(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
☒ | Accelerated Filer | ☐ | Non-accelerated Filer | ☐ | |||
Smaller Reporting Company | Emerging Growth Company |
Page | ||
September 30, 2019 | December 31, 2018 | |||||
ASSETS | ||||||
Real estate properties | $ | |||||
Development and value-add properties | ||||||
Less accumulated depreciation | ( | ) | ( | ) | ||
Real estate assets held for sale | ||||||
Unconsolidated investment | ||||||
Cash | ||||||
Other assets | ||||||
TOTAL ASSETS | $ | |||||
LIABILITIES AND EQUITY | ||||||
LIABILITIES | ||||||
Unsecured bank credit facilities | $ | |||||
Unsecured debt | ||||||
Secured debt | ||||||
Accounts payable and accrued expenses | ||||||
Other liabilities | ||||||
Total Liabilities | ||||||
EQUITY | ||||||
Stockholders’ Equity: | ||||||
Common shares; $0.0001 par value; 70,000,000 shares authorized; 38,409,217 shares issued and outstanding at September 30, 2019 and 36,501,356 at December 31, 2018 | ||||||
Excess shares; $0.0001 par value; 30,000,000 shares authorized; no shares issued | ||||||
Additional paid-in capital | ||||||
Distributions in excess of earnings | ( | ) | ( | ) | ||
Accumulated other comprehensive income | ||||||
Total Stockholders’ Equity | ||||||
Noncontrolling interest in joint ventures | ||||||
Total Equity | ||||||
TOTAL LIABILITIES AND EQUITY | $ |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
REVENUES | ||||||||||||
Income from real estate operations | $ | |||||||||||
Other revenue | ||||||||||||
EXPENSES | ||||||||||||
Expenses from real estate operations | ||||||||||||
Depreciation and amortization | ||||||||||||
General and administrative | ||||||||||||
Indirect leasing costs | ||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Gain on sales of real estate investments | ||||||||||||
Other | ( | ) | ||||||||||
NET INCOME | ||||||||||||
Net income attributable to noncontrolling interest in joint ventures | ( | ) | ( | ) | ( | ) | ( | ) | ||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Other comprehensive income (loss) - cash flow hedges | ( | ) | ( | ) | ||||||||
TOTAL COMPREHENSIVE INCOME | $ | |||||||||||
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Net income attributable to common stockholders | $ | |||||||||||
Weighted average shares outstanding | ||||||||||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Net income attributable to common stockholders | $ | |||||||||||
Weighted average shares outstanding |
Common Stock | Additional Paid-In Capital | Distributions in Excess of Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interest in Joint Ventures | Total | |||||||||||||
BALANCE, DECEMBER 31, 2018 | $ | ( | ) | |||||||||||||||
Net income | ||||||||||||||||||
Net unrealized change in fair value of cash flow hedges | ( | ) | ( | ) | ||||||||||||||
Common dividends declared – $0.72 per share | ( | ) | ( | ) | ||||||||||||||
Stock-based compensation, net of forfeitures | ||||||||||||||||||
Issuance of 232,205 shares of common stock, common stock offering, net of expenses | ||||||||||||||||||
Issuance of 571 shares of common stock, dividend reinvestment plan | ||||||||||||||||||
Withheld 28,955 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | ( | ) | ( | ) | ||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||
BALANCE, MARCH 31, 2019 | ( | ) | ||||||||||||||||
Net income | ( | ) | ||||||||||||||||
Net unrealized change in fair value of cash flow hedges | ( | ) | ( | ) | ||||||||||||||
Common dividends declared – $0.72 per share | ( | ) | ( | ) | ||||||||||||||
Stock-based compensation, net of forfeitures | ||||||||||||||||||
Issuance of 790,052 shares of common stock, common stock offering, net of expenses | ||||||||||||||||||
Issuance of 479 shares of common stock, dividend reinvestment plan | ||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||
BALANCE, JUNE 30, 2019 | ( | ) | ||||||||||||||||
Net income | ||||||||||||||||||
Net unrealized change in fair value of cash flow hedges | ( | ) | ( | ) | ||||||||||||||
Common dividends declared – $0.75 per share | ( | ) | ( | ) | ||||||||||||||
Stock-based compensation, net of forfeitures | ||||||||||||||||||
Issuance of 849,751 shares of common stock, common stock offering, net of expenses | ||||||||||||||||||
Issuance of 441 shares of common stock, dividend reinvestment plan | ||||||||||||||||||
Purchase of noncontrolling interest in joint venture | ||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||
BALANCE, SEPTEMBER 30, 2019 | $ | ( | ) |
Common Stock | Additional Paid-In Capital | Distributions in Excess of Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interest in Joint Ventures | Total | |||||||||||||
BALANCE, DECEMBER 31, 2017 | $ | ( | ) | |||||||||||||||
Net income | ||||||||||||||||||
Net unrealized change in fair value of cash flow hedges | ||||||||||||||||||
Common dividends declared – $0.64 per share | ( | ) | ( | ) | ||||||||||||||
Stock-based compensation, net of forfeitures | ||||||||||||||||||
Issuance of 179,501 shares of common stock, common stock offering, net of expenses | ||||||||||||||||||
Issuance of 667 shares of common stock, dividend reinvestment plan | ||||||||||||||||||
Withheld 23,824 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | ( | ) | ( | ) | ||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||
BALANCE, MARCH 31, 2018 | ( | ) | ||||||||||||||||
Net income | ||||||||||||||||||
Net unrealized change in fair value of cash flow hedges | ||||||||||||||||||
Common dividends declared – $0.64 per share | ( | ) | ( | ) | ||||||||||||||
Stock-based compensation, net of forfeitures | ||||||||||||||||||
Issuance of 750,282 shares of common stock, common stock offering, net of expenses | ||||||||||||||||||
Issuance of 565 shares of common stock, dividend reinvestment plan | ||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||
BALANCE, JUNE 30, 2018 | ( | ) | ||||||||||||||||
Net income | ||||||||||||||||||
Net unrealized change in fair value of cash flow hedges | ||||||||||||||||||
Common dividends declared – $0.72 per share | ( | ) | ( | ) | ||||||||||||||
Stock-based compensation, net of forfeitures | ||||||||||||||||||
Issuance of 316,102 shares of common stock, common stock offering, net of expenses | ||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||
BALANCE, SEPTEMBER 30, 2018 | $ | ( | ) |
Nine Months Ended September 30, | ||||||
2019 | 2018 | |||||
OPERATING ACTIVITIES | ||||||
Net income | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | ||||||
Stock-based compensation expense | ||||||
Net gain on sales of real estate investments and non-operating real estate | ( | ) | ( | ) | ||
Gain on casualties and involuntary conversion on real estate assets | ( | ) | ( | ) | ||
Changes in operating assets and liabilities: | ||||||
Accrued income and other assets | ||||||
Accounts payable, accrued expenses and prepaid rent | ||||||
Other | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||
INVESTING ACTIVITIES | ||||||
Development and value-add properties | ( | ) | ( | ) | ||
Purchases of real estate | ( | ) | ( | ) | ||
Real estate improvements | ( | ) | ( | ) | ||
Net proceeds from sales of real estate investments and non-operating real estate | ||||||
Proceeds from casualties and involuntary conversion on real estate assets | ||||||
Repayments on mortgage loans receivable | ||||||
Changes in accrued development costs | ||||||
Changes in other assets and other liabilities | ( | ) | ( | ) | ||
NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||
FINANCING ACTIVITIES | ||||||
Proceeds from unsecured bank credit facilities | ||||||
Repayments on unsecured bank credit facilities | ( | ) | ( | ) | ||
Proceeds from unsecured debt | ||||||
Repayments on unsecured debt | ( | ) | ( | ) | ||
Repayments on secured debt | ( | ) | ( | ) | ||
Debt issuance costs | ( | ) | ( | ) | ||
Distributions paid to stockholders (not including dividends accrued) | ( | ) | ( | ) | ||
Proceeds from common stock offerings | ||||||
Proceeds from dividend reinvestment plan | ||||||
Other | ( | ) | ( | ) | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | |||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||
Cash paid for interest, net of amounts capitalized of $6,067 and $4,545 for 2019 and 2018, respectively | $ | |||||
Cash paid for operating lease liabilities | ||||||
NON-CASH OPERATING ACTIVITY | ||||||
Operating lease liabilities arising from obtaining right of use assets | $ |
(1) | BASIS OF PRESENTATION |
(2) | PRINCIPLES OF CONSOLIDATION |
(3) | USE OF ESTIMATES |
(4) | LEASE REVENUE |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||
(In thousands) | ||||||
Lease income — operating leases | $ | |||||
Variable lease income (1) | ||||||
Income from real estate operations | $ |
(1) | Primarily includes tenant reimbursements for real estate taxes, insurance and common area maintenance. |
Years Ending December 31, | (In thousands) | |||
2019 - Remainder of year | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total minimum receipts | $ |
Years Ending December 31, | (In thousands) | |||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total minimum receipts | $ |
(5) | REAL ESTATE PROPERTIES |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Real estate properties: | ||||||
Land | $ | |||||
Buildings and building improvements | ||||||
Tenant and other improvements | ||||||
Right of use assets — Ground leases (operating) (1) | ||||||
Development and value-add properties (2) | ||||||
Less accumulated depreciation | ( | ) | ( | ) | ||
$ |
(1) |
(2) | Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use. Acquired properties meeting either of the following two conditions are considered value-add properties: (1) Less than |
Years Ending December 31, | (In thousands) | |||
2019 - Remainder of year | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total minimum payments | ||||
Imputed interest (1) | ( | ) | ||
Amortization | ( | ) | ||
Total ground leases | $ |
(1) | As the Company’s leases do not provide an implicit rate, in order to calculate the present value of the remaining ground lease payments, the Company used its incremental borrowing rate, adjusted for a number of factors, including the long-term nature of the ground leases, the Company’s estimated borrowing costs, and the estimated fair value of the underlying land, to determine the imputed interest for its ground leases. The Company elected to use the portfolio approach as all of its ground leases in place as of January 1, 2019, have similar characteristics and determined |
Years Ending December 31, | (In thousands) | |||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
$ |
(6) | DEVELOPMENT |
(7) | REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES |
(8) | REAL ESTATE SOLD AND HELD FOR SALE/DISCONTINUED OPERATIONS |
