EastGroup Properties (EGP) 26 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Keena Frazier	Director-Leasing Statistics
Marshall Loeb	President and Chief Executive Officer
Brent Wood	Chief Financial Officer
Bill Crow	Raymond James
Craig Mailman	Citi
Connor Mitchell	Piper Sandler
Nick Thillman	Baird
Jason Belcher	Wells Fargo
Jessica Zheng	Green Street
Jeff Spector	Bank of America
Ki Bin Kim	Truist
Todd Thomas	KeyBanc Capital Markets
Michael Carroll	RBC Capital Markets
Vikram Malhotra	Mizuho

Call transcript

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Operator

Good morning and welcome to the EastGroup Properties First Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please also note that this event is being recorded today.

I would now like to turn the conference over to Marshall Loeb, President and Chief Executive Officer. Please go ahead, sir.

Marshall Loeb

Good morning, and thanks for calling in for our first quarter 2023 conference call.

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

Keena Frazier

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

that statements the statements Litigation are of the some of and within XXXX call this Act XXXX. as and Private Exchange harbors Securities in of note under Securities forward-looking safe during XXXX and Securities Please the Act Act defined also Reform the

differ Form and risks. about filings to annual report whether known results recent uncertainties risks, unknown release, We more that XX-K statements included plans, intentions, as current based new otherwise. future information, company's to cause assumptions the the the in Forward-looking company for available in reflect detail result other about actual currently such strategies remark Such duty as abate. views and along and earnings see of and information or today with and most a statements on Please or in actual involve of prospects expectations, are undertake to on our our these our made may or factors no materially. events remarks, SEC our the update on press statements

Marshall Loeb

fluid continue our at a morning. Good by on start They high start strong Keena. Thanks, to opportunities a level the in year. environment. capitalizing team for and performing thanking a I'll

market. the demonstrate the continued quarter first and quality portfolio our industrial results resiliency Our the of of were strong and

Some guidance, ten the exceeded coming the prior trend. the a results in above FFO now of from years, share FFO the for per in has funds reported consecutive quarterly for operations truly X.X% year, And up quarter same long-term our produced per include quarter. share

points XX.X%, quarter And XXXX. averaged end, cash. projections up XX.X% we're of occupancy quarter occupied. spreads at XX leased at and basis GAAP quarterly were XX% from approximately ahead first Our and at Quarterly re-leasing robust XX.X% XX.X%

Cash same-store a NOI at XX% set the in record quarter.

finally, with roll at to having results And achieve happy quarter basis our share, from sector, these first rents, $X.XX thankfully I'm helping down XXXX. ten in quarter is our tenants top rent points XX the diversified most to us of falling finish per the X.X%

capital I'm In the best year. our dislocation. and of looming proud summary, prospects on with markets start for of it recession all was record quarters to Statistically, our one

our portfolio. demand and push We the and over rents new by to geography continue strength user end products strengthen at average development. to a responding on via raising of market XX% wide focusing for throughout industrial is and the allowed value rents leased, occupancy us what XX.X% quarter This creation

watching demand our response allows. while parts. stated fluid starts developments balanced development our of this $XXX we pending market starts a we're Based have demand economy closely As hold million. continue before, what forecasting by we're up, our leasing are And readthrough, goal on with of XXXX the within the

be quarter What's a first XXXX XXXX third square by as To from decline. quantify, promising quarter in XX% to dropped suspect approximately in footage, further XXXX. Then measured industrial comparing starts to starts. XX%, third quarter see fourth fell quarter decrease this starts is and to the I will

as further disposition since measured manages of right market approach pursue when strategic XX, as our the an opportunities, choppiness and we've newer, find we and investment opportunities. fast-growing markets mid-XXXX. to capital able well-located Las present will achieve volatility, in we'll The market a were example capital acquisition. taken which as the markets attractive Las building the we That We're underallocated, in well hopeful the a invest allocation towards them. other Given transactions World Vegas, development In Vegas an like said, Houston yields.

now several within speak to will assumptions updated topics, XXXX Brent including guidance. our

Brent Wood

Good morning.

first overall success continued strategy. execution our of results quarter strong time-tested Our and of reflect team, the our the our terrific of performance portfolio

$X.XX an of per the year. $X.XX in for involuntary same FFO of to that the exceeded $X.XX hurricane. result guidance first range as quarter for recognized gain, per end of replacements conversion quarter was the roof the attributable quarter share share damaged to a our last upper compared at FFO were

gain, the at continues end results $X.XX upper of per last over guidance of to the driven year. share outperformance range per and the success increase an Excluding same our FFO by The share, quarter was stellar brand. our X.X% portfolio near development operating be of

more analyze year opportunity From a towards issuances, stated in long our stability markets. sources. access all first a After the of capital stock equity potential the yielded the in we quarter our continually to perspective, that debt weighted we price have the

at During $XXX.XX share. of we per average $XXX the sold quarter, million an of shares price

interest As January, term seven-year rate of an term in senior $XXX and reported, with effective we previously unsecured closed X.XX%. loan million a fixed

bank of drawn to capital-constrained $XXX market. a taken additional facilities We million. our $XXX remain also the capacity provide to on simply credit in from flexibility successfully revolver. was This expanded We step the million unsecured conservatively

not have the a other maturity near-term rate July reminder, variable to with our revolver than mature XXXX. is light only does any $XX million scheduled debt schedule company the and through facilities As

and balance sheet markets financial capital strong with Although our remains healthy metrics. flexible fluid, are

down XX.X%. X.X times. total interest X.X was debt-to-EBITDA fixed to was and our and at is to charge coverage debt ratio market ratio times Unadjusted capitalization Our

increases to $X.XX year, represent of $X.XX involuntary midpoints XXXX Looking over a excluding X.X% prior conversion forward, guidance. increase for $X.XX the FFO accounting guidance $X.XX be for and per respectively, quarter the gain. share in X.X% year, compared $X.XX to and per of prior to second the of is to the range our share Those estimated the

an guidance. quarter's points Revised the guidance of growth for midpoint produces of increase XXX quarterly from same-store an last X% average year, basis

average the occupancy increased XX.X% the continued remainder by This of also is year. the along our XX.X%. the midpoint basis points optimism first result in for expectations to quarter, the of We budget from with outperforming our XX of

