MARYLAND | 13-2711135 |
(State or other jurisdiction | (I.R.S. Employer |
of incorporation or organization) | Identification No.) |
190 EAST CAPITOL STREET | |
SUITE 400 | |
JACKSON, MISSISSIPPI | 39201 |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number: (601) 354-3555 |
Page | ||
September 30, 2012 | December 31, 2011 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Real estate properties | $ | 1,583,171 | 1,550,444 | |||
Development | 130,533 | 112,149 | ||||
1,713,704 | 1,662,593 | |||||
Less accumulated depreciation | (487,902 | ) | (451,805 | ) | ||
1,225,802 | 1,210,788 | |||||
Unconsolidated investment | 2,794 | 2,757 | ||||
Cash | 1,027 | 174 | ||||
Other assets | 69,449 | 72,797 | ||||
TOTAL ASSETS | $ | 1,299,072 | 1,286,516 | |||
LIABILITIES AND EQUITY | ||||||
LIABILITIES | ||||||
Mortgage notes payable | $ | 613,797 | 628,170 | |||
Unsecured term loans payable | 130,000 | 50,000 | ||||
Notes payable to banks | 46,451 | 154,516 | ||||
Accounts payable and accrued expenses | 34,066 | 31,205 | ||||
Other liabilities | 16,898 | 17,016 | ||||
Total Liabilities | 841,212 | 880,907 | ||||
EQUITY | ||||||
Stockholders’ Equity: | ||||||
Common shares; $.0001 par value; 70,000,000 shares authorized; 29,278,070 shares issued and outstanding at September 30, 2012 and 27,658,059 at December 31, 2011 | 3 | 3 | ||||
Excess shares; $.0001 par value; 30,000,000 shares authorized; no shares issued | — | — | ||||
Additional paid-in capital on common shares | 697,311 | 619,386 | ||||
Distributions in excess of earnings | (241,616 | ) | (216,560 | ) | ||
Accumulated other comprehensive loss | (605 | ) | — | |||
Total Stockholders’ Equity | 455,093 | 402,829 | ||||
Noncontrolling interest in joint ventures | 2,767 | 2,780 | ||||
Total Equity | 457,860 | 405,609 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 1,299,072 | 1,286,516 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
REVENUES | ||||||||||||
Income from real estate operations | $ | 46,982 | 43,819 | 140,077 | 130,116 | |||||||
Other income | 15 | 20 | 43 | 64 | ||||||||
46,997 | 43,839 | 140,120 | 130,180 | |||||||||
EXPENSES | ||||||||||||
Expenses from real estate operations | 13,642 | 12,571 | 40,086 | 37,491 | ||||||||
Depreciation and amortization | 15,436 | 14,348 | 46,817 | 42,552 | ||||||||
General and administrative | 2,453 | 2,551 | 8,105 | 8,127 | ||||||||
Acquisition costs | 45 | 55 | 64 | 55 | ||||||||
31,576 | 29,525 | 95,072 | 88,225 | |||||||||
OPERATING INCOME | 15,421 | 14,314 | 45,048 | 41,955 | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Interest expense | (8,426 | ) | (8,680 | ) | (26,844 | ) | (26,100 | ) | ||||
Other | (98 | ) | 180 | 245 | 538 | |||||||
INCOME FROM CONTINUING OPERATIONS | 6,897 | 5,814 | 18,449 | 16,393 | ||||||||
DISCONTINUED OPERATIONS | ||||||||||||
Income (loss) from real estate operations | — | (23 | ) | 17 | (85 | ) | ||||||
Gain on sales of nondepreciable real estate investments, net of tax | — | — | 167 | — | ||||||||
Gain on sales of real estate investments | — | — | 1,869 | — | ||||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | — | (23 | ) | 2,053 | (85 | ) | ||||||
NET INCOME | 6,897 | 5,791 | 20,502 | 16,308 | ||||||||
Net income attributable to noncontrolling interest in joint ventures | (126 | ) | (121 | ) | (356 | ) | (354 | ) | ||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | 6,771 | 5,670 | 20,146 | 15,954 | ||||||||
Other comprehensive income (loss) | (605 | ) | — | (605 | ) | — | ||||||
TOTAL COMPREHENSIVE INCOME | $ | 6,166 | 5,670 | 19,541 | 15,954 | |||||||
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Income from continuing operations | $ | 0.23 | 0.21 | 0.64 | 0.59 | |||||||
Income (loss) from discontinued operations | 0.00 | 0.00 | 0.07 | 0.00 | ||||||||
Net income attributable to common stockholders | $ | 0.23 | 0.21 | 0.71 | 0.59 | |||||||
Weighted average shares outstanding | 28,912 | 26,839 | 28,271 | 26,823 | ||||||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Income from continuing operations | $ | 0.23 | 0.21 | 0.64 | 0.59 | |||||||
Income (loss) from discontinued operations | 0.00 | 0.00 | 0.07 | 0.00 | ||||||||
Net income attributable to common stockholders | $ | 0.23 | 0.21 | 0.71 | 0.59 | |||||||
Weighted average shares outstanding | 29,030 | 26,914 | 28,361 | 26,894 | ||||||||
AMOUNTS ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Income from continuing operations | $ | 6,771 | 5,693 | 18,093 | 16,039 | |||||||
Income (loss) from discontinued operations | — | (23 | ) | 2,053 | (85 | ) | ||||||
Net income attributable to common stockholders | $ | 6,771 | 5,670 | 20,146 | 15,954 |
Common Stock | Additional Paid-In Capital | Distributions in Excess of Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest in Joint Ventures | Total | |||||||||||||
BALANCE, DECEMBER 31, 2011 | $ | 3 | 619,386 | (216,560 | ) | — | 2,780 | 405,609 | ||||||||||
Net income | — | — | 20,146 | — | 356 | 20,502 | ||||||||||||
Common dividends declared – $1.57 per share | — | — | (45,202 | ) | — | — | (45,202 | ) | ||||||||||
Stock-based compensation, net of forfeitures | — | 3,571 | — | — | — | 3,571 | ||||||||||||