(9) | OTHER ASSETS |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Leasing costs (principally commissions) | $ | |||||
Accumulated amortization of leasing costs | ( | ) | ( | ) | ||
Leasing costs (principally commissions), net of accumulated amortization | ||||||
Acquired in-place lease intangibles | ||||||
Accumulated amortization of acquired in-place lease intangibles | ( | ) | ( | ) | ||
Acquired in-place lease intangibles, net of accumulated amortization | ||||||
Acquired above market lease intangibles | ||||||
Accumulated amortization of acquired above market lease intangibles | ( | ) | ( | ) | ||
Acquired above market lease intangibles, net of accumulated amortization | ||||||
Straight-line rents receivable | ||||||
Accounts receivable | ||||||
Mortgage loans receivable | ||||||
Interest rate swap assets | ||||||
Right of use assets — Office leases (operating) (1) | ||||||
Receivable for common stock offerings | ||||||
Goodwill | ||||||
Prepaid expenses and other assets | ||||||
Total Other assets | $ |
(1) |
(10) | DEBT |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Unsecured bank credit facilities - variable rate, carrying amount | $ | |||||
Unamortized debt issuance costs | ( | ) | ( | ) | ||
Unsecured bank credit facilities | ||||||
Unsecured debt - fixed rate, carrying amount (1) | ||||||
Unamortized debt issuance costs | ( | ) | ( | ) | ||
Unsecured debt | ||||||
Secured debt - fixed rate, carrying amount (1) | ||||||
Unamortized debt issuance costs | ( | ) | ( | ) | ||
Secured debt | ||||||
Total debt | $ |
(1) | These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps. |
Years Ending December 31, | (In thousands) | |||
2019 - Remainder of year | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
2024 and beyond | ||||
Total | $ |
(11) |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Property taxes payable | $ | |||||
Development costs payable | ||||||
Real estate improvements and capitalized leasing costs payable | ||||||
Interest payable | ||||||
Dividends payable | ||||||
Book overdraft (1) | ||||||
Other payables and accrued expenses | ||||||
Total Accounts payable and accrued expenses | $ |
(1) | Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the Company’s working cash line of credit. |
(12) |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Security deposits | $ | |||||
Prepaid rent and other deferred income | ||||||
Operating lease liabilities — Ground leases (1) | ||||||
Operating lease liabilities — Office leases (1) | ||||||
Acquired below-market lease intangibles | ||||||
Accumulated amortization of below-market lease intangibles | ( | ) | ( | ) | ||
Acquired below-market lease intangibles, net of accumulated amortization | ||||||
Interest rate swap liabilities | ||||||
Prepaid tenant improvement reimbursements | ||||||
Other liabilities | ||||||
Total Other liabilities | $ |
(1) |
(13) | COMPREHENSIVE INCOME |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
(In thousands) | ||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME: | ||||||||||||
Balance at beginning of period | $ | |||||||||||
Change in fair value of interest rate swaps - cash flow hedges | ( | ) | ( | ) | ||||||||
Balance at end of period | $ |
(14) | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
Interest Rate Derivative | Notional Amount as of September 30, 2019 | Notional Amount as of December 31, 2018 | ||
(In thousands) | ||||
Interest Rate Swap | $ | $ | ||
Interest Rate Swap | $ | $ | ||
Interest Rate Swap | $ | $ | ||
Interest Rate Swap | $ | $ | ||
Interest Rate Swap | $ | $ | ||
Interest Rate Swap | $ | $ | ||
Interest Rate Swap | $ | $ |
Derivatives As of September 30, 2019 | Derivatives As of December 31, 2018 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
(In thousands) | |||||||||||
Derivatives designated as cash flow hedges: | |||||||||||
Interest rate swap assets | Other assets | $ | Other assets | $ | |||||||
Interest rate swap liabilities | Other liabilities | Other liabilities |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
(In thousands) | ||||||||||||
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS | ||||||||||||
Interest Rate Swaps: | ||||||||||||
Amount of income (loss) recognized in Other comprehensive income on derivatives | $ | ( | ) | |||||||||
Amount of (income) loss reclassified from Accumulated other comprehensive income into Interest expense | ( | ) | ( | ) | ( | ) | ( | ) |
(15) | EARNINGS PER SHARE |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
(In thousands) | ||||||||||||
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Numerator – net income attributable to common stockholders | $ | |||||||||||
Denominator – weighted average shares outstanding | ||||||||||||
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||||||||||
Numerator – net income attributable to common stockholders | $ | |||||||||||
Denominator: | ||||||||||||
Weighted average shares outstanding | ||||||||||||
Unvested restricted stock | ||||||||||||
Total Shares |
(16) | STOCK-BASED COMPENSATION |
Three Months Ended | Nine Months Ended | ||||||||||||
Award Activity: | September 30, 2019 | September 30, 2019 | |||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at beginning of period | $ | $ | |||||||||||
Granted (1) (2) | |||||||||||||
Forfeited | ( | ) | |||||||||||
Vested | ( | ) | ( | ) | |||||||||
Unvested at end of period | $ | $ |
(17) | FAIR VALUE OF FINANCIAL INSTRUMENTS |
September 30, 2019 | December 31, 2018 | |||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | |||||||||
(In thousands) | ||||||||||||
Financial Assets: | ||||||||||||
Cash and cash equivalents | $ | |||||||||||
Mortgage loans receivable | ||||||||||||
Interest rate swap assets | ||||||||||||
Financial Liabilities: | ||||||||||||
Unsecured bank credit facilities - variable rate (2) | ||||||||||||
Unsecured debt (2) | ||||||||||||
Secured debt (2) | ||||||||||||
Interest rate swap liabilities |
(18) | RISKS AND UNCERTAINTIES |
(19) | LEGAL MATTERS |
(20) | RECENT ACCOUNTING PRONOUNCEMENTS |
• | Lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right of use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company is a lessee on a limited number of leases, including office and ground leases. As of January 1, 2019, the Company recorded its right of use asset and lease liability values for its operating leases as follows: office leases of $ |
• | Lessor accounting is largely unchanged under ASU 2016-02. The Company’s primary revenue is rental income; as such, the Company is a lessor on a significant number of leases. The Company is continuing to account for its leases in substantially the same manner. The most significant changes for the Company related to lessor accounting include: |
◦ | The new standard’s narrow definition of initial direct costs for leases — The new definition of initial direct costs results in certain costs (primarily legal costs related to lease negotiations) being expensed rather than capitalized upon adoption of the new standard. EastGroup recorded Indirect leasing costs of $ |
◦ | The guidance applicable to recording uncollectible rents — Upon adoption of the lease accounting guidance, reserves for uncollectible accounts are recorded as a reduction to revenue. Prior to adoption, reserves for uncollectible accounts were recorded as bad debt expenses. The standard also provides guidance related to calculating the reserves; however, those changes did not impact the Company. |
• | EastGroup has elected the practical expedient permitting lessors and lessees to make an accounting policy election by class of underlying asset to not separate non-lease components (such as common area maintenance) of a contract from the lease component to which they relate when specific criteria are met. The Company believes its leases meet the criteria. |
(21) | SUBSEQUENT EVENTS |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
• | international, national, regional and local economic conditions; |
• | the general level of interest rates and ability to raise equity capital on attractive terms; |
• | financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all; |
• | the competitive environment in which the Company operates; |
• | fluctuations of occupancy or rental rates; |
• | potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants; |
• | potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws or real estate investment trust (“REIT”) or corporate income tax laws, and potential increases in real property tax rates; |
• | our ability to maintain our qualification as a REIT; |
• | acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections; |
• | natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes; |
• | the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates; |
• | credit risk in the event of non-performance by the counterparties to the interest rate swaps; |
• | lack of or insufficient amounts of insurance; |
• | litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; |
• | our ability to retain key personnel; |
• | the consequences of future terrorist attacks or civil unrest; and |
• | environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
(In thousands) | ||||||||||||
Income from real estate operations | $ | 83,913 | 75,306 | 244,333 | 221,146 | |||||||
Expenses from real estate operations | (23,756 | ) | (21,718 | ) | (68,980 | ) | (63,847 | ) | ||||
Noncontrolling interest in PNOI of consolidated 80% joint ventures | (43 | ) | (77 | ) | (137 | ) | (237 | ) | ||||
PNOI from 50% owned unconsolidated investment | 244 | 217 | 732 | 652 | ||||||||
PROPERTY NET OPERATING INCOME (“PNOI”) | $ | 60,358 | 53,728 | 175,948 | 157,714 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
(In thousands) | ||||||||||||
NET INCOME | $ | 22,575 | 23,041 | 72,058 | 70,053 | |||||||
(Gain) on sales of real estate investments | — | (4,051 | ) | (11,406 | ) | (14,273 | ) | |||||
(Gain) on sales of non-operating real estate | — | — | — | (86 | ) | |||||||
(Gain) on sales of other assets | — | — | — | (427 | ) | |||||||
Net loss on other | 76 | — | 884 | — | ||||||||
Interest income | (34 | ) | (32 | ) | (101 | ) | (122 | ) | ||||
Other revenue | (25 | ) | (20 | ) | (504 | ) | (1,268 | ) | ||||
Indirect leasing costs | 110 | — | 306 | — | ||||||||
Depreciation and amortization | 25,990 | 22,970 | 77,027 | 67,463 | ||||||||
Company’s share of depreciation from unconsolidated investment | 36 | 33 | 106 | 95 | ||||||||
Interest expense | 8,522 | 8,804 | 26,214 | 26,253 | ||||||||
General and administrative expense | 3,151 | 3,060 | 11,501 | 10,263 | ||||||||
Noncontrolling interest in PNOI of consolidated 80% joint ventures | (43 | ) | (77 | ) | (137 | ) | (237 | ) | ||||
PROPERTY NET OPERATING INCOME (“PNOI”) | 60,358 | 53,728 | 175,948 | 157,714 | ||||||||