In the closing, us both of experience financial were team we the past, pleased with have our and our in times in quarter good portfolio and the allowing first our to And our strength, future. into location we of and quality as the uncertain lead we were results.

comments. Now Marshall make final will

Marshall Loeb

proud forward. the Brent. of closing, our We're team I'm results created. that momentum Thanks, In carrying

constantly marked rents. to strengthen and sheet. balance we're remain meantime, never Internally, overall the is unstable. environment In experience, development pushing occupancy capital while markets Externally, to the in leading starts. operations strong working decline a the fun we'll remain to while to this and work maintain historically And high

several excited positioned several And we play et for that population last There are long-term years, such bay migration, and future. shallow Sunbelt mile EastGroup's positive term, for. evolving occurring out markets I trends longer which are well cetera, remain logistics within onshoring, over as will secular distribution space chains,

call to for like We'd up now any questions. open the

Operator

with first Raymond begin now come Bill We ahead James. Our go will [Operator Instructions] question the Crow will session. from sir. question-and-answer Please

Bill Crow

guys. good morning Hi,

and yours. Marshall, on pull different quarter. wondering I risk construction I'm it's your profile other and a within as pipelines thinking back know their how activities, people Another about great you're back? and you to the risks existing any the parks. acquisitions Thanks. balance maybe talk Have enough the then make elevated this at pull shift balance, point. about in And between developments

Marshall Loeb

Sure.

morning thank Good you. question. Good And Bill. Okay.

as what – we've on development, at as much myself are really remind field the you corporate. think I the and right, I is team and Brent me let try tell us here to

say then it's same tenant been where I'll usually expansions in it's late relocations our and you our usually and Tampa Texas, parks, where So, parks of or within within our portfolio. it's use it's

a year higher that XXX year our kind with now start would I into have So, be where the good higher upper maybe probably last a been hesitant points really basis million. towards upper to so lose want or we dropped targeting north the a development yields. just markets, and getting pushing of at kind in to development said, fives that we've We we're sixes. year, ago, over you're we of $X tenant probably capital never mid threshold came That a ago of

know two $XXX or of If it how grows, million, And to in that I'm think need tells to us running $XXX existing we'll perfectly but be our say things and guys I smart tried we've million million, I got direction. slightly I'm go tenant, comfortable market react really, inventory. fund out. $XXX or the to we usually in that, about it's I've saying, ourselves, just I raised the development out to or we told starts calling that. flexible. And but market. pencil $XXX we'll prospect be this that I've be from a million the if the field should then here's how an we year

So we'll that way. go

like slow market to On Vegas right because and acquisition there. and an able building, very yield to market, that we'll just looks And we've two the were is capital. newer We smart bit markets, horizon. if of do some not to time both we going we've be that development on opportunity, happy acquisitions that acquisitions the really on more can made give also we in us like given to We it of we out three on the development yield close find if and if down a and could Las late, – – like But acquisition the were better development given there substitute kind be opportunity. of it saying aggressive the the a opportunity and we any find the could may replace offers may front, had acquisition the than get capital little to. a think, the a we development we'd or better that

Bill Crow

thanks. I the Is quarters market. have the on just portfolio. that's really really the that a seems ask strong bit but to last there could of from helpful. your been And and couple there? We anything Miami Yes, going a that data market, weaker follow-up. That's sense a it's little in performance a If

Marshall Loeb

one in and One good a County, about Broward filed It's bankruptcy tenant It had lost catch. bankruptcy. lawsuit a We foot. vacancy. was a XXX,XXX

runs we it XXX,XXX there And we've really to Florida have person need internally another for put of on that us. just feet backfill. kind So got we

We've So, we'll refilled. just that a space slow little been there. think get getting I

much that is don't through just kind work of the I space indicative to our of kind think need one we of that market So, it's so sub-divisible as system.

Bill Crow

Thank you. it. Got

Marshall Loeb

you welcome. are Sure,

Brent Wood

Thanks Bill.

Operator

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

Craig Mailman

perspective of capital on Hey, guys, yield May the clearly, be, a following has from development funding piece up cost and risen.

phenomenon? that about out thinking seeing a capture from how Just you on rent or And are of price any you this to market how guys developing? in are nature trying kind you're to where pushback speculative the either capital internally, that figure growth build-to-suit to markets

Marshall Loeb

lost I'll have and Again, and accommodate no Brent rents the exiting we've park still predominantly jump be lose start a regular on the to probably the Really in it. tenants. seems But always It it's there we pushback setting. that we market combining on. outgrown like not locations tenant or rents. can't that's have or space where very over

at or usually a renewal, are bit. if by a market market rents beat get you little it's a hopefully, can little better Our

we're location. going X.XX, We're starting terms to XXX only that for quarters we're over over historic say, much pretty that. to like maybe if yield rule be have Phoenix now, grow. yield, been or one Orlando our can say, in development good and type attractive or to personally, still it's kind to think improve of flux again, location, kind REIT for about in been able of a but returns, X a of it going of merchant few think going or advantages at, rate a to we And a of I we're a yields. it's private to be market achieving to an time cap an get acquisition trying And kind feel tried the we've we if – unlike market the developer as X.X And hold have you like in, as points all basis equity, has continues yields Austin

then And same-store So we're show excited that later as up value in creating on development, will about. some the which we're NOI well. hopefully,

