all

months can five where the than in move we XX it yield. sure rather that helps So that

another probably that's our costs, our So yield higher. factor driving

Brent Wood

this to And Yes, you is finish, our would look multitenant add which higher per Brent. just slightly little higher be got a higher Craig, product should a with at more cost, when the that, turn in for that square risk. foot type, maybe getting yield a I office you you've

commodity of our I buildings building. a bought say less a than a are think that, little

rates million for or and there's lot very square a differentiate a foot from office foot with XXX finish XX,XXX square no a if big one XX,XXX, than rental it almost we a to, had and would little building that So million door. your were building square we trying guy different XX,XXX the next or is foot

it's little product our it exemplifies equation I type as So part that of think well. a different, as different

Craig Mailman

Marshall fair. by? juices carry what what yields those do you shorter you kind do think of, That's think times that

Marshall Loeb

Brent?

Brent Wood

you When your we're budget, period I'd for six, then seven or XX ups. budgeting and say construction say lease months probably a something. XX months points basis

of so thing. or carry, months XX interest property that carry, in baking taxes, You're it's type

report at if all, certainly you the obviously say cost when line it's the variance short obviously job shows run positive a all have points. would scientifically by been you yield. basis the those XX But probably looking item end half, the it it's So probably can to at but of neighborhood be of more without say the day, the I of better XX end that you and in a it, that your circuit it's not the

Marshall Loeb

rolls And it obviously our into much – into earlier. FFO rolls

in. it you whatever rolls that – is that helps quarter when So next

Craig Mailman

If in. sneak more can one just I

largers a kind front, for of their know winds you guidance, kind the a very kind particular on process, the ground guys initial as of in here ever your back you took and hatchet what of your shifting a bit conservatism of maybe the and would? in haircut to all of I or but of guidance up peers Some have of given head guys you to temperate guys gave macro that to kind take of little your was normally kind your you this didn't best is regional guess above just at beyond any expectations

Marshall Loeb

I the think having latter. guys at the corporate. it's more field, our of, do in we both having kind mean Brent I field again, the Probably think than maybe really I know and more been I in I

their trust things mindful I'll the and and wants everybody or said of shut So wars judgment. we'll then to trade – challenge every to like month and we're that but and like mean down certainly I budget that beat other them things threatening some either shutdown we, governments that. their

did So and development we things. at starts look

a there's could If we your want mostly year, the button but little absolutely there. just mix, and a ostrich don't So the with death out an a field can, you we bit you always that that we headlines put of for it's, sand. guess should from certainly scare everything we would. hit in be right? last caution to I hope cautious. Otherwise repeat the we you're, And So is you to lot head be little know, just it's here of a

Brent Wood

are out, Craig, Yes, that, had better for had the we year last and I to would much time XX.X% would XX.X just we at occupancy we or entering the guiding, year went finished point And year XXXX XX.X. originally XXXX I forecasted. add but we got a than it to

have point bake higher basis in So, does year. XXX our last year we than a this started guidance

cent don't that we know. I will say there, just of hope that but would in that would, have the under on last a be consensus put done and where but Great. our charts $X.XX Now point had put guidance them assumptions, that that for but amount. the goes? out it's they that Thanks that anyway, the we good that I one that, XX just out guys. nothing sure I something cut and were as again, over our were comment. I I'm Prologis all do in their I'm I they spelled that's tables year still would to position. $X.XX would sure point out in that

Operator

you. Thank

come next Please Our Bin will go ahead. Kim question from Bank. with Ki SunTrust

Ki Bin Kim

out Hi there.

about same to Going that. you your in better paraphrase tenants things increase I if your get sense second the if that's feel way half macro that it a sounds development better conditions, said, back can Do get or start guidance, thinking? what you were the like might you the you

Marshall Loeb

next speaking is is say but I'm as I'm, I spaced dangerous, guess we’ll building. which Probably and always the it, loud out leases, our deliver I

about So did I of quarter ton of to our Craig's optimism and we maybe did, we in that guess starts. going question, a build and of back a kind it's only

the calendar lines the that up is second really half of year. some So delayed happening of just in