Issuance of 1,511,398 shares of common stock, common stock offering, net of expenses | — | 74,903 | — | — | — | 74,903 | ||||||||||||
Issuance of 4,500 shares of common stock, options exercised | — | 108 | — | — | — | 108 | ||||||||||||
Issuance of 2,982 shares of common stock, dividend reinvestment plan | — | 155 | — | — | — | 155 | ||||||||||||
Withheld 17,927 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | — | (812 | ) | — | — | — | (812 | ) | ||||||||||
Net unrealized change in fair value of interest rate swap | — | — | — | (605 | ) | — | (605 | ) | ||||||||||
Distributions to noncontrolling interest | — | — | — | — | (369 | ) | (369 | ) | ||||||||||
BALANCE, SEPTEMBER 30, 2012 | $ | 3 | 697,311 | (241,616 | ) | (605 | ) | 2,767 | 457,860 |
Nine Months Ended September 30, | ||||||
2012 | 2011 | |||||
OPERATING ACTIVITIES | ||||||
Net income | $ | 20,502 | 16,308 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization from continuing operations | 46,817 | 42,552 | ||||
Depreciation and amortization from discontinued operations | 176 | 238 | ||||
Stock-based compensation expense | 2,781 | 1,910 | ||||
Gain on sales of land and real estate investments | (2,036 | ) | (27 | ) | ||
Changes in operating assets and liabilities: | ||||||
Accrued income and other assets | 2,832 | 1,007 | ||||
Accounts payable, accrued expenses and prepaid rent | 1,977 | 7,042 | ||||
Other | 134 | (104 | ) | |||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 73,183 | 68,926 | ||||
INVESTING ACTIVITIES | ||||||
Real estate development | (34,834 | ) | (28,982 | ) | ||
Purchases of real estate | (10,950 | ) | (23,450 | ) | ||
Real estate improvements | (13,670 | ) | (14,089 | ) | ||
Proceeds from sales of real estate investments | 7,399 | — | ||||
Changes in accrued development costs | 72 | 2,313 | ||||
Changes in other assets and other liabilities | (6,426 | ) | (5,014 | ) | ||
NET CASH USED IN INVESTING ACTIVITIES | (58,409 | ) | (69,222 | ) | ||
FINANCING ACTIVITIES | ||||||
Proceeds from bank borrowings | 186,072 | 213,034 | ||||
Repayments on bank borrowings | (294,137 | ) | (160,030 | ) | ||
Proceeds from mortgage notes payable | 54,000 | 65,000 | ||||
Principal payments on mortgage notes payable | (68,282 | ) | (75,222 | ) | ||
Proceeds from unsecured term loan payable | 80,000 | — | ||||
Debt issuance costs | (1,474 | ) | (632 | ) | ||
Distributions paid to stockholders | (45,035 | ) | (41,880 | ) | ||
Proceeds from common stock offerings | 74,903 | 450 | ||||
Proceeds from exercise of stock options | 108 | 133 | ||||
Proceeds from dividend reinvestment plan | 168 | 184 | ||||
Other | (244 | ) | (431 | ) | ||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (13,921 | ) | 606 | |||
INCREASE IN CASH AND CASH EQUIVALENTS | 853 | 310 | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 174 | 137 | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 1,027 | 447 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||
Cash paid for interest, net of amount capitalized of $3,362 and $2,695 for 2012 and 2011, respectively | $ | 26,162 | 25,340 |
(1) | BASIS OF PRESENTATION |
(2) | PRINCIPLES OF CONSOLIDATION |
(3) | USE OF ESTIMATES |
(4) | REAL ESTATE PROPERTIES |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Real estate properties: | ||||||
Land | $ | 240,486 | 235,394 | |||
Buildings and building improvements | 1,073,931 | 1,056,783 | ||||
Tenant and other improvements | 268,754 | 258,267 | ||||
Development | 130,533 | 112,149 | ||||
1,713,704 | 1,662,593 | |||||
Less accumulated depreciation | (487,902 | ) | (451,805 | ) | ||
$ | 1,225,802 | 1,210,788 |
(5) | DEVELOPMENT |
(6) | BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES |
(7) | REAL ESTATE HELD FOR SALE/DISCONTINUED OPERATIONS |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
DISCONTINUED OPERATIONS | 2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | |||||||||||||
Income from real estate operations | $ | — | 123 | 304 | 325 | ||||||||
Expenses from real estate operations | — | (57 | ) | (111 | ) | (172 | ) | ||||||
Property net operating income from discontinued operations | — | 66 | 193 | 153 | |||||||||
Depreciation and amortization | — | (89 | ) | (176 | ) | (238 | ) | ||||||
Income (loss) from real estate operations | — | (23 | ) | 17 | (85 | ) | |||||||
Gain on sales of nondepreciable real estate investments, net of tax | — | — | 167 | — | |||||||||
Gain on sales of real estate investments | — | — | 1,869 | — | |||||||||
Income (loss) from discontinued operations | $ | — | (23 | ) | 2,053 | (85 | ) |
(8) | OTHER ASSETS |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Leasing costs (principally commissions) | $ | 41,208 | 39,297 | |||
Accumulated amortization of leasing costs | (17,429 | ) | (16,603 | ) | ||
Leasing costs (principally commissions), net of accumulated amortization | 23,779 | 22,694 | ||||
Straight-line rents receivable | 22,152 | 20,959 | ||||
Allowance for doubtful accounts on straight-line rents receivable | (502 | ) | (351 | ) | ||
Straight-line rents receivable, net of allowance for doubtful accounts | 21,650 | 20,608 | ||||
Accounts receivable | 3,568 | 3,949 | ||||