Brent Wood

very saw the pleased the price debt. head our front This kind rate just We we $XX pretty not environment. We're when evaluating back million a quarter only I Last year, to of turned average the in Yes, we first to at just happier now, stock and – by were we're year priced we initially of, attractively But that in even that, did first of million view add add a little to – equity, our Brent. revolver issued the sources. were out hikes. continually to with of which equity $XXX much on didn't mid-four Craig. is you would million. then $X.X that, We an last pivoted is that call as year get of most the quarter, far would best And fell, what capital difficult – equity we versus to we're our of mid-five. market. debt that be or I it, component, and a in in last got about a is able result kind

equity. assumptions little debt bit, as saw result, our increased guidance in you as lowered So and we a a our

go but towards we good direction. balance can anticipate we environment current We probably lean equity, would on sheet. we're based either And that pricing,

the the field to strategic guys acquisitions, put that to opportunities via find think a that Marshall still thing work good or out important point find capital making as in good to to our spread. at we risk-reward to continue development I is said, continue our

the capital. for need that's really what's so And driving

that eye appreciate to we the use are finding way a we The on guys keep it. to a So even money. close need

Craig Mailman

the the back as then competitive cities you you That's that starts, land not? where pulls is monetize developers which overdeveloped do you constrained Where now to likely – helpful. have now and you been of and further see fill other in best of across cited bit. to capital in And of pullback $XXX financing start you bank the construction guys you kind the are about maybe the given guys landscape bank we think where a at that contracts they've look as But markets that million environment. – you're can starts, that void the the gap land kind opportunity little and the or fill where think in

Marshall Loeb

have a where feel market good I some population The It I – is answer. not in I'm strong. and – good growth there I had it we've it We sure opportunities awfully – I like out is question, earlier, seems there. play an really don't as Austin I wish will that parks. mentioned lot have Atlanta, I like pipeline, construction is Atlanta our of in opportunities. bay but not we're number where land we dropping in another pretty a Atlanta, Austin lot shallow the pretty today. seeing rapidly bank starts a that construction. good in is of but There's market the too. lot a of There's in

glad think expansions, it's Tampa, I I'm I those bought relocations for markets, specific end in up So, park when subsequent of lot us. think wrapping there, of of Oaks. that been last we're in our land two, quarter Grand And in and Florida the we Tampa to a

where would probably we'll of within tenant kind demand broad raw and keep the market it's kind of three need is, markets the of mind. kind we be that that like materials the the our So it's pretty markets. that well. going as But to in based – again, I follow come would those And to where

Craig Mailman

you're slip set? seeing If your Antonio. looked talk third -- mentioned a Tampa the there just then price of pretty San foot acquisition what about perspective was Can from kind piece I land billable – could land, bought market, square and you pricing you because could it attractive per the just and a like the you you opportunity in here

Marshall Loeb

few two has of And sellers the Good generational seems probably have like categories. – XX%, there's and I years time. running made, fine moved that. Where someone The land prices the probably are or basis, the where pretty hold land, mind, comment. my land one a and you and flipping acquiring opportunities we probably getting farmer, holders, always in for they moved the were it both those are pricing And put of a in permitted, a more with those where we would out I There's it people just it lot. opportunity, couple that and it of they selling if that's we're where found zoned like maybe excited on people a XX%, back, are like that, forward things Austin about haven't acquisitions. in of acquisitions then that, sticky it

and those. you looked few financing-wise, their know lot can't And XX, don't last of a of heard found we've couple the from where gotten of where West months building at developers so the out few a a over the have and builder, couple of is a years. you a where with those, because experience, lot, raise looking pattern merchant We've usually and the they've the really we've that XX at more a have now, equity could out debt as are could unlike don't skis that it's they sell you or basically

team, we like or better And land land that story back acquired land in was both of the it's land-rich, then and and described sites, and the right always seems poor site a it San San it Antonio our acquisitions – complement infill that with it I-XX, – Antonio church. there especially was but cash an a we've it as is I'll the along a

the we And corner help so relocate now. site, and probably a worked it for we the to years X of on church

helping good And bases But that but tables, our at – and we and in looked to that's a get we've horse land water Parkland So name church order and churches, was build you for Terra there, and dark thank Reed a parks, like horses I'll and site. unusual. it. Warren

eagle and build. Tampa, where of sites, someone can Fort you you to there in an year Myers, have times and site are on to certain the experience have in then we land there eagle was And hire observe odd

outside us that in him, there's that and and building of Myers the on and Fort that. and not helped site, we'll have Tampa disturb experience and just around an this stays try site we've and so eagle he hope through on And we'll to that lived kind we

there's they of – started is how three, us unusual permitting to the where see those always don't seller atypical. this on you zoning but were what, four But April, month it situation. and there's I closing most and get the saw long something the kind good an investors always years probably think, both usually And sites, of ago, that's in takes

Craig Mailman

Great. Thanks Marshal.

Marshall Loeb

Sure. Thank you, Craig.