PNOI from 2018 and 2019 Acquisitions | (1,978 | ) | (534 | ) | (4,078 | ) | (655 | ) | ||||
PNOI from 2018 and 2019 Development and Value-Add Properties | (5,494 | ) | (2,348 | ) | (13,631 | ) | (4,778 | ) | ||||
PNOI from 2018 and 2019 Operating Property Dispositions | — | (372 | ) | (416 | ) | (1,359 | ) | |||||
Other PNOI | 54 | 85 | 179 | 304 | ||||||||
SAME PNOI | 52,940 | 50,559 | 158,002 | 151,226 | ||||||||
Net lease termination fee (income) from same properties | (34 | ) | (34 | ) | (940 | ) | (173 | ) | ||||
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS | $ | 52,906 | 50,525 | 157,062 | 151,053 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
(In thousands, except per share data) | ||||||||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | $ | 22,571 | 23,010 | 72,053 | 69,950 | |||||||||
Depreciation and amortization | 25,990 | 22,970 | 77,027 | 67,463 | ||||||||||
Company’s share of depreciation from unconsolidated investment | 36 | 33 | 106 | 95 | ||||||||||
Depreciation and amortization from noncontrolling interest | (48 | ) | (45 | ) | (141 | ) | (133 | ) | ||||||
(Gain) on sales of real estate investments | — | (4,051 | ) | (11,406 | ) | (14,273 | ) | |||||||
(Gain) on sales of non-operating real estate | — | — | — | (86 | ) | |||||||||
(Gain) on sales of other assets | — | — | — | (427 | ) | |||||||||
FUNDS FROM OPERATIONS (“FFO”) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 48,549 | 41,917 | 137,639 | 122,589 | |||||||||
Net income attributable to common stockholders per diluted share | $ | 0.60 | 0.64 | 1.94 | 1.98 | |||||||||
Funds from operations (“FFO”) attributable to common stockholders per diluted share | $ | 1.28 | 1.17 | 3.71 | 3.48 | 1.0 | (1) | |||||||
Diluted shares for earnings per share and funds from operations | 37,869 | 35,798 | 37,136 | 35,265 |
(1) | The Company initially reported FFO of $3.49 per share during the nine months ended September 30, 2018. In connection with the Company's adoption of the Nareit Funds from Operations White Paper - 2018 Restatement, the Company now excludes from FFO the gains and losses on sales of non-operating real estate and assets incidental to the Company’s business and therefore adjusted the prior year results, including the Company’s FFO for 2018, to conform to the updated definition of FFO. There was no impact to the three months ended September 30, 2018, as there were no sales incidental to the Company’s business during that period. |
• | 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 for the three months ended September 30, 2019 was $1.28 per share compared to $1.17 per share for the same period of 2018, an increase of 9.4%. For the nine months ended September 30, 2019, FFO was $3.71 per share compared with $3.48 per share for the same period of 2018, an increase of 6.6%. See Note (1) in the table above for a description of the adjustments made to 2018 FFO. |
• | For the three months ended September 30, 2019, PNOI increased by $6,630,000, or 12.3%, compared to the same period in 2018. PNOI increased $3,146,000 from newly developed and value-add properties, $2,381,000 from same property operations and $1,444,000 from 2018 and 2019 acquisitions; PNOI decreased $372,000 from operating properties sold in 2018 and 2019. |
• | The same property net operating income change represents the PNOI increase or decrease for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2018 through September 30, 2019). PNOI, excluding income from lease terminations, from same properties increased 4.7% and 4.0% for the three and nine months ended September 30, 2019, respectively, as compared to the same periods in 2018. |
• | Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2018 through September 30, 2019). Same property average occupancy was 97.2% for the three months ended September 30, 2019, compared to 95.8% for the same period of 2018. Same property average occupancy for the nine months ended September 30, 2019, was 96.9% compared to 96.2% for the same period of 2018. |
• | 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, 2019, was 97.4%. Quarter-end occupancy ranged from 95.7% to 96.9% over the previous four quarters ended September 30, 2018 to June 30, 2019. |
• | 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 increases on new and renewal leases (3.6% of total square footage) averaged 19.7% for the three months ended September 30, 2019. For the nine months ended September 30, 2019, rental rate increases on new and renewal leases (12.5% of total square footage) averaged 17.0%. |
• | Lease termination fee income is included in Income from real estate operations. Lease termination fee income for the three and nine months ended September 30, 2019 was $34,000 and $1,019,000, respectively, compared to $34,000 and $173,000 for the same periods of 2018. |
• | In 2018 and prior years, the Company’s bad debt expense was included in Expenses from real estate operations. In 2019, the Company began recording reserves for uncollectible rent as reductions to Income from real estate operations. The Company recorded reserves for uncollectible rent of $26,000 and $339,000 for the three and nine months ended September 30, 2019, respectively, compared to $196,000 and $282,000 for the same periods of 2018. |
REAL ESTATE PROPERTIES ACQUIRED IN 2019 | Location | Size | Date Acquired | Cost (1) | |||||||
(Square feet) | (In thousands) | ||||||||||
Airways Business Center | Denver, CO | 382,000 | 05/20/2019 | $ | 45,775 | ||||||
385 Business Park | Greenville, SC | 155,000 | 07/31/2019 | 12,138 | |||||||
Grand Oaks 75 Business Center 1 | Tampa, FL | 169,000 | 09/06/2019 | 16,554 | |||||||
Total Real Estate Property Acquisitions | 706,000 | $ | 74,467 |
(1) | Total cost of the operating properties acquired was $80,201,000, of which $74,467,000 was allocated to Real estate properties as indicated above. The Company allocated $11,016,000 of the total purchase price to land using third party land valuations for the Denver, Greenville and Tampa markets. The market values are considered to be Level 3 inputs as defined by ASC 820 , Fair Value Measurement (see Note 17 in the Notes to Consolidated Financial Statements for additional information on ASC 820). Intangibles associated with the purchases of real estate were allocated as follows: $6,983,000 to in-place lease intangibles and $312,000 to above market leases (both included in Other assets on the Consolidated Balance Sheets) and $1,561,000 to below market leases (included in Other liabilities on the Consolidated Balance Sheets). |
VALUE-ADD PROPERTIES ACQUIRED IN 2019 | Location | Size | Date Acquired | Cost (1) | |||||||
(Square feet) | (In thousands) | ||||||||||
Logistics Center 6 & 7 | Dallas, TX | 142,000 | 04/23/2019 | $ | 12,605 | ||||||
Arlington Tech Centre 1 & 2 | Dallas, TX | 151,000 | 08/16/2019 | 12,615 | |||||||
Grand Oaks 75 Business Center 2 | Tampa, FL | 150,000 | 09/06/2019 | 12,815 | |||||||
Total Value-Add Property Acquisitions | 443,000 | $ | 38,035 |
(1) | Total cost of the value-add properties acquired was $38,390,000, of which $38,035,000 was allocated to Development and value-add properties as indicated above. The Company allocated $5,099,000 of the total purchase price to land using third party land valuations for the Dallas and Tampa markets. The market values are considered to be Level 3 inputs as defined by ASC 820 , Fair Value Measurement (see Note 17 in the Notes to Consolidated Financial Statements for additional information on ASC 820). The Logistics Center acquisition is under a ground lease; therefore, no value was allocated to land for this transaction. Intangibles associated with the purchases were allocated as follows: $423,000 to in-place lease intangibles (included in Other assets on the Consolidated Balance Sheets) and $68,000 to below market leases (included in Other liabilities on the Consolidated Balance Sheets). |
Costs Incurred | Anticipated Building Conversion Date | ||||||||||||||||
DEVELOPMENT AND VALUE-ADD PROPERTIES ACTIVITY | Costs Transferred in 2019 (1) | For the Nine Months Ended 9/30/2019 | Cumulative as of 9/30/2019 | Projected Total Costs | |||||||||||||
(In thousands) | |||||||||||||||||
LEASE-UP | Building Size (Square feet) | ||||||||||||||||
Broadmoor 2, Atlanta, GA | 111,000 | $ | — | 1,471 | 7,885 | 8,300 | 11/19 | ||||||||||
Logistics Center 6 & 7, Dallas, TX (2) | 142,000 | — | 14,462 | 14,462 | 16,400 | 01/20 | |||||||||||
Settlers Crossing 1, Austin, TX | 77,000 | — | 974 | 7,234 | 9,900 | 01/20 | |||||||||||
Settlers Crossing 2, Austin, TX | 83,000 | — | 1,228 | 8,343 | 9,200 | 01/20 | |||||||||||
Parc North 5, Dallas, TX | 100,000 | — | 1,642 | 8,595 | 9,200 | 02/20 | |||||||||||
Ten West Crossing 8, Houston, TX | 132,000 | — | 2,723 | 9,313 | 10,900 | 04/20 | |||||||||||
Tri-County Crossing 1 & 2, San Antonio, TX | 203,000 | — | 5,813 | 14,708 | 16,700 | 04/20 | |||||||||||
Eisenhauer Point 7 & 8, San Antonio, TX | 336,000 | — | 9,479 | 22,569 | 24,900 | 05/20 | |||||||||||
Airport Commerce Center 3, Charlotte, NC | 96,000 | — | 2,704 | 8,497 | 8,900 | 06/20 | |||||||||||
Parc North 6, Dallas, TX | 96,000 | 2,552 | 4,493 | 7,045 | 10,100 | 07/20 | |||||||||||
Arlington Tech Centre 1 & 2, Dallas, TX (3) | 151,000 | 12,717 | 12,717 | 15,100 | 08/20 | ||||||||||||
CreekView 121 5 & 6, Dallas, TX | 139,000 | — | 6,834 | 12,439 | 15,900 | 09/20 | |||||||||||
Gateway 5, Miami, FL | 187,000 | 11,944 | 9,365 | 21,309 | 22,400 | 09/20 | |||||||||||
Grand Oaks 75 2, Tampa, FL (4) | 150,000 | 12,879 | 12,879 | 13,600 | 09/20 | ||||||||||||
Total Lease-Up | 2,003,000 | 14,496 | 86,784 | 167,995 | 191,500 | ||||||||||||
UNDER CONSTRUCTION | |||||||||||||||||
Eisenhauer Point 9, San Antonio, TX | 82,000 | 1,154 | 4,897 | 6,051 | 6,600 | 11/19 | |||||||||||
World Houston 43, Houston, TX | 86,000 | 1,041 | 4,609 | 5,650 | 7,000 | 11/19 | |||||||||||
World Houston 45, Houston, TX | 160,000 | 4,430 | 11,152 | 15,582 | 18,300 | 12/19 | |||||||||||
Steele Creek IX, Charlotte, NC | 125,000 | 1,766 | 6,495 | 8,261 | 9,800 | 10/20 | |||||||||||
SunCoast 6, Ft. Myers, FL | 81,000 | 3,915 | 3,339 | 7,254 | 8,400 | 10/20 | |||||||||||
Horizon VIII & IX, Orlando, FL | 216,000 | 4,967 | 9,943 | 14,910 | 18,800 | 11/20 | |||||||||||
Gilbert Crossroads A & B, Phoenix, AZ | 140,000 | 3,221 | 6,329 | 9,550 | 15,600 | 12/20 | |||||||||||
Tri-County Crossing 3 & 4, San Antonio, TX | 203,000 | 2,334 | 2,070 | 4,404 | 14,700 | 05/21 | |||||||||||
World Houston 44, Houston, TX | 134,000 | 1,546 | 268 | 1,814 | 9,100 | 05/21 | |||||||||||
Ridgeview 1 & 2, San Antonio, TX | 226,000 | 2,499 | 179 | 2,678 | 18,500 | 06/21 | |||||||||||
LakePort 1-3, Dallas, TX | 194,000 | 3,542 | 230 | 3,772 | 22,500 | 07/21 | |||||||||||
Settlers Crossing 3 & 4, Austin, TX | 173,000 | 4,030 | 156 | 4,186 | 18,400 | 07/21 | |||||||||||
