MARYLAND
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13-2711135
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification No.)
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190 EAST CAPITOL STREET
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SUITE 400
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JACKSON, MISSISSIPPI
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39201
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(Address of principal executive offices)
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(Zip code)
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Registrant’s telephone number: (601) 354-3555
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Page
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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Consolidated Balance Sheets, September 30, 2011 (unaudited)
and December 31, 2010
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3
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Consolidated Statements of Income for the three and nine months
ended September 30, 2011 and 2010 (unaudited)
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4
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Consolidated Statement of Changes in Equity for the nine months
ended September 30, 2011 (unaudited)
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5
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Consolidated Statements of Cash Flows for the nine months
ended September 30, 2011 and 2010 (unaudited)
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6
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Notes to Consolidated Financial Statements (unaudited)
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7
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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14
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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24
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Item 4.
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Controls and Procedures
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25
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PART II.
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OTHER INFORMATION
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Item 1A.
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Risk Factors
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25
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Item 6.
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Exhibits
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25
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SIGNATURES
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Authorized signatures
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26
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September 30, 2011
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December 31, 2010
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|||||||
(Unaudited)
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||||||||
ASSETS
|
||||||||
Real estate properties
|
$ | 1,486,907 | 1,447,455 | |||||
Development
|
99,261 | 73,722 | ||||||
1,586,168 | 1,521,177 | |||||||
Less accumulated depreciation
|
(439,465 | ) | (403,187 | ) | ||||
1,146,703 | 1,117,990 | |||||||
Unconsolidated investment
|
2,740 | 2,740 | ||||||
Cash
|
447 | 137 | ||||||
Other assets
|
62,303 | 62,409 | ||||||
TOTAL ASSETS
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$ | 1,212,193 | 1,183,276 | |||||
LIABILITIES AND EQUITY
|
||||||||
LIABILITIES
|
||||||||
Mortgage notes payable
|
$ | 634,108 | 644,424 | |||||
Notes payable to banks
|
144,298 | 91,294 | ||||||
Accounts payable and accrued expenses
|
30,404 | 20,969 | ||||||
Other liabilities
|
15,392 | 15,083 | ||||||
Total Liabilities
|
824,202 | 771,770 | ||||||
EQUITY
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||||||||
Stockholders’ Equity:
|
||||||||
Common shares; $.0001 par value; 70,000,000 shares authorized;
27,080,371 shares issued and outstanding at September 30, 2011 and
26,973,531 at December 31, 2010
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3 | 3 | ||||||
Excess shares; $.0001 par value; 30,000,000 shares authorized;
no shares issued
|
– | – | ||||||
Additional paid-in capital on common shares
|
593,923 | 591,106 | ||||||
Distributions in excess of earnings
|
(208,680 | ) | (182,253 | ) | ||||
Total Stockholders’ Equity
|
385,246 | 408,856 | ||||||
Noncontrolling interest in joint ventures
|
2,745 | 2,650 | ||||||
Total Equity
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387,991 | 411,506 | ||||||
TOTAL LIABILITIES AND EQUITY
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$ | 1,212,193 | 1,183,276 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
REVENUES
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||||||||||||||||
Income from real estate operations
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$ | 43,942 | 43,118 | 130,441 | 131,077 | |||||||||||
Other income
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20 | 20 | 64 | 108 | ||||||||||||
43,962 | 43,138 | 130,505 | 131,185 | |||||||||||||
EXPENSES
|
||||||||||||||||
Expenses from real estate operations
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12,628 | 13,176 | 37,663 | 39,745 | ||||||||||||
Depreciation and amortization
|
14,437 | 14,648 | 42,790 | 44,071 | ||||||||||||
General and administrative
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2,551 | 2,521 | 8,127 | 7,603 | ||||||||||||
Acquisition costs
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55 | – | 55 | 72 | ||||||||||||
29,671 | 30,345 | 88,635 | 91,491 | |||||||||||||
OPERATING INCOME
|
14,291 | 12,793 | 41,870 | 39,694 | ||||||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Equity in earnings of unconsolidated investment
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87 | 84 | 260 | 251 | ||||||||||||
Gain on sales of non-operating real estate
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9 | 9 | 27 | 28 | ||||||||||||
Interest income
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84 | 85 | 251 | 252 | ||||||||||||
Interest expense
|
(8,680 | ) | (8,845 | ) | (26,100 | ) | (26,515 | ) | ||||||||
NET INCOME
|
5,791 | 4,126 | 16,308 | 13,710 | ||||||||||||
Net income attributable to noncontrolling interest in joint ventures
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(121 | ) | (103 | ) | (354 | ) | (307 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES,
INC. COMMON STOCKHOLDERS
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$ | 5,670 | 4,023 | 15,954 | 13,403 | |||||||||||
BASIC PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
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||||||||||||||||
COMMON STOCKHOLDERS
|
||||||||||||||||
Net income attributable to common stockholders
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$ | .21 | .15 | .59 | .50 | |||||||||||
Weighted average shares outstanding
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26,839 | 26,758 | 26,823 | 26,747 | ||||||||||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
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||||||||||||||||
COMMON STOCKHOLDERS
|
||||||||||||||||
Net income attributable to common stockholders
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$ | .21 | .15 | .59 | .50 | |||||||||||
Weighted average shares outstanding
|
26,914 | 26,828 | 26,894 | 26,810 | ||||||||||||
See accompanying Notes to Consolidated Financial Statements (unaudited).
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Additional
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Distributions
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Noncontrolling
|
||||||||||||||||||
Common
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Paid-In
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In Excess
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Interest in
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|||||||||||||||||
Stock
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Capital
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Of Earnings
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Joint Ventures
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Total
|
||||||||||||||||
BALANCE, DECEMBER 31, 2010
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$ | 3 | 591,106 | (182,253 | ) | 2,650 | 411,506 | |||||||||||||
Net income
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– | – | 15,954 | 354 | 16,308 | |||||||||||||||
Common dividends declared – $1.56 per share
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– | – | (42,381 | ) | – | (42,381 | ) | |||||||||||||
Stock-based compensation, net of forfeitures
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– | 2,203 | – | – | 2,203 | |||||||||||||||
Issuance of 15,000 shares of common stock,
common stock offering, net of expenses
|
– | 450 | – | – | 450 | |||||||||||||||
Issuance of 6,000 shares of common stock, options exercised
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– | 133 | – | – | 133 | |||||||||||||||
Issuance of 4,528 shares of common stock,
dividend reinvestment plan
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– | 188 | – | – | 188 | |||||||||||||||
Withheld 3,564 shares of common stock to satisfy tax
withholding obligations in connection with the vesting of
restricted stock
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– | (157 | ) | – | – | (157 | ) | |||||||||||||
Distributions to noncontrolling interest
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– | – | – | (259 | ) | (259 | ) | |||||||||||||
BALANCE, SEPTEMBER 30, 2011
|
$ | 3 | 593,923 | (208,680 | ) | 2,745 | 387,991 |
See accompanying Notes to Consolidated Financial Statements (unaudited).