Operator

ahead go Sandler. next Mitchell will your Connor with question Our from come question. Please Piper with

Connor Mitchell

Thanks morning. transaction amount touched development for question. good on a Hey markets. have taking guys guess I you good my

just focus on little to tenants. want on I bit So, pressure a any the

guys bankruptcy. you about So, previously a talked

just guess pulling issues I as So, some include with back your of a struggles? credit? follow-up, the in due And to one. on you you with seeing banks any other I'll Do this is, are see pressure tenants then any on the tenants retailer

Brent Wood

very thirds Yes. bad – and XX strong did have currently, got we quarter And that pleasantly, described just and tenant from our much was summary to continue is we balance. morning. so Hey we Yes, Brent. the tenants only Connor, we we of the I of predominantly, active the $XXX,XXX good first not record or debt. one about issues. the two rent list. we've a And In situation be About payment guess, This tenants. was reminder, – overall from straight-line is tenants our that of X,XXX most allowance on

number current. All that our is historically very XX are low. top So tenants It's low.

quarter. in as have budget XXX goes, far the we as So first the

it down quickly. can tenant couple just of bit get X.X. to thousand certain hundred little came that a conservative. first saw and Hopefully, third, one a maintain numbers and to But quarter, fourth balance dollars with a prove we in quarter, So to a those that fairly get we so just be you XXX as second,

seen troubles So, any have or us a issues. banking had to out called we've issues We're of couple got reach that with aware California or not to tenants of might tenants that in your answer funding not question, any out banks there.

a collections, a resilient, from and be stability it continues standpoint, very very tenant receivables strong. and So to

Connor Mitchell

you. from Thank all me. that’s Okay,

Brent Wood

Thank you.

Marshall Loeb

Connor. Thanks,

Operator

go next our Baird. Please your will And with ahead Thillman question Nick from with question. come

Nick Thillman

best some guide Hey performance on to bit of kind bit XXXX quarter, going Maybe at and slowdown, but lumpiness off of same-store. looks getting was suggests Obviously, XX%, as guys. little in X% there's I wondering the a there like any through company history first here range. but a burn we a the good wanted morning touch little that concession in down if to just

Marshall Loeb

Marshall. Nick good morning, it's

with really We're right. You're quarter. our happy

it's through is to part have great move up the year, better we're think challenge and a as against our better and I of running problem we comps.

year forward. last be in will So we're really, as But we still not. it finished XXs, moving

This points on picked XX we occupancy. up of rents quarter, basis and

XX for our gain down year. Again, able during basis course we're occupancy the occupancy points lower drift raise the that we will of were guide year. the So, to glad

harder I we can just up coming against to – hopefully, think it's comps. we'll be. And continue hopefully,

XX%. be to at thrilled we're Look,

can little think I beat, ahead there, April. to still are the be going And positive our through it quarters the in but end beats. showing if of higher we hang will bit mountains occupancy a has

but And very nervous I all our quarters good. this that. reflect don't months, given one. will been more hope for of be just the operations I've so the for I'm I've year And eight wrong several been day-to-day the and nervous headlines far, about economy,

Nick Thillman

into like just That's change question on the then any amount noticed of recently? helpful. you their tenants maybe are making And space your tenant investment Have base. in one

Marshall Loeb

up like and it, could you to seem some things and trending does some be It say of of the that. inflation

it air-conditioned parks space. in our the that's spaces. made like hiring. have probably and we've – had hiring markets upped like Western Tenants and things one and you've think And I that, our with noticed of in more some more that and thing things is HVAC think fans Arizona Florida that, and – before I but difficulty for given amenities space we've their the accommodating employees too, in at

the and always that's the we'll things racking don't so And buildings, like retailers. much the structure time, retail can physical over store online, I've more retail improve we more distribution of where ways are efficient I just working to always they're hope buildings think efficiency at think And offer up that. space then format and the order our option. pick pick finding because still up I just our has than

going will but So play still. over several another started source that over but will think I it be I mix that years, – play to, to more that's think get – of out demand, out

Nick Thillman

me. it Thanks That’s guys. from

Marshall Loeb

Nick. welcome are You

Operator

Jason Our question. your Fargo. next question Belcher go will come with from with Please Wells ahead

Jason Belcher

morning. you any you maybe onshoring good seeing which near-shoring And additional talk hi could those and how if the demand of impact are about production that about biggest Wondering Yes, should activity we from are or and think markets from trends? seeing manufacturing evolving going forward?

Marshall Loeb

very San strong Paso past the Diego, we've and of the up take do years fill we've Okay. manufacturing. where it. has and there stab a in us El years been XX what or few acquired best several of are years, the really we three kind those probably years Happy plus to China at the is as a opportunities four would there. We seeing we're quickly. talk last benefits, been market markets, reading Texas And El those about Paso for the you few one expect, seeing over

still San and good Diego we market. So, like a has been then Arizona

been in little we're Phoenix, active We've markets. XXX% but those less Tucson, in in so a

like – Texas seen a the So in we seeing where that's Central nearshoring manufacturing. pickup has we're

plants of built Tesla some that Austin. the and like same and out in in with things Mesa, that it Phoenix in have chip and And been

built. San is are Antonio suppliers the manufacturer, are that get up we mean the even where picking with pick it I in getting the won't plants coming we've I'm they're glad we up, working to areas although seen our that and So,

source. So it's another

how years. think Mexico or out. will the open it India or plant go you Vietnam I out number we where and does of go think I with process play a to can't another when we of do plays and do to imagine over it that it

of doing some Tijuana would not decision interesting, tells in go CEOs I'm something me or large San are to and couple had been the in that does tours chain over-analyzing from we've I XXX,XXX means where supply that's come what expect or tour company. I'm feet, a chain. a it Juarez you've I space and their they it of lease roll the and had think it's probably XX,XXX bigger But through thinking a And especially the Diego, supply how

So I'm play several in Phoenix sites. actively on next out the Paso. over will in some looking We're mentioned, I'm at in working different – But tailwinds that we've El keep years. we're San Diego to and up philosophies that glad again, We're land I to got trying few as have I that. pick think full