Total Under Construction | 1,820,000 | 34,445 | 49,667 | 84,112 | 167,700 | ||||||||||||
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND) | Estimated Building Size (Square feet) | ||||||||||||||||
Phoenix, AZ | 178,000 | (3,221 | ) | 499 | 4,087 | ||||||||||||
Ft. Myers, FL | 407,000 | (3,915 | ) | 2,135 | 11,542 | ||||||||||||
Miami, FL | 463,000 | (11,944 | ) | 6,234 | 30,621 | ||||||||||||
Orlando, FL | — | (4,967 | ) | 323 | 1,075 | ||||||||||||
Tampa, FL | 349,000 | — | 4,146 | 5,706 | |||||||||||||
Atlanta, GA | 100,000 | — | 3,164 | 3,890 | |||||||||||||
Jackson, MS | 28,000 | — | — | 706 | |||||||||||||
Charlotte, NC | 475,000 | (1,766 | ) | 1,463 | 6,906 | ||||||||||||
Austin, TX | — | (4,030 | ) | 288 | — | ||||||||||||
Dallas, TX | 322,000 | (6,094 | ) | 2,437 | 8,535 | ||||||||||||
Houston, TX | 1,501,000 | (7,017 | ) | 15,686 | 25,108 | ||||||||||||
San Antonio, TX | 397,000 | (5,987 | ) | 893 | 3,955 | ||||||||||||
Total Prospective Development | 4,220,000 | (48,941 | ) | 37,268 | 102,131 | ||||||||||||
8,043,000 | $ | — | 173,719 | 354,238 | |||||||||||||
Development and Value-Add Properties Activity table is continued on the next page. |
DEVELOPMENT AND VALUE-ADD PROPERTIES TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2019 | Building Size (Square feet) | Building Conversion Date | |||||||||||||||
Siempre Viva I, San Diego, CA | 115,000 | $ | — | — | 14,075 | 01/19 | |||||||||||
CreekView 121 3 & 4, Dallas, TX | 158,000 | — | 1,739 | 15,539 | 03/19 | ||||||||||||
Horizon VI, Orlando, FL | 148,000 | — | 3,682 | 11,907 | 03/19 | ||||||||||||
Horizon XI, Orlando, FL | 135,000 | — | 507 | 9,230 | 04/19 | ||||||||||||
Falcon Field, Phoenix, AZ | 97,000 | — | 181 | 8,413 | 05/19 | ||||||||||||
Gateway 1, Miami, FL | 200,000 | — | 3,402 | 23,643 | 05/19 | ||||||||||||
SunCoast 5, Ft. Myers, FL | 81,000 | — | 1,335 | 7,870 | 05/19 | ||||||||||||
Steele Creek V, Charlotte, NC | 54,000 | — | 2,223 | 5,537 | 07/19 | ||||||||||||
Total Transferred to Real Estate Properties | 988,000 | $ | — | 13,069 | 96,214 | (5) |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Leasing costs (principally commissions) | $ | 87,887 | 78,985 | |||
Accumulated amortization of leasing costs | (34,765 | ) | (30,185 | ) | ||
Leasing costs (principally commissions), net of accumulated amortization | 53,122 | 48,800 | ||||
Acquired in-place lease intangibles | 26,841 | 21,696 | ||||
Accumulated amortization of acquired in-place lease intangibles | (11,227 | ) | (9,833 | ) | ||
Acquired in-place lease intangibles, net of accumulated amortization | 15,614 | 11,863 | ||||
Acquired above market lease intangibles | 1,689 | 1,465 | ||||
Accumulated amortization of acquired above market lease intangibles | (953 | ) | (902 | ) | ||
Acquired above market lease intangibles, net of accumulated amortization | 736 | 563 | ||||
Straight-line rents receivable | 39,501 | 36,022 | ||||
Accounts receivable | 3,698 | 5,433 | ||||
Mortgage loans receivable | 2,564 | 2,594 | ||||
Interest rate swap assets | 1,405 | 6,701 | ||||
Right of use assets — Office leases (operating) (1) | 2,223 | — | ||||
Receivable for common stock offerings | 3,785 | — | ||||
Goodwill | 990 | 990 | ||||
Prepaid expenses and other assets | 13,604 | 8,265 | ||||
Total Other assets | $ | 137,242 | 121,231 |
(1) | See Note 20 in the Notes to Consolidated Financial Statements for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets for office leases. |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Property taxes payable | $ | 38,258 | 10,718 | |||
Development costs payable | 19,356 | 15,410 | ||||
Real estate improvements and capitalized leasing costs payable | 6,729 | 3,911 | ||||
Interest payable | 6,070 | 4,067 | ||||
Dividends payable | 30,133 | 27,738 | ||||
Book overdraft (1) | 13,912 | 15,048 | ||||
Other payables and accrued expenses | 7,969 | 9,671 | ||||
Total Accounts payable and accrued expenses | $ | 122,427 | 86,563 |
(1) | Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the Company’s working cash line of credit. |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Security deposits | $ | 19,799 | 18,432 | |||
Prepaid rent and other deferred income | 11,151 | 12,728 | ||||
Operating lease liabilities — Ground leases (1) | 12,275 | — | ||||
Operating lease liabilities — Office leases (1) | 2,246 | — | ||||
Acquired below-market lease intangibles | 8,112 | 5,891 | ||||
Accumulated amortization of below-market lease intangibles | (4,011 | ) | (3,028 | ) | ||
Acquired below-market lease intangibles, net of accumulated amortization | 4,101 | 2,863 | ||||
Interest rate swap liabilities | 1,027 | — | ||||
Prepaid tenant improvement reimbursements | 607 | 614 | ||||
Other liabilities | 5,651 | 15 | ||||
Total Other liabilities | $ | 56,857 | 34,652 |
(1) | See Note 20 in the Notes to Consolidated Financial Statements for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets and related liabilities for ground leases and office leases. |
• | PNOI increased by $6,630,000 ($0.18 per diluted share), or 12.3%, for the three months ended September 30, 2019, as compared to the same period of 2018. PNOI increased $3,146,000 from newly developed and value-add properties, $2,381,000 from same property operations and $1,444,000 from 2018 and 2019 acquisitions; PNOI decreased $372,000 from operating properties sold in 2018 and 2019. Lease termination fee income was $34,000 in both the three month periods ended September 30, 2019 and 2018. The Company recorded reserves for uncollectible rent of $26,000 and $196,000 during the three months ended September 30, 2019 and 2018, respectively. Straight-lining of rent increased Income from real estate operations by $1,170,000 and $1,432,000 for the three months ended September 30, 2019 and 2018, respectively. |
• | There were no sales during the three months ended September 30, 2019; EastGroup recognized gains on sales of real estate investments and non-operating real estate of $4,051,000 ($0.11 per diluted share) during the same period of 2018. |
• | Depreciation and amortization expense increased by $3,020,000 ($0.08 per diluted share) and $9,564,000 ($0.26 per diluted share) during the three and nine months ended September 30, 2019, respectively, as compared to the same periods of 2018. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2019 | 2018 | Increase (Decrease) | 2019 | 2018 | Increase (Decrease) | |||||||||||||
(In thousands) | ||||||||||||||||||
VARIABLE RATE INTEREST EXPENSE | ||||||||||||||||||
Unsecured bank credit facilities interest - variable rate (excluding amortization of facility fees and debt issuance costs) | $ | 1,604 | 1,028 | 576 | 5,182 | 2,182 | 3,000 | |||||||||||
Amortization of facility fees - unsecured bank credit facilities | 199 | 199 | — | 591 | 537 | 54 | ||||||||||||
Amortization of debt issuance costs - unsecured bank credit facilities | 139 | 139 | — | 416 | 369 | 47 | ||||||||||||
Total variable rate interest expense | 1,942 | 1,366 | 576 | 6,189 | 3,088 | 3,101 | ||||||||||||
FIXED RATE INTEREST EXPENSE | ||||||||||||||||||
Unsecured bank credit facilities interest - fixed rate (1) (2) (excluding amortization of facility fees and debt issuance costs) | — | 200 | (200 | ) | — | 1,001 | (1,001 | ) | ||||||||||
Unsecured debt interest (1) (excluding amortization of debt issuance costs) | 7,041 | 6,078 | 963 | 20,005 | 18,464 | 1,541 | ||||||||||||
Secured debt interest (excluding amortization of debt issuance costs) | 1,508 | 2,500 | (992 | ) | 5,503 | 7,609 | (2,106 | ) | ||||||||||
Amortization of debt issuance costs - unsecured debt | 117 | 133 | (16 | ) | 394 | 425 | (31 | ) | ||||||||||
Amortization of debt issuance costs - secured debt | 60 | 69 | (9 | ) | 190 | 211 | (21 | ) | ||||||||||
Total fixed rate interest expense | 8,726 | 8,980 | (254 | ) | 26,092 | 27,710 | (1,618 | ) | ||||||||||
Total interest | 10,668 | 10,346 | 322 | 32,281 | 30,798 | 1,483 | ||||||||||||
Less capitalized interest | (2,146 | ) | (1,542 | ) | (604 | ) | (6,067 | ) | (4,545 | ) | (1,522 | ) | ||||||
TOTAL INTEREST EXPENSE | $ | 8,522 | 8,804 | (282 | ) | 26,214 | 26,253 | (39 | ) |
(1) | Includes interest on the Company’s unsecured bank credit facilities and unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 14 in the Notes to Consolidated Financial Statements. |
(2) | The Company had designated an interest rate swap to an $80 million unsecured bank credit facility draw that effectively fixed the interest rate on the $80 million draw to 2.020% through the interest rate swap’s maturity date. This swap matured on August 15, 2018, and the $80 million draw has reverted to the variable interest rate associated with the Company’s unsecured bank credit facilities. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2019 | 2018 | Increase (Decrease) | 2019 | 2018 | Increase (Decrease) | |||||||||||||
(In thousands, except rates of interest) | ||||||||||||||||||
Average borrowings on unsecured bank credit facilities - variable rate | $ | 195,701 | 131,775 | 63,926 | 203,347 | 101,571 | 101,776 | |||||||||||
Weighted average variable interest rates (excluding amortization of facility fees and debt issuance costs) | 3.24 | % | 3.10 | % | 3.40 | % | 2.87 | % |
SECURED DEBT REPAID IN 2019 | Interest Rate | Date Repaid | Payoff Amount | |||||
(In thousands) | ||||||||
Dominguez, Industry I & III, Kingsview, Shaw, Walnut and Washington | 7.50% | 04/05/2019 | $ | 45,725 |
NEW UNSECURED DEBT IN 2018 AND 2019 | Effective Interest Rate | Date Obtained | Maturity Date | Amount | ||||||
(In thousands) | ||||||||||
$60 Million Senior Unsecured Notes | 3.93% | 04/10/2018 | 04/10/2028 | $ | 60,000 | |||||
$80 Million Senior Unsecured Notes | 4.27% | 03/28/2019 | 03/28/2029 | 80,000 | ||||||
$35 Million Senior Unsecured Notes | 3.54% | 08/15/2019 | 08/15/2031 | 35,000 | ||||||
$75 Million Senior Unsecured Notes | 3.47% | 08/19/2019 | 08/19/2029 | 75,000 | ||||||
Weighted Average/Total Amount for 2018 and 2019 | 3.85% | $ | 250,000 |
UNSECURED DEBT REPAID IN 2018 AND 2019 | Interest Rate | Date Repaid | Payoff Amount | |||||
(In thousands) | ||||||||
$50 Million Senior Unsecured Term Loan | 3.91% | 06/21/2018 | $ | 50,000 | ||||
$75 Million Senior Unsecured Term Loan | 2.85% | 07/31/2019 | 75,000 | |||||
Weighted Average/Total Amount for 2018 and 2019 | 3.27% | $ | 125,000 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Estimated Useful Life | 2019 | 2018 | 2019 | 2018 | ||||||||||
(In thousands) | ||||||||||||||
Upgrade on Acquisitions | 40 yrs | $ | 750 | 135 | 1,105 | 174 | ||||||||
Tenant Improvements: | ||||||||||||||
New Tenants | Lease Life | 4,706 | 4,262 | 11,508 | 10,214 | |||||||||
Renewal Tenants | Lease Life | 506 | 918 | 2,033 | 2,234 | |||||||||
Other: | ||||||||||||||
Building Improvements | 5-40 yrs | 1,576 | 3,930 | 4,364 | 6,557 | |||||||||