Allowance for doubtful accounts on accounts receivable | (541 | ) | (522 | ) | ||
Accounts receivable, net of allowance for doubtful accounts | 3,027 | 3,427 | ||||
Acquired in-place lease intangibles | 10,429 | 12,157 | ||||
Accumulated amortization of acquired in-place lease intangibles | (5,029 | ) | (4,478 | ) | ||
Acquired in-place lease intangibles, net of accumulated amortization | 5,400 | 7,679 | ||||
Acquired above market lease intangibles | 2,438 | 2,904 | ||||
Accumulated amortization of acquired above market lease intangibles | (951 | ) | (929 | ) | ||
Acquired above market lease intangibles, net of accumulated amortization | 1,487 | 1,975 | ||||
Mortgage loans receivable | 4,150 | 4,154 | ||||
Discount on mortgage loans receivable | (36 | ) | (44 | ) | ||
Mortgage loans receivable, net of discount | 4,114 | 4,110 | ||||
Loan costs | 8,477 | 7,662 | ||||
Accumulated amortization of loan costs | (4,655 | ) | (4,433 | ) | ||
Loan costs, net of accumulated amortization | 3,822 | 3,229 | ||||
Goodwill | 990 | 990 | ||||
Prepaid expenses and other assets | 5,180 | 8,085 | ||||
$ | 69,449 | 72,797 |
(9) | ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Property taxes payable | $ | 18,585 | 9,840 | |||
Development costs payable | 6,000 | 5,928 | ||||
Interest payable | 2,629 | 2,736 | ||||
Dividends payable on unvested restricted stock | 1,582 | 1,415 | ||||
Other payables and accrued expenses | 5,270 | 11,286 | ||||
$ | 34,066 | 31,205 |
(10) | OTHER LIABILITIES |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Security deposits | $ | 9,556 | 9,184 | |||
Prepaid rent and other deferred income | 5,616 | 6,373 | ||||
Interest rate swap liability | 871 | — | ||||
Other liabilities | 855 | 1,459 | ||||
$ | 16,898 | 17,016 |
(11) | COMPREHENSIVE INCOME |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | ||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS: | ||||||||||||
Balance at beginning of period | $ | — | — | — | — | |||||||
Change in fair value of interest rate swap | (605 | ) | — | (605 | ) | — | ||||||
Balance at end of period | $ | (605 | ) | — | (605 | ) | — |
(12) | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
Interest Rate Derivative | Notional Amount | |
Interest Rate Swap | $80,000,000 |
Liability Derivatives As of September 30, 2012 | Liability Derivatives As of December 31, 2011 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivatives designated as cash flow hedges: | |||||||||||
Interest rate swaps | Other Liabilities | $ | 871,000 | Other Liabilities | $ | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | ||||||||||||
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS | ||||||||||||
Interest Rate Swaps: | ||||||||||||
Amount of loss recognized in Other Comprehensive Income on derivative | $ | (655 | ) | — | (655 | ) | — | |||||
Amount of loss reclassified from Accumulated Other Comprehensive Loss into Interest Expense | (50 | ) | — | (50 | ) | — | ||||||
MARK TO MARKET DERIVATIVES | ||||||||||||
Interest Rate Swaps: | ||||||||||||
Amount of loss recognized in earnings upon swap designation | $ | (242 | ) | — | (242 | ) | — |
(13) | EARNINGS PER SHARE |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | ||||||||||||
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Numerator – net income attributable to common stockholders | $ | 6,771 | 5,670 | 20,146 | 15,954 | |||||||
Denominator – weighted average shares outstanding | 28,912 | 26,839 | 28,271 | 26,823 | ||||||||
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Numerator – net income attributable to common stockholders | $ | 6,771 | 5,670 | 20,146 | 15,954 | |||||||
Denominator: | ||||||||||||
Weighted average shares outstanding | 28,912 | 26,839 | 28,271 | 26,823 | ||||||||
Common stock options | 2 | 5 | 3 | 7 | ||||||||
Unvested restricted stock | 116 | 70 | 87 | 64 | ||||||||
Total Shares | 29,030 | 26,914 | 28,361 | 26,894 |
(14) | STOCK-BASED COMPENSATION |
Three Months Ended | Nine Months Ended | ||||||||||||
Award Activity: | September 30, 2012 | September 30, 2012 | |||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at beginning of period | 276,784 | $ | 42.28 | 235,929 | $ | 38.90 | |||||||
Granted | — | — | 111,732 | 48.79 | |||||||||
Forfeited | — | — | — | — | |||||||||
Vested | — | — | (70,877 | ) | 41.27 | ||||||||
Unvested at end of period | 276,784 | $ | 42.28 | 276,784 | $ | 42.28 |
(15) | RISKS AND UNCERTAINTIES |
(16) | RECENT ACCOUNTING PRONOUNCEMENTS |
(17) | FAIR VALUE OF FINANCIAL INSTRUMENTS |
September 30, 2012 | December 31, 2011 | |||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | |||||||||
(In thousands) | ||||||||||||
Financial Assets: | ||||||||||||
Cash and cash equivalents | $ | 1,027 | 1,027 | 174 | 174 | |||||||
Mortgage loans receivable, net of discount | 4,114 | 4,356 | 4,110 | 4,317 | ||||||||
Financial Liabilities: | ||||||||||||
Mortgage notes payable | 613,797 | 670,753 | 628,170 | 674,462 | ||||||||
Unsecured term loans payable | 130,000 | 130,803 | 50,000 | 50,000 | ||||||||
Notes payable to banks | 46,451 | 46,409 | 154,516 | 153,521 | ||||||||
Interest rate swap liability | 871 | 871 | — | — |
(18) | SUBSEQUENT EVENTS |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | ||||||||||||