Jason Belcher

helpful. Thanks development there? then that you're an seeing cost give on could one square on noticed guidance, terms update more just what materials me; That's increase your inflation color. inflation. foot the And if for the can all labor for I you comment in us of per price just cost if and in front starts maybe you

Marshall Loeb

costs positive are we the going you Yes. the where and Arizona rather in say of in price last we'll our those bit. starts, sometimes on we're – bid But where to X% where end moved around, or false And can have a be San good Florida specifically a we've get they XX% kind The helpful, have higher than construction to one if lower. come I at a would in And it's usually maybe Antonio, been those by shell come have project. one build the could as in down couple little projects of they thankfully, costs Phoenix, seen the of year. out would get

get drop the things subcontractors busy starts, some the with spending of pickup and although will that. less as like hopeful infrastructure a the and I'm in lot construction that, things see like that So there's

awful a at so was helping pretty the they hot, be a like seeing, come a it's times after market that our use our to in the thing obviously and think still absent while really thankfully supply pricing And that months that's and steel increases. well few expensive to a few it buildings too we actually of or more I an electrical concrete then material drops flattened the get And we're quickly. down and deliveries we've market is of lot We'll, other buildings. things panels hopefully when years and us – up, pretty were can good heavy we're seeing get drops delivery just to so seems least the out seen couple of we problematic

Jason Belcher

That's all me. for lot. a Thanks

Marshall Loeb

are You welcome.

Operator

will Zheng with come Green from go your next question Our question. Jessica ahead Street. Please with

Jessica Zheng

think in Good declined how XPL any container view are that at the sensitive overall driven your first do quarter. hear seen import I'm curious volumes volumes. XPL Has to pretty year-over-year demand you significantly import softness all? tenants morning. to in the We've the on

Marshall Loeb

within that. thankfully, the within lot will a wanting XPLs. any world, and And so within our out on it space have back, XPL the like in say their is portfolio, buy the like everyone not things and seen if had you leases time, long-term of issues like we've them not things ones movement are any lease, of certainly I think we we've that. consolidation of far give There's to really

think I can over things tenant XPLs they're location locations they're of are the first submarket. when contract. headquarters multiple that, one early have rapidly Obviously, be they'll tenants things a their like to like have that thought and pretty a time, not – and expand to it's I and good, also in

had other any direction, they're move – you have one parts twitchy pretty you moving – within tenancy. of So, we knock way They'll tenants. XPL the there really but in on too – maybe there, out our wood not or as one amount pointed as many abnormal any

Jessica Zheng

color. the for Thanks Great. Okay.

Marshall Loeb

You are welcome.

Brent Wood

you. Thank

Operator

Please from with And go ahead with come our question Bank your America. Spector of will next question. Jeff

Jeff Spector

really seen creating your anything forecast, have morning. more over anything clarify, the wanted I Marshall, Is a that to last recession. the tied or you recession kind Good that like of tenants, concern concerns recession? Or on actually it since year? economic just the is anything heard BofA from for calling Great. to

Marshall Loeb

wasn't on the right. it Jeff, morning, and Good to economist, mean, blame I I yes looking you're BofA but...

Brent Wood

I responsibility. taking I hear mean him full

Marshall Loeb

us, But when feels a that it more. there's watch typically a line newspaper phrase good. We XX% really through the a I pretty is called our failing of good. have that XX% the raising and board X,XXX in we're read we're lot are there. feel in if come feet, our Like banks but own recession, things the with there's or rents leased and lot at use on out like in And, it anxiety and banks feels that of have TV,

long-winded it's trying don't paranoid to I nervousness, it to some extent, should which saying, opportunities. always corners, I felt like to be of around the more I but to look point that think we no, doing it's do So I a want good way headline miss

So for field, like they it's the look heads things headline anxiety. find trying the to because to in And like I at got then that. two when I've tenants space me guys they're and talk

Jeff Spector

some all it's hope possible the are there's line econ the then again, take the merchant blame is the good. second, on By if time, that so this that group comments I each you. wanted Thank on confirm you anything down your way And and Or BofA may just distress opportunities, seeing advantage? I today? to all actually be could builders,

Marshall Loeb

where to a have financial and do that's in scrambling sell parts. that. in they again, either There's venture One we a in the the to of a was sites that or we a the last few a that, were get I late years. order, they the was Arizona, house the acquired things think had not Austin, just moving hear broker I of they been Vegas where last do land the and that something specifically little like we're Las on bit couple year one had something and passed bought needed in joint one, can it electrical site, newer stories that equipment, we the where we sites merchant from developer we've another ordered seen – where think out steel, they West, the seen you'll was couple There's now sense their trying

a of And violate highest Las although certain that not I other we so The we the to were were were closing, to think we bidders, the over the XX one there do a in stressed told trying and without move things and were of we confidentiality to really tenant in we agreement the close path bought close Vegas, awarded days. way. that ability bidder, little contract line using property our credit our we we our but was could to were

some more If acquisition think opportunities, not be it talking but going we've distress. lot the environment. we Blake to and shows be our for really Torino – think I'm again, they of I Baird, have great on and seen a may know team, of of and land respect up, lot we acquisitions I it So peers, a a it's

toe dry like to find right demand believe, a pipeline I If in want slightly some on put newer for powder, here or is we If a where tightening like dry and some capital water powder or there last our some and in replacement we can that. looked little XX at our And it's in we below got is a the have Blake, going if constrained were it something we be really think have distressed credit opportunities so acquisitions trying able days either we're yield. development Las we've the we we quarters. can hadn't bit. we'll development building to find pricing into and and two can be good started sticking cost But the a and to things Vegas the three when

good So we rate close that's year have been get that a opportunity. would on that pretty GAAP something felt the a return, to a we cap can like ago if mid-Xs sub-four

Jeff Spector

Thank Okay. Great. you.