Roofs | 5-15 yrs | 2,701 | 2,570 | 8,239 | 6,881 | |||||||||
Parking Lots | 3-5 yrs | 783 | 1,137 | 1,268 | 2,112 | |||||||||
Other | 5 yrs | 436 | 27 | 816 | 765 | |||||||||
Total Real Estate Improvements (1) | $ | 11,458 | 12,979 | 29,333 | 28,937 |
(1) | Reconciliation of Total Real Estate Improvements to Real estate improvements on the Consolidated Statements of Cash Flows: |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Total Real Estate Improvements | $ | 29,333 | 28,937 | ||||
Change in Real Estate Property Payables | (2,852 | ) | (1,316 | ) | |||
Change in Construction in Progress | 1,315 | (842 | ) | ||||
Real Estate Improvements on the Consolidated Statements of Cash Flows | $ | 27,796 | 26,779 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Estimated Useful Life | 2019 | 2018 | 2019 | 2018 | ||||||||||
(In thousands) | ||||||||||||||
Development and Value-Add | Lease Life | $ | 2,152 | 2,044 | 6,085 | 3,757 | ||||||||
New Tenants | Lease Life | 1,415 | 2,231 | 4,478 | 4,942 | |||||||||
Renewal Tenants | Lease Life | 1,149 | 941 | 3,679 | 3,088 | |||||||||
Total Capitalized Leasing Costs | $ | 4,716 | 5,216 | 14,242 | 11,787 | |||||||||
Amortization of Leasing Costs | $ | 3,285 | 2,853 | 9,724 | 8,476 |
• | Lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right of use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company is a lessee on a limited number of leases, including office and ground leases. As of January 1, 2019, the Company recorded its right of use asset and lease liability values for its operating leases as follows: office leases of $2,376,000 and ground leases of $10,226,000. During the three months ended June 30, 2019, the Company entered into new operating leases, resulting in the recording of the following right of use assets and lease liabilities: office leases of $155,000 and ground leases of $2,679,000. The combined values are less than 1% of the Company’s Total assets as of September 30, 2019. |
• | Lessor accounting is largely unchanged under ASU 2016-02. The Company’s primary revenue is rental income; as such, the Company is a lessor on a significant number of leases. The Company is continuing to account for its leases in substantially the same manner. The most significant changes for the Company related to lessor accounting include: |
◦ | The new standard’s narrow definition of initial direct costs for leases — The new definition of initial direct costs results in certain costs (primarily legal costs related to lease negotiations) being expensed rather than capitalized upon adoption of the new standard. EastGroup recorded Indirect leasing costs of $110,000 and $306,000 on the Consolidated Statements of Income and Comprehensive Income during the three and nine months ended September 30, 2019. |
◦ | The guidance applicable to recording uncollectible rents — Upon adoption of the lease accounting guidance, reserves for uncollectible accounts are recorded as a reduction to revenue. Prior to adoption, reserves for uncollectible accounts were recorded as bad debt expenses. The standard also provides guidance related to calculating the reserves; however, those changes did not impact the Company. |
• | EastGroup has elected the practical expedient permitting lessors and lessees to make an accounting policy election by class of underlying asset to not separate non-lease components (such as common area maintenance) of a contract from the lease component to which they relate when specific criteria are met. The Company believes its leases meet the criteria. |
September 30, 2019 | December 31, 2018 | |||||
(In thousands) | ||||||
Unsecured bank credit facilities - variable rate, carrying amount | $ | 140,006 | 195,730 | |||
Unamortized debt issuance costs | (1,427 | ) | (1,804 | ) | ||
Unsecured bank credit facilities | 138,579 | 193,926 | ||||
Unsecured debt - fixed rate, carrying amount (1) | 840,000 | 725,000 | ||||
Unamortized debt issuance costs | (1,419 | ) | (1,600 | ) | ||
Unsecured debt | 838,581 | 723,400 | ||||
Secured debt - fixed rate, carrying amount (1) | 135,719 | 189,038 | ||||
Unamortized debt issuance costs | (389 | ) | (577 | ) | ||
Secured debt | 135,330 | 188,461 | ||||
Total debt | $ | 1,112,490 | 1,105,787 |
(1) | These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
October – December 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | Fair Value | ||||||||||||||||||
Unsecured bank credit facilities - variable rate (in thousands) | $ | — | — | — | 140,006 | (1) | — | — | 140,006 | 140,467 | (2) | ||||||||||||||
Weighted average interest rate | — | — | — | 3.04 | % | (3) | — | — | 3.04 | % | |||||||||||||||
Unsecured debt - fixed rate (in thousands) | $ | — | 105,000 | 40,000 | 75,000 | 115,000 | 505,000 | 840,000 | 864,265 | (4) | |||||||||||||||
Weighted average interest rate | — | 3.55 | % | 2.34 | % | 3.03 | % | 2.96 | % | 3.77 | % | 3.50 | % | ||||||||||||
Secured debt - fixed rate (in thousands) | $ | 2,248 | 9,096 | 89,562 | 32,770 | 119 | 1,924 | 135,719 | 138,938 | (4) | |||||||||||||||
Weighted average interest rate | 4.44 | % | 4.43 | % | 4.55 | % | 4.09 | % | 3.85 | % | 3.85 | % | 4.42 | % |
(1) | The variable-rate unsecured bank credit facilities mature in July 2022 and as of September 30, 2019, have balances of $110,000,000 on the $350 million unsecured bank credit facility and $30,006,000 on the $45 million unsecured bank credit facility. |
(2) | The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates, excluding the effects of debt issuance costs. |
(3) | Represents the weighted average interest rate for the Company’s variable rate unsecured bank credit facilities as of September 30, 2019. |
(4) | The fair value of the Company’s fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, 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, excluding the effects of debt issuance costs. |
ITEM 4. | CONTROLS AND PROCEDURES. |
ITEM 1A. | RISK FACTORS. |
ITEM 6. | EXHIBITS. |
Exhibits | ||
The following exhibits are included in or incorporated by reference into, this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2019: |
Exhibit Number | Description |
Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) of Marshall A. Loeb, Chief Executive Officer (filed herewith). | |
Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) of Brent W. Wood, Chief Financial Officer (filed herewith). | |
Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Marshall A. Loeb, Chief Executive Officer (furnished herewith). | |
Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Brent W. Wood, Chief Financial Officer (furnished herewith). | |
101.INS | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (filed herewith) |
101.1.SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith) |
101.2.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) |
101.3.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith) |
101.4.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith) |
101.5.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) |
EASTGROUP PROPERTIES, INC. | |
/s/ BRUCE CORKERN | |
Bruce Corkern, CPA | |
Senior Vice President, Chief Accounting Officer and Secretary | |
/s/ BRENT W. WOOD | |
Brent W. Wood | |
Executive Vice President, Chief Financial Officer and Treasurer |
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 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 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/ MARSHALL A. LOEB | |
MARSHALL A. LOEB | |
Chief Executive Officer | |
October 25, 2019 |
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 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 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/ BRENT W. WOOD | |
BRENT W. WOOD | |
Chief Financial Officer | |
October 25, 2019 |
(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/ MARSHALL A. LOEB | |
MARSHALL A. LOEB | |
Chief Executive Officer | |
October 25, 2019 |
(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/ BRENT W. WOOD | |
BRENT W. WOOD | |
Chief Financial Officer | |
October 25, 2019 |
7
M<683RXIEX^4JN,CC&*_//_A_OJG_ $3>T&/^HD<#_P =XJY??\%VO$>E0I)=
M?"DVT
PRINCIPLES OF CONSOLIDATION (Details) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
University Business Center 120 and 130 [Member] | ||
Subsidiaries [Line Items] | ||
Joint Ventures Assets Liabilities Revenues And Expenses With Noncontrolling Interests | 100.00% | 100.00% |
Less Than Wholly Owned Joint Venture Investment Ownership Percentage | 80.00% | 80.00% |
Industry Distribution Center II - undivided tenant-in-common interest [Member] | ||
Subsidiaries [Line Items] | ||
Tenant-in-common interest | 50.00% | 50.00% |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. Specifically, the Company has entered into derivative instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative instruments, described below, are used to manage differences in the amount, timing and duration of the Company’s known or expected cash payments principally related to certain of the Company’s borrowings. The Company’s objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2019, the Company had six interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans. All of the Company’s interest rate swaps convert the related loans’ LIBOR rate components to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective. The changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Other comprehensive income and is subsequently reclassified into earnings through interest expense as interest payments are made in the period that the hedged forecasted transaction affects earnings. Amounts reported in Other comprehensive income (loss) related to derivatives will be reclassified to Interest expense as interest payments are made or received on the Company’s variable-rate debt. The Company estimates that an additional $260,000 will be reclassified from Other comprehensive income (loss) as a decrease to Interest expense over the next twelve months. The Company’s valuation methodology for over-the-counter (“OTC”) derivatives is to discount cash flows based on Overnight Index Swap (“OIS”) rates. Uncollateralized or partially-collateralized trades are discounted at OIS rates, but include appropriate economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. The Company calculates its derivative valuations using mid-market prices. In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. The Company has material contracts that are indexed to USD-LIBOR and is monitoring this activity and evaluating the related risks. As of September 30, 2019 and December 31, 2018, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk:
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018. See Note 17 for additional information on the fair value of the Company’s interest rate swaps.
