EastGroup Properties (EGP) 23 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Marshall Loeb	President and Chief Executive Officer
Brent Wood	Chief Financial Officer
Keena Frazier	Director of Leasing Statistics
James Feldman	Bank of America Merrill Lynch
Alexander Goldfarb	Sandler O'Neill & Partners, L.P.
John Guinee	Stifel, Nicolaus & Co., Inc.
Ki Bin Kim	Suntrust Robinson Humphrey, Inc.
Emmanuel Korchman	Citigroup
Craig Mailman	KeyBanc Capital
Jason Green	Evercore ISI
William Crow	Raymond James & Associates, Inc.
Eric Frankel	Green Street Advisors
Richard Anderson	SMBC Nikko Securities America, Inc.

Call transcript

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Operator

Good morning and welcome to the EastGroup Properties’ First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call maybe recorded. It is now my pleasure to turn the conference over to Marshall Loeb, President and CEO. ahead. go Please

Marshall Loeb

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

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

Keena Frazier

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

Keena. Thanks,

performed well a quarter, off with the [strong tenant]. year team Our starting this

a releasing The market occupancy, of consecutive per results to and metrics, saw prior last from This above and of of year share. industrial XX same-store guidance Based coming in first higher of spreads. X.X% of NOI vitality were FFO solid demonstrated achieving number a compared the to year. we the a positive operations another strength, guidance, quarter increase the $X.XX on marks the through quarter is funds share compared Some as FFO quarters trends the we strong quarter. the further annual raised positive such by our saw quarter market as further

buildings. we rents through operating bear steadily were has trend growling out, XX.X% allowing Several this XX.X% and and create shallow our market, from largest leased in predominantly This in-fill specifically XX% to XX% and supply our quarter-end, truly a short Supply value-add XX% check in on markets. been XXXX. small-bay industrial and the ground-up NOI value a the XX as remains of where and disciplined, is roughly or location occupied. acquisitions. market for supply the the to environment At and statistics for leased leased Houston slightly As was still XX% controlled, marks current deliveries roughly and better, continues demand has quarters, our construction. over and us development increase occupancy largely markets big consecutive institutional exceeded and bay a it's Houston below our XX% fallen is while of In remained control, largest cycle, byproduct institutionally result, box as focused long-term

their GAAP respectively. same-property of continued GAAP respectively. and XX.X%, NOI of Houston the rents GAAP. cash square XX.X% our were the and Further, pool, out by lease our to spreads results was declined. in with first up an foot lease We're that quarterly quarter rising positive quarterly X.X% one materially cash from Pulling XXXX. numbers growth XX.X% trend, XXX,XXX and impacted rise X.X% cash and XX.X% Rent average XX X.X% occupancy points pleased basis also Our where

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

different five first the began During quarter, five XXX,XXX and we square on feet. cities buildings totaling construction

While X.X coming million million. XXX,XXX At containing our an with we in a XX projected feet yield into feet XXX% portfolio XX with development cities transferred $XXX cost projects quarter-end, of three totaling square average the of of projects out square the X.X%. pipeline pipeline, leased consisted of

For XXXX, $XXX starts the our as we're to had and raising year million projected a we and million record. $XXX starts commentary color last were

So our of XX% we're to we raise this And on mid-year. starts, starting as color excited by over year's further forecast. those XXXX project

spread continue over enhancing our geographic year reduces to And cities. grow development the This pipeline. activity our to as revisit progresses projected ability diversity we'll risks nine So starts. while finally, different is the

active. pipeline three to quiet properties. relatively off was First for but was acquire market acquisitions, separate committed quarter We're our

leased We XXX,XXX million. expect building $XX development airport, foot is new the to close for two XX% which total currently of soon square on investment at DFW a

XXXX, Next building. Phoenix. a We will acre the have of $X to contract Arizona in Diego in they down sold area invest in to square reacquiring which result, during a Transportation redevelopment. as seven finally, and square construction. foot buildings And the million $X.X but torn San just the buildings Miramar for not site were additional XXX,XXX of million, XXX,XXX over two the buildings under reacquire we freeway totaling feet Department in accommodate $XX we’re a And were we'll million

five included first financial Houston On review guidance. a in topics XXXX we our disposition $X.X Brent on the XX,XXX side, now for quarter. sold square a million building will of variety world foot

Brent Wood

morning. Good

overall XXXX first experience in quarter the X.X%. compared share upper an first results increase at our portfolio. to team field per the of $X.XX, due strong the We FFO end the to per superior our range of execution exceeded quarter of for share continue performance to our and of guidance positive $X.XX by

of Operations now estate the FFO non-operating of losses exclude of of adoption quarter XXXX the In release, with we connection from on Restatement. and titled As our per from first reported XXXX. FFO. noted sales We gains Nareit $X.XX real Paper share the Funds in earnings during White

private and to For gain on plane. sale year a land the the prior comparison partial purposes, a we of the to gain the exclude adjusted sale interest in results on

continue defined EastGroup, FFO as standard our reporting of will Nareit. As tradition we by for

sheet. Our in protracted price share operationally strong our both allow strengthen continued performance to balance us and has to

release demonstrated overlooked in metrics and information, the the obvious earnings is less in is perhaps what stream. is revenue this While our diversity sometimes in and supplemental

