EastGroup Properties (EGP) 26 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Marshall Loeb	President and Chief Executive Officer
Keena Frazier	Director-Leasing Statistics
Brent Wood	Chief Financial Officer
John Guinee	Stifel
Alexander Pernokas	Bank of America
Alexander Goldfarb	Sandler O'Neill
Craig Mailman	KeyBanc Capital
Bill Crow	Raymond James
Emmanuel Korchman	Citi
Vikram Malhotra	Morgan Stanley
Jason Green	Evercore
Jon Petersen	Jefferies
Rich Anderson	SMBC Nikko
Brendan Finn	Wells Fargo

Call transcript

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Operator

Good morning, and welcome to the EastGroup Properties’ Second 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, today's call may be recorded and I will be standing by if you should need any assistance.

It is now my pleasure to introduce Mr. CEO. and President Loeb, Marshall Please go ahead.

Marshall Loeb

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

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

Keena Frazier

most conference to of the and today Investor SEC website, G. contain on that as information these reconciliation periodic our our in our Regulation reports financial and them non-GAAP note release, measures are such as definitions or page Please both regarding measures the supplement call GAAP that measures our refer with results. recent to earnings financial and use of press a non-GAAP to our filed Please our to our further furnished FFO will financial PNOI and and available for defined of

are Securities Please this during also within call statements that Act. Private some note Reform forward-looking the statements Litigation

press to our the to our statements along and actual refer SEC the factors them undertake risks, that no and involve and in uncertainties certain remarks of risks We results as may unknown events release these today as known Forward-looking actual are update Such duty made differ other statements materially. we in earnings unfold. to cause with of filings.

Marshall Loeb

pace Thanks, Keena. We in earlier set the year. this strong the team maintaining had a quarter, performance

operations we're in our year second quarter. guidance, X.X%, share came rose involuntary as Some and of the quarter per our market, for above guidance to from Normalizing Based compared the we a XX annual of the $X.XX FFO prior quarter raising higher share. year. gains, the in quarters FFO consecutive funds marking we're on trends the a seeing were last strength X.X% compared positive achieving saw increase to FFO

the and number of quarter metrics spreads. vitality NOI positive as occupancy, results same-store is a further through of market demonstrated another releasing The of industrial such solid

is end, long At environment consecutive occupied, increase roughly allowing a value better, operating leased up acquisitions. XX.X% XX.X% current quarters and create were the ground out, bear through occupancy short, quarter rents Several steadily for last in our is largest we us exceeded and bay truly or Houston, XX% XX where demand XX% locations, value-add still largest Houston below trend. term from statistics XX% XX.X% been has while the of As marking our in infill and to continues and NOI to mile In leased. fourth growing projected to roughly XX% quarter. markets small our fall market, was parks. And market, XXXX development lease

bay and this industrial largely a byproduct and a check box focused big in Supply predominately specifically shallow of our control, supply as institutionally is supply it's controlled, disciplined. remain And In deliveries on remains construction. institutional result, in been as the cycle, markets.

and X.X% respectively. continued Our GAAP cash up same-property XX.X%, from We GAAP. at spreads X.X% positive occupancy X.X% with Rent were second cash was XX and points of NOI XXXX. also quarterly quarter rising XX.X% pleased growth trend, their average basis

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

return whereas projected was pipeline's a cap in development X.X%, the we end, rate estimate market Xs. quarter At

four During second XXX,XXX quarter, square on we began totaling developments, construction feet.

at properties stabilized totaling yield an XX% we of XXX,XXX square the the of into pipeline, average portfolio X.X%. out While leased four feet coming transferred with

a XX approximately projected projects quarter development of $XXX our feet million. consists of with cost end, X.X of square pipeline As containing million

raising starts XXXX, For million. we're to $XXX projected our

starts As million year a record color for was us. in last our commentary, $XXX

and results. again year's the excited to raise we're target exceed So last

Finally, enhancing on our ongoing over This ability activity spread the is while our our XX pipeline an development grow basis. to reduces different geographic cities. diversity risk,

an opportunities in quarter terms We also of active and had dispositions. value-add acquisitions,

Our now XX% square Airways X foot Dallas. for Within good acquisition two-building, Business Denver remaining. closed late closing leased value-add and $XX Center These was in activity X in at the million. leased XX% XXX,XXX XXX,XXX four-building, with in were up square our the to we April buildings component, are Logistics foot on &

Commerce three XXX,XXX funds Next, close the in an have are and quarter completion of These foot upon Las construction risk Southwest Center Vegas. investment million. at will with under projecting expected square buildings are close $XXX on we total a third and

the for we Miramar We land will plan the site X-acre San purchased three building. Diego, XXX,XXX a we parcels. which As a future, of area acquired square accommodate in foot

acquired XX-acre we west site Houston, site in and Katy or submarket. a in submarket While in the a the northwest XX-acre

Center, quarter towards University XXX, we center Commerce X-building, perspective, of our And XXX,XXX foot XX,XXX square funds in Business in million. sale risk on sale Barbara, a the R&D interest property $XX.X the disposition's an for of a close. property a Santa XX% we foot have Orlando with at from Finally, closed service projected Altamonte Center finally, third square in

our financial Brent guidance. of topics, review XXXX will now a variety including

Brent Wood

morning. Good

X.X% of XXXX and months our end the XXXX field an second to Funds increase in X.X% compared conversions, ended and of respectively. upper from X.X%. and share the continue $X.XX $X.XX, experience operations, performance strong at superior the per of months per June results quarter casualties three FFO XX, by of on second six to of quarter our excluding guidance execution overall the due exceeded range share our gains represented an portfolio. We involuntary for to team the increase and positive for

per continued $XXX.XX share of and common to share proceeds the further for quarter, sheet. Our second capital allowing a gross strong $XX From perspective, stock operationally us average our we performance in price strengthen both of an balance is during at issued price million.