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EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
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Nine Months Ended
September 30,
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||||||||
2011
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2010
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|||||||
OPERATING ACTIVITIES
|
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Net income
|
$ | 16,308 | 13,710 | |||||
Adjustments to reconcile net income to net cash provided by operating activities:
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||||||||
Depreciation and amortization from continuing operations
|
42,790 | 44,071 | ||||||
Amortization of mortgage loan premiums
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(94 | ) | (93 | ) | ||||
Gain on sales of land and real estate investments
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(27 | ) | (28 | ) | ||||
Amortization of discount on mortgage loan receivable
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(10 | ) | (10 | ) | ||||
Stock-based compensation expense
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1,910 | 1,472 | ||||||
Equity in earnings of unconsolidated investment, net of distributions
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– | 19 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accrued income and other assets
|
1,007 | 1,587 | ||||||
Accounts payable, accrued expenses and prepaid rent
|
7,042 | 3,087 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
68,926 | 63,815 | ||||||
INVESTING ACTIVITIES
|
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Real estate development
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(28,982 | ) | (6,724 | ) | ||||
Purchases of real estate
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(23,450 | ) | (23,906 | ) | ||||
Real estate improvements
|
(14,089 | ) | (15,438 | ) | ||||
Repayments on mortgage loans receivable
|
27 | 28 | ||||||
Changes in accrued development costs
|
2,313 | (418 | ) | |||||
Changes in other assets and other liabilities
|
(5,041 | ) | (5,058 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES
|
(69,222 | ) | (51,516 | ) | ||||
FINANCING ACTIVITIES
|
||||||||
Proceeds from bank borrowings
|
213,034 | 139,343 | ||||||
Repayments on bank borrowings
|
(160,030 | ) | (94,280 | ) | ||||
Proceeds from mortgage notes payable
|
65,000 | – | ||||||
Principal payments on mortgage notes payable
|
(75,222 | ) | (14,714 | ) | ||||
Debt issuance costs
|
(632 | ) | (60 | ) | ||||
Distributions paid to stockholders
|
(41,880 | ) | (42,018 | ) | ||||
Proceeds from common stock offerings
|
450 | 303 | ||||||
Proceeds from exercise of stock options
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133 | 338 | ||||||
Proceeds from dividend reinvestment plan
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184 | 201 | ||||||
Other
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(431 | ) | (2,320 | ) | ||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
606 | (13,207 | ) | |||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
310 | (908 | ) | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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137 | 1,062 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 447 | 154 | |||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||
Cash paid for interest, net of amount capitalized of $2,695 and $2,705
for 2011 and 2010, respectively
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$ | 25,340 | 25,892 | |||||
Fair value of common stock awards issued to employees and directors, net of forfeitures
|
3,827 | 5,174 | ||||||
See accompanying Notes to Consolidated Financial Statements (unaudited).
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September 30, 2011
|
December 31, 2010
|
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(In thousands)
|
||||||||
Real estate properties:
|
||||||||
Land
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$ | 226,398 | 221,523 | |||||
Buildings and building improvements
|
1,008,527 | 985,798 | ||||||
Tenant and other improvements
|
251,982 | 240,134 | ||||||
Development
|
99,261 | 73,722 | ||||||
1,586,168 | 1,521,177 | |||||||
Less accumulated depreciation
|
(439,465 | ) | (403,187 | ) | ||||
$ | 1,146,703 | 1,117,990 |
September 30, 2011
|
December 31, 2010
|
|||||||
(In thousands)
|
||||||||
Leasing costs (principally commissions), net of accumulated amortization of
$15,799 and $18,566 for 2011 and 2010, respectively
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$ | 22,776 | 22,274 | |||||
Straight-line rent receivable, net of allowance for doubtful accounts of $311
and $282 for 2011 and 2010, respectively
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20,208 | 18,694 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $484 and $706
for 2011 and 2010, respectively
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2,629 | 2,460 | ||||||
Mortgage loans receivable, net of discount of $46 and $56 for 2011 and 2010,
respectively
|
4,114 | 4,131 | ||||||
Loan costs, net of accumulated amortization of $4,173 and $4,129 for 2011
and 2010, respectively
|
3,195 | 3,358 | ||||||
Acquired in-place lease intangibles, net of accumulated amortization of
$8,136 and $6,443 for 2011 and 2010, respectively
|
2,672 | 3,046 | ||||||
Goodwill
|
990 | 990 | ||||||
Prepaid expenses and other assets
|
5,719 | 7,456 | ||||||
$ | 62,303 | 62,409 |
September 30, 2011
|
December 31, 2010
|
|||||||
(In thousands)
|
||||||||
Property taxes payable
|
$ | 17,859 | 9,776 | |||||
Interest payable
|
2,685 | 2,625 | ||||||
Dividends payable on nonvested restricted stock
|
1,292 | 791 | ||||||
Development costs payable
|
2,986 | 673 | ||||||
Other payables and accrued expenses
|
5,582 | 7,104 | ||||||
$ | 30,404 | 20,969 |
September 30, 2011
|
December 31, 2010
|
|||||||
(In thousands)
|
||||||||
Security deposits
|
$ | 8,887 | 8,299 | |||||
Prepaid rent and other deferred income
|
5,991 | 6,440 | ||||||
Other liabilities
|
514 | 344 | ||||||
$ | 15,392 | 15,083 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS:
|
||||||||||||||||
Balance at beginning of period
|
$ | – | (159 | ) | – | (318 | ) | |||||||||
Change in fair value of interest rate swap
|
– | 76 | – | 235 | ||||||||||||
Balance at end of period
|
$ | – | (83 | ) | – | (83 | ) |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
BASIC EPS COMPUTATION FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
|
||||||||||||||||
COMMON STOCKHOLDERS
|
||||||||||||||||
Numerator – net income attributable to common stockholders
|