We're shareholders. risks rents a million of our U.S. the square square benefiting portfolio metropolitan rental our of presence fastest XXX,XXX tenants XX square and of is areas and from both operating of we XX XX.X is XX% in size feet diversity from growing have our than sourced from square smaller foot where tenant the XX,XXX feet. geographic square XX% tenant building average our size XX,XXX and are Accordingly, of Our average than foreign consists an mitigating XXX,XXX feet feet. concentration a in revenue tenants

in to Looking for and midpoints representative increase share an year compared midpoint respectively of the XXXX of forward, year. our X.X% $X.XX the $X.XX quarter for per estimated share restated the to range of is of guidance million and FFO be $X.XX year. guidance $X.XX and X.X% to $X.XX the to the per and for Those second of the prior increase

million You that is may FFO. recall in we conversion of $X.X XXXX included in had involuntary second that gain quarter a

midpoint prior guidance year. Excluding of over gain, represents increase X.X% the FFO a quarter second that

occupancy $XX comprised In $XX and to $XXX,XXX by results X.X%. revisions invest estimated Our momentum both XX.X% more to development guidance anticipate XX.X% financial of increasing million, as acquisitions from the updated million capital. metrics XX of an termination increase due fees, notable continue X.X% basis result to for common increase include, our be direct our same-property by stock in experienced, value range XXXX. and that first points leasing the an we summary, the issuance throughout continuing million, that fee add quarter increasing Other and average and of guidance assumptions finding year to combined $XX income results to have increasing assumption cash increasing we with by operating upcoming in to produce no the property some starts best opportunities by

Now, some final Marsh will make comments.

Marshall Loeb

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

few to continually committed strong balance As we of a pursuing maintaining demonstrated the our strategy equity an sheet combination past operating manage to healthy us of strong your the about We this while our we with we're by raised years. optimistic in metrics our improving pursue as And opportunities, team, improving as opportunities also environment. take operating questions. our risk, while effective current The strategy, capitalizing future. market now has on the we'll mix sheet balance our and view

Operator

ahead. first comes BAML. go our Jamie And Please Instructions] [Operator Feldman from from question

James Feldman

morning. Good you. Thank Great.

Marshall Loeb

Good morning.

James Feldman

little more hoping was showing you that talk and mean color can you the I this that picture, and some markets. in can for it supply takes you your protected I maybe where of is a just what around building you little others? bit a more creeping more size some we could give the seeing seen have So your about supply time than some product comfort gives bit some maybe some continue and where

Marshall Loeb

good Jamie, and Marshall. It’s good morning. questions. Thanks

see at number, markets, the large major our supply You'll markets. least in especially in some

infill do really really will at long-term, would we what say can industrial get can you infill We then into job do it our night? And sites digging guys Atlanta, or certainly if develop We – up zoned what say Inland keeps good we into we would finding Dallas, Empire. that products. a have you see said it. in teams of that I good

our to we find team that site, the next that land we struggle. they seem in over how under at keep quoting. and that keep stats million are struggle throw square I'll know for is you So stats XX.X but there's to credit but with couple million. XX% buildings Dallas work XX we with coming construction, A that – to park. give of we'll example, hard – for the kind these and next up feet demonstrate it of of count There's XX for it that and I'm CBRE brokers

feet. average of So square our to XXX,XXX develop may really square you up feet. What XXX,XXX is an idea – and orXXX,XXX get gives we size it a building

being XX,XXX So think and size the if that feet, XX,XXX, those around aren't average configured you up. buildings our just they tenant depth of of

could accommodate even foot You XXX,XXX building divide square not to XXX,XXX or that.

X.X%. XX was only It's I moving definition, Dallas. bay of example, but buildings count only for in is that X% vacant, building. bit in shallow know our it's CBRE’s half a Atlanta, and for then than don’t surprised the little So probably that larger supply And towards average I market

XX.X rate Last vacancy drops And dramatically. a little construction. feet over in XX pretty year they there's Atlanta absorbed square the million So under million.

even are under in that much parity in pretty but the eight there's box, feet it's big over square XXX,XXX buildings So construction.

are helps So Dallas in of in Atlanta, it's Dallas, that markets, much delivered smaller are Houston, and Atlanta, is Denver, – so and pattern what's to terms box seem being and big nice where both most larger are our our we're see sites extreme we for maybe in larger. those of whether peers

Clarion, them, too make foot your by for that buildings loading put need design, whoever So to a our tenants and they can't the get go the are capital need answers those of town out they and edge deep. to, to the doors that the XXX,XXX Heitman, AEW can't Hopefully question. They to work. spaces build building,

James Feldman

Yes, credit $XXX,XXX and termination you – helpful. sticking watch Okay. And your about just and guess branches also and just moving the you so to expense you maybe we guidance, lowered anything address for increased that's moving need then think your your I Can great. by bad here? then debt fees. to the talk with list about pieces That's might outlook

Brent Wood

termination felt back one known We The We in our closing American location. were able feel by just term rent. represented $XXX,XXX, XX,XXX so being of company of fee we large North we to $XXX,XXX. in space we attractive filling an like out was fee on guidance It's in was excess negotiate foot net-net XX the come would did what fees, ahead. Tampa. timely, Jamie, space that's Sure. months confident quarter of a termination their felt driven second square primarily

$XXX,XXX, was of that our issue news good Bad by And we transaction. very so wasn't debt, just firm just the pleased, standard us, pretty We've $XXX,XXX a There the had was just bulk items. of their current. out order less per miscellaneous [indiscernible] driven affirmed they particular quarter budgeted. be with single of than that that there people looking had mattress which AR, of no to first continued any is at about one which the spaces really time ration we Last wanting there. primary remain Yes, we driver. here kind released is and say, reported

So good. of feels bad year fees, this end of the all good, AR, term early it debt, it that, feels

Marshall Loeb

And And and I'll Jamie, give add to I'll you Josh that. credit.

drifted down. to year happy quarter. report top XX tenants the end and were X.X% concentration pulled the X.X% showing the We tenant had of see You together have our this or at

a looked for lowest within where that percentage multiple largest is, going next where the report locations, things down of them I some And our think tenants the three I industrial I the then within believe top keep in the couple company are one those two of drifting it's your to sector. multiple buildings. there's and tenants, then even through our customers, in grows on So number that is concentration quarters. specifically should when XX

James Feldman

All promoting keep appreciate right, And research. thanks. it. our We

Operator

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

Alexander Goldfarb

Hey, good morning.