average issued an per providing we at ended proceeds $XXX.XX share, During June price $XXX six the gross of of million. months common stock XX,

a proceeds months $XXX we the million for agreements pleased six debt rate lock a million second note a interest and for rate into of $XX XX-year at access of of unsecured that with trailing year. executed have represents rate fixed a and interest quarter, issuance, X.XX%, two attractive with only the notes, million remain fixed during interest equity for capital private gross raised XX-year to X.XX%. second note We Just Also senior $XX the equity last pricing. via to the year, placement company's largest

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

assumptions results and guidance an updated quarter second average leasing produce in with straight-line and increase both same-property that year combined occupancy comprise Our for the range. cash increase the in an

include and expectations fee opportunities to notable development million, to increasing property starts guidance increasing $XXX ahead and invest Other termination and of revisions and the common estimated best XXXX. some stock attractive $XX operating $XXX,XXX debt known operating momentum In continue acquisitions of by have by and experienced million, by that we stock unsecured of by acquisitions increasing value-add we fees. continuing due be price, issuance results by million, million we $XX increase income With financial increasing assumption million. summary, $XX anticipate property capital our to metrics an by throughout $XX our

final will make some Now comments. Marshall

Marshall Loeb

continuing solid across are Brent. improving Industrial and property fundamentals Thanks, markets. our

Following these and we geographically upgrading fundamentals, investing our continue portfolio. in, diversifying

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

for open we'll any And the now call questions. up

Operator

ahead. to Please Instructions] Guinee [Operator with first you. We'll Thank John Stifel. go go

John Guinee

deals, questions. Carolina? think Great, thank A And who is just why what market? of you're your you question up in tenants upgrading to South you second very do leasing percent are your then couple When existing leasing development you're Greenville, much. the

Marshall Loeb

John, business of a and about we of a a to – our create may existing next I that – somewhere as estimating park is so what expansions good existing couple or X/X of build it tenants move of that we the have where of XX% The take them. neighborhood. tenants existing seen the especially, are kind opportunity. Which Good ones like a XX-month in or during Marshall. the has we've last years. period. over it's And had parks, percent increased questions. XX great morning. in we Orlando I'm kind It's It's bit. little – like Charlotte, we probably a between

building two building to from park. nine the moves within Someone

any XX% maybe So a estimating at given as X/X time. as and high

there And good we we've then for John Region you give Greenville-Spartanburg and probably, the market and years, and excites area, It's us a bid along the about a a team where market we few between a credit finding as really, Greenville, this then it's in number I'll Charlotte basically looking Atlanta. the and on What been like Greenville know deals. at loss Coleman a question. Eastern what building. And I-XX, of halfway Wes or for

X.X the to auto-related – a And a moved the back corridor to is It's Charlotte footprint. was Atlanta – more Metro Volvo Charleston. and that grow. about really textile Michelin with of our in within million plant. do people. fits economy some It's then down when it lot driven with So market BMW It it's they transitioned. suppliers of – there. based a area, continues from

been and late it. also economy technology, And appealing, Clemson some driving what But University, a with it Furman, their also what's job big interesting of Wofford, the driver of that just growth those. that's made of

of up. have then a So community. And retirement really popped lot jobs tech

It towards So It's freeways the property, brand plant footprint. If on it's were new more BMW kind the chasing – – two Greenville. it's is really it hill. Spartanburg. property The fits fits we we And the profile. in property. our situated a up our of our between

has they great to pursuing of freeways. So tie to leased visibility. was leased had before ingress, we could was different up balance X/X egress It two Trane. it the And it really, it. John it. Good And

XXX% ended we a So started up as building, value-add leased where opportunity. buying it

grow to to said We already some seeing and bit little opportunities And we other run. kind some a walk John before had of the let's things. team we're

There's contract Texas, – or we for up Orlando Let's the industrial no back there example. million news opportunity. tires got Tampa and over and get ownership or this may maybe square which it and surprised, that as stones about Atlanta for building markets guess we institutional XXX look feet, I – kick makes was Greenville-Spartanburg. learning I than that closed. undiscovered under once Austin, Charlotte. between is the market more to it's market pleasantly and a turn bad being But tied go And we we're in There's there a out larger to and were

John Guinee

thank Great, you.

Marshall Loeb

You’re welcome.

Operator

we'll of Thank of next line Alexander you. And to the America. Pernokas from Bank go

Alexander Pernokas

was good I development me the for could starts land more Great. there. quarter. on Congrats updated acquired some hoping great morning. if newly Hey, plans you on guys another detail give and some

Marshall Loeb

Okay, sure. Good question.

three X-acre acquired, Navy parcels comes that of site. Diego. San quarter. I'll north Miramar Excited a and Miramar On it's base side really the the we're land – Diego. what with just start on San about we it this in different

side the base. So or or of east the us, as land federal Navy on of south say. the it's the I-XX the And they all would XXX we're just to