Marshall Loeb

You are welcome.

Operator

next And Truist. Ki will our come with question your question. go with Kim Please from Bin ahead

Ki Bin Kim

a if curious feet is I'm a Thanks. there Good only question product ask you if XXX at that historical million-plus in to level getting buildings supply slice tougher level gauge that's a product, look describe relative the or easier of out want you a would square that morning. shallow-bay of just I more deliveries. context, of supply supply smaller to supply new of trying your I supply. to about that portfolio? how for realize it But to comparable or small your own you is

Marshall Loeb

if numbers last of little in. talked year it where, and They've the think feet X other the granular some just picking answering I'll about and quarter. than a markets. Ki really Bin. million We've I'm square use I'm were a seen more I CBRE Atlanta starts were it morning, Good the average

what's X.X XX% XXX,XXX million feet is trying under quarter a X under buildings up. then First construction, in other stats, in and feet, there I'm square maybe of and throughout they of it couple was million,

good for so And us. feet XXX,XXX building, you're is end size near pretty higher a getting the

or square a I like. in the so pipeline comparable buildings million been, that We've of think I which are usually Seven back, product. do over said we've stepping over, feet X always XX% XX% what's is that, to with a the in developer someone those developers hit AEW, regional merchant partner lot it competition Nuveen, is been than isn't institutions. like Clarion an of have and – larger our institutional local harder

debt up be hard just last to know it's the exit in the debt a that equity your is and that it So raise certainly gone of year. where and or has to lot cost capital,

Brent XXXX. get to with shallow in I last through this – and If to no We're quarter XX% gives quarter, to bank of Spector, – I get So them, our pretty that. I bay hope development well. we're supply earlier hope where from be Jeff they tightening think, third XXXX, push I you're and And and us new year the period about tenancy of well. we starts credit that it this you tightening credit a year, our there's about opportunities would it decline on some than pre-lease XX%, it about I material full are that and I'm imagine half a and thankfully, there just own talk back tight. market. into is of as that pretty and to abilities decline own there's per XX%. excited tenants, hopeful example, I'm the in the where markets hang that's overall fallen as CBRE there's it make can second that over think after this I I anxiety have my X,XXX is rents for will quarter flip our hopeful And first from spoke year pretty side bigger of

Ki Bin Kim

you Great. curious the on quarter. the remainder what lease of And XX% I'm we should had expect of guys year? thoughts spreads for just if this reported any you

Marshall Loeb

point good pretty really do, wish other spread offset thankfully a we at Last XX%. we It And this thing well. still have where credit, it more down, they thankfully, or like California that you I things was pointed California we that there's your I is lot our Unfortunately, year, strong slow which and years little and throughout like a it's was had rents a as and run portfolio. rate we to unfortunately ran like it with rolling not market. about fourth and in about feels quarter, out don't, rising role we tech most fortunately before out think a was unless good than pretty The averaged markets California a Ki but are, Bin that. is I

normalized, not seem down in rate. markets. all just the your rents of So I for yet. slowing demand don't our rents back with can the deeper in we'll portfolio, the those other to grow pretty continue nice working to you're think to through putting I was, run market what a we that's most way feels in and That's net XX%, be good stay the Hopefully, but thing the – like and to like back, of back it quarters

Ki Bin Kim

you. Thank Okay.

Marshall Loeb

Sure.

You welcome. are

Operator

ahead come question. Capital your Thomas go And KeyBanc Todd Markets. with our with next will question Please from

Todd Thomas

Hi. Thanks. just discussion up the follow Good I to; and about the on projected to leading you're of the for in pick next starts should leasing pricing pace morning. as wanted the yields we I guess over expect moving quarters XXXX, just a continue several think development power bit. shallow higher? decrease we bay? stabilized around that discussing the And given Does

Marshall Loeb

development are And they'll not see. up. concern, projects. will have I our where that keep early finish. going it's much it. construction maybe hopefully, I leasing, think so underwrite I'm beating creeping yields moving we that and slightly economy our We've as up pricing years, it we'll is always been leasing I bid to we down; we'll flat again, several some we've that pattern, it's keep dramatically, from had the said We then projects, to you – up. rents completion mean, your hope if if will with the If I continue is supply. but and like our where on then And think don't would be today, stays optimistic success to the shell on last one-year I'd

great development our last upside of a couple see and a empties just stay It's tenant how can if more markets, need as I We out. bay can should don't be we're stay okay delivering thesis get more I rapidly we kind probably knock tailwinds we always hold our mile did deep pipeline those like if wood. or the good quarters should a this around say on of economy. kind projects we program. – have recession. okay, quarter, we and hovering recession, to a really your and of in in we fairly recession XXX% leasing supply then things on enough is up. of a we economy; an development Sunbelt will shallow If just need But leased getting we're where demand returns

Todd Thomas

then And Okay. acquisitions. to second back question,

to a sounded yield it Vegas $XX the achieved that in range. right? million for anything the there do size? And you something something dislocations could Las or is available? something tracking that So transact extent the of that you And to that in in larger becomes April, something that deal there portfolios are completed are Is you're appetite premium there like mid-X% any

Marshall Loeb

Good question.

kind right was That's freeway. it of the yield five and You're off was where an accurate about the right. Xs building our years description that Las Vegas of in that old