Income from real estate operations | $ | 46,982 | 43,819 | 140,077 | 130,116 | |||||||
Expenses from real estate operations | (13,642 | ) | (12,571 | ) | (40,086 | ) | (37,491 | ) | ||||
PROPERTY NET OPERATING INCOME | $ | 33,340 | 31,248 | 99,991 | 92,625 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | ||||||||||||
NET INCOME | $ | 6,897 | 5,791 | 20,502 | 16,308 | |||||||
Equity in earnings of unconsolidated investment | (89 | ) | (87 | ) | (266 | ) | (260 | ) | ||||
Interest income | (82 | ) | (84 | ) | (248 | ) | (251 | ) | ||||
Other income | (15 | ) | (20 | ) | (43 | ) | (64 | ) | ||||
Gain on sales of land | — | (9 | ) | — | (27 | ) | ||||||
(Income) loss from discontinued operations | — | 23 | (2,053 | ) | 85 | |||||||
Depreciation and amortization from continuing operations | 15,436 | 14,348 | 46,817 | 42,552 | ||||||||
Interest expense | 8,426 | 8,680 | 26,844 | 26,100 | ||||||||
General and administrative expense | 2,453 | 2,551 | 8,105 | 8,127 | ||||||||
Interest rate swap ineffectiveness | 269 | — | 269 | — | ||||||||
Acquisition costs | 45 | 55 | 64 | 55 | ||||||||
PROPERTY NET OPERATING INCOME | $ | 33,340 | 31,248 | 99,991 | 92,625 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands, except per share data) | ||||||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | $ | 6,771 | 5,670 | 20,146 | 15,954 | |||||||
Depreciation and amortization from continuing operations | 15,436 | 14,348 | 46,817 | 42,552 | ||||||||
Depreciation and amortization from discontinued operations | — | 89 | 176 | 238 | ||||||||
Depreciation from unconsolidated investment | 33 | 33 | 100 | 100 | ||||||||
Depreciation and amortization from noncontrolling interest | (65 | ) | (54 | ) | (191 | ) | (162 | ) | ||||
Gain on sales of real estate investments | — | — | (1,869 | ) | — | |||||||
FUNDS FROM OPERATIONS (FFO) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 22,175 | 20,086 | 65,179 | 58,682 | |||||||
Net income attributable to common stockholders per diluted share | $ | 0.23 | 0.21 | 0.71 | 0.59 | |||||||
Funds from operations (FFO) attributable to common stockholders per diluted share | $ | 0.76 | 0.75 | 2.30 | 2.18 | |||||||
Diluted shares for earnings per share and funds from operations | 29,030 | 26,914 | 28,361 | 26,894 |
• | 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 2012 was $0.76 per share compared with $0.75 per share for the same period of 2011, an increase of 1.3% per share. For the nine months ended September 30, 2012, FFO was $2.30 per share compared with $2.18 per share for the same period of 2011, an increase of 5.5% per share. |
• | For the three months ended September 30, 2012, PNOI increased by $2,092,000, or 6.7%, compared to the same period in 2011. PNOI increased $1,561,000 from 2011 and 2012 acquisitions, $495,000 from newly developed properties and $45,000 from same property operations. |
• | The 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 0.1% for the three months ended September 30, 2012, and increased 1.2% for the nine months compared to the same periods in 2011. |
• | 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, 2012, was 94.3%. Quarter-end occupancy ranged from 93.0% to 94.3% over the period from September 30, 2011 to September 30, 2012. |
• | 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 (3.6% of total square footage) averaged 2.6% for the third quarter of 2012. For the nine months ended September 30, 2012, rental rate increases on new and renewal leases (17.6% of total square footage) averaged 0.9%. |
• | Lease termination fee income for the three and nine months ended September 30, 2012 was $57,000 and $314,000, respectively, compared to $52,000 and $542,000, respectively, for the same periods of 2011. Bad debt expense for the three and nine months ended September 30, 2012 was $155,000 and $542,000, respectively, compared to $128,000 and $427,000, respectively, for the same periods last year. |
REAL ESTATE PROPERTY ACQUIRED IN 2012 | Location | Size | Date Acquired | Cost (1) | ||||||
(Square feet) | (In thousands) | |||||||||
Madison Distribution Center | Tampa, FL | 72,000 | 01/31/2012 | $ | 3,273 | |||||
Wiegman Distribution Center II | Hayward, CA | 84,000 | 08/20/2012 | 6,894 | ||||||
Total Acquisitions | 156,000 | $ | 10,167 |
(1) | Total cost of the property acquired was $10,950,000, of which $10,167,000 was allocated to Real Estate Properties as indicated above. Intangibles associated with the purchase of real estate were allocated as follows: $672,000 to in-place lease intangibles, $119,000 to above market leases (both included in Other Assets on the Consolidated Balance Sheets) and $8,000 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. |
Costs Incurred | |||||||||||||||||
DEVELOPMENT | Costs Transferred in 2012(1) | For the Nine Months Ended 9/30/2012 | Cumulative as of 9/30/2012 | Estimated Total Costs | Completion Date | ||||||||||||
(In thousands) | |||||||||||||||||
LEASE-UP | Building Size (Square feet) | ||||||||||||||||
Southridge IX, Orlando, FL | 76,000 | $ | — | 900 | 6,262 | 7,100 | 03/12 | ||||||||||