La And right us so from the Jolla. that freeway across puts

really location great liked auto high a dealership, dense for so last a that. It's land great to industrial it's So and land. distribute good fairly former visibility got a area to mile worth net

to that The who under there. hospital XXX,XXX there VA foot at Miramar runs currently a we've designed the ground There's tricky a shuttle Navy part service a base. – It's the lease. building will nearby go user

less area it wait we're burns construction. a site. bit we it's wish land until we'll little literally we the is our lease So visibility lease off. a an there's were and where – there. I getting with until begin expires product like what And ground before no older an But that yield attractive bigger

developed And years. Houston, you it And as then Houston, would a jumping of for was know market – operated. years. kind a we've XX-plus – it's to on these properties, based basically building map where our obviously XX to there – a with And we've kind of in we've in we for building Katy two o'clock I Brent we park. where X if describe o'clock been is is We're the market before. last

the – northwest The gives the oldest and in most Katy. the most So buying constrained. that submarket, arguably site growth land is opportunity us probably really preferred

we're World northwest the then in acquired we the land So site our And Houston. at active in submarket.

to pretty whole full I Houston would say with network, within take you land. the So through we're

in three our have We all land submarkets. of desired

to forward. opportunity going value there So we have create

And that brand then X.X% the new rates the big we're five for park probably picture, are in type Houston, range. to Houston. X% Market in product, in to I high in especially developing cap like fours

And that. size. ways a we'll value of from up creating now, so we've away construction a and couple delivering nicely. there, our keep we're We've been We've And identified also been what's been building has manage happy with leasing buildings. but what under

– the size assets elsewhere Houston look manage Houston. as we some more company may XXXX and our in also keep see growing we'll us we But we'll as into you sell

don't to stop Houston. get we want But So we value, have big in also the of good a to want love Don't too mindful that. we're there. creating team

think drop projected hopefully, below down. I keep fourth drip And continue seeing you'll buildings, we'll percent – it's continue let next to our delivering but XX% So to XX%. year leased that actually quarter,

Alexander Pernokas

Great, thanks guys.

Marshall Loeb

you’re Sure, welcome. Thanks, Alex.

Operator

And Please you. go go ahead. Alexander Golddfarb O'Neill. Sandler next Thank from we'll to

Alexander Goldfarb

morning down there. good Hey,

Just XXX, spoken are that in always had on in the XXX more initially guys you but target a the reality yields. Marshall, to of the question sustainability you XXX.

for sustain developer do the lot to – at really like of maybe to Why yields think private and guys you see you why And you out no REITs within have guys different think sees yields? that than these the you that's have – look XXX that same do peers that think basis guys than been such you which basis have you incredibly yields? you If lot of probably do a wide development, have in which stabilized. able points, a XX for apartments, compressed industrial sustaining do really development development among or guys some apartment wide – your points even stand less you development, example, of

Marshall Loeb

also. there question. can Good to continue rising. morning Good are maintain Construction we out yields. these I hope prices

it prices pressure the of I pressure with rising. are will market, keep construction on benefit the We've think that, to able And rents. been tight high. on up maintain upward yields land prices a with – even an putting pretty

what side, build. private much I've the what said like fit in of the are building chain. larger On food peers buildings we – I Most where then thankfully our we

shallow last building So bay a less there's people $XX million mile site.

see helps our that things markets Atlanta, And getting So California, right, in the I yield. spread especially or think certainly the premium tight, larger you're like certainly us is we the maintain – Southern that. over cost

where can happens that And that and stumble the type something really economy, usually type the it's And on margins – we've chased some tight. of yields big thankfully seen you opportunities, of pre-lease where your and box kind we've and – to if the the profit get they're thing, disappear.

maintain been hard So and had those able two, been too pre-lease. have chase or to we've but gotten a not to really one yield one, our only – we've careful haven't where

not and the the maintain can as continue out good to to They hope to I as give I'll field guys there. it. And land the continue find So It's in find is hard we credit. it's it hard future. sites shrinking them predict to

So wood, hopefully, knock XXX basis can on XXX we points. to stay

pushed getting recent The were larger us we – in helped the as other transaction, cap between type GLP platform rates. rates you've What both that's down. is seen the IPT. on or is mid-X keep and type cap thing – hearing They're

was months the brokers more there's rates comment XX was than – the be believe, talking that chasing U.S. international national compressed. to one hard industrial their cap So And earlier ago. to there in capital probably to but week, it's continue of

Alexander Goldfarb

thank Okay, you.

Marshall Loeb

welcome. you’re Sure,

Operator

Thank Mailman the Please go go of to ahead. next Capital. KeyBanc line you. we'll And from Craig

Craig Mailman

morning guys. Hey, good

Just another question on development.

of five You given markets are can kind growth talk But in markets the Dallas shifts predominantly. the any construction? of potential, levels which you're if just the the dynamic playing guys most seen higher kind in like country. still are of any Houston, in rent fully what's you've I demand, active active size you same built and being in understand changes ranges two about those markets of not in

Marshall Loeb

fair numbers. leased. a square and XX.X looking Dallas that's in construction roughly I'll It’s at and under CBRE. million couple. start question And the It's maybe XX% good – Houston are these with feet Dallas to from move

pretty over square million decade, number feet square it's XX over big number in So And absorbed the out a feet the over square that's good been last are Dallas. year and look they XXXX. there. a in put we when Those back, then – like million last number. absorbed feet XXX saw that But I million XX Dallas

it broker last has riding broker totally So demand a said, around the a industry different with the were just as growing. the market haven't is of been – "If average industrial it's you one been size in they a car interesting. with years, We in five tenant And in in was a and market. different where

the is do, about edge And of XX where buildings rule the So to makes always it's when about and of I to this XX% say, that we it. we're nervous the on us always thumb thumb, to if supply buildings what it then we of look out trying absorbed. do start into the supply rule construction. sort at we're our with but being to competitive by market of kind with are big is digging typically, keeps that would of helpful, any box be town, XX% – truly it what's is And numbers, team time the and a market we'll seems under Dallas trying