The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2019 and 2018:
See Note 13 for additional information on the Company’s Accumulated other comprehensive income resulting from its interest rate swaps. Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with financial institutions the Company regards as credit-worthy. The Company has an agreement with its derivative counterparties containing a provision stating that the Company could be declared in default on its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender. As of September 30, 2019, the fair value of derivatives in a net liability position related to these agreements was $1,027,000.
|
RISKS AND UNCERTAINTIES |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | 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.
|
DEBT |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT The Company’s debt is detailed below. EastGroup presents debt issuance costs as reductions of Unsecured bank credit facilities, Unsecured debt and Secured debt on the Consolidated Balance Sheets.
Until June 14, 2018, EastGroup had $300 million and $35 million unsecured bank credit facilities with margins over LIBOR of 100 basis points, facility fees of 20 basis points and maturity dates of July 30, 2019. The Company amended and restated these credit facilities on June 14, 2018, expanding the capacity to $350 million and $45 million, as detailed below. The $350 million unsecured bank credit facility is with a group of nine banks and has a maturity date of July 30, 2022. The credit facility contains options for two six-month extensions (at the Company’s election) and a $150 million accordion (with agreement by all parties). The interest rate on each tranche is usually reset on a monthly basis and as of September 30, 2019, was LIBOR plus 100 basis points with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the Company’s credit ratings. The Company had designated an interest rate swap to an $80 million unsecured bank credit facility draw that effectively fixed the interest rate on the $80 million draw to 2.020% through the interest rate swap’s maturity date. This swap matured on August 15, 2018, and the $80 million draw has reverted to the variable interest rate associated with the Company’s unsecured bank credit facilities. As of September 30, 2019, the Company had $110,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 3.048%. The Company has a standby letter of credit of $674,000 pledged on this facility. The Company’s $45 million unsecured bank credit facility has a maturity date of July 30, 2022, or such later date as designated by the bank; the Company also has two six-month extensions available if the extension options in the $350 million facility are exercised. The interest rate is reset on a daily basis and as of September 30, 2019, was LIBOR plus 100 basis points with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the Company’s credit ratings. As of September 30, 2019, the interest rate was 3.016% on a balance of $30,006,000. In March 2019, the Company closed $80 million of senior unsecured private placement notes with an insurance company. The notes have a 10-year term and a fixed interest rate of 4.27% with semi-annual interest payments. In August 2019, the Company closed $35 million of senior unsecured private placement notes with an insurance company. The notes have a 12-year term and a fixed interest rate of 3.54% with semi-annual interest payments. Also in August 2019, the Company closed $75 million of senior unsecured private placement notes with an insurance company. The notes have a 10-year term and a fixed rate of 3.47% with semi-annual interest payments. The notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. In July 2019, the Company repaid a $75 million unsecured term loan at maturity with an effectively fixed interest rate of 2.846%. Scheduled principal payments on long-term debt, including Unsecured debt and Secured debt (not including Unsecured bank credit facilities), as of September 30, 2019, are as follows:
|
PRINCIPLES OF CONSOLIDATION |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | 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. As of September 30, 2019 and December 31, 2018, EastGroup had an 80% controlling interest in University Business Center 120 and 130. The Company records 100% of the assets, liabilities, revenues and expenses of the buildings held in joint ventures with the 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.
|
DEVELOPMENT |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
DEVELOPMENT [Abstract] | |
Development | DEVELOPMENT For properties under development and value-add properties acquired in the development stage, costs associated with development (i.e., land, construction costs, interest expense, property taxes and other 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 related to such development activities. The internal costs are allocated to specific development projects based on development activity. 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. The Company transfers properties from the development and value-add program to Real estate properties as follows: (i) for development properties, at the earlier of 90% occupancy or one year after completion of the shell construction, and (ii) for value-add properties, at the earlier of 90% occupancy or one year after acquisition. Upon the earlier of 90% occupancy or one year after completion of the shell construction, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).
|
CONSOLIDATED BALANCE SHEETS - Unaudited - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
||
---|---|---|---|---|
ASSETS | ||||
Real estate properties | $ 2,739,657,000 | $ 2,553,481,000 | ||
Development and value-add properties | [1] | 354,238,000 | 263,664,000 | |
Real estate, development and value-add properties | 3,093,895,000 | 2,817,145,000 | ||
Less accumulated depreciation | (854,368,000) | (814,915,000) | ||
Real estate, net | 2,239,527,000 | 2,002,230,000 | ||
Real estate assets held for sale | 15,949,000 | 0 | ||
Unconsolidated investment | 7,596,000 | 7,870,000 | ||
Cash | 130,000 | 374,000 | ||
Other Assets | 137,242,000 | 121,231,000 | ||
TOTAL ASSETS | 2,400,444,000 | 2,131,705,000 | ||
LIABILITIES | ||||
Unsecured bank credit facilities | 138,579,000 | 193,926,000 | ||
Unsecured debt | 838,581,000 | 723,400,000 | ||
Secured debt | 135,330,000 | 188,461,000 | ||
Accounts payable and accrued expenses | 122,427,000 | 86,563,000 | ||
Other liabilities | 56,857,000 | 34,652,000 | ||
Total Liabilities | 1,291,774,000 | 1,227,002,000 | ||
Stockholders' Equity: | ||||
Common shares; $.0001 par value; 70,000,000 shares authorized; 38,409,217 shares issued and outstanding at September 30, 2019 and 36,501,356 at December 31, 2018 | 4,000 | 4,000 | ||
Excess shares; $.0001 par value; 30,000,000 shares authorized; no shares issued | 0 | 0 | ||
Additional paid-in capital | 1,442,745,000 | 1,222,547,000 | ||
Distributions in excess of earnings | (336,645,000) | (326,193,000) | ||
Accumulated Other Comprehensive Income | 378,000 | 6,701,000 | ||
Total Stockholders' Equity | 1,106,482,000 | 903,059,000 | ||
Noncontrolling interest in joint ventures | 2,188,000 | 1,644,000 | ||
Total Equity | 1,108,670,000 | 904,703,000 | ||
TOTAL LIABILITIES AND EQUITY | $ 2,400,444,000 | $ 2,131,705,000 | ||
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - Unaudited (Parenthetical) - $ / shares |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Stockholders' Equity Attributable to Parent | ||||||
Common dividends declared - per share (in dollars per share) | $ 0.75 | $ 0.72 | $ 0.72 | $ 0.72 | $ 0.64 | $ 0.64 |
Issuance of shares of common stock, common stock offering, net of expenses | 849,751 | 790,052 | 232,205 | 316,102 | 750,282 | 179,501 |
Issuance of shares of common stock, dividend reinvestment plan | 441 | 479 | 571 | 0 | 565 | 667 |
Withheld shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | 0 | 0 | 28,955 | 0 | 0 | 23,824 |
OTHER LIABILITIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of other liabilities | A summary of the Company’s Other liabilities follows:
(1) See Note 20 for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets and related liabilities for ground leases and office leases.
|
REAL ESTATE PROPERTIES (Tables) |
9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ground lease payments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ground lease payments [Table Text Block] | The following schedule indicates approximate future minimum ground lease payments for these properties by year as of September 30, 2019: Future Minimum Ground Lease Payments
(1) As the Company’s leases do not provide an implicit rate, in order to calculate the present value of the remaining ground lease payments, the Company used its incremental borrowing rate, adjusted for a number of factors, including the long-term nature of the ground leases, the Company’s estimated borrowing costs, and the estimated fair value of the underlying land, to determine the imputed interest for its ground leases. The Company elected to use the portfolio approach as all of its ground leases in place as of January 1, 2019, have similar characteristics and determined 7.3% as the appropriate rate as of January 1, 2019, for all leases in place at that time. For the ground lease acquired during April 2019, the Company used its incremental borrowing rate, adjusted for the factors discussed above, which was determined to be 8.0%.
|
Since the Company has applied the provisions on a prospective basis, the following represents approximate future minimum ground lease payments by year as of December 31, 2018, as applicable under ASC 840, Leases, prior to the adoption of ASC 842. Future Minimum Ground Lease Payments
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | The Company’s Real estate properties and Development and value-add properties at September 30, 2019 and December 31, 2018 were as follows:
(2) Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use. Acquired properties meeting either of the following two conditions are considered value-add properties: (1) Less than 75% occupied as of the acquisition date (or will be less than 75% occupied within one year of acquisition date based on near term lease roll), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.
|
OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
|||
---|---|---|---|---|---|
Other Liabilities, Unclassified [Abstract] | |||||
Security deposits | $ 19,799 | $ 18,432 | |||
Prepaid rent and other deferred income | 11,151 | 12,728 | |||
Operating lease liabilities - ground leases | [1] | 12,275 | 0 | ||
Operating lease liabilities - office leases | [1] | 2,246 | 0 | ||
Acquired Below Market Lease Intangibles | 8,112 | 5,891 | |||
Accumulated Amortization of Acquired Below Market Lease Intangibles | (4,011) | (3,028) | |||
Acquired Below Market Lease Intangibles, Net of Accumulated Amortization | 4,101 | 2,863 | |||
Interest rate swap liabilities | 1,027 | 0 | |||
Prepaid tenant improvement reimbursements | 607 | 614 | |||
Other liabilities | 5,651 | 15 | |||
Other Liabilities | $ 56,857 | $ 34,652 | |||
|
USE OF ESTIMATES |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates | 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, liabilities, 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.
|
REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Real Estate Property Acquisitions and Acquired Intangibles | REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES Upon acquisition of real estate properties, EastGroup applies the principles of FASB ASC 805, Business Combinations. The FASB Codification provides a framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the guidance, companies are required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business. EastGroup determined that its real estate property acquisitions in 2018 and the first nine months of 2019 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company capitalized acquisition costs related to its 2018 and 2019 acquisitions. The FASB 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 for business combinations is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired. 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 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. 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 $1,321,000 and $3,653,000 for the three and nine months ended September 30, 2019, respectively, and $1,157,000 and $3,202,000 for the same periods in 2018. Amortization of above and below market leases increased rental income by $366,000 and $842,000 for the three and nine months ended September 30, 2019, respectively, and $217,000 and $477,000 for the same periods in 2018. During the nine months ended September 30, 2019, the Company acquired the following operating properties: Airways Business Center in Denver; 385 Business Park in Greenville; and Grand Oaks 75 Business Center 1 in Tampa. The Company also acquired the following value-add properties: Logistics Center 6 & 7 in Dallas; Arlington Tech Centre 1 & 2 in Arlington (Dallas); and Grand Oaks 75 Business Center 2 in Tampa. At the time of acquisition, these value-add properties were classified in the lease-up phase. The total cost for the properties acquired by the Company was $118,591,000, of which $74,467,000 was allocated to Real estate properties and $38,035,000 was allocated to Development and value-add properties. EastGroup allocated $16,115,000 of the total purchase price to land using third party land valuations for the Denver, Greenville, Tampa and Dallas markets. Logistics Center 6 & 7 is located on land under a ground lease; therefore, no value was allocated to land for this transaction. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement (see Note 17 for additional information on ASC 820). Intangibles associated with the purchase of real estate were allocated as follows: $7,406,000 to in-place lease intangibles and $312,000 to above market leases (both included in Other assets on the Consolidated Balance Sheets) and $1,629,000 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. Also during the nine months ended September 30, 2019, EastGroup acquired 6.5 acres of land in San Diego for $13,386,000. In connection with the acquisition, the Company allocated value to land and below market leases. EastGroup recorded land of $13,979,000 based on third party land valuations for the San Diego market. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement. This land, which is included in Real estate properties on the Consolidated Balance Sheets, is currently leased to a tenant that operates a parking lot on the site. The Company recorded $593,000 to below market leases in connection with this land acquisition. These costs are amortized over the remaining life of the associated lease in place at the time of acquisition. During the year ended December 31, 2018, the Company acquired the following operating properties: Gwinnett 316 in Atlanta; Eucalyptus Distribution Center in Chino (Los Angeles); Allen Station I & II in Dallas; and Greenhill Distribution Center in Austin. The Company also acquired one value-add property, Siempre Viva Distribution Center I in San Diego. At the time of acquisition, Siempre Viva I was classified in the lease-up phase. The total cost for the properties acquired by the Company was $71,086,000, of which $54,537,000 was allocated to Real estate properties and $13,934,000 was allocated to Development and value-add properties. EastGroup allocated $23,263,000 of the total purchase price to land using third party land valuations for the Atlanta, Dallas, Austin, San Diego and Chino (Los Angeles) markets. Intangibles associated with the purchase of real estate were allocated as follows: $4,350,000 to in-place lease intangibles and $21,000 to above market leases and $1,756,000 to below market leases. These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition. The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment. No impairment of goodwill or other intangibles existed during the periods ended September 30, 2019 and September 30, 2018.