– about just deals probably although year I there's up many well, it at portfolio quality think were is. portfolios it seen and think the it we wasn't last but it's the – nearly few, mean and portfolio but it. as lined Tulloch fit on So seems and looked the dry like the that higher There's because excited we're it well, of to it, there's portfolio biased, portfolio buy so of us in always our there's finance seems market just that a feel but that. odds markets portfolio one we're always We've hard recently powder fewer and to like we the excited it transacting. what doesn't I I much so there's the

to a out a can where tires price price the larger and and equity Tulloch and it ago. would there's good it, we to we kicking that, pretty year well we on sense and that to to I and we're we that make be think always passed – the couple find one we need transaction with So were of big accretive if if transact a stock were a have happy things have FFO. on came our On as own that

forward in – more that develop steady move buy we'll So once and while, without to if we try slow those and to it, And a if blue look portfolio even and once and the never exception a rule. perfectly long we be in few say buildings we'll difficult with hurdles the a shareholders are if grow and acquisitions happy every each of shot. if that do never, we method quarter, our a there's a but a acquisitions building are but longer every moon, – we portfolio just kind keeping once at would up find – in night. But I'm

Todd Thomas

you. Thank All right.

Marshall Loeb

Sure. Thanks Todd.

Operator

question. next question your And Capital come go our Michael with Carroll Please Markets. will ahead with RBC from

Michael Carroll

slowdown in to it comments that compared really has obviously is off much? been But levels demand. year? your think wanted I noticeable touch Or you've to still mean those last just today? I noticed Marshall, highlighting, of I about you've Thanks. to healthy. Yes. there there record on of mean, big not pullback a been how pretty I a activity

Marshall Loeb

way felt someone space frenetic rep fun was is The the scary that sustainable same was it three multiple for and other where remember it find – rents a similar – isn't a because in saying, parabolic there the it prospects was results space and where while, one tenant were where team I field and you hear phrase but being the feel or fun broker, our for up, going showings what a have tenant rep didn't would from there's in used. it I'll for this a are broker two and it and we almost, a

process than and leasing normalized running that that, space a out like or things it of Amazon pre-COVID but or feels it more, manageable market. Now This XXXX for sustainable. space up rapidly it more two fun this a more a feel prospects, one – and of feels was there's it's scramble and didn't

too. and to just prospects developer. stock also time have move Uber an those have everybody driver tips like was is I industrial number guess. or sustainable. becoming we days when more thankfully bonds slow of think not slowed And rapidly got giving So or was it's I down We've think your will again you multiple, down in to feels But your it, it they're active I our markets, – cash, money in that developers the slowing

Michael Carroll

just that due Okay. And your costs also yields to or with costs development mean, all? the how at where that rents of does included to thought improving? whole I that talked kind that yields you development mean ticking is guess, due financing construction start in dropping? might you then interest reflected higher. Or And get about Is I I that that they calculation? on rates has they are your today. pressured

Marshall Loeb

time, really first Maybe do. the does. part, the I first second. rent It take Yes, I'll on the

rents slight pricing, rising that bit where a done part. rents. than where some maybe think underwrote on pricing. against have in thought. those We'll we current We've we higher we'll built drop in I always on or continue underwriting and rents building improvements and a And think bit use it too. our But little market rents a I last projected haven't originally we then numerator ideally rents the where little construction we construction from of

to that's development hopefully, underwriting on our last target our where raised think seems think pick could the we have we year, I just to have were what because development points, of – they basis financing strong XX And costs we we're up. So yields. XX I although creep up yields,

let how I'll Brent, you at And this. we look

Brent Wood

Yes.

what earlier, typically point basically got kind Marshall we're capital again had wanted somewhere little the around in or we're I historically still still building our to a of of that with over good a equity hitting in But XXX maybe so said We debt think together or historical area, money. mid-X in cost still between Marshall a but we increase getting basis expensive call kind call the that or said, cost we're said on as a spread, spread, blend has yield you're that. As tightened spoiled it environment. of than of cheaper that in that the we and you and that mentioned said, making range; shuffle and spread our doubling a X obviously We're when had basis where to good And to of lost high-X a there. opportunity. capital, cost X time we'd it, more – low equity upper X we cap call the our it's period good debt mid-Xs because capital got of

continues a and wide such still be NAV So accretive in we creator than monitor you we're But you position where you very to less room wiggle it. It certainly it's gives had when good had for a gap. a us.

Michael Carroll

Great. mid-X and get mean, can XXX And just near I now? if mean I are thanks a That to to spread, a kind can yield Okay. in that do I close XXX right development more. how of, just need it? one anywhere sneak you we justify that's you level

Marshall Loeb

think, That's, you're I I will below. be little get going or to think been different, a There's – building, that's a X market brand-new think well-leased I but every – reasonably assets There we've land. still people looked that. there and acquisitions at said, transacting some building are I like out and especially on as and we bought things smaller a and the

two they or would it we build, a out building buyers So there. were if that be

on saw one in One going to and cap we in San that. hoping. four ultimately than just as price like – we much some and Diego is that at things had think we that thought rate I we Phoenix we go a underwrote like higher transaction where bid we were

a property on think rate X are feels of debt industrial and much cap where spite rents in based other outpacing it's to sectors. probably like are how compared still really inflation safe I yields a it's So

Michael Carroll

Thank Great. you. Okay.

Marshall Loeb

are You welcome.

Operator

Please from question. ahead with come your will Morgan go question Ronald next with Stanley. Our Kamdem

Unidentified Analyst

morning guys. Timmy is This Ronald Good Kamdem. Hello. for

on couple the dispositions question I of Just we've the this past of a that that Houston you over quarter. seen kind some on thought quarters. completed had of

$XXX I pricing under foot. a think the a little was

kind you and asset pricing forward the Just a at expect if of that's Just Houston guys curious going year sales we if that's kind for of the one-off? or beyond are how curious for looking remainder the of that.