year-to-date. of rate kind where In Houston north, it's about there. good The more construction north XX the since World And over million which the X.X%. Houston, the again, deliveries – is our feet. three million. X.X%. submarket, to up vacancy feet is, then saw square news were absorption, there's I square over The up looking the quarter in Houston, X.X% market XXX,XXX in lowest is XXXX. overall of is on the And at second level XX% numbers It's

building XXX,XXX a feet. us where So probably probably again, is that's for – in Houston, big

but little are a million sized square that even construction, of feet. a kind that million are type is to bit buildings it's So there's which a three of And X.X that different feet number, pre-leased, under good is tenant. each X north, in up XXX,XXX square of XX%

go The it's supply feels been – in it the seeing buildings, competitive. deliveries center, like are demand markets. the typically bigger to – I pickup seen months, we ecommerce also delivery distribution been but also it. edge really we've has that it a box a strong is continues to as seen whether need been, say distribution It's regional typically less Brent, would need to demand center that pickup I up go XX have where chime non-ecommerce, of and our it's in up. in we've last call a delivery. people So neighborhood delivery quick on quicker evolve quick And or numbers that then they as town over the – quick And our

Craig Mailman

any you rents on product? And set seeing your your any impact are rents ability of on to push or

Marshall Loeb

year-to-date. rent bumps. – – the at We in looking XX% it captures and I'm XX% about from numbers XXXX, like I GAAP and doing this been rent good spreads the free the year, that last memory. were Just We've because question.

I thinking you're years. And keep rent at kind going been So of on the teens saying are take there's rents. great. I'll be in spreads, I've more for to upward those looking to mid that numbers, when high pressure the

may saying eventually it So I'll I keep be right. and

high charts. we'll demand – to what could not that be that kind and of thinking keep the see, in prices seeing we're go they're construction beyond I the again, teens that going off they'll get that not we of side – more But

more in And thinking what you in the rolled. of rents peripherally some where because keep caution it's in only have new on I did supply I is any given or spite we and would impacting upward But rolled pressure versus – we'll say supply, Jackson quarter of the mix the have us. California things

Brent Wood

Brent. add Craig, this Yes. just would – is I

mention the level. they're the markets industrial Houston and about, in as two among certainly five of Dallas, we're at footprint. mentioned within largest we've so I'll being micro active. the And the most also You our always just country talked

on step the leased, I of And XX one this our day We have XX you time. streak the back in – last that have into or and of advantage one back we firsthand kind looking our were have the existing what of rolled say projects and broke portfolio with knowledge thing in of activity area is phase. other multiphase and just the the prior that our small developments XXX% while having building that at Phoenix been Marshall

it, factors holding So take we're but a look aware and far the markets at so are quite of all nicely. the up

Craig Mailman

sheet. one helpful That's quick the and a just on maybe balance

but to year has guys get the weakness been, And still other of, de-levering capital. slightly on permanent for you're know economic I further think to I are capital maybe acquisitive And XX-XX I'm even you capital of if it, stock is there be of moves allow are call, that let slowdown would versus the advantage against don't or any you cost about where if you. of tradeoff guys just basis ahead issuing fully how debt. that. rates points Given you the cost know XX-ish but taking low, curious. me

Brent Wood

we've do want like, to go? to cap. wouldn't market joked to And promised Marshall where X%. gone with Yes. him now I've And about debt below I go XX-XX we we he's

It's a heavy-handed have high class of We problem. it's So the good with equity. the certainly like been problem more that a it's with have. to We – cost – something each. much

So our while we be which driven a with by up it will largest $XXX being of million, lot and bumped single year capital that's opportunities. course to

forecasting issue had year, million. this million. is that our repayments mean what look we've issuance. I $XXX two Craig, $XXX of What I issuance is debt year debt year we're the would encourage is net at the to at, what you this look you And when But do to by for

additional year. So new have about net-net, $XX will debt for million the of we

much. that not So

agree with what we you're – tendency saying. our So

at obligations. a won't more our little continue cover we equity, be but price We our want line especially to room current heavy-handed plenty of all the to with altogether. ignore with the is keep to tendency debt to Our

dance, fun long it's us as in holds way. price So in the I conversation there. option near good you'll a have in XX-XX but because But mix the a to think it's it's as stay a either see term that

Craig Mailman

guys. thanks Great,

Marshall Loeb

welcome. You’re

Operator

Thank you. our take And go we'll Raymond from Crow question next with ahead. Bill Please James.

Bill Crow

fight end? tenant probably reps little Good to Or morning see you're be guys. more know to Marshall, for space? with back. But whose are tenants during it's bit shock fight some some certainly third sticker And time some deal are any the tenants for and time at effort the point, and yet? the cycle. are expiring cheaper of to there's And I starting their have maybe second it or they leases just I moving a looking is just – to you everything – out else. starting And on not a got

Marshall Loeb

Bill, morning, and question. it’s good – think good a I

right. You're

helps that bad tenants than be I could not about renewals. a probably more if able for the we I'm it is. not space. something, a have we're But have wouldn't pertains to You before grabbed must park survey – there and have – if we we us That guess it's above a or this in maybe and of that can they Thankfully, right far answer get – and credit be as someone initial they're it – red of speak. flag. serious is they really market, and the ideally, we're one market little probably this kind hopefully we'll in I tenant what the And space to looking we're rep new above or broker, to a doesn't not renewal said, – going get my cycle it best market. kind sticker market, meeting. and the too the meeting, out that it's go broker once shock But

example, – that, the are, two in what we're people Tampa, and is in the hearing on locations where more Fort will like Phoenix their or tenants and our different that a of component And that to bad location, and a factor sides things we of thankfully, rent went that we're like can cost growing transportation obviously and Dallas is – or seeing more that We've a maybe or traffic they from their be need Dallas-Fort Worth, town. right with is Worth how you is where cost. given couple of Atlanta of perspective market actually trends smaller

to pool. and be things TI, worried are people had the – of and actually But increase. Labor us labor and on hear. – guys And that were Fort follow conversations tenants, because so Worth rent factor, all shortages some it's they factor in tenants stuck as rent, of the their things the something for continue recently they we've Dallas our So well with so contractors, of more our the can hiring. sets traffic lease more term, HVAC time that having we more where bigger used struggling is they're – brokers is although a to much probably that, to like like I was lunch that. location find said spending two really tenants this a with

we unable with with were to him I'd that but one labor. were – like My expand. recently to And tenant good. said, business We find they is were the