World Houston 31B, Houston, TX | 35,000 | — | 1,445 | 2,805 | 3,900 | 04/12 | |||||||||||
Thousand Oaks 1, San Antonio, TX | 36,000 | — | 865 | 3,274 | 4,600 | 05/12 | |||||||||||
Thousand Oaks 2, San Antonio, TX | 73,000 | — | 1,188 | 4,352 | 5,000 | 05/12 | |||||||||||
Beltway Crossing IX, Houston, TX | 45,000 | — | 1,190 | 2,331 | 2,600 | 06/12 | |||||||||||
Beltway Crossing X, Houston, TX | 78,000 | — | 1,743 | 3,749 | 4,400 | 06/12 | |||||||||||
Southridge XI, Orlando, FL | 88,000 | 2,298 | 2,934 | 5,232 | 6,200 | 09/12 | |||||||||||
Total Lease-Up | 431,000 | 2,298 | 10,265 | 28,005 | 33,800 | ||||||||||||
UNDER CONSTRUCTION | Anticipated Completion Date | ||||||||||||||||
Beltway Crossing XI, Houston, TX | 87,000 | 1,184 | 948 | 2,132 | 4,900 | 02/13 | |||||||||||
World Houston 33, Houston, TX | 160,000 | 1,338 | 3,548 | 4,886 | 10,900 | 02/13 | |||||||||||
World Houston 34, Houston, TX | 57,000 | 1,039 | 160 | 1,199 | 3,600 | 03/13 | |||||||||||
World Houston 35, Houston, TX | 45,000 | 806 | 129 | 935 | 2,800 | 03/13 | |||||||||||
Ten West Crossing 1, Houston, TX | 30,000 | 423 | 97 | 520 | 3,800 | 05/13 | |||||||||||
World Houston 36, Houston, TX | 60,000 | 986 | 157 | 1,143 | 6,100 | 05/13 | |||||||||||
Total Under Construction | 439,000 | 5,776 | 5,039 | 10,815 | 32,100 | ||||||||||||
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND) | Estimated Building Size (Square feet) | ||||||||||||||||
Phoenix, AZ | 528,000 | — | 2,100 | 5,561 | 40,100 | ||||||||||||
Tucson, AZ | 70,000 | — | — | 417 | 4,900 | ||||||||||||
Denver, CO | 84,000 | — | 627 | 627 | 7,700 | ||||||||||||
Fort Myers, FL | 663,000 | — | 329 | 17,532 | 48,100 | ||||||||||||
Orlando, FL | 1,426,000 | (2,298 | ) | 2,761 | 25,060 | 93,000 | |||||||||||
Tampa, FL | 519,000 | — | 1,557 | 6,043 | 30,800 | ||||||||||||
Jackson, MS | 28,000 | — | — | 706 | 2,000 | ||||||||||||
Charlotte, NC | 95,000 | — | 71 | 1,317 | 7,100 | ||||||||||||
Dallas, TX | 70,000 | — | 50 | 814 | 4,100 | ||||||||||||
El Paso, TX | 251,000 | — | — | 2,444 | 9,600 | ||||||||||||
Houston, TX | 2,197,000 | (5,776 | ) | 10,478 | 25,817 | 142,200 | |||||||||||
San Antonio, TX | 478,000 | — | 359 | 5,375 | 32,200 | ||||||||||||
Total Prospective Development | 6,409,000 | (8,074 | ) | 18,332 | 91,713 | 421,800 | |||||||||||
7,279,000 | $ | — | 33,636 | 130,533 | 487,700 | ||||||||||||
DEVELOPMENTS COMPLETED AND TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2012 | Building Size (Square feet) | Completion Date | |||||||||||||||
Beltway Crossing VIII, Houston, TX | 88,000 | $ | — | 43 | 5,242 | 09/11 | |||||||||||
World Houston 32, Houston, TX | 96,000 | — | 66 | 6,276 | 01/12 | ||||||||||||
World Houston 31A, Houston, TX | 44,000 | — | 243 | 4,086 | 06/11 | ||||||||||||
Total Transferred to Real Estate Properties | 228,000 | $ | — | 352 | 15,604 | (2) |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Leasing costs (principally commissions) | $ | 41,208 | 39,297 | |||
Accumulated amortization of leasing costs | (17,429 | ) | (16,603 | ) | ||
Leasing costs (principally commissions), net of accumulated amortization | 23,779 | 22,694 | ||||
Straight-line rents receivable | 22,152 | 20,959 | ||||
Allowance for doubtful accounts on straight-line rents receivable | (502 | ) | (351 | ) | ||
Straight-line rents receivable, net of allowance for doubtful accounts | 21,650 | 20,608 | ||||
Accounts receivable | 3,568 | 3,949 | ||||
Allowance for doubtful accounts on accounts receivable | (541 | ) | (522 | ) | ||
Accounts receivable, net of allowance for doubtful accounts | 3,027 | 3,427 | ||||
Acquired in-place lease intangibles | 10,429 | 12,157 | ||||
Accumulated amortization of acquired in-place lease intangibles | (5,029 | ) | (4,478 | ) | ||
Acquired in-place lease intangibles, net of accumulated amortization | 5,400 | 7,679 | ||||
Acquired above market lease intangibles | 2,438 | 2,904 | ||||
Accumulated amortization of acquired above market lease intangibles | (951 | ) | (929 | ) | ||
Acquired above market lease intangibles, net of accumulated amortization | 1,487 | 1,975 | ||||
Mortgage loans receivable | 4,150 | 4,154 | ||||
Discount on mortgage loans receivable | (36 | ) | (44 | ) | ||
Mortgage loans receivable, net of discount | 4,114 | 4,110 | ||||
Loan costs | 8,477 | 7,662 | ||||
Accumulated amortization of loan costs | (4,655 | ) | (4,433 | ) | ||
Loan costs, net of accumulated amortization | 3,822 | 3,229 | ||||
Goodwill | 990 | 990 | ||||
Prepaid expenses and other assets | 5,180 | 8,085 | ||||
$ | 69,449 | 72,797 |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Property taxes payable | $ | 18,585 | 9,840 | |||
Development costs payable | 6,000 | 5,928 | ||||
Interest payable | 2,629 | 2,736 | ||||
Dividends payable on unvested restricted stock | 1,582 | 1,415 | ||||
Other payables and accrued expenses | 5,270 | 11,286 | ||||
$ | 34,066 | 31,205 |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Security deposits | $ | 9,556 | 9,184 | |||
Prepaid rent and other deferred income | 5,616 | 6,373 | ||||
Interest rate swap liability | 871 | — | ||||
Other liabilities | 855 | 1,459 | ||||
$ | 16,898 | 17,016 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2012 | 2011 | Increase (Decrease) | 2012 | 2011 | Increase (Decrease) | |||||||||||||