Marshall Loeb

Yes.

tenant one-off. was It It a our that building earlier the a little the for think I World in one at of was Houston. was time. more buildings

building Houston building. there we'd this features had got said, initial nice and some re-leasing in been recently gone if to our what that kind the vacant, we we our to as want the were had We size, always ask as And So It was and we've gain like vacant, Houston. to good on building a all would got unusual development, a try developing we of exit. it team here. we were you manage It's work. right, to keep yield

and So we and below, X X that model. rounding if can like a to develop to or a we sell

expect was it think built exit be we ago. – would had amount little foot fair a we XX good So our needed $XXX a But tenant-specific thought still this dispositions a I to was it that and to of that. to more of would XX, a years bit I you expect of a and in work re-tenant building of time that north

Unidentified Analyst

obviously You And slowing been? Maybe vacancy, growth talked you year remainder about The market today. level the a is follow-up. when market XX% just rent of portfolio what historically then do is on typically growth? expect like And occupied for starts. for question, of see the where just that just Great. you around rent that

for about that? just curious So the outlook

Marshall Loeb

have year. wider will rule last It's I And suspect would of just the deliveries we maybe I that like, a tenant early at I think I wouldn't rent nationally. to years see do the I never market make industrial because XX%, landlord for sounds a we've in again call feel Brent remember vacancies growth guess, growth it think old. But several been vacancy me thought more want probably both that becomes will and and both an than you'd thumb XX%, that had above add-up us anytime it someone XX%, to market balance Yes. range; industrial, be quarters. be probably of I just where rent And But the pick market. XX%. at I XX% X% the will year-over-year that XX% box, on is most this of a below It year. big told up

we'll I type, think supply will comes as growth rent I to the But on and it continue of be have especially from our that hopefully out lot think of product pipeline. a sheltered

hope it we some see market and in once because and So kind that drift there year. one think or will we've the the the of just I'm numbers kind a We're last on been we're free – But well, mix. X.X%, to we the on where are a where in. gets we of last all is each a market, market that X.X%, might every this other where be X% way while a rent which different, to continue few it now I a the path year quoting was off X-plus can on to quarter, were start market bumps GAAP more years bumps rent little probably rent at I the a where the rent to – heavy you'll increase able depending in in you're as all

Unidentified Analyst

Great. Thank you, guys.

Marshall Loeb

Welcome. Sure.

Operator

with question from Vikram question. our with go your here will Mizuho. next ahead Please come And Malhotra

Vikram Malhotra

some just sorry did if you rent Thanks for the I of clarify so I'm the about wanted repeating. questions. taking talked not spreads to and the I hear, and maybe comments

just across out sort maybe top markets three in just think just you around talked about market spreads, rent where growth market if of to can the then about two on you you talk playing growth the first GAAP I'm Miami, wondering normalization. XXXX. or talked there rent – about specifically, rent but you were comments And Just were see you some I

rapid you you Texas, above sort XXXX of of If the parts your of the trends markets, most where are Thank you. where normalization seeing Miami, you sort levels? seeing to are still rank California, were

Marshall Loeb

we're within mean I my digits, In of thinking, to it I crystal overall I'd thing. high island as wish again happy and level, don't as markets. my single but growth, think, ball, to if to I type were Okay. rent it kind But be accurate core, you was. take our be too mid-teens

got find the think I a strong that love of County we'd and get to – Weston feel Florida Miami, we've market, that other specific vacancy market kind submarket, so we'll backfill, we South is in Broward still. Southwest a opportunities some but

to supply Florida markets Area, Bay is and I Orange and world about have bulletproof numbers you in type a County, as diversity Diego in we Phoenix, try awfully time best I've I like portfolio a market, had agree lot San markets. markets geographic rent our much our geographic Phoenix, good it and California, working the there. make the about as the XXX% in real were a and Our strong the but talked big, talk of our strong, can that's Phoenix The people diversity, Austin, thing. Dallas to L.A., spend we're leased strong on and Central something growth still diversity are tenant

the are Atlanta, and El Florida, growth markets, in then and in XX, Paso the leased call Texas terms some it, markets we would good in definitely of rents, Dallas, Austin, still last, XX months California those even before as our best have type we're – Charlotte markets, well. major they're said of and but So seeing California our Central

Vikram Malhotra

Thanks.

spreads growth, So then seeing California a where just to levels? to clarify, there's I your reversion a just you're guess faster. is strong, through accelerate but you the saying clarify, saying market would you're is year rent the QX on said of maybe And but bit if wouldn't are cash normalizing from average strongest, rent have you XX% California the

Marshall Loeb

you're market. of old They on we'll working I think The a lease those I laid vacancies some markets overall. little bit up got a and the to guess, California. the it the But that has mix markets they isn't We've other Bay backfilled. in standout seen California markets that, right and in two would. hopefully, the caught us, up, with bad pick They will company that be of tech depend I part that's of but it. Area, just every we've used Bay people get is off rolling. of more have we're on is and and how the say Area, should California to slowdown

Vikram Malhotra

you. Thank Okay.

Marshall Loeb

Welcome.

Operator

And over Marshall this for concludes like closing I'd the session. any conference question-and-answer remarks. back to turn to Loeb the

Marshall Loeb

we a here Thank you to or appreciate you. are If at We you. certainly follow-up in month. Nareit questions, we Brent some this question seeing Thank Thank your of get just your your time you, and and available morning. in I to many look EastGroup. forward you everyone, for interest didn't over have

Brent Wood

Thank you.

Operator

very The conference Thank today's much presentation. for has attending concluded. now you

You may now your lines. disconnect

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