So to and as are time and bigger how we I a about think spending tenants. our it bigger one more think of is we driver and be sure that's making does getting impact that kind locations

Bill Crow

in an for Are environment? themselves to protect leases pushing the tenants try expanding and longer

Marshall Loeb

it I four annual keep our keeps what we hardcoded. every comes I – We Really? staff, with keep kind And years. up is. X.X it its chart. I think a to in How have our mean trends of kidded that term our quarter, average in – about lease

get is and – years more X.X averages little a will the But downturn our in the of here, term. still developments new because its TI. average term kind that it So

of saying. you're XX. as worried mentioned ability think them move our love But what the is that, is building people kind what like are earlier, I sense I makes the parks, thing: it other we about So to outgrowing to about three building which their and to, from things space

Bill Crow

No, the it. that Keith was spreadsheets, I numbers it hardcoded the and I but... had thought appreciate

Marshall Loeb

[Indiscernible]

Bill Crow

Thanks guys. Appreciate it.

Marshall Loeb

welcome. You're

Operator

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

Emmanuel Korchman

Hey acquisition of team criteria does change does properties? find cost capital it the and guys. stock Marshall significant of advantage, morning, given your plan go out to you've the there your Good ramp price – the in does that the

Marshall Loeb

I something try morning good use mean now. capital. than I thankfully, at come team to really what few question. certainly properties decouple. good spreads it Good the want we of we stock more We to and said will have a an to our down have years as want quality we able do ago. been say buy where tenure don't place, Brent I are portfolio. where the as – the from excuse of kind does attractive come can a guess the has we debt been – And price the we to We in; could competitive XX maybe months cost maintain and mentally look our and That is to of for regret

third opportunities, it the probably some the we have first of round. round into knocked in we're second whereas making would or got So out of these

us so does make Although really I – would – we're – more is competitive. it say and we it

leased with better our acquiring development you competitive our value-adds we're acquisitions where not competitive. that is even developments and that or That's gets dig and market. goes something market our been capital kind value-adds even of incredibly a through listed year, cost most we're what is off either and when if But of still and this to between of has

of mentioned and I of, the is light balance But the capital. like cost terms create it our kind in give sun north our to leaning geographically while down strong the cap shining XX% or equity – make market let's little of to of hay opportunities is above But some things continue chase and last on of that of debt years. within probably us the three Brent a as idea and does mix maybe side, diversify is and the debt-to-market too, our okay, green the sheet

a like while feels nice that taking improving like mix mix. to the like of sheet balance us. our I hedging So seems It – advantage opportunities we're

Emmanuel Korchman

in to how driven just in, same Thanks. as infill to type markets product you we the And type good – that if your shallow about door much less driven? you trends that markets smaller that those in think go the portfolio, operate the market attribute the vein, versus open in sort maybe more it's of tenant and does other bay? or asset to And the you're

Marshall Loeb

not I'm I'm understanding. sure

I you. follow So didn't if my apologies

the trends of for open that… that Is really does markets us? So bay, shallow up new within seeing our we're kind

Emmanuel Korchman

I question guess markets. been like you've on the Marshall, focused the is, Sunbelt

you're going you had trends consider had but widened a yes, If focus the you now, other sort into would in of and been asset tied in ago be good? you in years if markets to non-Sunbelt similar as today? one And that would just markets the

Marshall Loeb

markets. could ships. all But mean gone about growth. I'm rising question. Okay. I have that Sunbelt our also Hypothetical’s No, I markets good we're What we seeing tide to guessing. like raises the think those we a the is opportunities,

is people there's in today, than bet Orlando, our more just are is. the Dallas, with going where there where job – the million to LA growth, be retirement So X.X

not have in but done markets, well in we've as probably would Sunbelt those well as markets. done we So

picture go big markets, maybe guess been trying a to to again and new I process. rather it's than do mainly, what we've

office First, doing guess the not don't to that three to you and we in then just needed we – the reduce and but this was we like back two go size like if shrink Houston, we allocated. years, some Reduce I just it Houston over opening things. LA of or wanted Houston. felt

are some San Diego, Francisco, we were Denver, in been LA, those markets in Uber were I There hyper markets. were we've competitive. Las Vegas they San we – said, know – existing like

markets, active have those Let's boots more ground. more the on in be

example. we've Atlanta, there. active Miami, We been for So entered

to So years, would be it. of push enter the kind out stool. If about footprint without that the and in rather geographic leg next our getting any new then we five of markets don't patient heading I'd be you're maybe where diversity of

there sure I are that I'm think okay, be opportunities. would but

of Sunbelt years attributes growth. or And Greenville that always make of a a been market good not quarter, point, for there guess. at but I than we're at we've may It this sense. exactly Denver and Sunbelt has is like XX got or two it's not kind markets climate the other may three market, some And looking

just will manner. It in and there. a over hopefully get we'll be we'll So disciplined time do it

Emmanuel Korchman

Thank much very Marshall. Great. you

Marshall Loeb

Emman. Thanks, Sure.