$ | 5,670 | 4,023 | 15,954 | 13,403 | |||||||||||
Denominator – weighted average shares outstanding
|
26,839 | 26,758 | 26,823 | 26,747 | ||||||||||||
DILUTED EPS COMPUTATION FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
|
||||||||||||||||
COMMON STOCKHOLDERS
|
||||||||||||||||
Numerator – net income attributable to common stockholders
|
$ | 5,670 | 4,023 | 15,954 | 13,403 | |||||||||||
Denominator:
|
||||||||||||||||
Weighted average shares outstanding
|
26,839 | 26,758 | 26,823 | 26,747 | ||||||||||||
Common stock options
|
5 | 9 | 7 | 11 | ||||||||||||
Nonvested restricted stock
|
70 | 61 | 64 | 52 | ||||||||||||
Total Shares
|
26,914 | 26,828 | 26,894 | 26,810 |
Award Activity:
|
Three Months Ended
September 30, 2011
|
Nine Months Ended
September 30, 2011
|
||||||||||||||
Shares
|
Weighted Average
Grant Date
Fair Value
|
Shares
|
Weighted Average
Grant Date
Fair Value
|
|||||||||||||
Nonvested at beginning of period
|
235,162 | $ | 38.89 | 170,575 | $ | 36.29 | ||||||||||
Granted
|
– | – | 78,491 | 45.05 | ||||||||||||
Forfeited
|
(233 | ) | 35.85 | (233 | ) | 35.85 | ||||||||||
Vested
|
– | – | (13,904 | ) | 41.77 | |||||||||||
Nonvested at end of period
|
234,929 | $ | 38.89 | 234,929 | $ | 38.89 |
September 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 447 | 447 | 137 | 137 | |||||||||||
Mortgage loans receivable,
net of discount
|
4,114 | 4,320 | 4,131 | 4,199 | ||||||||||||
Financial Liabilities:
|
||||||||||||||||
Mortgage notes payable
|
634,108 | 680,931 | 644,424 | 671,527 | ||||||||||||
Notes payable to banks
|
144,298 | 144,064 | 91,294 | 89,818 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Income from real estate operations
|
$ | 43,942 | 43,118 | 130,441 | 131,077 | |||||||||||
Expenses from real estate operations
|
(12,628 | ) | (13,176 | ) | (37,663 | ) | (39,745 | ) | ||||||||
PROPERTY NET OPERATING INCOME
|
$ | 31,314 | 29,942 | 92,778 | 91,332 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
NET INCOME
|
$ | 5,791 | 4,126 | 16,308 | 13,710 | |||||||||||
Equity in earnings of unconsolidated investment
|
(87 | ) | (84 | ) | (260 | ) | (251 | ) | ||||||||
Interest income
|
(84 | ) | (85 | ) | (251 | ) | (252 | ) | ||||||||
Other income
|
(20 | ) | (20 | ) | (64 | ) | (108 | ) | ||||||||
Gain on sales of non-operating real estate
|
(9 | ) | (9 | ) | (27 | ) | (28 | ) | ||||||||
Depreciation and amortization from continuing operations
|
14,437 | 14,648 | 42,790 | 44,071 | ||||||||||||
Interest expense
|
8,680 | 8,845 | 26,100 | 26,515 | ||||||||||||
General and administrative expense
|
2,551 | 2,521 | 8,127 | 7,603 | ||||||||||||
Acquisition costs
|
55 | – | 55 | 72 | ||||||||||||
PROPERTY NET OPERATING INCOME
|
$ | 31,314 | 29,942 | 92,778 | 91,332 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands, except per share data)
|
||||||||||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP
PROPERTIES, INC. COMMON STOCKHOLDERS
|
$ | 5,670 | 4,023 | 15,954 | 13,403 | |||||||||||
Depreciation and amortization from continuing operations
|
14,437 | 14,648 | 42,790 | 44,071 | ||||||||||||
Depreciation from unconsolidated investment
|
33 | 33 | 100 | 99 | ||||||||||||
Noncontrolling interest depreciation and amortization
|
(54 | ) | (52 | ) | (162 | ) | (157 | ) | ||||||||
FUNDS FROM OPERATIONS (FFO) ATTRIBUTABLE TO
COMMON STOCKHOLDERS
|
$ | 20,086 | 18,652 | 58,682 | 57,416 | |||||||||||
Net income attributable to common stockholders per diluted share
|
$ | .21 | .15 | .59 | .50 | |||||||||||
Funds from operations (FFO) attributable to common stockholders
per diluted share
|
.75 | .70 | 2.18 | 2.14 | ||||||||||||
Diluted shares for earnings per share and funds from operations
|
26,914 | 26,828 | 26,894 | 26,810 |
·
|
The FFO change per share represents the increase or decrease in FFO per share from the current period compared to the same period in the prior year. FFO per share for the third quarter of 2011 was $.75 per share compared with $.70 per share for the same period of 2010, an increase of 7.1% per share. For the nine months ended September 30, 2011, FFO was $2.18 per share compared with $2.14 per share for the same period of 2010, an increase of 1.9% per share.
|
·
|
Same property net operating income change represents the PNOI increase or decrease for the same operating properties owned during the entire current period and prior year reporting period. PNOI from same properties increased 3.6% for the three months ended September 30, 2011, and increased 0.5% for the nine months.
|
·
|
Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period. Occupancy at September 30, 2011, was 93.0%. Quarter-end occupancy ranged from 88.3% to 93.0% over the period from September 30, 2010 to September 30, 2011.
|
·
|
Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases on the same space. Rental rate decreases on new and renewal leases (6.1% of total square footage) averaged 13.8% for the third quarter of 2011. For the nine months ended September 30, 2011, rental rate decreases on new and renewal leases (17.1% of total square footage) averaged 13.1%.
|
·
|
Termination fee income for the three and nine months ended September 30, 2011, was $52,000 and $542,000, respectively, compared to $378,000 and $2,816,000, respectively, for the same periods of 2010. Bad debt expense for the three and nine months ended September 30, 2011 was $128,000 and $427,000, respectively, compared to $91,000 and $833,000, respectively, for the same periods last year.
|
REAL ESTATE PROPERTIES ACQUIRED IN 2011
|
Location
|
Size
|
Date
Acquired
|
Cost (1)
|
|||||||
(Square feet)
|
(In thousands)
|
||||||||||
Lakeview Business Center
|
Charlotte, NC
|
127,000 |
08/17/11
|
$ | 6,460 | ||||||
Ridge Creek Distribution Center II
|
Charlotte, NC
|
300,000 |
08/17/11
|
14,530 | |||||||
Broadway Industrial Park, Building VII
|
Tempe, AZ
|
24,000 |
09/26/11
|
1,100 | |||||||
Total Acquisitions
|
451,000 | $ | 22,090 |
(1)
|
Total cost of the properties acquired was $23,450,000, of which $22,090,000 was allocated to real estate properties as indicated above. Intangibles associated with the purchases of real estate were allocated as follows: $1,320,000 to in-place lease intangibles, $66,000 to above market leases (both included in Other Assets on the Consolidated Balance Sheets) and $26,000 to below market leases (included in Other Liabilities on the Consolidated Balance Sheets). All of these costs are amortized over the remaining lives of the associated leases in place at the time of acquisition. During the first nine months of 2011, the Company expensed acquisition-related costs of $55,000 in connection with the Lakeview, Ridge Creek II and Broadway VII acquisitions.