few for So questions just guys. a you

the healthy spoke and guys the the from far few the strong capital a portfolio were granted markets fourth your at guidance months year just and guys on to pretty But ended On now. in call definitely as about as the guidance ago initial strong improvement quarter low yet Marshall, being you demand concerned. still the you tenant point

guys this fundamentally just operations lease overly as to penny this sound few in well in or when jump driving laid you it's one-time like it this were seems is Because really it just time. in portfolio early the your cautious out the which a of it just anything initial changed apart year, look like dramatic it too core something pretty that sounds term, doesn't $X.XX So that's improvement? bodes numbers but months you from operations was really it it shareholders, just for led that

Marshall Loeb

bit it in would – That's We we average typically of for averaged that. XX.X% buildings a quarter which This at was And it pleasantly and were companywide a yes fair surprised. both year us say is almost little my a record was last full question. it answer XX%. XX.X% was to and is we occupied,

within little number, hard wars the and think beyond especially the – of little little occupancy our but the to the us was the fills picked now a that. it So nervous were the demand the that it's tenants. we bit them, overly shutdown up did larger time but pause years tenant, world the over upside. of a I world And people and hit a Not probably have, has see more they in of surprised fair all tell our to we button the the bit probably don't the pause and and in of a that bit, seem January. that was back holidays, first December government like – like tenant pretty half where moving to two kind ago trade things a

optimistic. it's So paranoidly I our think about job. care We being

we going head were little things So where were worried and were they and about have in since moving still then to January bit cautious, improved then. back although things a

certainly based they things we to couple what see than like the on and based ground. we and heard years feel better don't I in think So overly on read, weren't the economy, really we everything did we so cautious a what even ago of more on

Brent Wood

add just that. I Brent. is this would Alex, to And

the mentioned in to add that. I just would You've moving earlier that year. much

the earlier contain we would a little moving is by and earlier essentially about year by comes year, penny $X.XX, at an that raised by $X.XX, then out a moving in amount You basically we year quarter. I to a much that then beat a the the additional fair to of easier time in this it which mentioned do

it's said, as being that net more same-store XXXX than obviously to and year, point being the not those Not as out get one-time and especially later by operating Delta the harder contributing that's faster and It's driven which As perform, income that are its since in and and developments to take your from much, – then items. – guiding January all have more as property, the in of to that long really point, Marsh happen. you our to we'll pipeline. news, move were good They it’s properties X rolled quarterly. can it in we included development continue as out

Alexander Goldfarb

Okay. total $X.XX increased investments. that guys me second, in for that to And increase, leads also you your then activity of ATM the part Brent increased

color X) on and And better egg, could it's yields? So a were how it's able whether maybe you then to the more chicken acquisition ATM. the bit little just match, you quickly given provide whether

go even back by the half of do more, up more one we acquisitions going have mid-year. like front front to be the could year the better if I'm and that and the guys, ATM, sounds in or would the hey which investment guessing wouldn't So out have I benefit XX% acquisition ramp like whichever, earnings it we given sounds starts other. on acquisitions without activity hey, you the Marshall It that said get between you fact of the think are

maybe about little versus can cost cost acquisitions? the interplay of accretion ATM you bit of just So talk the the the the a and between the

Brent Wood

specific and acquisitions Marshall say be our then But just Yes. at the I start that talk I'll XX%. assets. about let more capital are would being clear driving to

we think so quarter obviously at issuance effort as balance continue call sheet, a stay line or and issuing we're very a debt-to-total more have that strong to up ended conscious to with trying market I not of lower last We a be cap. at the ATM we opportunity. an little to

it what do is price an like it. that's drive there that and so now don't And assuming opportunity we And as or right But the readily ATM. we do view available. will we

as what long-term we I'll on value-add we let stand development acquisitions, own good then Marshall then, like and they apt since feel on it. their are So merit it's good do to as touch are it, long make whether certainly

Marshall Loeb

in Brent, two Thanks some in the terms on feel of acquisitions buckets. visibility and million really We year. probably color Sure. this $XX

got fill to bucket given checkbook. hardest the that's – and most the everybody's the that's a Although competition

aren't say - they would Then XX, last kind the The walking comfortable then And ago at they're acquire on value XXXX were had more buying other comfortable through building our like two knew them. the So XX are, for we we they're just from interstate of feel them. long-term, different Arizona complex. We we have probably then to today back days better XXXX benefits bidders, are, buildings a that in going Phoenix. add that but was front. call. four and DOT common We really

spending since stopped It's acquired years of of a couple them. obviously kind before of we them. So they for been couple a had years they've money

We'd we it's redevelop once of and So little those bit long-term of we'll like take in redeveloped. release. a north be a seven terms it all and to just think

yield in DSW, type yield, like value new and know leased development the Its that if about Miramar. Diego – by add just in get sixes time and the So with right what a that's signed, TIs XX%, I it's and on you the done XX% brand San there. the But the freeway, And they're then the Diego the good in land east, may buildings, we of disclosed, high activity. tenants type San we it. which XXX leases

a north Air just Miramar Naval card we're a So of lot. Station. former It's

than So XXX the mile the see industrial other land. a it's we Right [La of location. last And on for is side it's lot a typically really really better Jolla].

So think if La the site. to a biggest is quickly a delivered site. said we that was great you it it's want problem I products wish into get bigger I Jolla,

they it, return on really, expires get lease and ground then their lease until we'll a it. decide have develop when so We a we'll

just the get in can So them a really three we before take we stabilized portfolio. acquisitions. It'll all minute like

to capital it’s but close us this year. Brent for probably raise so the And will more XXXX,

Alexander Goldfarb

Thank you. Okay.