Operator

Morgan to we'll Vikram And you. next from go the line of Thank Malhotra Stanley.

Vikram Malhotra

you sort be full-year taking where of just on high Is like Maybe the basis look it NOI the But suggest seems given we you just spreads cash in a you're guidance. occupancy sort the the if first second kind the seems half, of to are Brent, this Xs same-store about first talk on one part? half? number escalators, on would at your just and it high for should Thanks conservatism guidance, my deceleration. trending end. look question. rent is, the just could just how If your of you at and

Brent Wood

Vikram, so. hope Hi I

we're the guidance months the been year's than along. budgeting And lower the it's for well. again, basically the we gone, toward we've to that. As accomplish. what we've the the That to just right, first as you're necessarily performed would same-store able of We've six we're our gone be for say higher what end. But year does that hope back budget, half slightly not raise

just there out you're in you're be six still last in I of get occupancy. budgeting numbers, our, playing months mid-XX to would some point to going mid-XX squeezing XX.X% at hey more we're say, year, occupied challenging about to When a those it's XX.X% that aggressive real to the tight. point o, we're

same-store, So conservative. it the hope proves I

the of driving pull of think conversation solid same, our midpoint how pans got bigger raised But top So rent morning which up. want certainly lowered the will is, end is same-store this increased of we continue the in we very development We it a how bottom the a and to the that's to lot picture the slightly. right out. value-add growth – as see and NAV growth. But direction. And kept it growth, that and kind end rolls solid our really being program lot in

Vikram Malhotra

mix submarket a here picture Can from you be watching question that other growth And bigger Okay. of about Greenville. highlight of submarkets, on there's you for? sort And talk between that of wish sort on you if how just in a any then term That's helpful. new should in acquisitions in of terms development? see terms can and markets, list we you nearer entered

Marshall Loeb

building Greenville-Spartanburg. kind often our be as meant are comfortable what creating it whether before within we acquisitions, given Greenville, but not the competitive every or it's case, of kind we'll someone world Certainly, which it else's development look value-add sits we've acquired value-add, – Probably has of leased. was at learned today, more that new and value, we're completely

the like take if leasing risk, we we construction So but the buildings state-of-the-art and not on the risk.

Spartanburg, Greenville, So consumer we're buildings near fits but the metro worth the of population where serving what our the nothing little we growth, and plant, BMW that area, do in against higher better kind example. that like the serving net for than a really we're submarket

there. So I we how like fit

terms be and passed it's we've but one a further the Nashville too. Denver. some In around to places these like again we've around about never We toyed Nashville, on market, looked late game on is our markets if never which we that's and a looked to It's Nashville one If like that's of with kind that's okay with to opportunities there. bit Lake, one other talked Salt we've on not that would footprint the I'm within Lake, in or get that. that the Sunbelt little in But get we're out is that periphery idea Salt and in. of and okay we around another

say, – where we but I right let's always at opportunity, market. awfully and allocated it's enter under and looking it. And best owe at in we But in if to the you an expensive, always it's think we'll opportunity, two be be it the can great a area, we're in meantime, the we're to active market find a as least can find markets we the Bay or

let's – there we example. so patient in opportunity or till find can And we'll just for keep right Orange be the County,

Vikram Malhotra

Okay, Thank you. great.

Marshall Loeb

You're welcome.

Operator

we'll Please go Thank ahead. Green line the next go Jason you. of And to Evercore. with

Jason Green

starts. a Just question quick on development

pretty get tick Or if are environment much you better, out As development little starts to business this a continues can even year? the or increase? stay bit fiscal what were for the this to up, do for you capped XXXX same year could

Marshall Loeb

at not run quarter, couple XX% like just in but looking. about run you XX% and is third fourth quarter We many, weather. left kind the XX% of quarter you first the has – so half third starts and of of of some markets, out of could, the year point balance was I our I time. more – It's into what's a kind mean of

nothing weather we're but in right Denver, later run Charlotte You the could now issues. and gets pending, some at also looking in as year could it into not you

every So and they lot north permit department, go hotels, we whether would also that it's busy. as of too possibly would $XXX could industrial, a million are of you all imagine – city multifamily,

longer taking to things plans get approved and and longer like it's that. So permits pulled and

maybe on one could certainly development for to I up peers thing that upside has like starts that do demand and our We to park. and as the is because really it. there's within about, we next pulled our well a there the we're our what we capacity some So as articulate really have been building compared And model as XXXX. don't it's

corporate do idea versus we based building. demand it a it, next build to on if that be So good it's go will hey saying,

to further we'll we this So into the can we've next A the few and if And million even started if pleasantly year don't us then record look July. set. a you year XXXX, as see you we'll beat we're $XXX a $XXX beating what ago, have million say, good was million is typical XXXX it. And surprised maintain kind sign – and hopefully stays that stronger. and right – year. all economy I'm there $XXX gotten $XXX we to of have to would $XXX Well, million, years is that our to opportunity market starts of we'll million. the look that maybe And it's told now we the and we way into hopefully our pace roll get year so hopefully in last get then to we've

Jason Green

very Thanks Great. much.