|
Costs Incurred
|
|||||
DEVELOPMENT
|
Size
|
Costs
Transferred
in 2011(1)
|
For the Nine
Months Ended 9/30/11
|
Cumulative
as of
9/30/11
|
Estimated
Total Costs
|
(Square feet)
|
(In thousands)
|
LEASE-UP
|
||||||||||||||||||||
World Houston 31, Houston, TX
|
44,000 | $ | – | 2,304 | 3,359 | 4,600 | ||||||||||||||
Beltway Crossing VIII, Houston, TX
|
88,000 | 1,256 | 2,673 | 3,929 | 5,300 | |||||||||||||||
Total Lease-Up
|
132,000 | 1,256 | 4,977 | 7,288 | 9,900 | |||||||||||||||
UNDER CONSTRUCTION
|
||||||||||||||||||||
World Houston 32, Houston, TX
|
94,000 | 1,834 | 2,588 | 4,422 | 6,800 | |||||||||||||||
Southridge IX, Orlando, FL
|
76,000 | 1,987 | 1,061 | 3,048 | 5,400 | |||||||||||||||
Thousand Oaks 1, San Antonio, TX
|
36,000 | 865 | 391 | 1,256 | 4,600 | |||||||||||||||
Thousand Oaks 2, San Antonio, TX
|
73,000 | 1,187 | 494 | 1,681 | 5,000 | |||||||||||||||
Total Under Construction
|
279,000 | 5,873 | 4,534 | 10,407 | 21,800 | |||||||||||||||
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
|
||||||||||||||||||||
Phoenix, AZ
|
432,000 | – | 3,363 | 3,363 | 30,800 | |||||||||||||||
Tucson, AZ
|
70,000 | – | – | 417 | 4,900 | |||||||||||||||
Tampa, FL
|
249,000 | – | 211 | 4,411 | 14,600 | |||||||||||||||
Orlando, FL
|
1,508,000 | (1,987 | ) | 1,968 | 23,013 | 96,300 | ||||||||||||||
Fort Myers, FL
|
659,000 | – | 497 | 17,051 | 48,100 | |||||||||||||||
Dallas, TX
|
70,000 | – | 47 | 749 | 4,100 | |||||||||||||||
El Paso, TX
|
251,000 | – | – | 2,444 | 9,600 | |||||||||||||||
Houston, TX
|
2,412,000 | (3,090 | ) | 10,963 | 23,271 | 151,800 | ||||||||||||||
San Antonio, TX
|
484,000 | (2,052 | ) | 332 | 4,912 | 32,200 | ||||||||||||||
Charlotte, NC
|
95,000 | – | 54 | 1,229 | 7,100 | |||||||||||||||
Jackson, MS
|
28,000 | – | – | 706 | 2,000 | |||||||||||||||
Total Prospective Development
|
6,258,000 | (7,129 | ) | 17,435 | 81,566 | 401,500 | ||||||||||||||
6,669,000 | $ | – | 26,946 | 99,261 | 433,200 | |||||||||||||||
DEVELOPMENTS COMPLETED AND TRANSFERRED
|
||||||||||||||||||||
TO REAL ESTATE PROPERTIES DURING 2011
|
||||||||||||||||||||
Arion 8 Expansion, San Antonio, TX
|
20,000 | $ | – | 76 | 1,483 | |||||||||||||||
Total Transferred to Real Estate Properties
|
20,000 | $ | – | 76 | 1,483 | (2) |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||
2011
|
2010
|
Increase
(Decrease)
|
2011
|
2010
|
Increase
(Decrease)
|
|||||||||||||||||||
(In thousands, except rates of interest)
|
||||||||||||||||||||||||
Average bank borrowings
|
$ | 113,556 | 124,291 | (10,735 | ) | 120,297 | 117,474 | 2,823 | ||||||||||||||||
Weighted average variable interest rates
(excluding loan cost amortization)
|
1.42 | % | 1.48 | % | 1.42 | % | 1.43 | % | ||||||||||||||||
VARIABLE RATE INTEREST EXPENSE
|
||||||||||||||||||||||||
Variable rate interest
(excluding loan cost amortization)
|
$ | 407 | 465 | (58 | ) | 1,277 | 1,259 | 18 | ||||||||||||||||
Amortization of bank loan costs
|
74 | 78 | (4 | ) | 225 | 235 | (10 | ) | ||||||||||||||||
Total variable rate interest expense
|
481 | 543 | (62 | ) | 1,502 | 1,494 | 8 | |||||||||||||||||
FIXED RATE INTEREST EXPENSE
|
||||||||||||||||||||||||
Fixed rate interest
(excluding loan cost amortization)
|
8,966 | 8,986 | (20 | ) | 26,725 | 27,170 | (445 | ) | ||||||||||||||||
Amortization of mortgage loan costs
|
185 | 185 | – | 568 | 556 | 12 | ||||||||||||||||||
Total fixed rate interest expense
|
9,151 | 9,171 | (20 | ) | 27,293 | 27,726 | (433 | ) | ||||||||||||||||
Total interest
|
9,632 | 9,714 | (82 | ) | 28,795 | 29,220 | (425 | ) | ||||||||||||||||
Less capitalized interest
|
(952 | ) | (869 | ) | (83 | ) | (2,695 | ) | (2,705 | ) | 10 | |||||||||||||
TOTAL INTEREST EXPENSE
|
$ | 8,680 | 8,845 | (165 | ) | 26,100 | 26,515 | (415 | ) |
MORTGAGE LOANS REPAID IN 2010 AND 2011
|
Interest Rate
|
Date Repaid
|
Payoff Amount
|
||||||
Tower Automotive Center
|
6.03 | % |
10/01/10
|
$ | 8,770,000 | ||||
Butterfield Trail, Glenmont I & II, Interstate I, II & III,
Rojas, Stemmons Circle, Venture and West Loop I & II
|
7.25 | % |
01/31/11
|
36,065,000 | |||||
America Plaza, Central Green and World Houston 3-9
|
7.92 | % |
05/10/11
|
22,832,000 | |||||
Weighted Average/Total Amount
|
7.32 | % | $ | 67,667,000 |
NEW MORTGAGES IN 2010 AND 2011
|
Interest Rate
|
Date
|
Maturity Date
|
Amount
|
|||||||
40th Avenue, Centennial Park, Executive Airport,
Beltway V, Techway Southwest IV, Wetmore V-VIII,
Ocean View and World Houston 26, 28, 29 & 30
|
4.39 | % |
12/28/10
|
01/05/21
|
$ | 74,000,000 | |||||
America Plaza, Central Green, Glenmont I & II,
Interstate I, II & III, Rojas, Stemmons Circle, Venture,
West Loop I & II and World Houston 3-9
|
4.75 | % |
05/31/11
|
06/05/21
|
65,000,000 | ||||||
Weighted Average/Total Amount
|
4.56 | % | $ | 139,000,000 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||
Estimated
Useful Life
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
|||||||||||||||||
Upgrade on Acquisitions
|
40 yrs
|
$ | 31 | 4 | 254 | 32 | |||||||||||
Tenant Improvements:
|
|||||||||||||||||
New Tenants
|
Lease Life
|
2,191 | 3,599 | 5,955 | 8,414 | ||||||||||||
New Tenants (first generation) (1)
|
Lease Life
|
– | 301 | 1,028 | 582 | ||||||||||||
Renewal Tenants
|
Lease Life
|
232 | 459 | 1,791 | 1,168 | ||||||||||||
Other:
|
|||||||||||||||||
Building Improvements
|
5-40 yrs
|
713 | 1,077 | 2,748 | 2,941 | ||||||||||||
Roofs
|
5-15 yrs
|
292 | 553 | 1,155 | 2,035 | ||||||||||||
Parking Lots
|
3-5 yrs
|
180 | 469 | 689 | 828 | ||||||||||||
Other
|
5 yrs
|
48 | 144 | 298 | 453 | ||||||||||||
Total Capital Expenditures
|
$ | 3,687 | 6,606 | 13,918 | 16,453 |
(1)
|
First generation refers to space that has never been occupied under EastGroup’s ownership.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||
Estimated
Useful Life
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
|||||||||||||||||
Development
|
Lease Life
|
$ | 430 | 26 | 800 | 192 | |||||||||||
New Tenants
|
Lease Life
|
915 | 876 | 2,451 | 2,934 | ||||||||||||
New Tenants (first generation) (1)
|
Lease Life
|
– | 43 | 187 | 91 | ||||||||||||
Renewal Tenants
|
Lease Life
|
593 | 1,005 | 1,882 | 2,535 | ||||||||||||
Total Capitalized Leasing Costs
|
$ | 1,938 | 1,950 | 5,320 | 5,752 | ||||||||||||
Amortization of Leasing Costs
|
$ | 1,601 | 1,642 | 4,819 | 5,073 |
(1)
|
First generation refers to space that has never been occupied under EastGroup’s ownership.