Marshall Loeb

welcome. You’re

Operator

And go our from question ahead. Guinee with next Stifel. comes John Please

John Guinee

a bought lease, Can them. lease at unusual. sort could options a the versus strategy, the where noticed your buildings moving new you're property some basically a talk that new questions are dirt third, infill filling a existing much ground end somewhere of you yours with bit of development non-EastGroup address maybe up existing a how building year? seemed demolished? often up much lease on with you development, is background the then about XX-year you actually you in just second-generation leasing how the And tenants? your assets and have is then up an I Hey, those which curiosity Thanks. – Second, XXth you into greenfield buying tenants Great. of development how being of when little

Marshall Loeb

chime Thanks, try John. answer in… those to Brent and can I'll

Brent Wood

that all all John, yes… That

John Guinee

one That question. just was

Marshall Loeb

typical think the that On And number XX-year and the lease ground observation good ground a DFW, observation. fair is that is you studied I if lease. airport leases, acres XX,XXX and has their

all a hotel of types that's terms really who on office. So industrial who's there's as are national there in leases ground developers those well of that as retail

it lease. years we So first, the have, XX our left ground XX-year on call

Some DFW [indiscernible] to of into the back and roll ones, well be renew. we before they'll older go

at at terms So if a we but looked in kind probably get from of It's of and ground simple go is DFW. right to brokers, it just some market. talking point walking off weeds, lease. fee pricing, one of through three then at it and it, XX quarters you the of the in to maybe basis were exit the tarmacs And the fee four a and probably yield to premium simple the

we underwrote around that, we're yields. probably a X.XX. like X And as that's market type to X.X and carry and things rents So

So mentioned second nothing of as what We'd for they one there's to we really talking simply I in like mean the ground sites. we're the rather had into at Dallas but good be in that question. our to getting simple, fee airport. at wanted left vacancy to of earlier, struggle tenants our portfolio, paid it, we find And looking I there. we're And Most guys, the feel expand. lease your it ties premium

then we do airport make we apologize So buying grow. to be DFW we'd [indiscernible] that to the and fee these of more having especially moving XX and years probably buildings about kind need what continues next complicated, But like prefer call greenfield, and at semi Most development the space. stables location, have green, things, and Downs, we're the story have trying we in we how still more over investment Miami what's at this looking where or our them harder We of to DFW, but it of to given where someone Churchill nice do prominence like to redevelopment. a Steele it find towards build not was we're our but a – Creek promise XX% of relocating a I'll and harder we're seems site is all a down it Texas things and III sites would get in I'll relocate someone, committee. ground pick do we'll more lease. certainly to and towards We infill leasing of that is And and they the Charlotte church parks, sample.

So they’ll either the do want to if really building. a renewal, they IX on and location or early Steele renewal be and Creek one expansion new relocate them they'll into

part So to and that's of the our pitch market tenants.

tenant If went your but to they probably fill you're accommodate into grow, of up we or accommodate that someone's like growth a and Houston people Creek how they are can't parks. because or they're world we can our growth the every Kyrene, lease down going can optimist, midterm Most in move and that we street your much overestimates. Steele build, usually then

the is development are back – economy's the And years as our old three it's vacant a good and about good good well. a we're then news bit, at market. probably of getting but So those economy, are go half to There'll approaching fill back couple we market, both, below so leases are those so an get typically a of spaces expanding. early leasing little below and are back typically the spaces be the tenants they're

John Guinee

you. Thank Right.

Marshall Loeb

You’re welcome.

Operator

ahead. question from Please Kim And with Ki Suntrust. go next Bin comes our

Ki Bin Kim

Thanks.

I bit mean history quarter. it's just ratio one really a Your long quarter anything high little a tenant dropped But retention. this noteworthy there? in of retention

Brent Wood

as still yes number of feet our space leased a three the which square tenants. to the several Ki We during footage we that stick point behind will we we and subtenants, treat XXX,XXX square thought years non-renewal, that had lease is trying tenant way leases out Bin, to fairest basically we into that We quote wave then quarter This the technically not done could And sign larger in tenants tenant renewable. it Brent. them that. one that to the had, of for behind just be that, lease won't things. future. at those Their to a We've with runs way treated a basically to California, be the always

definitely But the just So we situation same. in little I that would being retention we've it that comparison in handled quarter the bit to again, the how past, skewed the friendly a call treated percentage. a type

upward I see that. anomaly click think of back you'll having absence So like not in that definitely another

Ki Bin Kim

And there is discernible this renew? maybe tenants to besides Any quarter. any too it's why trends kind of not on

Marshall Loeb

Usually on I think we it. can't renewal

the XX%. that's year was in we of they over probably and U.S. we try our it probably have kind But growing It's a biggest where work company what bankruptcy we little they're more growing. or more had more termination than we to ready. closed I don't don't have But would our cases able average. that is accommodate It end see of we that said, tenant that retention. But problem by a growth. space next we and reason That's probably and right the the into, in in model if or average run the European historical space, some development think the we where the lose. have are still think use, around and a we now. I they're Tampa will their time we XXs low the business so to think was just XX% not I over did typically average not biggest XX%

Ki Bin Kim

problems. Both high-class on the

Marshall Loeb

Knock on so hope I yes. wood.

Ki Bin Kim

you. All Thank right.

Marshall Loeb

you. Thank

Brent Wood

you. Thank

Operator

go Citi. Manny ahead. question comes Please next Korchman And with our from

Emmanuel Korchman

to the Manny. results We earlier or market in market like here the it's quarter. were with oversupply and changed? given grow sounds comments at perception desire Hey the your guys, or on same-store Marshall, in in to that that also Atlanta market

Marshall Loeb

In Atlanta, Jill, I'm sorry.