Marshall Loeb

welcome. You're

Operator

ahead. go Jefferies. our Please Jon question with from we'll And you. Petersen next take Thank

Jon Petersen

thanks. you details of I early There's some few but Greenville, here. occupied, a going type for more to it's great, that's XXXX XXX% mentioned acquisitions. XX% have value-add questions on some some the opportunities certainly some TIs. Oh after in In

of turn million return top additional the that and what of the into acquisitions, how have on guess that does you much acquisition? do I to $XX spend on So TIs

Marshall Loeb

Good question. to feet. sensitive is – tenant it’s tenant a of square we're that's seller. would so and a probably it's XXX,XXX But agreements, Trane then confidentiality one – seller It's there's the I to into the moving another and typical be – XXX under Conditioning in guess in, purchase TI. well, there's want say some Air I our I I guess the

even got of seven-year really under an And we both agreement. So maybe as before it's leases. the signed second as purchase and in were – and one as them, sale we got we LOI the really,

of South it will Carolina, I The a get to understand from as tenant done. getting TI the take of So is the the state Greenville. bit incentives, some little also it, city

year little lease TI the line of time averages. company And in fourth over a out part get take next will done and quarter build it their of is probably to why term occupy with that's year. first of So probably to late they'll bit per

Jon Petersen

All right. Okay.

type it's like significant redevelopment thing some happening? So not

Marshall Loeb

the It's No, XXX,XXX the that. they've no, office, restrooms, all dock in the it's a and lighting add equipment, getting and tenant brand nothing. new got foot a all the so building, to

Jon Petersen

hair domain sounds then transaction with And last few of it right. that then eminent a little of Phoenix, on bit you out got had All here the a and in coming like it. Okay. it over years

total there. $XX million about of like it's So investment a of expected

versus walk yield the can this this developments? project history then like stacks and of you through normal how kind curious Just something the maybe up if on of

Marshall Loeb

Arizona we and a it freeway freeway back. late before so it ADOT acquired stopped And but knew two – 'XXs, they acquired, CapEx now overnight, coming. more had naturally buildings late widening, We buildings since doing project. them of two then we believe. our was of four for DOT had then built finished the Interstate buildings the the Commons – is widening. that took happen in and was question. It two kind was Four didn't XXXX Good I then. our stopped, It of we

And visibility two they is our didn't access buildings the better down. So better. the is and then tear

$X a working closed So bit is It's to process. state taken we the about the we news time. we're a bit torn little thankfully. buying a over for which just get the by good them We down. thought if had option. little option of exercised didn't buildings little now It's reacquire they would our We them have million, than an a through for sold – back less we is

little years So have bit back buying them a for we're two we lower later a price. –

needs to building, then about tenant today duplicate and awfully new cost But deal. them million ones re-have roof, the because a to in would to just your we'll return. a it so lot. kill the a tenants its have smaller We're pro – it's take hard get couple of be parking improvement a million development We'll forming them this and that get below it's would more investment. $XX And type

we're So it from and doing memory. I'm optimistic

the we Valley – we end forma market. we be southwest East return. stable think probably not would a not where up in And there. industrial But pro most probably It's be type side is the so of high better. would town, it good, Xs X's, I it's that like X completed, high Southwest about the Valley to

quarter. get the get will can late – we yield good be we once think work which third be and will So over on them, to hopefully value buildings back

Jon Petersen

One on quarter. were nitpicky I negative significantly pretty this Okay. question could. the changes All rent renewals kind I noticed more In right. of if Atlanta,

going about I going some color more there? on on what's – Give what there. me XX% was think on

Marshall Loeb

on eye what size a big busy it's Atlanta. good of it's not a a Yes, in sample chart. Most small – market. really we And

what market we new we big a market, course the of Of value-add. like was not and most brand there have

the in I market quarter lease then quarter lease in and the a So that of one XX-year was above lease the to went and lease. lease in that one a was short-term second believe that – were re-leasing, expired terms it was a first a long-term

we both those rolled And backwards. of so on

the – sample – small So uniquely a indicative market. I an odd for It's say not of it's us. size it's would not just

Atlanta So a as we up of square one our or love we I'd get with handful can footage as than and some lease odd our in have to hopefully, – build numbers what end rather had. you two in up looking like stats numbers

Jon Petersen

maybe we would I mark-to-market high that level cash point step if So guess on the where portfolio, you your to back of put whole renewals, today?

Marshall Loeb

not it tried continuing than our aren't every X% TI X% in and probably state side just aren't it in – markets. We other do the intentionally estimating that We've at good to very yard. at estimating Because it. grow most at that. sometimes We're on to even we rents and mumbling and the – very just I'm than depends bad good it. we higher see markets California the of

Jon Petersen

All Thank you. right.

Marshall Loeb

Sure.

You're welcome.

Operator

Advisors. Thank you. Street next And of question the [ph] Green we'll from line our Eric take Anderson with

Unidentified Analyst

occurred at? deals Could Thank those that are getting a that you, that’s one. the you past new that that prices of reflected the comment looking you're reflected and whether few months in over on sales smaller some portfolio are have transactions

Marshall Loeb

there, question I Good that. Frankel. apologize

a in we've a like year nice But the think not quarter. old attractive they're do from I'm Xs, we're low I want think we center our for bouncing, weaker little bit. gains. this assets, that, We've they it but say rate. say I – type was what past that also XX-plus and seen future I bad service low cap been memory Orlando kind is to what – I what we a cap from describe assets. I'm aren't which selling, should well pricing even pruning doing They've trying in compression would them we've to as got had assets performed rate bottom of on and I'm X we us. so,

earlier. We're XX-plus bought on building we X/X year of rate is got cap at on risk distribution seeing it in Last year, probably XX Phoenix, a town on for sold in funds the the XX-year-old old that Xs, in side R&D/office a – we've Barbara. Santa the years which southwest we

everybody yes, markets, A capital class amount to would rather We've it's of little a we time doing. is product It's but kind as we attractive always equity, given So good even feels equity, it issue I our also correctly, but distribution I'm own keep a in the question Top rent like, and an the answering the be seen the there's in your growth type if issue pruning and X it – from tricky. which these – gets time time an should a something to to bottom of it portfolio, think attractive dispose of assets. it's