|
ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | ACCOUNTS PAYABLE AND ACCRUED EXPENSES A summary of the Company’s Accounts payable and accrued expenses follows:
(1) Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the Company’s working cash line of credit.
|
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accounts Payable and Accrued Expenses | A summary of the Company’s Accounts payable and accrued expenses follows:
(1) Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the Company’s working cash line of credit.
|
LEASE REVENUE LEASE REVENUE (Tables) |
9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Revenue [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease, Lease Income [Table Text Block] | The table below presents the components of Income from real estate operations for the three and nine months ended September 30, 2019:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Rental Receipts Under Non-cancelable Leases [Table Text Block] | The following schedule indicates approximate future minimum rental receipts under non-cancelable leases for real estate properties by year as of September 30, 2019:
|
Since the Company has applied the provisions on a prospective basis, the following represents approximate future minimum rental receipts under non-cancelable leases for real estate properties by year as of December 31, 2018, as applicable under ASC 840, Leases, prior to the adoption of ASC 842.
|
CONSOLIDATED BALANCE SHEETS - Unaudited (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common shares, authorized | 70,000,000 | 70,000,000 |
Common shares, issued | 38,409,217 | 36,501,356 |
Common shares, outstanding | 38,409,217 | 36,501,356 |
Excess shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Excess shares, authorized | 30,000,000 | 30,000,000 |
Excess shares, issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
OPERATING ACTIVITIES | ||
Net Income | $ 72,058 | $ 70,053 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 77,027 | 67,463 |
Stock-based compensation expense | 4,177 | 4,033 |
Net gain on sales of real estate investments and non-operating real estate | (11,406) | (14,359) |
Gain on casualties and involuntary conversion on real estate assets | (100) | (1,150) |
Changes in operating assets and liabilities: | ||
Accrued income and other assets | 2,137 | 628 |
Accounts payable, accrued expenses and prepaid rent | 25,547 | 13,997 |
Other | 1,256 | 1,330 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 170,696 | 141,995 |
INVESTING ACTIVITIES | ||
Development and value-add properties | (191,872) | (118,489) |
Purchases of real estate | (94,414) | (52,934) |
Real estate improvements | (27,796) | (26,779) |
Net proceeds from sales of real estate investments and non-operating real estate | 18,102 | 24,508 |
Proceeds from casualties and involuntary conversion on real estate assets | 187 | 1,483 |
Repayments on mortgage loans receivable | 30 | 1,977 |
Changes in accrued development costs | 3,946 | 1,896 |
Changes in other assets and other liabilities | (16,169) | (9,804) |
NET CASH USED IN INVESTING ACTIVITIES | (307,986) | (178,142) |
FINANCING ACTIVITIES | ||
Proceeds from unsecured bank credit facilities | 660,431 | 311,641 |
Repayments on unsecured bank credit facilities | (716,155) | (336,789) |
Proceeds from Unsecured Debt | 190,000 | 60,000 |
Repayments on Unsecured Debt | (75,000) | (50,000) |
Repayments on secured debt | (53,301) | (8,410) |
Debt issuance costs | (252) | (1,857) |
Distributions paid to stockholders (not including dividends accrued) | (80,110) | (45,449) |
Proceeds from common stock offerings | 213,562 | 112,325 |
Proceeds from dividend reinvestment plan | 162 | 166 |
Other | (2,291) | (5,239) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 137,046 | 36,388 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (244) | 241 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 374 | 16 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 130 | 257 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest, net of amounts capitalized of $6,067 and $4,545 for 2019 and 2018, respectively | 23,229 | 23,112 |
Cash paid for operating lease liabilities | 962 | 0 |
NON-CASH OPERATING ACTIVITY | ||
Operating lease liabilities arising from obtaining right of use assets | $ 15,435 | $ 0 |
COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
COMPREHENSIVE INCOME [Abstract] | ||||||||
Balance at Beginning of Period, Accumulated Other Comprehensive Income | $ 634 | $ 6,701 | $ 10,140 | $ 5,348 | $ 6,701 | $ 5,348 | ||
Net unrealized change in fair value of interest rate swaps - cash flow hedges | (256) | $ (3,754) | $ (2,313) | 553 | $ 1,186 | $ 3,606 | (6,323) | 5,345 |
Balance at End of Period, Accumulated Other Comprehensive Income | $ 378 | $ 634 | $ 10,693 | $ 10,140 | $ 378 | $ 10,693 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|---|---|
Financial Assets [Abstract] | |||||||
Cash and Cash Equivalents, at Carrying Value | $ 130 | $ 374 | $ 257 | $ 16 | |||
Fair Value [Member] | |||||||
Financial Assets [Abstract] | |||||||
Cash and Cash Equivalents, Fair Value Disclosure | 130 | 374 | |||||
Mortgage loans receivable | 2,608 | 2,571 | |||||
Interest rate swap assets | 1,405 | 6,701 | |||||
Financial Liabilities [Abstract] | |||||||
Unsecured bank credit facilities - variable rate | 140,467 | 196,423 | |||||
Unsecured debt Fair Value Disclosure | 864,265 | 718,364 | |||||
Secured debt | 138,938 | 191,742 | |||||
Interest rate swap liabilities | 1,027 | 0 | |||||
Carrying Amount [Member] | |||||||
Financial Assets [Abstract] | |||||||
Cash and Cash Equivalents, at Carrying Value | [1] | 130 | 374 | ||||
Mortgage loans receivable | [1] | 2,564 | 2,594 | ||||
Interest rate swap assets | [1] | 1,405 | 6,701 | ||||
Financial Liabilities [Abstract] | |||||||
Unsecured bank credit facilities - variable rate | [1] | 140,006 | 195,730 | ||||
Unsecured debt Fair Value Disclosure | [1] | 840,000 | 725,000 | ||||
Secured debt | [1] | 135,719 | 189,038 | ||||
Interest rate swap liabilities | [1] | $ 1,027 | $ 0 | ||||
|
DEVELOPMENT (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Development properties [Member] | |
Development and Value-add [Line Items] | |
Length of Time After Project Completion When Development Cost Ceased Being Capitalized | 1 year |
Percentage of Occupation When Costs Ceased Being Capitalized | 90.00% |
Value-add properties [Member] | |
Development and Value-add [Line Items] | |
Percentage of Occupation When Costs Ceased Being Capitalized | 90.00% |
Length of Time After Project Acquisition When Project Transfers to Real Estate Properties | 1 year |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [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, 2019 and December 31, 2018.
(1) Carrying amounts shown in the table are included on the Consolidated Balance Sheets under the indicated captions, except as explained in the notes below. (2) Carrying amounts and fair values shown in the table exclude debt issuance costs (see Note 10 for additional information). 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 (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). Interest rate swap assets (included in Other assets on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 14 for additional information on the Company’s interest rate swaps. Unsecured bank credit facilities: The fair value of the Company’s unsecured bank credit facilities is estimated by discounting expected cash flows at current market rates (Level 2 input), excluding the effects of debt issuance costs. Unsecured debt: The fair value of the Company’s unsecured 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 (Level 2 input), excluding the effects of debt issuance costs. Secured debt: The fair value of the Company’s secured 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 (Level 2 input), excluding the effects of debt issuance costs. Interest rate swap liabilities (included in Other liabilities on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 14 for additional information on the Company’s interest rate swaps.
|
EARNINGS PER SHARE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | 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 EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested. 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 EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding plus the dilutive effect of unvested restricted stock. The dilutive effect of unvested restricted stock is determined using the treasury stock method. Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:
|
LEGAL MATTERS Legal Matters (Notes) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
LEGAL MATTERS [Abstract] | |
Legal Matters and Contingencies [Text Block] | LEGAL MATTERS The Company is not presently involved in any material litigation nor, to its knowledge, is any material litigation threatened against the Company or its properties, other than routine litigation arising in the ordinary course of business. |
OTHER ASSETS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | A summary of the Company’s Other assets follows:
(1) See Note 20 for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets for office leases.
|
SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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. As of September 30, 2019 and December 31, 2018, EastGroup had an 80% controlling interest in University Business Center 120 and 130. The Company records 100% of the assets, liabilities, revenues and expenses of the buildings held in joint ventures with the 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 | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, 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.
|
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. 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. As of September 30, 2019, the Company owned three operating properties, University Business Center 130, University Business Center 125 and University Business Center 175, that were classified as held for sale on the September 30, 2019 Consolidated Balance Sheet. The properties are expected to be sold in the fourth quarter of 2019. The Company did not classify any properties as held for sale as of December 31, 2018. In accordance with FASB ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation. The Company does not consider its sales in 2018 and the nine months ended September 30, 2019, or the properties classified as held for sale as of September 30, 2019, to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results. |
Real Estate Property Acquisitions and Acquired Intangibles [Policy Text Block] | Upon acquisition of real estate properties, EastGroup applies the principles of FASB ASC 805, Business Combinations. The FASB Codification provides a framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the guidance, companies are required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business. EastGroup determined that its real estate property acquisitions in 2018 and the first nine months of 2019 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company capitalized acquisition costs related to its 2018 and 2019 acquisitions. The FASB 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 for business combinations is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired. 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 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. 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. |
Earnings Per Share, Policy [Policy Text Block] | 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 EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested. 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 EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding plus the dilutive effect of unvested restricted stock. The dilutive effect of unvested restricted stock is determined using the treasury stock method.
|
Share-based Payment Arrangement [Policy Text Block] | EastGroup applies the provisions of ASC 718, Compensation - Stock Compensation, to account for its stock-based compensation plans. ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued.
|
Fair Value Measurement, Policy [Policy Text Block] | ASC 820, Fair Value Measurement, 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).
|
BASIS OF PRESENTATION |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION |
Cover - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Oct. 24, 2019 |
|
Cover page. | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity File Number | 1-07094 | |
Entity Registrant Name | EastGroup Properties Inc | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 13-2711135 | |
Entity Address, Address Line One | 400 W Parkway Place | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Ridgeland, | |
Entity Address, State or Province | MS | |
Entity Address, Postal Zip Code | 39157 | |
City Area Code | 601 | |
Local Phone Number | 354-3555 | |
Title of 12(b) Security | Common stock, $0.0001 par value per share | |
Trading Symbol | EGP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 38,409,619 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Central Index Key | 0000049600 | |
Document Quarterly Report | true | |
Document Transition Report | false |
COMPREHENSIVE INCOME (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The components of Accumulated other comprehensive income are presented in the Company’s Consolidated Statement of Changes in Equity and are summarized below. See Note 14 for information regarding the Company’s interest rate swaps.