Emmanuel Korchman

Atlanta. Yes,

Marshall Loeb

Vice a spot, it's we we’d kind Atlanta but we're have level and President Atlanta. based move hired Atlanta there'll just grow a last of week John like of at the Okay. in adding the to backfill in regional be like there Yes, someone our to and Coleman,

market X% under we like product type a lot with So vacant. our the

but construction, if absorption million XX there's mentioned, guess over, feet. year I As million last over that was helps under feet square XX I square

market the over years absorbed. because a square and are but the at and it the worried what's kind the being last Atlanta our little your little delivered Dallas of to. gravitate the few were bit you keeps you buildings get of look is peers bit and then of and absorption that supply and shocking foot And So where getting breath XXX,XXX away, it numbers a is up that those most takes thankfully

came in the in growth to to disciplined week pursuing we're trying acquire last be So and just building we in unfortunately the Atlanta but trying second on yet.

of kind two, battles they in Right type of path seems where right call identified XX or in disciplined. for growth of the kind of map. of the and of hire O'clock and market picking XX we're O'clock to residential. on trying the the liked Atlanta and kind it's be we terms X keep at our Golden is now our a Triangle good north call backyard long-term and also to we'll Atlanta high to stay that an to fit what But up So building are, end residential

helpful. is that hopefully So

Emmanuel Korchman

is just maybe great. any at giving looking in interest bigger price And Okay, stock bigger away or trading. portfolios, your acquisitions

Brent Wood

And the The Look better is. have. the at bigger perfection yes gets to more competition package, the really care, and the would intense portfolio those just where and that usual sales the we bigger interests. the it priced

of future like one our you're XX and year years Our downturn peers and in through look, a lot thing. the not underwrites that a and two no type maybe spy seven a a typically acquisitions to will [indiscernible] four

We in have round years lose few about initial winner real. beds good of on of managing surprise I XX maybe believe of with In our talk go the not, almost not terms and Atlanta pipeline trying terms on lot this picked just of at the for we We you like to development stay hard assumption time a month far those the it And awfully tell. But it's can a we for, more It's it's a out at those. much result as like our acquisitions it that competitive just you're on assume were too we'll looked return them. package We'd one And acquisition the there a Harvey. almost was as XX So so how there to felt just shadow tried for winner and at of the if value-add and it, we quarter. the we'll keep point. of last I'm industrial we makes to it and hope we a take it. comfortable year I we've – growth in wall one some will up getting risks as the certainly brokers each hard. attractive we, rent and is and too you're a of and shareholders. that, beds of hard will the capital global in keep

Emmanuel Korchman

Marshall. Thanks, Great.

Marshall Loeb

welcome. Okay,

Operator

go Mailman Craig comes next KeyBanc And our question Capital. ahead. with from Please

Craig Mailman

just kind construction Good morning, Can risk. guys. yields you Marshall, what on was the add talk, these to this talk sourced and plays pretty maybe for development some under follow-up on value competition you I of competition I the these them? like is without close about guess, of was

Marshall Loeb

sold was to and had need the We little freeway Interstate now buildings there. tear right the no is get relationship order bit done. each local we liked least, off they and Now good before but them and down. at agreed to particular It's they're if again, going a guys, far. of and I think work year a Dallas, good our I ADOT to a repurchase yield question we developed anomaly market to called so on and developer. think didn't kind these that. a have developer it had sell was an on And of we and comments And and in the the activity regional he the Phoenix were that

is even our visibility up access So And is didn't tear better. and and process. the thankfully they down buildings

right there So had it value. repurchase to we appraised a

LA. bit And we've letting XX-year Southern this market then deal with and doing off land, of thinking Miramar it five the cajoled a it tied in a bit group us that had friends a them participate again, out XX was California there. same. the JV. in up land it's a So a It's we and And based had little and family and little relationship a they

hopefully year and But a to over us. of about the side of they here maybe for stones lot So we're or up it's small turning over the there. a deal find excited add the course

bid a market driving and in better we'll be on in offer that in it's may to things to lob a gets. value better of goes or find winning be really as that's that it's to get but blast seller it are hard around willing then shots, wait this when on broker, but you this, everybody it, and them all awfully and the with buy path case, and for almost an the So car sell a long say, they'll that's if email us to to

Craig Mailman

construction sort I'm I sounds And negotiate like like is anything got to deal. a with there That's It backend that fee. they helpful. DFW the you? try on of to mean, developers

Marshall Loeb

not they've know it's, we'll lot how road were, and partner your that. should, your can in next financings into don't typically of the you who I they which do. a you IRR Usually arranged. all want Yes, It no, financial they and a Thankfully is, what know times, really and promote know don't got but on and was his and build this is I I I no. down those, developer go to building, get case. the

And so was next off the chips on will And good no really third-party is for having he fully house, down like money road but and which a that's some move we development, the him. focused his probably make in some table him, but take leasing. the leasing for and on to doing they'll broker promote

he and pick take side a can velocity of of buildings the it up we stepping. hopefully we'll here. half some designing back the by the hopefully And think finding nice we did from so and leasing And job

Craig Mailman

little tenants just time. there good, I'm and on change? had. have markets Has the presence evolving curious, change? had of we Then long you of legacy for in a sort – at seeing is just those a EastGroup the ecommerce been Or ground helpful. of evolve? it guys your demand but of the product some a bit of sort know I peers separately, than type demand how all just some guys you mean, how composition mix have a is your That's guys of different your a

Marshall Loeb

could the like worse gets Goodman we'll Houston, The tenants see who Fort traffic – Worth a of are Worth what still say traffic them, call in there it well needed all about X,XXX, as and you would are We someone need that day liked also evolves to may air almost we in in a tenants doing Dallas customer facility chime the our and it's markets, is Dallas immediately. so typically Dallas legacy them as Dallas, HVAC want there you that in well. Fort and to floor and economy. they our it's doing all [granite in in in Brent July, supply HVAC in X,XXX closer is also tenant towel], guy, about almost in traditional contractor, you in old in, different be want all typically spend And their because out kind and conditioner if when Tampa that's – and you of, and industries the your like