Unidentified Analyst

the I you yield appreciate color. rate expect expect portfolio comment that cap Could the on the you actually receive you Denver acquisition? just on to or

Marshall Loeb

leased, range downtown I the seller. work airport to It upsetting airport, be the I'm a the – of can XX% mid-Xs. type go really it's located, closer to tenants, deal. without in and XX low X.X would in memory, to like between our well Kind X.X – and from to trying within airport, Its the a submarket,

Unidentified Analyst

years guys noticed way leasing disclose you just the quarter? I is signed final years were signed that numbers quite question. by were popping. California eye Were Okay, appreciated. this ago, those is ago, like comment you when originally over spread rolled which three your that's seven helpful. Obviously, a And you they ago? Could five on market, the leases years

Marshall Loeb

probably weren't I that is leases – opportunities, and the them we re-leasing are you you see we we rates honestly, the to I'm in LA news cap period. yes, expire. a long guess they five to Bay that's exception try to I and portfolio our time the spreads the where three that's little bit California, Bay almost that And need in are I really and Those such. – – year were the hope why I dig to in lowest are But most that's see guessing of – hate there more. see as good need an within it's great area just to hoping, find abnormally area.

Unidentified Analyst

it. That’s Thank Okay. you.

Marshall Loeb

Welcome. Sure.

Operator

question with Thank Rich And Nikko. we'll SMBC you. from take Anderson next our

Rich Anderson

a had I feeling was next. I Thanks.

to year. for the whatnot performance believe phrase So a look you I same-store this sort in guidance guidance sort if the on on future. what of in When with it – you running is – the last and at might year, you neck-in-neck growth, like question of raise ability produced you're just the

the future profile opportunities now value-add I'm reached opportunity on that new your quasi same-store ceiling faster the than the and is growth more FFO if company? on of the you've less same-store wondering acceleration expectations. vis-a-vis So the a the occupying acquisitions, same-store growth to that path pull on of in set non kind Is the mind perhaps

Brent Wood

I'll that hear to as thought there's I'm you. losing with say opportunity from much Rich. Good here. same-store I Yes, there, my not start the train that, would on of

In terms probably we in of pushing a rate few now. that same going terms yes, I think – run have forward, the for years

think right, and will a I development you're big value-add contributor. be

of yield. looking we've in added one our Marshall the earlier. growth – it's X that the were current development. million cost value-add $XXX pipeline, Since and under and this XXXX high think is of evaluated at I a under our through at aspects I

somewhere on X, mid-X put you a in to a had XX%-XX% we've assets. if a return So that those at

value-add will a you're think in push on, I pushed some be growth. So FFO will XXXX growth will be certainly, spot big internal that I think there some be development by – But up.

Rich Anderson

Okay. years these imagine this watermark termination question. up for at this so. $X an be foreshadow the But are for sort a That I'm starting year company curious up company suddenly back Lease if bit? all industry. specific an going or million perhaps guys you for eye least you're now. specific, specific, say Great. income high of that company on second becomes to five little events. I having for as loosen you'll things specific And last And then company at over a will

Marshall Loeb

performed case, Charlotte. termination in. past in represents good In we've really moved and We $XXX,XXX $XXX,XXX of news is Coast. on Florida job loosening on it's it quarter And Chris in The the big in up. both in space. And – two a of things our tenant each good in the had fees not Segrest case cases, there indicative there East this side one those Charlotte, in each re-let the Tampa really

year. we to EastGroup, We're on million. So this $XXX,XXX and our good of $XXX,XXX north But out be was the viewed there was those that years to that to two going was. The guiding it last really turned it to just just upside which XXXX. trend negotiated terminations for were has that heavy in that closer side, $X caused back

out just So it driven. tenant not driven, type was more opportunity work

the money and in actually the higher at space some So rents. team to pocket, our put do re-lease it good extra execution on

Rich Anderson

All very Makes sense. Thanks it. much. right. Appreciate

Marshall Loeb

You're welcome.

Operator

Thank Finn from question you. And Fargo. Wells we'll take our next from Brendan

Brendan Finn

Hey earlier looks don't the in have guys. your Thanks land there. Denver for It on guys any taking follow-up about wanted like I expanding commentary my question. to you market.

continue looking parcels So for there as also going there are well? land expanding you Or in like to through acquisitions QX? you are and try did you

Marshall Loeb

usually I we a being with and rounds, Good think good Yes, Usually, rounds. glad their it for the little we probably Denver. a question. and I'm interview, jumps both. someone got morning into make It's the mean in did last of be acquisition I the atypical buyer we three It's competitive. us to bed.

on value-add Denver. as we've knock it markets. find path we we we value-add will probably be of to what in on markets, of probably the market. are development better. built acquiring we'll off most think guess given as opportunities looking wood, like before, can But look be something. other and be that, our couple we're a soon in grow Denver in I at two. would And where say in off I end all up and market, in if our and Where is I development our there one would will We to is Denver So now market, probably, One probably where before grow. And developed

Brendan Finn

good. Sounds Thanks guys.

Marshall Loeb

Sure.

welcome. You're

Operator

it any Thank at to closing like speakers our remarks. no questions. turn you. And for have time, further to I'd back this over we

Marshall Loeb

everyone, Okay. your your time. Appreciate your this Thanks, Erica. Thanks, in for EastGroup, interest morning. time

Thanks. If you are available comments any questions, follow-up have afternoon. this or we

Brent Wood

Thank you.

Operator

like conference. participation and day. thank line wonderful on a to have feel We'd everybody Please free to any disconnect for today's your time at their

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