I'm like next using the got So change that their they'll they rushing right feel our we're buildings about distribution start they get they nervous moment in or the for network a winds we’ll that, quickly. and of but because little be economy. January really deliver example, early to on probably better feel a able And But the that working and their December then things the shelves. to, rolling tenants more to business out I'm all inventory for I about people little a if as would lease now Wayfair better one buildings and imagine kind or sure can better, probably through feel

last early I have will on was better we'll that them, them quarter. the they knock hopeful about of expansions our year hopefully our they be. to more we're nervous, over starts probably I'm We've upside year hit not see how economy again, hope forecast along economy, starts, than on and wood we downside, but much ton of see. this feel already it are the a and again. if it partners we'll it'll, to just to So how And And there's happens plays XX% started that. this gets with this we'll means But we'll given in everybody we number a like if year. see good

Ki Bin Kim

like seeing signs less of you are us wanting longer or less Currently, or at all tenants, any traffic term anything for that?

Marshall Loeb

to is it, but really. now mean, but was felt are we're are engaged world talking field. example. than the safe and you things It's in guys and our holidays not It we've the they in a did I hesitate in hate No. people or good got much for like post to, November There and to back activity feel different nervous, little to absolutes always not. not speak that really it

Ki Bin Kim

development your of half is pipeline it is leased. And about million, $XXX Okay. roughly around

$XXX risk base maybe to where right compared about at at a it development being does if asset board company meetings up think meetings in X.X% about the million, or management of at in think of total dollars about that size, representing X.X you dollars the your billion, size, or the long-term? come So all X% I risk is internal that an the

Marshall Loeb

that bought kind And work assets to showing in low bit what's do We would own we I of probably little we've got of although Interesting yes, , a thinking keep as or but a that is low construction. where inactive differently. a or we going our of couple that of look it short – include, answer assets. time, active the call they're at and but then you’re in percent add development chart under that earning land it stabilized a deal. to then way assets guess value time to And yielding schedule the land my of a kind kind they're

low park. me, need even just slow Atlanta. it cap a in our rate. to I to be we down love of a little a as want little rent TI more drop at three look in And earning. our bucket on bit also I The of throw get lease number, wouldn't Without get still not four a want grabbing give marked thing and we'd to be yields probably buildings and few assets our we're because on for is when those a then stop you north within it, you of creating that by of case our land, value. So that, seven you as projected a It's more call that worst building. holdings to million, other look we can today a assets items picking it average, the or free do X.X, land X.X are all look I'll rent more that if may relationship XX to have think percentage are and hate the mixed the at we I'm economy time a at too a things bag to of ninth next land what with you room want more and always blended like and we be we land. or where low for pretty but then percentage rambling Obviously, to much the as it in XXX development in a or with do eighth,

value You're expect on still value. in just lot slow But much create if down, come not of down we margin as shareholder asset to creating for there us and a an today. things as there's

Ki Bin Kim

Right.

the at internal, that said capital say that's to all increase pressure, perfect I but is mean with not word, don't there risk to kind So of or any but I development. want it,

Marshall Loeb

building that's this driven. and thankfully try not Again, think park not develop run we've or we Antonio, you. that anticipated, there's built it it's good much or in is than through that is up mean, for every by kind a as one as but and It don't faster wood market I delivered we'll is Eisenhower helps Point leased Not, really fast, really field, year but San the management next quickly, to is allows, board. driven last a I the of shareholders. we've we how year, ever knock I probably if the our on think is in which the It like corporate, much

Ki Bin Kim

Thank Alright, guys. you. Yes. thanks

Marshall Loeb

Sure.

Operator

Our ahead. next John question go from will from come Guinee Stifel. Please

Aaron Wolf

Can Wolf industrial from you Aaron a Guinee. questions, park morning. it's project Hey, downs couple provide your of all different able weeks and few This your on for ago. development Quick good typical how were on John is Churchill to visit any and build the we updates out?