Lowe's of couple drives more or each leased retailer ecommerce they bit roll a one as strategies. evolution with recently with us, then people more that home their us but is there's tenant little where and they've worked of space washer, the and a with like quarter from refrigerator, So a a out we change spaces no tenants their model see we've dryer,

the an from buy gets So facility. online that's And you it store, a it EastGroup been and delivered buy new it in change.

physical But get some house lower and ecommerce, and fairly be close some the touch brick-and-mortar last it lower your we rents just rents. quickly. people to consumer, it's closing and if can that So were to

Brent Wood

residential only thing kind tenant it's don't the very our for of then all tenant most to gone. about is – on competition looking also spaces you're depth anytime little it a their always think I current if they where lot going people that is offer markets times is it board you're of economy get I we quickly. this if feel think have you lot psychology, enough put dictated hours, very a where offering that goes there's be But the that, looking how to have to business if don’t psychology so because at add activity, relate market, you in would better. just to and it Yes. that the I Greg, out on that I activity there's at feel good, across and and a home positive. pressure underlying think in equate market in and and a is a And of you overall of residential lot The XX markets our to to But

deep landlord the is all And urgency that be market. of of all of and So it's is activity. are to there, that bit sense urgency, type Marshall that to there there are that more signs varying up. said, with out solid, But up which tenants markets just which all in a our adds stacking like sense

Craig Mailman

It’s helpful. Thanks guys.

Marshall Loeb

Sure.

Operator

And our next question Evercore. comes from Jason Green ahead. go Please with

Jason Green

Good morning.

there at increase guidance development impact into development, more the additional fiscal from point? to year better that than is for this is of to guidance portion good impact was due expected less everything any a baked or Given or upside XXXX

Marshall Loeb

it north we I'll a preface by half little the I'm it quarter, move I of starts it $XX but did an call that year. guess the XX%, million the in I hope, of optimist, this saying and first

put southwest the our our building foot like on go store development really building out have XXX,XXX than the on they're rather or deliver decide shelves. side I build Phoenix. we of almost a an what So and retail you’re It's next the about on where starts, of going and model love to corporately south of is that leasing, inventory really Atlanta we to

out So material we keep still pretty and shadow there. good size that's a a development pipeline

also although I’m in the there hopeful the million guys of talking could to our million, be terms a to would us. year $XXX I'm starts this So that $XXX record for in be upside appreciative field

the deleveraging having job stretch have it as and balance which million as $XXX have to we of and used So more and some $XXX team a our sheet, we a and good I the us nice so say operational Brent a and starts much and million risk and million done to as the allows like market. to way on market our up $XXX worked push

unsafe safe our or a keep balance also Let's almost or. as hedge sheet

I'd – to the for news XXX tenants do. on love up I look and it'll our with know to one have bump want that really what these you. depend of So quarters another

Brent Wood

driven not properties outside our And And I I develop portfolio growth, FFO is heavily quarters. added And and the are would by in being just I factoring we the add into Jason, for back that, of more words about weighted value with little property, talking say when been we're a add X/X/XX, pretty in year they're store since especially to so that third in same-store fourth other in the saying had value-add. development that am and increase. what

that So grow we we into about I we're looking think operating million have net have fourth first quarter, of factor X.X and property a that in pot income X.X fair quarter development by from billion.

insignificant to on large through continued a rest is it So we're on year. playing push counting it and role of the the

Jason Green

your right. and yields have last the development you. touch on XX those how costs costs we over trending the can development and been how then All are months? Thank maybe just impacting And

Marshall Loeb

out Yes. as one in at spreads if lease will rents have following record and had aside, we guess we I to keep gap would We an over Good and them it's think easy releasing question. say, Houston, XX%. pull

concrete rents, then construction a that, seeing construction market good tight a push have costs, steel rising it's all feel we gone but costs, you're So underlying alive, And prices, and prices up. economy.

stories this to hire trying of and all we've at the sites during heard competition of even all subs So away and our are GCs of the construction. workers one the busy of

pushing up. is also shortage labor the Just rents

moved yields are our seven, seven, four. probably three, it's So

yield the cap rates. lower we're in what's into portfolio, a what the lower doing was portfolio four seven three. rolled seven it think I little memory, we bit but a it was what from Miami's

been It's But come economy. to should a up construction good down. it to probably would years ago. So a those continued have creep in just X.X about prices

fair launch talk So and something amount. we that's about a certainly

Jason Green

you. Thank Okay.

Operator

And our James. go Raymond next ahead. from Crow question Please with Bill comes

William Crow

Marshall. morning, Good Thanks.

from getting fully with space curious lease mean it seeing your to I if increased that's be your grocers? developments? refrigerated thought about Just into partially new retailer demand on Are seems your What you in-fill not growing. is of portfolio. one

Marshall Loeb

we've Good certainly last And in even I this Brent have keeping damage to there's direct generic that. freezer with fairly then and the cooler the know And We year because that trend issues. the like it. can sometimes he's had One slab experience year, some read cold and in quickly question. and get too it things like chime our space fairly that buildings seems and can be into gets you about what sometimes are and I storage going. when you where come that public the a that And dated REIT equipment change. issues

So and some of the also startups. tenants are

online we the a tenant startup delivery heavy. next if the better all area market tight just road. were and about the we something down and could an we and It happened the Bay steered just in and away because had from thinking So was a TIs options grocery,

per So you've what that. or of a foot it seems be bad out like year a when is And area, average experience $X.XX but with tenants it about it. per on really pursued or our it you've having we may Brent, growing be had lived on I focused we because to TI move square haven't it until our missing is. two

Brent Wood

things you're ideally dirt keep on and to issues. because the front protect designed cooler freezer what meaning from spaces, concrete Bill, there's not your to building good going it, talents specific unfreezing end the protect structural I the would Yes, with think freezing and it you morning. the do The underneath Marshall for that's your into sub-slab, slap, said

you us And percentage would that want improvements end. utilized. specific money building so then into you commitment ideally the on or front small that doesn't grocers. there you're it TI Then would and the to lease would be building that actually for do And of very actual to an get – some we chance

enough taking and But front day term, that specifically. on design deeper just changing prevalent situation, suit we've out then plenty capital it's something to build more basis, in, warrant additional you won't a look it in we end. would not can but on day the and to you definitely So of risk on seen a

William Crow

your So clamoring markets, you're to direct-to-consumer not get anything Kroger seeing Publix, within or like that? space

Marshall Loeb

in gotoworks.com something – in buying that, it out for with pick been long back out the XX a ago. group pull online, like a from years and where XXXX of and lease about certainly up, seen the Every it market. lot a you not the We clicking And it's that's time. we've – store, but yet signed tried bring long, they up called grocers

William Crow

Yep.