|
September 30, 2011
|
December 31, 2010
|
|||||||
(In thousands)
|
||||||||
Mortgage notes payable – fixed rate
|
$ | 634,108 | 644,424 | |||||
Bank notes payable – floating rate
|
144,298 | 91,294 | ||||||
Total debt
|
$ | 778,406 | 735,718 |
Oct.-Dec. 2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
Total
|
Fair Value
|
|||||||||||||||||||||||||
Fixed rate debt (in thousands)
|
$ | 5,928 | 68,684 | 60,164 | 96,993 | 100,279 | 302,060 | 634,108 | 680,931 | (1) | ||||||||||||||||||||||
Weighted average interest rate
|
5.64 | % | 6.50 | % | 5.10 | % | 5.69 | % | 5.38 | % | 5.61 | % | 5.63 | % | ||||||||||||||||||
Variable rate debt (in thousands)
|
$ | – | 144,298 | (2) | – | – | – | – | 144,298 | 144,064 | (3) | |||||||||||||||||||||
Weighted average interest rate
|
– | 1.09 | % | – | – | – | – | 1.09 | % |
(1)
|
The fair value of the Company’s fixed rate debt is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers.
|
(2)
|
The variable rate debt is comprised of two lines of credit with balances of $133,000,000 on the $200 million line of credit and $11,298,000 on the $25 million working capital line of credit as of September 30, 2011. The Company has exercised its right for a one-year extension on the $200 million line of credit.
|
(3)
|
The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates.
|
(a) Form 10-Q Exhibits:
|
(31) Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
|
(a) David H. Hoster II, Chief Executive Officer
|
(b) N. Keith McKey, Chief Financial Officer
|
(32) Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
|
(a) David H. Hoster II, Chief Executive Officer
|
(b) N. Keith McKey, Chief Financial Officer
|
(101) The following materials from EastGroup Properties, Inc.’s Quarterly Report on Form 10-Q for
|
the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language):
|
(i) consolidated balance sheets, (ii) consolidated statements of income, (iii) consolidated
|
statement of changes in equity, (iv) consolidated statements of cash flows, and (v) the notes to
|
the consolidated financial statements.**
|
** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are
|
deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or
|
12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of
|
the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability
|
under those sections.
|
EASTGROUP PROPERTIES, INC.
|
||
/s/ BRUCE CORKERN
|
||
Bruce Corkern, CPA
|
||
Senior Vice President, Controller and
|
||
Chief Accounting Officer
|
||
/s/ N. KEITH MCKEY
|
||
N. Keith McKey, CPA
|
||
Executive Vice President, Chief Financial Officer,
|
||
Treasurer and Secretary
|
Certification of Chief Executive Officer Exhibit 31(a)
|
EastGroup Properties, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of EastGroup Properties, Inc.; |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ DAVID H. HOSTER II
|
|
DAVID H. HOSTER II
|
|
Chief Executive Officer
|
|
October 25, 2011
|
Certification of Chief Financial Officer Exhibit 31(b)
|
EastGroup Properties, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of EastGroup Properties, Inc.; |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ N. KEITH MCKEY
|
|
N. KEITH MCKEY
|
|
Chief Financial Officer
|
|
October 25, 2011
|
Certification of Chief Executive Officer Exhibit 32(a)
|
EastGroup Properties, Inc.
|
/s/ DAVID H. HOSTER II
|
|
DAVID H. HOSTER II
|
|
Chief Executive Officer
|
|
October 25, 2011
|
Certification of Chief Financial Officer Exhibit 32(b)
|
EastGroup Properties, Inc.