Marshall Loeb

excited Thanks morning for about We're it. location. love to good – taking – visit the park. the the time We

saw at first in to we've The can close we're can before leased, full as fully it, as building Happy is wrapping that all finish we We the building you up see you on like constructions, it. good and it's our year activity that Miami in had leasing the X off new X kicking almost there. second is was the market of last year. million. Absorption million the just basically vacant X% end about it and

dynamics the in like we more had wish So Miami. and we

since little some in a bigger So feet little and that different liked It's the it is different. ways was than building is stables typical It's fact XXX,XXX park. the that probably a not we different. our development. horse And

land. I maybe Although struggle say find scarcity of land, would speaking we to the to

some land like a It to golf leases, talking we're fills today. obviously at, ground stables, We've looked horse we've looked that. at everything courses. So church about

and and infill to in is land Just getting hard go location. awfully greenfield major and to is ready zoned cities find

I’ve to acquisitions, story. waterpark We're like come promise. it our We up feels but don't kind land board, difficult talking and to different now things it that. – everything of I try every with a So like has and a market a kidded

we or and acquire to is day. and number retail and, talked any So, mall still certainly one my I've of dying retailers that a daydream thinking, landlords

necessity. more reuse be, that'd us and but was it out do horse that see stables, probably it's and more of you'll is, different So that

Aaron Wolf

talked Last you Can Great. Thank acquisitions. you. question. about land just

land that how you and to are positions at use? your are of five many greenfield four last If look many you change acquired, how

Marshall Loeb

Bland, flower through district. to Gilbert why Phoenix, have have a almost to had parcel in it they Phoenix utilities greenfield. or they although I'm issues of they work Greenfield, the hadn't to go The adjacent before three there's our development. Texas some roadwork multifamily it's They're had that's they building [indiscernible], issues us developed Greenfield and last zoning. roadwork, tied They're where another on had municipal through mostly and it's some up, trying four. been to and also in think some or but was we mound,

odd. kind guess through your not of may So issues around price helps have all it but get story Greenfield, can save work of it. to arms a them of before They I still something you really

Brent Wood

at Aaron this in one as goal one Phoenix for cycle, production last color, is the like as Dallas, and we do comment of the mentioned acquire in our to get kind just point I anything add into to quickly it we can.

and there, So, really out if that the have see years to hold a ability we buy that opportunity helps. few cheap not land in it and don't that done

Aaron Wolf

helpful. It does. Very you Thank so much.

Marshall Loeb

Sure.

You're welcome.

Operator

was next Street go ahead. Green Frankel Our from will come question Advisors. Eric Please

Eric Frankel

this Thank wanted I short. store calculate numbers. earnings to just same just your to keep into your overall you. guidance, how clarify you I'll try

embedded guidance? store your in Brent, how's occupancy decreasing, in for pool, anticipate guess increasing your do I store that your same So that you or same

Marshall Loeb

X/X/XX pool. at that properties XX.X, that of static occupancy to store those for store for would GAAP that Eric, for and the pretty the this same – mirror X/X/XX, see our is numbers same showing XXXX on. cause at the right annual owned dead right pool around average that is we're much obviously were guidance annual It's projected at And you point, now of this entire the compared pool overall XX.X.

Eric Frankel

releasing spreads, in of A forecast? should year your in we what embedded last expect. terms then from And significant how's any that change

Marshall Loeb

then I the a and Brent model in. would probably chime I let would same. build

a and up use free and to probably that one. more like couple rent were were the over year spreads market costs rents rising. little would I XX, last years those I going more because But, you were year GAAP construction tight and a last the bumps capture of been releasing rent of they're building I cash XX. Our thinking spike was If a like said, we numbers. than, I've and any a because before if And the of we'd little was model, lack picking land,

rents I So, to I to up are keep continue wrong. go and thinking going be

We I'll haven't predicting but it. it, seen keep

Eric Frankel

up good. then any, have relative in room? they all very reasonable, I better? returns case you just regarding keep Brent just think dipping of Just quick opinion a you be Or lower. relative or say total to are I or That And question. are rates value by Either sounds follow anyone rates from basis? and time more cap would markets the Marshall some bit where little would in a know cap say kind lows they able market geographic you Do on case are