Marshall Loeb

didn't are how to work that XX that and figure And work. still are groceries we out time. people later And years to trying at here make online

the get will some and don't of and near-term I being space. it really But not areas densely industrial, traditional a heavy big see So metropolitan in catalyst the that there populated.

Brent Wood

say then just it. you seen dry question. guess could out in people whether goods, we've Kroger, Publix, that. if we of certainly say, and Texas, haven't I do clamoring, we've wouldn't I And would, I seen Walmart, it. Heb we more a like looking again, good it in terms as but seen read would about And people

William Crow

maybe what of One there's but premature, that preliminary you mean assessment the last and might a certainly California talk this XX done about me, prop changes. in to Have for you? one

Marshall Loeb

well few ability rent [indiscernible] and effect, but be wood to to that I some rents that it than the so be our prop just our would pass everything's, times California. high end an but those those XX% almost through would them. would on may tenants some knock was on how we hinder short-term, In guess years it leases building. and so and pass all it generally it's be have It it, rental to when California, rolled, would could to leases net depending under Thankfully our It rate on growth would below old market, our happen going impact recently can we've minimal it because Everything, peers If rather California. triple would jobs. in for all own of not buildings of XX. in in XXX%. push have through time we market being of acquired their a of amount some they us, that. would fair have up we are what

get So players I be be some fact, we're watching huge pretty this know imagine can't for it That land. lobbying Land, in Watson how in plays the that read involved would and would will just and out. imagine, this. There it be there'll about – I Irvine Company heavily have Carson

William Crow

Yep.

That’s Thanks. it. me. from Okay. it Appreciate

Brent Wood

Phil. Thanks,

Operator

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

Eric Frankel

to Can be rose better a market. wondering anomaly. out if an there we talk supply you. amount I think or Thank fair just about and that in just of there, Houston role I'm in the we rolled fundamentals the but our a lead's was market seems

Marshall Loeb

it what fair good Good an would the I anomaly role I Houston, and guess was it? of kind chain. the was a a what single sense call It it one, of question. in that a details amount was Houston. of and pre-leased/build-to-suit, a quarter was mezzanine a tenet, up the single that office tenant XXX,XXX office. that about XX/XX foot within leased World at it feet XXX,XXX And

office, use that second to also yard as So able XPL. storey and They outside were a that tenant had storage.

cooler in it. to it when to building, during they the with we Phoenix pretty animal harder when release where bit vacant a building of tenant, a with out space ago end tie for a attendance a used, and this then little decided, moved years is becomes a it it specific So situation for freezer of a consolidated, you sat couple of it up a and makes I'll couple We a on years the had downturn. similar unique

decided So vacant, after could. there and just we a we XX-year lease with deal stretch the annual bumps, and it to out make

are Company even numbers So again and would've would have without Houston that XX%. over GAAP our releasing been spreads been our a as just XX% in GAAP

are if and on do Brent have I cover partially this and our pick would've just kind a not gun and rate just Brent's we you deal. look, on for as I not had obviously only rolled the his or hey, the signed renewal not, my Brent's not said, this all guilty specific let's right, the or your should finally can't it pretty original XX We and sat that. along on. did doing Any I and if take fingerprints me all my where leases of choose done of head hey, a here. there metrics been, while of But on that a hand are whether to fingerprints and And defense XX helps wasn't So better tenant we're vacant it and it we then it you, we building tenant out we well. move has given a and gotten to do the let's color deal was it? quarter look,

Brent Wood

Yes.

that covers think it. I

the think I point to have situation, not one-off do field, of been bigger what is would we've And XX% it in couple the GAAP that is that's these We absent we got the the lease. of the – next more over talking coming one think a anticipate. quarters. guys don't that four a

when go XXXX, company up. first were bump to that Texas fully one a down would GAAP expect X% than where again pulled Texas rate XXXX lease the from really there to XX% XXXX. increase, as that I that, lease minus with we which I run just as would that that and really a is So the better out were that just for been we've quarter as past back point a and to slightly

Marshall Loeb

that. is XXXX. at which quarter, glancing market Couple of been the first is of the and market just was it's north overall the stats. The Houston Houston of our lowest – vacant X.X% X.X% kind end Park at I is other World since

the rents north And market is market encouraged back where Houston an much that, the they're And but in for bit peak. were as that. us we would to we back XXXX. of to the in people refer they anomaly a that then say downturn, pretty were are And in when north actually to little Houston's usually So by – well.

to So said, was to anomaly this it's we see the we market were in think XXXX. as back Brent recover glad where and an

a our So that balance of then recent more the much markets. was downturn

Eric Frankel

color. Okay. additional I appreciate the

growth external asset and question and follow-up a acquisitions Just on pricing.

but I some for could pretty targeting. are cap markets months competitive down and think the There you basis you're cap points think XX, six you've stabilized alluded where to say of XX trended a environment, quantify rates ago? maybe rates XX, have you