|
/s/ N. KEITH MCKEY
|
|
N. KEITH MCKEY
|
|
Chief Financial Officer
|
|
October 25, 2011
|
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 | Oct. 01, 2010 |
---|---|---|---|
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||
Repayment of mortgage loan | $ 8,770,000 | ||
Financial Assets | |||
Cash and cash equivalents | 447,000 | 137,000 | |
Financial Liabilities | |||
Mortgage notes payable | 634,108,000 | 644,424,000 | |
Notes payable to banks | 144,298,000 | 91,294,000 | |
Carrying (Reported) Amount, Fair Value Disclosure [Member] | |||
Financial Assets | |||
Cash and cash equivalents | 447,000 | 137,000 | |
Mortgage loans receivable, net of discount | 4,114,000 | 4,131,000 | |
Financial Liabilities | |||
Mortgage notes payable | 634,108,000 | 644,424,000 | |
Notes payable to banks | 144,298,000 | 91,294,000 | |
Estimate of Fair Value, Fair Value Disclosure [Member] | |||
Financial Assets | |||
Cash and cash equivalents | 447,000 | 137,000 | |
Mortgage loans receivable, net of discount | 4,320,000 | 4,199,000 | |
Financial Liabilities | |||
Mortgage notes payable | 680,931,000 | 671,527,000 | |
Notes payable to banks | $ 144,064,000 | $ 89,818,000 |
CONSOLIDATED BALANCE SHEETS Parenthetical (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
EQUITY | ||
Common shares, par value | $ 0.0001 | $ 0.0001 |
Common shares, authorized | 70,000,000 | 70,000,000 |
Common shares, issued | 27,080,371 | 26,973,531 |
Common shares, outstanding | 27,080,371 | 26,973,531 |
Excess shares, par value | $ 0.0001 | $ 0.0001 |
Excess shares, authorized | 30,000,000 | 30,000,000 |
Excess shares, issued | 0 | 0 |
RISKS AND UNCERTAINTIES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
RISKS AND UNCERTAINTIES [Abstract] | |
Risks and Uncertainties | (15) RISKS AND UNCERTAINTIES The state of the overall economy can significantly impact the Company's operational performance and thus impact its financial position. Should EastGroup experience a significant decline in operational performance, it may affect the Company's ability to make distributions to its shareholders, service debt, or meet other financial obligations. |
Document And Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Oct. 21, 2011 | Jun. 30, 2010 | |
Entity Registrant Name | EastGroup Properties Inc | ||
Entity Central Index Key | 0000049600 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 923,034,000 | ||
Entity Common Stock, Shares Outstanding | 27,080,371 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2011 |
EARNINGS PER SHARE (Details) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS [Abstract] | ||||
Numerator - net income attributable to common stockholders | $ 5,670 | $ 4,023 | $ 15,954 | $ 13,403 |
Denominator - weighted average shares outstanding (in shares) | 26,839 | 26,758 | 26,823 | 26,747 |
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS [Abstract] | ||||
Numerator - net income attributable to common stockholders | $ 5,670 | $ 4,023 | $ 15,954 | $ 13,403 |
Weighted average shares outstanding (in shares) | 26,839 | 26,758 | 26,823 | 26,747 |
Common stock options (in shares) | 5 | 9 | 7 | 11 |
Nonvested restricted stock (in shares) | 70 | 61 | 64 | 52 |
Total Shares | 26,914 | 26,828 | 26,894 | 26,810 |
SUBSEQUENT EVENTS | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
SubsequentEventsAbstract | |
Subsequent Events | (18) SUBSEQUENT EVENT In October 2011, EastGroup executed an application for a $54 million, non-recourse first mortgage loan with a fixed interest rate of 4.09%, a 10-year term and a 20-year amortization schedule. The loan, which will be secured by properties containing 1.4 million square feet, is expected to close in January 2012. The Company plans to use the proceeds of this mortgage loan to reduce variable rate bank borrowings. |
DERIVATIVES AND HEDGING ACTIVITIES (Details) (USD $) | Oct. 01, 2010 |
---|---|
DERIVATIVES AND HEDGING ACTIVITIES [Abstract] | |
Payment of Outstanding Mortgage Loan on Tower Automotive Center | $ 8,770,000 |
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REAL ESTATE PROPERTIES | 9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||
REAL ESTATE PROPERTIES [Abstract] | |||||||||||||||||||||||||||||||
Real Estate Properties | (4) REAL ESTATE PROPERTIES EastGroup has one reportable segment - industrial properties. These properties are concentrated in major Sunbelt markets of the United States, primarily in the states of Florida, Texas, Arizona, California and North Carolina, have similar economic characteristics and also meet the other criteria that permit the properties to be aggregated into one reportable segment. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows (including estimated future expenditures necessary to substantially complete the asset) expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. As of September 30, 2011 and December 31, 2010, the Company determined no impairment charges on the Company's real estate properties were necessary. Depreciation of buildings and other improvements, including personal property, is computed using the straight-line method over estimated useful lives of generally 40 years for buildings and 3 to 15 years for improvements and personal property. Building improvements are capitalized, while maintenance and repair expenses are charged to expense as incurred. Significant renovations and improvements that improve or extend the useful life of the assets are capitalized. Depreciation expense was $12,175,000 and $36,278,000 for the three and nine months ended September 30, 2011, respectively, and $12,222,000 and $36,429,000 for the same periods in 2010. The Company's real estate properties at September 30, 2011 and December 31, 2010 were as follows:
|
PRINCIPLES OF CONSOLIDATION (Policies) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
PRINCIPLES OF CONSOLIDATION [Abstract] | |
Consolidation Policy | The consolidated financial statements include the accounts of EastGroup, its wholly-owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest. At September 30, 2011 and December 31, 2010, the Company had a controlling interest in two joint ventures: the 80% owned University Business Center and the 80% owned Castilian Research Center. The Company records 100% of the joint ventures' assets, liabilities, revenues and expenses with noncontrolling interests provided for in accordance with the joint venture agreements. The equity method of accounting is used for the Company's 50% undivided tenant-in-common interest in Industry Distribution Center II. All significant intercompany transactions and accounts have been eliminated in consolidation. |
OTHER ASSETS (Details) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Summary of Other Assets [Abstract] | ||
Leasing costs (principally commissions), net of accumulated amortization | $ 22,776 | $ 22,274 |
Straight-line rent receivable, net of allowance for doubtful accounts | 20,208 | 18,694 |
Accounts receivable, net of allowance for doubtful accounts | 2,629 | 2,460 |
Mortgage loans receivable, net of discount | 4,114 | 4,131 |
Loan costs, net of accumulated amortization | 3,195 | 3,358 |
Acquired in-place lease intangibles, net of accumulated amortization | 2,672 | 3,046 |
Goodwill | 990 | 990 |
Prepaid expenses and other assets | 5,719 | 7,456 |
Other Assets Total | 62,303 | 62,409 |
Accumulated amortization of leasing costs | 15,799 | 18,566 |
Straight-line rent receivable allowance for doubtful accounts | 311 | 282 |
Allowance for doubtful accounts | 484 | 706 |
Discount - Mortgage loans receivable | 46 | 56 |
Accumulated amortization of loan costs | 4,173 | 4,129 |
Accumulated amortization - Acquired in-place lease intangibles | $ 8,136 | $ 6,443 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Carrying amounts and fair value of financial instruments | The following table presents the carrying amounts and estimated fair values of the Company's financial instruments in accordance with ASC 820 at September 30, 2011 and December 31, 2010.
Carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions, except as indicated in the notes below. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying amounts approximate fair value due to the short maturity of those instruments. Mortgage loans receivable, net of discount (included in Other Assets on the Consolidated Balance Sheets): The fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (Level 2 input). Mortgage notes payable: The fair value of the Company's mortgage notes payable is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company's bankers (Level 2 input). Notes payable to banks: The fair value of the Company's notes payable to banks is estimated by discounting expected cash flows at current market rates (Level 2 input). |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | (17) FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. The Codification requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3). The Company's interest rate swap, as discussed in Note 12, was reported at fair value and shown on the Consolidated Balance Sheets under Other Liabilities. The swap was settled on October 1, 2010, with the repayment of the Company's $8,770,000 mortgage loan on the Tower Automotive Center. Until the repayment, the fair value of the interest rate swap was determined by estimating the expected cash flows over the life of the swap using the mid-market rate and price environment as of the last trading day of the reporting period. This market information is considered a Level 2 input as defined by ASC 820. The following table presents the carrying amounts and estimated fair values of the Company's financial instruments in accordance with ASC 820 at September 30, 2011 and December 31, 2010.
Carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions, except as indicated in the notes below. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying amounts approximate fair value due to the short maturity of those instruments. Mortgage loans receivable, net of discount (included in Other Assets on the Consolidated Balance Sheets): The fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (Level 2 input). Mortgage notes payable: The fair value of the Company's mortgage notes payable is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company's bankers (Level 2 input). Notes payable to banks: The fair value of the Company's notes payable to banks is estimated by discounting expected cash flows at current market rates (Level 2 input). |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended | |||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] | ||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | (9) ACCOUNTS PAYABLE AND ACCRUED EXPENSES A summary of the Company's Accounts Payable and Accrued Expenses follows:
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CONSOLIDATED STATEMENTS OF CASH FLOWS Parenthetical (USD $) In Thousands | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Statement of Cash Flows Parenthetical [Abstract] | ||
Cash paid for interest, amount capitalized | $ 2,695 | $ 2,705 |
COMPREHENSIVE INCOME (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME [Abstract] | ||||||||||||||||||||||||||||||||||||
Comprehensive Income |
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BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES [Abstract] | |
Business Combinations and Acquired Intangibles | (6) BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES Upon acquisition of real estate properties, the Company applies the principles of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations, which requires that acquisition-related costs be recognized as expenses in the periods in which the costs are incurred and the services are received. The Codification also provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their respective fair values. Goodwill is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates. Factors considered by management in allocating the cost of the properties acquired include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The allocation to tangible assets (land, building and improvements) is based upon management's determination of the value of the property as if it were vacant using discounted cash flow models. The purchase price is also allocated among the following categories of intangible assets: the above or below market component of in-place leases, the value of in-place leases, and the value of customer relationships. The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management's estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above and below market leases are included in Other Assets and Other Liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based upon management's assessment of their respective values. These intangible assets are included in Other Assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable. Amortization expense for in-place lease intangibles was $661,000 and $1,693,000 for the three and nine months ended September 30, 2011, respectively, and $784,000 and $2,569,000 for the same periods in 2010. Amortization of above and below market leases decreased rental income by $71,000 and $256,000 for the three and nine months ended September 30, 2011, respectively, and decreased rental income by $168,000 and $346,000 for the same periods in 2010. During the first nine months of 2011, EastGroup acquired the following operating properties: Lakeview Business Center and Ridge Creek Distribution Center II in Charlotte, North Carolina, and Broadway Industrial Park, Building VII, in Tempe, Arizona. The Company purchased these properties for a total cost of $23,450,000, of which $22,090,000 was allocated to real estate properties. The Company allocated $4,875,000 of the total purchase price to land using third party land valuations for the Charlotte and Tempe markets. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurements and Disclosures (see Note 17 for additional information on ASC 820). Intangibles associated with the purchase of real estate were allocated as follows: $1,320,000 to in-place lease intangibles, $66,000 to above market leases (both included in Other Assets on the Consolidated Balance Sheets), and $26,000 to below market leases (included in Other Liabilities on the Consolidated Balance Sheets). These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition. EastGroup expensed acquisition-related costs of $55,000 during the three and nine months ended September 30, 2011. The Company did not expense any acquisition-related costs during the three months ended September 30, 2010. During the nine months ended September 30, 2010, EastGroup expensed acquisition-related costs of $72,000 in connection with the acquisitions of Commerce Park 2 & 3 in Charlotte, North Carolina; Ocean View Corporate Center in San Diego, California; and East University Distribution Center III in Phoenix, Arizona. The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment. In management's opinion, no impairment of goodwill and other intangibles existed at September 30, 2011 and December 31, 2010. |
COMPREHENSIVE INCOME | 9 Months Ended | |||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME [Abstract] | ||||||||||||||||||||||||||||||||||||
Comprehensive Income | (11) COMPREHENSIVE INCOME Comprehensive income is comprised of net income plus all other changes in equity from non-owner sources. The components of Accumulated Other Comprehensive Loss are summarized below. See Note 12 for information regarding the Company's interest rate swap, which was settled in October 2010.
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REAL ESTATE HELD FOR SALE DISCONTINUED OPERATIONS | 9 Months Ended |
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Sep. 30, 2011 | |
REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS [Abstract] | |
Real Estate Held For Sale and Discontinued Operations | (7) REAL ESTATE HELD FOR SALE/DISCONTINUED OPERATIONS The Company considers a real estate property to be held for sale when it meets the criteria established under ASC 360, Property, Plant, and Equipment, including when it is probable that the property will be sold within a year. A key indicator of probability of sale is whether the buyer has a significant amount of earnest money at risk. Real estate properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. In accordance with the guidelines established under the Codification, the results of operations for the properties sold or held for sale during the reported periods are shown under Discontinued Operations on the Consolidated Statements of Income. Interest expense is not generally allocated to the properties held for sale or whose operations are included under Discontinued Operations unless the mortgage is required to be paid in full upon the sale of the property. EastGroup did not sell any real estate properties during 2010 or during the first nine months of 2011, and the Company had no real estate properties held for sale at September 30, 2011 or December 31, 2010. Therefore, the Company has no Discontinued Operations on the Consolidated Statements of Income. |
OTHER ASSETS (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||
Other Assets | A summary of the Company's Other Assets follows:
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DEVELOPMENT | 9 Months Ended |
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Sep. 30, 2011 | |
DEVELOPMENT [Abstract] | |
Development | (5) DEVELOPMENT During the period in which a property is under development, costs associated with development (i.e., land, construction costs, interest expense, property taxes and other direct and indirect costs associated with development) are aggregated into the total capitalized costs of the property. Included in these costs are management's estimates for the portions of internal costs (primarily personnel costs) deemed directly or indirectly related to such development activities. As the property becomes occupied, depreciation commences on the occupied portion of the building, and costs are capitalized only for the portion of the building that remains vacant. When the property becomes 80% occupied or one year after completion of the shell construction (whichever comes first), capitalization of development costs ceases. The properties are then transferred to real estate properties, and depreciation commences on the entire property (excluding the land). |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Parenthetical (USD $) | 9 Months Ended |
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Sep. 30, 2011 | |
Statement of Stockholders' Equity Parenthetical [Abstract] | |
Common dividends declared - $1.56 per share | $ 1.56 |
Issuance of 15,000 shares of common stock, common stock offering, net of expenses | 15,000 |
Issuance of 6,000 shares of common stock, options exercised | 6,000 |
Issuance of 4,528 shares of common stock, dividend reinvestment plan | 4,528 |