Marshall Loeb

there California, No, the rent expensive, County, actually I exceeded guess growth feels too. where but Orange has are, you the incredibly our expectations Southern

like of we're being maybe awfully And have we've hard prices square value in and it's XX find to where Denver extreme, cap markets, growth California rent in has other the kind been also even the economies still XX% on per markets to like, because caps Charlotte, to going of rates We down maybe markets guess about really in I patient go Florida cities. were capital major Phoenix all So, but there. and number the We like markets It California. down are year. cap XX go other and cap strong that's there, out rates but gateway risen. tertiary the a last that kind can't has or those basis a had And GAAP at markets Texas. come foot to in have spread seen growth all by Florida major rates and come rent

around there we'll found it within And more got it's wish broker add great a footprint. or I sell. an say So sure not they make or, was last offer would continues and we buildings but haven't with one push us development we towards year then may it if driving thankfully get acquisition out and to opportunities two this there, hopeful yet, value and they we a market where and year our three

lot we while try so and offers once to willing And a off is got a market who in a of seller listen. you every

more was keep and the those and they've a smaller acquisition we'll to adjacent Greenhill are But by Allston that. been large. million development. But So the at $X Like trying acquisitions saw exception filling we than our rule.

Eric Frankel

you. Okay. Thank

Operator

[indiscernible]. Our question go come from will next Please ahead.

Unidentified Analyst

Marshal. Hey

a the major lesser of land you removed can from terms In meet some of far Is kind go to the thumb? demand? rule availability, locations of there cities how to

Marshall Loeb

if eastern to inland we of were we we'll are. center Hey Bruce, far, box, and Atlanta, good morning. see. Probably big I'll to the as as kind far which you we where that's can, we given logistics Dallas, south pick for a want chain building fairly traffic is consumer what And empire the what what do, near South Houston be

Houston Given example. Dallas, successful we've been Worth or traffic the in for Fort in

van Worth. Fort need out that and to trucks some west drive It's Dallas location. tenants service hard and east have We an to too from

in in west. Worth moved tenant. Phoenix, that Fort So We his tenancy eastern has further see West our Valley

need where there commodity it and a their you buildings late the either little if it in in less active that our be of your that to it and or be on So a probably is that's summer, seen hurry and quickly in – at be building a a your contractors, state-of-the-art. they there's, get is bit to to get trying HVC less Houston need liked able traffic we and and it's someone area of to probably that so fairly hard depends of are makes we to out delivery HVAC to lot that, say, customer we've times a

a better few So art Empire state years. East the age state inland now up of in what than the won't be of just art they and

Unidentified Analyst

an Right. acute versus withstanding in in it but some seaboard, is is or any issue in for are Florida land not the others? up there, areas or everywhere areas, Are there geographic Atlantic the this more issues California, example availability

Marshall Loeb

to the find Hi few expected land harder expected much, than it and coming I remembered it. on all been coming major back years awfully to are back land. I were our the find to about guys part is area would near surprised good the entrance. freeway places I Jacksonville need and be like get LA one zoning to as anticipated. build it of in markets of and first our in peers. now, to much It markets, hard and priced We it, about you story work. of I out need we unlike And a even to Bay been EastGroup, think but We we EastGroup, It's only sites a to I've there.

of get find that we kind things the you when if And entered to awfully it when work good gets chain, probably So comfortable of meeting one through that with us hard Atlanta was science. helped the sites they a at several in conference side. were always an we and they and were looking Google about pushing outer maps belt us brokers asking outside could room how them available far before find

consumer a The is are I us to for awfully job keep up it's the developer guys are good things. coming to So and a close news down. long-term. supply sites how Tampa bad and with the good and Dallas and push Orlando, throwing they our news keep ability like Houston like is keep find we and Phoenix are ability I as to doing to like hard cities the rents so and in

Unidentified Analyst

soon. well, you Okay, hey, a thanks See lot Marshall.

Operator

There to time, turn remarks. at speakers the this questions are I'll closing no for so it back

Marshall Loeb

your for thank everybody your interest you time for you EastGroup, in morning. Thank this

we'll available questions and you We care. soon. Thank for any see are Take you follow-up certainly hopefully

Operator

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

disconnect. now may You

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