Marshall Loeb

We've the spread type the about that then spread properties those and seen they recently kept a kind in the powder that which square a land, dry of in comment is and with most we've on and and capital long but been it, $XX of. is asset sidelines Dallas, they’re of they coming product right bid the and of HFF maybe we and X’s, and every brush U.S. they’ve say X, markets there's a of Miami, bid did would demand, square compress that foot you markets, what square of kind it I LA, broad favorite track now approaching pushing $XXX, foot San they to Phoenix, there, see, it's square met there was into all so international foot types we that get product ask the industrial for the I'll And to what in of And ask – Diego then list Atlanta, is would is more Tampa, those $XX per product laundry you're now then industrial. X.X such kind are been the X predicting when as – again, $XXX land Yes, are maybe hear that prices sites. met a LA, per major high industrial with can comp in a XX’s we've seen to market. markets CBRE, most or quote Charlotte, all I per and and they there's measure types, they've these And last in said cap secondary efficient Denver, Diego. compress Brent foot markets, in meaning their bring ever in we've San class heard, rates year there's

Eric Frankel

facilities, some follow-up and one It’s in investing quick more guess grocery all interesting. sort of at Thanks the tenants question. I question that was That’s our earlier. mentioned just related been move to equipment new leases some Is automation general just have signed? they're quickly or product more occurring more the in handling that's so of to more that budget your just robotics

Marshall Loeb

a smaller their generally, warehouse would space that they're and will do think all are moving we're sheet have shortage, is cutting we in that them the the just certainly the number and like is think more quick think they're probably little we trending and early delivery. company. and matter they'll of yes. get again, product consumer, balance efficient how and the what a looks the But Usually, say keep it we of can I get tenants product on, and FedEx like. I locations, And to how with larger it the that, It's the of and tenant doing they Certainly better more. closer they're capitalized that. edge on through a probably fast what – labor way so their

Eric Frankel

Okay. Thank you.

Operator

question our with Rich Please next comes SMBC Anderson And from Nikko. go ahead.

Richard Anderson

nature from rise Thanks. remarks? don't love is? if you did heard months of I but your Good couple it think ago morning. the to what Hey, it, mention I I'd the a in G&A and didn't, know the guidance prepared of you Brent,

Brent Wood

its and summarily in there'll to suit, a that but restricted with to to the get is it We XX-K feel deal hear will have out up been it Yes. costs the in Rich, that lawsuit component oriented. you. down that very day two. XX-Q And little yet some costs in be But we Yes, without stock good that, speak notes in that or which year with of then in, that. relates the was there we've and with to involved ourselves the that the think is some you bit you, a G&A is was comp related discussed next bit a yourself. of I be we to $XXX,XXX have into to defending merit, of discussed defend to incurred [indiscernible]

in the say the the pieces primarily down, moving few increase a and would that are there drove up piece was So you that new that's see but there I guidance.

Richard Anderson

that's acquisitions good management. Okay, But to going balance a anyone, you're for then are backwards. but you're about of to take the for your just for course, enough. or ask risk development product. on what demand forward, And sheet spend, nothing increasing add given out and not you sort a There's your but I'd of question value like after your looking step there go Marshall

You're that that off least spread getting acquisitions take premium the year basis the is occupancy, looking or for a maybe got from but trending to you're and three are down, a years basis versus number and it XX or to point Maybe we development. only XXX this between points of manage starts now? sort is not our of is foreshadow spreads the XXX some two foot things now? though? to If which What that accelerator

Marshall Loeb

the usually Good. Fair I basis a of we've rule kind own again, point underwriting, we'll rates. premium we'll is you're market when target, north been we do we rents. and current thankfully that. thumb do of typically kind over we question our not And market use development of project of XXX yields, then cap our And internal our

I'll We've added fairly, what we for and digested a had working. portfolio there recently Atlanta bit, but – in our was had vacancy really caught at really little some up we new years in And plate. we then and more same acquisitions had developments done even time within vacancy. stopped of development we product looking So of off about be we stop our If a Atlanta, we're Phoenix, like this I've or compare at, that buildings until on give we couple add our development. to we past few value and number to leasing to we would factor years. we've able certainly stop. retail from and benefited won't model the accelerator where model we're they're put as foot downturn our up the credit that XXX, an those take on our rents. over stopped inflation and gets We ago earlier. and kind Houston, were I in not and delivering work If a closer some I'll in in during some

we we up really there pursue – own our acquisitions kind to internal so catch said, or that had supply new finish sites. And of land new in we've and what before market let's is

go developed moving, third and the shelves another build when up our add the yields, and get vacant a build the it, sun And don't I slow do to leased those to in down really back of couple of almost sheet what's down, charm, let want one slow are balance to where to buildings safe go us first there. a things or unless when keep if So things shines been our while reason, committee. – and make to we if buildings view try will to quickly. I committee try we will kind may hay because won't then But they the it's up on market-by-market it's and an compelling shelves we we've can vacancy, to years good, and investment fourth say the last

and that slows creating one up, defense in started to or to kind keep you on that's market's and So another. trying But pass again. earlier XX% all But the and that that then be liked down diversified we've our we'll one not feels our year each anomaly. then here when or case them miss get until it XX one I in roll last, leased XX see developments to XXX% last and it watch rolled to in like knock two the coming but And rolled at me that okay, development, shareholder we'll our wood, completion. slip have of into you telling we're play an for more of the which starts of they doing We'll value keep that probably geographically market have all portfolio. just in kind

Richard Anderson

comment, And outside if Thank And making All move perhaps right, storm? fair to that's churches I you. a not lightning during just enough. I buildings, you're have. one industrial walking all I accommodate just direct, your mean

Marshall Loeb

Thank you.

Operator

there it no And does over are this appear that time. at the questions further phone

Marshall Loeb

for Appreciate for any in everyone may interest available you questions your EastGroup time. Thanks you. Thank Take care. certainly follow-up we're and your have.

Operator

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

at disconnect may time. You any

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