Withheld 3,564 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | 3,564 |
BASIS OF PRESENTATION | 9 Months Ended |
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Sep. 30, 2011 | |
BASIS OF PRESENTATION [Abstract] | |
Basis of Presentation | (1) BASIS OF PRESENTATION The accompanying unaudited financial statements of EastGroup Properties, Inc. ("EastGroup" or "the Company") have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The financial statements should be read in conjunction with the financial statements contained in the 2010 annual report on Form 10-K and the notes thereto. Certain reclassifications have been made in the 2010 consolidated financial statements to conform to the 2011 presentation. |
REAL ESTATE PROPERTIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
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Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2010 | |
REAL ESTATE PROPERTIES [Abstract] | |||||
Depreciation Expense During the Period | $ 12,175,000 | $ 12,222,000 | $ 36,278,000 | $ 36,429,000 | |
Estimated useful lives for buildings (in years) | 40 | ||||
Estimated useful lives of improvements and personal property - minimum (in years) | 3 | ||||
Estimated useful lives of improvements and personal property - maximum (in years) | 15 | ||||
Real estate properties component balances [Abstract] | |||||
Land | 226,398,000 | 226,398,000 | 221,523,000 | ||
Buildings and building improvements | 1,008,527,000 | 1,008,527,000 | 985,798,000 | ||
Tenant and other improvements | 251,982,000 | 251,982,000 | 240,134,000 | ||
Development | 99,261,000 | 99,261,000 | 73,722,000 | ||
Real estate and development properties | 1,586,168,000 | 1,586,168,000 | 1,521,177,000 | ||
Less accumulated depreciation | (439,465,000) | (439,465,000) | (403,187,000) | ||
Real estate, net | $ 1,146,703,000 | $ 1,146,703,000 | $ 1,117,990,000 |
REAL ESTATE PROPERTIES (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||
REAL ESTATE PROPERTIES [Abstract] | |||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | The Company's real estate properties at September 30, 2011 and December 31, 2010 were as follows:
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SUBSEQUENT EVENTS (Details) (USD $) | Sep. 30, 2011 |
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SubsequentEventsAbstract | |
Amount of loan application | $ 54,000,000 |
Non-recourse first mortgage loan fixed interest rate | 4.09% |
Term of non-recourse first mortgage loan (in years) | 10 |
Loan amortization schedule term (in years) | 20 |
Number of square feet in properties securing the loan (in square feet) | 1,400,000 |
PRINCIPLES OF CONSOLIDATION | 9 Months Ended |
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Sep. 30, 2011 | |
PRINCIPLES OF CONSOLIDATION [Abstract] | |
Principles of Consolidation | (2) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of EastGroup, its wholly-owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest. At September 30, 2011 and December 31, 2010, the Company had a controlling interest in two joint ventures: the 80% owned University Business Center and the 80% owned Castilian Research Center. The Company records 100% of the joint ventures' assets, liabilities, revenues and expenses with noncontrolling interests provided for in accordance with the joint venture agreements. The equity method of accounting is used for the Company's 50% undivided tenant-in-common interest in Industry Distribution Center II. All significant intercompany transactions and accounts have been eliminated in consolidation. |
USE OF ESTIMATES (Policies) | 9 Months Ended |
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Sep. 30, 2011 | |
USE OF ESTIMATES [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the reporting period and to disclose material contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 9 Months Ended | |||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] | ||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | A summary of the Company's Accounts Payable and Accrued Expenses follows:
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REAL ESTATE HELD FOR SALE DISCONTINUED OPERATIONS (Policies) | 9 Months Ended |
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Sep. 30, 2011 | |
REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS [Abstract] | |
Real Estate Held For Sale and Discontinued Operations [Policy Text Block] | The Company considers a real estate property to be held for sale when it meets the criteria established under ASC 360, Property, Plant, and Equipment, including when it is probable that the property will be sold within a year. A key indicator of probability of sale is whether the buyer has a significant amount of earnest money at risk. Real estate properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. In accordance with the guidelines established under the Codification, the results of operations for the properties sold or held for sale during the reported periods are shown under Discontinued Operations on the Consolidated Statements of Income. Interest expense is not generally allocated to the properties held for sale or whose operations are included under Discontinued Operations unless the mortgage is required to be paid in full upon the sale of the property. |
OTHER LIABILITIES | 9 Months Ended | |||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||
OTHER LIABILITIES [Abstract] | ||||||||||||||||||||||
Other Liabilities | (10) OTHER LIABILITIES A summary of the Company's Other Liabilities follows:
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USE OF ESTIMATES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
USE OF ESTIMATES [Abstract] | |
USE OF ESTIMATES | (3) USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the reporting period and to disclose material contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. |
EARNINGS PER SHARE | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | (13) EARNINGS PER SHARE The Company applies ASC 260, Earnings Per Share, which requires companies to present basic and diluted earnings per share (EPS). Basic EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting period. The Company's basic EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding. Diluted EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting period and to each share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The Company calculates diluted EPS by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding plus the dilutive effect of nonvested restricted stock and stock options had the options been exercised. The dilutive effect of stock options and their equivalents (such as nonvested restricted stock) was determined using the treasury stock method which assumes exercise of the options as of the beginning of the period or when issued, if later, and assumes proceeds from the exercise of options are used to purchase common stock at the average market price during the period. Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:
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PRINCIPLES OF CONSOLIDATION (Details) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
University Business Center [Member] | ||
Subsidiaries [Line Items] | ||
Joint venture ownership interest (in hundredths) | 80.00% | 80.00% |
Castilian Research Center [Member] | ||
Subsidiaries [Line Items] | ||
Joint venture ownership interest (in hundredths) | 80.00% | 80.00% |
Industry Distribution Center II [Member] | ||
Subsidiaries [Line Items] | ||
Tenant-in-common interest (in hundredths) | 50.00% | 50.00% |
BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES (Policies) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES [Abstract] | |
Business Combinations | Upon acquisition of real estate properties, the Company applies the principles of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations, which requires that acquisition-related costs be recognized as expenses in the periods in which the costs are incurred and the services are received. The Codification also provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their respective fair values. Goodwill is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates. Factors considered by management in allocating the cost of the properties acquired include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The allocation to tangible assets (land, building and improvements) is based upon management's determination of the value of the property as if it were vacant using discounted cash flow models. The purchase price is also allocated among the following categories of intangible assets: the above or below market component of in-place leases, the value of in-place leases, and the value of customer relationships. The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management's estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above and below market leases are included in Other Assets and Other Liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based upon management's assessment of their respective values. These intangible assets are included in Other Assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable. |
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