(In thousands, except rates of interest) | ||||||||||||||||||
Average bank borrowings | $ | 85,643 | 113,556 | (27,913 | ) | 103,394 | 120,297 | (16,903 | ) | |||||||||
Weighted average variable interest rates (excluding loan cost amortization) | 1.59 | % | 1.42 | % | 1.52 | % | 1.42 | % | ||||||||||
VARIABLE RATE INTEREST EXPENSE | ||||||||||||||||||
Bank loan interest (excluding loan cost amortization) | $ | 342 | 407 | (65 | ) | 1,176 | 1,277 | (101 | ) | |||||||||
Amortization of bank loan costs | 86 | 74 | 12 | 257 | 225 | 32 | ||||||||||||
Total variable rate interest expense | 428 | 481 | (53 | ) | 1,433 | 1,502 | (69 | ) | ||||||||||
FIXED RATE INTEREST EXPENSE | ||||||||||||||||||
Mortgage loan interest (excluding loan cost amortization) | 8,343 | 8,966 | (623 | ) | 26,491 | 26,725 | (234 | ) | ||||||||||
Unsecured term loan interest (excluding loan cost amortization) | 686 | — | 686 | 1,658 | — | 1,658 | ||||||||||||
Amortization of mortgage loan costs | 182 | 185 | (3 | ) | 584 | 568 | 16 | |||||||||||
Amortization of unsecured term loan costs | 20 | — | 20 | 40 | — | 40 | ||||||||||||
Total fixed rate interest expense | 9,231 | 9,151 | 80 | 28,773 | 27,293 | 1,480 | ||||||||||||
Total interest | 9,659 | 9,632 | 27 | 30,206 | 28,795 | 1,411 | ||||||||||||
Less capitalized interest | (1,233 | ) | (952 | ) | (281 | ) | (3,362 | ) | (2,695 | ) | (667 | ) | ||||||
TOTAL INTEREST EXPENSE | $ | 8,426 | 8,680 | (254 | ) | 26,844 | 26,100 | 744 |
NEW MORTGAGES IN 2011 AND 2012 | Interest Rate | Date | Maturity Date | Amount | ||||||
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 | |||||
Arion 18, Beltway VI & VII, Commerce Park II & III, Concord, Interstate V, VI & VII, Lakeview, Ridge Creek II, Southridge IV & V and World Houston 32 | 4.09% | 01/04/12 | 01/05/22 | 54,000,000 | ||||||
Weighted Average/Total Amount | 4.45% | $ | 119,000,000 |
MORTGAGE LOANS REPAID IN 2011 AND 2012 | Interest Rate | Date Repaid | Payoff Amount | |||||
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 | |||||
Oak Creek Distribution Center IV | 5.68% | 03/01/12 | 3,463,000 | |||||
University Business Center (125 & 175 Cremona) | 7.98% | 04/02/12 | 8,679,000 | |||||
University Business Center (120 & 130 Cremona) | 6.43% | 05/01/12 | 1,910,000 | |||||
51st Avenue, Airport Distribution, Broadway I, III & IV, Chestnut, Interchange Business Park, Main Street, North Stemmons I land, Southpark, Southpointe and World Houston 12 & 13 | 6.86% | 06/04/12 | 31,724,000 | |||||
Interstate Distribution Center - Jacksonville | 5.64% | 09/04/12 | 4,123,000 | |||||
Weighted Average/Total Amount | 7.21% | $ | 108,796,000 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Estimated Useful Life | 2012 | 2011 | 2012 | 2011 | ||||||||||
(In thousands) | ||||||||||||||
Upgrade on Acquisitions | 40 yrs | $ | 503 | 31 | 1,131 | 254 | ||||||||
Tenant Improvements: | ||||||||||||||
New Tenants | Lease Life | 1,803 | 2,191 | 5,636 | 5,955 | |||||||||
New Tenants (first generation) (1) | Lease Life | 125 | — | 348 | 1,028 | |||||||||
Renewal Tenants | Lease Life | 478 | 232 | 1,908 | 1,791 | |||||||||
Other: | ||||||||||||||
Building Improvements | 5-40 yrs | 1,072 | 713 | 2,881 | 2,748 | |||||||||
Roofs | 5-15 yrs | 108 | 292 | 1,039 | 1,155 | |||||||||
Parking Lots | 3-5 yrs | 66 | 180 | 666 | 689 | |||||||||
Other | 5 yrs | 83 | 48 | 249 | 298 | |||||||||
Total Capital Expenditures | $ | 4,238 | 3,687 | 13,858 | 13,918 |
(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 | 2012 | 2011 | 2012 | 2011 | ||||||||||
(In thousands) | ||||||||||||||
Development | Lease Life | $ | 250 | 430 | 1,472 | 800 | ||||||||
New Tenants | Lease Life | 701 | 915 | 2,356 | 2,451 | |||||||||
New Tenants (first generation) (1) | Lease Life | 115 | — | 214 | 187 | |||||||||
Renewal Tenants | Lease Life | 442 | 593 | 2,442 | 1,882 | |||||||||
Total Capitalized Leasing Costs | $ | 1,508 | 1,938 | 6,484 | 5,320 | |||||||||
Amortization of Leasing Costs (2) | $ | 1,741 | 1,601 | 5,275 | 4,819 |
(1) | First generation refers to space that has never been occupied under EastGroup’s ownership. |
(2) | Includes discontinued operations. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
DISCONTINUED OPERATIONS | 2012 | 2011 | 2012 | 2011 | |||||||||
(In thousands) | |||||||||||||
Income from real estate operations | $ | — | 123 | 304 | 325 | ||||||||
Expenses from real estate operations | — | (57 | ) | (111 | ) | (172 | ) | ||||||
Property net operating income from discontinued operations | — | 66 | 193 | 153 | |||||||||
Depreciation and amortization | — | (89 | ) | (176 | ) | (238 | ) | ||||||
Income (loss) from real estate operations | — | (23 | ) | 17 | (85 | ) | |||||||
Gain on sales of nondepreciable real estate investments, net of tax | — | — | 167 | — | |||||||||
Gain on sales of real estate investments | — | — | 1,869 | — | |||||||||
Income (loss) from discontinued operations | $ | — | (23 | ) | 2,053 | (85 | ) |
September 30, 2012 | December 31, 2011 | |||||
(In thousands) | ||||||
Mortgage notes payable – fixed rate | $ | 613,797 | 628,170 | |||
Unsecured term loans payable – fixed rate | 130,000 | 50,000 | ||||
Notes payable to banks – variable rate | 46,451 | 154,516 | ||||
Total debt | $ | 790,248 | 832,686 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
October – December 2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | Total | Fair Value | |||||||||||||||||||
Fixed rate mortgage debt (in thousands) | $ | 6,029 | 57,917 | 98,920 | 102,287 | 92,716 | 255,928 | 613,797 | 670,753 | (1) | ||||||||||||||||
Weighted average interest rate | 5.41 | % | 5.03 | % | 5.66 | % | 5.36 | % | 5.79 | % | 5.27 | % | 5.40 | % | ||||||||||||
Fixed rate unsecured term loan (in thousands) | $ | — | — | — | — | — | 130,000 | 130,000 | 130,803 | (1) | ||||||||||||||||
Weighted average interest rate | — | — | — | — | — | 3.30 | % | 3.30 | % | |||||||||||||||||
Variable rate debt (in thousands) | $ | — | 46,451 | (2) | — | — | — | — | 46,451 | 46,409 | (3) | |||||||||||||||
Weighted average interest rate | — | 1.34 | % | (4) | — | — | — | — | 1.34 | % |
(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 matures in January 2013 and is comprised of two lines of credit with balances of $31,000,000 on the $200 million line of credit and $15,451,000 on the $25 million working capital line of credit as of September 30, 2012. |
(3) | The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates. |
(4) | Represents the weighted average interest rate as of September 30, 2012. |
ITEM 4. | CONTROLS AND PROCEDURES. |
ITEM 1A. | RISK FACTORS. |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 6. | EXHIBITS. |
(a) | Form 10-Q Exhibits: | |||
(10 | ) | Material Contracts (* Indicates management or compensatory agreement): | ||
(a) | Loan Agreement dated as of August 31, 2012 by and among EastGroup Properties, Inc., EastGroup | |||
Properties, L.P., each of the financial institutions party thereto as lenders, PNC Bank, National | ||||
Association, as administrative agent, U.S. Bank National Association, as syndication agent, and PNC | ||||
Capital Markets LLC, as lead arranger and book runner (incorporated by reference to Exhibit 10.1 to the | ||||
Company's Form 8-K filed September 7, 2012) | ||||
(b) | Sales Agency Financing Agreement dated September 20, 2012 between EastGroup Properties, Inc. and | |||
BNY Mellon Capital Markets, LLC (incorporated by reference to Exhibit 1.1 to the Company's | ||||
Form 8-K filed September 24, 2012) | ||||
(c) | Sales Agency Financing Agreement dated September 20, 2012 between EastGroup Properties, Inc. and | |||
Raymond James & Associates, Inc. (incorporated by reference to Exhibit 1.2 to the Company's | ||||
Form 8-K filed September 24, 2012) | ||||
(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, 2012, formatted in XBRL (eXtensible Business Reporting Language): | ||||
(i) consolidated balance sheets, (ii) consolidated statements of income and comprehensive 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 |
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 22, 2012 |
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 22, 2012 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DAVID H. HOSTER II | |
DAVID H. HOSTER II | |
Chief Executive Officer | |
October 22, 2012 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ N. KEITH MCKEY | |
N. KEITH MCKEY | |
Chief Financial Officer | |
October 22, 2012 |
7
M<683RXIEX^4JN,CC&*_//_A_OJG_`$3>T&/^HD<#_P`=XJY??\%VO$>E0I)=
M?"DVT
REAL ESTATE PROPERTIES (Details) (USD $)
|
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Real Estate Investment Property, Net [Abstract] | |||||
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 | ||||
Depreciation Expense During the Period | $ 12,814,000 | $ 12,175,000 | $ 38,791,000 | $ 36,278,000 | |
Real Estate Properties | |||||
Land | 240,486,000 | 240,486,000 | 235,394,000 | ||
Building and building improvements | 1,073,931,000 | 1,073,931,000 | 1,056,783,000 | ||
Tenant and other improvements | 268,754,000 | 268,754,000 | 258,267,000 | ||
Development | 130,533,000 | 130,533,000 | 112,149,000 | ||
Real estate and development properties | 1,713,704,000 | 1,713,704,000 | 1,662,593,000 | ||
Less accumulated depreciation | (487,902,000) | (487,902,000) | (451,805,000) | ||
Real estate, net | $ 1,225,802,000 | $ 1,225,802,000 | $ 1,210,788,000 |
EARNINGS PER SHARE (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||
Numerator – net income attributable to common stockholders | $ 6,771 | $ 5,670 | $ 20,146 | $ 15,954 |
Denominator - Weighted average shares outstanding | 28,912 | 26,839 | 28,271 | 26,823 |
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||
Numerator – net income attributable to common stockholders | $ 6,771 | $ 5,670 | $ 20,146 | $ 15,954 |
Denominator - Weighted average shares outstanding | 28,912 | 26,839 | 28,271 | 26,823 |
Common stock options | 2 | 5 | 3 | 7 |
Unvested restricted stock | 116 | 70 | 87 | 64 |
Total Shares | 29,030 | 26,914 | 28,361 | 26,894 |
COMPREHENSIVE INCOME (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
COMPREHENSIVE INCOME [Abstract] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ 0 | $ 0 | $ 0 | $ 0 |
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period | (605) | 0 | (605) | 0 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (605) | $ 0 | $ (605) | $ 0 |
COMPREHENSIVE INCOME (Tables)
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The components of Accumulated Other Comprehensive Loss are presented in the Company's Consolidated Statement of Changes in Equity and are summarized below. See Note 12 for information regarding the Company's interest rate swap.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 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 following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820 at September 30, 2012 and December 31, 2011.
(1) Carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions, except as explained 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). Unsecured term loan payable: The fair value of the Company’s unsecured term loan 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). Interest rate swap liability (included in Other Liabilities on the Consolidated Balances Sheets): The instrument is recorded at fair value based on models using inputs, such as interest rate yield curves, observable for substantially the full term of the contract. See Note 12 for additional information on the Company's interest rate swap. |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
||||
---|---|---|---|---|---|---|
Financial Assets: | ||||||
Cash and cash equivalents | $ 1,027 | $ 174 | ||||
Carrying Amount [Member]
|
||||||
Financial Assets: | ||||||
Cash and cash equivalents | 1,027 | [1] | 174 | [1] | ||
Mortgage loans receivable, net of discount | 4,114 | [1] | 4,110 | [1] | ||
Financial Liabilities: | ||||||
Mortgage notes payable | 613,797 | [1] | 628,170 | [1] | ||
Unsecured term loan payable | 130,000 | [1] | 50,000 | [1] | ||
Notes payable to banks | 46,451 | [1] | 154,516 | [1] | ||
Derivative Financial Instruments, Liabilities, Fair Value Disclosure | 871 | [1] | 0 | [1] | ||
Fair Value [Member]
|
||||||
Financial Assets: | ||||||
Cash and cash equivalents | 1,027 | 174 | ||||
Mortgage loans receivable, net of discount | 4,356 | 4,317 | ||||
Financial Liabilities: | ||||||
Mortgage notes payable | 670,753 | 674,462 | ||||
Unsecured term loan payable | 130,803 | 50,000 | ||||
Notes payable to banks | 46,409 | 153,521 | ||||
Derivative Financial Instruments, Liabilities, Fair Value Disclosure | $ 871 | $ 0 | ||||
|
8LH`=IG-QA"-,YS;B0XL#6<&[[.@B7]I%[J4++`YT"9.YS7FX;R*9 MZVZP$R\05^Z^ZKN2)
`)"LS@7BZ\\F;2MOG'6"WVRI?:
MI93%`4_JJ_YT*I(/1UB'[>T."89^:>V^.KM2"SBW+\R)Z5Y,][9&H"%=8;KW
M%%RA/[++'_ESX<>L^>O[>>""[T%+57JTCZP;/OC@GF"Y2ASA"-._YW2W!;[6
M,I5]M\H[I+LZYC+WTB46Z%UYK&7>G,_;@P3PCEKF[@$FXP5"U=W7@E?R@,=B
MS9@+;K>*['4N6!I(:F.7A;K*@9@-;C#Z@G6:FU7"\D#B\3(O>JH=5\/]]&35
M@8(UU%ODZ&(2#I.[O?&[6H4K3.ZB>U&?>^'>PP9R,S?^"KX$)GAQA"-,\#9:
M(VL@B7B_%[WF2WO-O?2*R4#GZ^M=U'?FPO3N@>G=/4;C!<+.W=>#5SJ6B\4$
M;[MU9*\3O#H>L,#T;LOB+YCB;?BT\4#2\(H@.JL=5\3]=&:%@:[*%T=A7Y@3
M4[R8XFV-0$.ZPA3O*;A"%V,[-G\#+^'!??"X(')#+-J,(QQA4KJ[*=XAA=4Q/[F7?C!E+DSJ-N?G=C^I:_D)*Q1)JS//T"S$$8Y:;!;V_ZB#
MJ&"F]13$X4F'EB18.FT_7DGU68\]93\\Z'#V*&1QM&&2&Z N?\NGOOW)5;08.F,]W<6
MI`_P]!Q$3Y12^SZ@Y5VG<83O2>(PA"&>P!L30M//9'9-DIXP)J-@YH?TN'>D
M](1@?-P;^J/T2+-,1QW(WM`=V*IJBO+04R5WH!N.H ^_^8?SW)8J_FHZVP(;/9+^LWY-!XFF].D*X^#GYZ^>VSV)^@O/Z[DQ/XS
M+2;9S<-I,_X?KO\9?7+>7WG^U?NKZZOH\]8$V=&0\^,`YQOAWC-M?!E2SP9#
M.<5T.$SR!W,@'WC3,8HX&3W,(%<$RQ\+IP+\,9M:?OT'$X%DO?FNEAUK*\+P
MTM\IW^K<0&`Y_E;\<#3)]Y"()TEX=/]]MDW9J`\"7_Y[]:6C<0[ZYDF>'IOO
M+%Y "M7I:#E03N`EXU'_2SGJE9F:WM)7G^8/8Y&8ZG\"+@O60T^Q'@W@=G-)Z8
M#<^!E^#U9G?7RL:GQ[^7(QW*M\S@G/'+'42;)==-3>B5%?+@Y.`
M$`$FP)SCT:.D;`,+7GDSG<#38+'Z8'/,%^!-(],7DQ1WCNF`+IRWV:@WF)HV
M8,>4WX_"!H@9."(QQU:W0.M[J_
M;K.N8XT?=(HO[13WTNE%UFK(I>U`0NI+[,U=?\)YW^=>F'@)YX83+DKA!?"/T#4W#2.9MQ]E#YR?IIP]POX
MI0=><33W8F;"9&?9/"#O:.:/*9E/?/;[GSBN_*UY[`/OS=T@>.:`0MT'H%BDJY*(]`?JSO$67RHB-&FCQN-*;HI
M)7(N4SW3X]4W_!<[#9S5N-PBBEZ;T*I)N8V9-'_3NBW/\`'E9=F\[INR)2E6
MMA%+TFIEU<(S9UILX7+;&6_7HZO=DM-?N,PNTW$3;V4T+@,?6_VDPIK)#R@L
M0]@AC63XN?O
E,;?XL3L@"0&Q-O<*K+
M&TJ>7[Z($2:*4Q@X@5\#8R0D"1.Z!8Q"@L"I5?Q5LUGU)[,ZQJ0V$T4[:[*K
M8`8BYY3<"1DS-
M,2\^3@1K\RH/Y)^
M*$8!!UHS&9=.6M?O3*MI.AUV9HJCC:/M)9491GU!V@/%WV;*<4!R0-:@_F3%
MY/AK?V7&_F)3J^RKSE<;/!SI\$6=="P.\7D7QI2^WW&341O#PP
EK963FP.13;47)/)5:9W4)#T-SS#;,6=P8X1#E$.40
M;N5U,CR^6L9.;[=B/^M*RF]G2X:Q==>^"R[$J'"4TG19:ZEVMIJ4KK0M#.
M&(-_5;RO<^
MJ_1:Y<_6=L^3=EF6=+?;XDM8VBZ'HM@5'-G:D0U5VVV'.QO*BAJ/R;QVZ;25
M75O9;8Q&LWQE*[O'T,J&&%M/,XGWZM=0?[X%A.?X0,RQI\[H]Z_0_H_F'0)V/+^42^&.[EM`/?(A]I)9_V
M'O(K6\Q7!>W)$SX?LXX;)RERT,R-$?[F^DN"C0ER?1\]<2PBB`DF;C2)T>?%
MA/P@1K?&\'/\,XHP4;DQN>#+#Y3,,.H:0Y,,R!T?9^D']-?I8.H%!&N>ZZ-X
M#;\8?<<11EX<4\
MHAVVI-;T5OYA5:,9CDR;1Q=*<91]>,JLWTL:C^!^UAA7MPTUYH
MWW\O_:X++<1Z[(EM:)EZ\>UD=WT.G0JA)X-HNSEQ(M7'UF7\KZAKY==A'L?.
M^SJ"".S9!UWEJ).C[>7H`X0C.XG1B=BHH];\O9LH'SBS.LU.#4\W2=PAVD.W
M2R*W.6"C,W$'-W&=P'7&\/E7M;>C*_XJ<7JB3&Z#W0E0D91?N!;0S#JZ!S;A(8<1J7
M%H]^'`\*I\PJ,*PKB=);.]+E-H4''BJ69\J!%X[@X[T,^,SY.HSG0[P!S^-,
M;(4?!IO'@PEP]#K*$^NG'*`F=BZB]"_G(LOS[`:DHSASG)=I%A8Y/8R*HX\/
M]SBC/47I0>84\6@T-1!E+136#IRUU1WMU"?R.=WGJ`",FS#.
M(CXUJ&_C='!7XB[B[_5J1;LOK%_MNP#6_9'EX);^&TQV"1]0T7.BX\LEPCVX
M8T]2:0&P[B4KG8M)`0PI"F>P4%:&3Y-JKT5MCB,KE/^)[ I3,<=G,'C`AB?GUS.9S?P;8F:1E"'VMEU
M;5[7](V"_E7YKB\F=ZD\MO+:3^\6P,&T.A8/[(D$!+UIW[G(OBWA0K-4
MLW