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - Unaudited - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Distributions In Excess Of Earnings |
Accumulated Other Comprehensive Income |
Noncontrolling Interest in Joint Ventures |
---|---|---|---|---|---|---|
BALANCE at Dec. 31, 2017 | $ 751,130 | $ 3 | $ 1,061,153 | $ (317,032) | $ 5,348 | $ 1,658 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 28,748 | 0 | 0 | 28,713 | 0 | 35 |
Net unrealized change in fair value of cash flow hedges | 3,606 | 0 | 0 | 0 | 3,606 | 0 |
Common dividends declared | (22,388) | 0 | 0 | (22,388) | 0 | 0 |
Stock-based compensation, net of forfeitures | 1,044 | 0 | 1,044 | 0 | 0 | 0 |
Issuance of common stock, common stock offering, net of expenses | 14,602 | 0 | 14,602 | 0 | 0 | 0 |
Issuance of common stock, dividend reinvestment plan | 54 | 0 | 54 | 0 | 0 | 0 |
Withheld shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | (2,055) | 0 | (2,055) | 0 | 0 | 0 |
Distributions to noncontrolling interest | (65) | 0 | 0 | 0 | 0 | (65) |
BALANCE at Mar. 31, 2018 | 774,676 | 3 | 1,074,798 | (310,707) | 8,954 | 1,628 |
BALANCE at Dec. 31, 2017 | 751,130 | 3 | 1,061,153 | (317,032) | 5,348 | 1,658 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | (70,053) | |||||
Net unrealized change in fair value of cash flow hedges | 5,345 | |||||
BALANCE at Sep. 30, 2018 | 869,931 | 4 | 1,176,034 | (318,410) | 10,693 | 1,610 |
BALANCE at Mar. 31, 2018 | 774,676 | 3 | 1,074,798 | (310,707) | 8,954 | 1,628 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 18,264 | 0 | 0 | 18,227 | 0 | 37 |
Net unrealized change in fair value of cash flow hedges | 1,186 | 0 | 0 | 0 | 1,186 | 0 |
Common dividends declared | (22,875) | 0 | 0 | (22,875) | 0 | 0 |
Stock-based compensation, net of forfeitures | 1,885 | 0 | 1,885 | 0 | 0 | 0 |
Issuance of common stock, common stock offering, net of expenses | 67,554 | 1 | 67,553 | 0 | 0 | 0 |
Issuance of common stock, dividend reinvestment plan | 54 | 0 | 54 | 0 | 0 | 0 |
Distributions to noncontrolling interest | (43) | 0 | 0 | 0 | 0 | (43) |
BALANCE at Jun. 30, 2018 | 840,701 | 4 | 1,144,290 | (315,355) | 10,140 | 1,622 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | (23,041) | 0 | 0 | 23,010 | 0 | 31 |
Net unrealized change in fair value of cash flow hedges | 553 | 0 | 0 | 0 | 553 | 0 |
Common dividends declared | (26,065) | 0 | 0 | (26,065) | 0 | 0 |
Stock-based compensation, net of forfeitures | 1,574 | 0 | 1,574 | 0 | 0 | 0 |
Issuance of common stock, common stock offering, net of expenses | 30,170 | 0 | 30,170 | 0 | 0 | 0 |
Distributions to noncontrolling interest | (43) | 0 | 0 | 0 | 0 | (43) |
BALANCE at Sep. 30, 2018 | 869,931 | 4 | 1,176,034 | (318,410) | 10,693 | 1,610 |
BALANCE at Dec. 31, 2018 | 904,703 | 4 | 1,222,547 | (326,193) | 6,701 | 1,644 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 22,534 | 0 | 0 | 22,529 | 0 | 5 |
Net unrealized change in fair value of cash flow hedges | (2,313) | 0 | 0 | 0 | (2,313) | 0 |
Common dividends declared | (26,520) | 0 | 0 | (26,520) | 0 | 0 |
Stock-based compensation, net of forfeitures | 1,447 | 0 | 1,447 | 0 | 0 | 0 |
Issuance of common stock, common stock offering, net of expenses | 24,400 | 0 | 24,400 | 0 | 0 | 0 |
Issuance of common stock, dividend reinvestment plan | 54 | 0 | 54 | 0 | 0 | 0 |
Withheld shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | (2,788) | 0 | (2,788) | 0 | 0 | 0 |
Distributions to noncontrolling interest | (43) | 0 | 0 | 0 | 0 | (43) |
BALANCE at Mar. 31, 2019 | 921,474 | 4 | 1,245,660 | (330,184) | 4,388 | 1,606 |
BALANCE at Dec. 31, 2018 | 904,703 | 4 | 1,222,547 | (326,193) | 6,701 | 1,644 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | (72,058) | |||||
Net unrealized change in fair value of cash flow hedges | (6,323) | |||||
BALANCE at Sep. 30, 2019 | 1,108,670 | 4 | 1,442,745 | (336,645) | 378 | 2,188 |
BALANCE at Mar. 31, 2019 | 921,474 | 4 | 1,245,660 | (330,184) | 4,388 | 1,606 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 26,949 | 0 | 0 | 26,953 | 0 | (4) |
Net unrealized change in fair value of cash flow hedges | (3,754) | 0 | 0 | 0 | (3,754) | 0 |
Common dividends declared | (27,106) | 0 | 0 | (27,106) | 0 | 0 |
Stock-based compensation, net of forfeitures | 2,291 | 0 | 2,291 | 0 | 0 | 0 |
Issuance of common stock, common stock offering, net of expenses | 89,036 | 0 | 89,036 | 0 | 0 | 0 |
Issuance of common stock, dividend reinvestment plan | 55 | 0 | 55 | 0 | 0 | 0 |
Distributions to noncontrolling interest | (43) | 0 | 0 | 0 | 0 | (43) |
BALANCE at Jun. 30, 2019 | 1,008,902 | 4 | 1,337,042 | (330,337) | 634 | 1,559 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | (22,575) | 0 | 0 | 22,571 | 0 | 4 |
Net unrealized change in fair value of cash flow hedges | (256) | 0 | 0 | 0 | (256) | 0 |
Common dividends declared | (28,879) | 0 | 0 | (28,879) | 0 | 0 |
Stock-based compensation, net of forfeitures | 1,739 | 0 | 1,739 | 0 | 0 | 0 |
Issuance of common stock, common stock offering, net of expenses | 103,911 | 0 | 103,911 | 0 | 0 | 0 |
Issuance of common stock, dividend reinvestment plan | 53 | 0 | 53 | 0 | 0 | 0 |
Purchase of noncontrolling interest in joint venture | 668 | 0 | 0 | 0 | 0 | 668 |
Distributions to noncontrolling interest | (43) | 0 | 0 | 0 | 0 | (43) |
BALANCE at Sep. 30, 2019 | $ 1,108,670 | $ 4 | $ 1,442,745 | $ (336,645) | $ 378 | $ 2,188 |
REAL ESTATE PROPERTIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investment Property, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Properties | REAL ESTATE PROPERTIES EastGroup has one reportable segment – industrial properties. These properties are primarily located in major Sunbelt regions of the United States. The Company’s properties have similar economic characteristics and as a result, have been 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. During the periods ended September 30, 2019 and September 30, 2018, the Company did not identify any impairment charges which should be recorded. Depreciation of buildings and other improvements is computed using the straight-line method over estimated useful lives of generally 40 years for buildings and 3 to 15 years for improvements. 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 $21,384,000 and $63,650,000 for the three and nine months ended September 30, 2019, respectively, and $18,960,000 and $55,785,000 for the same periods in 2018. The Company’s Real estate properties and Development and value-add properties at September 30, 2019 and December 31, 2018 were as follows:
Ground Leases On January 1, 2019, EastGroup adopted the principles of FASB Accounting Standards Codification (“ASC”) 842, Leases, as further discussed in Note 20. In connection with the adoption, the Company recorded right of use assets for its ground leases, which are classified as operating leases, using the effective date transition option; under this option, prior years are not restated. As of January 1, 2019, the Company recorded right of use assets for its ground leases of $10,226,000. In April 2019, the Company acquired Logistics Center 6 & 7 in Dallas, which is located on land under a ground lease. The Company recorded a right of use asset of $2,679,000 in connection with this acquisition. As of September 30, 2019, the unamortized balance of the Company’s right of use assets for its ground leases was $12,242,000. The right of use assets for ground leases are included in Real estate properties on the Consolidated Balance Sheets. As of September 30, 2019, the Company operated two properties in Florida, three properties in Texas and one property in Arizona that are subject to ground leases. These leases have terms of 40 to 50 years, expiration dates of August 2031 to October 2058, and renewal options of 15 to 35 years, except for the one lease in Arizona which is automatically and perpetually renewed annually. The Company has included renewal options in the lease terms for calculating the ground lease assets and liabilities as the Company is reasonably certain it will exercise these options. Total ground lease expenditures were $261,000 and $705,000 for the three and nine months ended September 30, 2019, respectively, and $193,000 and $585,000 for the same periods in 2018. Payments are subject to increases at 3 to 10 year intervals based upon the agreed or appraised fair market value of the leased premises on the adjustment date or the Consumer Price Index percentage increase since the base rent date. These future changes in payments will be considered variable payments and will not impact the assessment of the asset or liability unless there is a significant event that triggers reassessment, such as amendment with a change in the terms of the lease. The weighted-average remaining lease term as of September 30, 2019, for the ground leases is 44 years. The following schedule indicates approximate future minimum ground lease payments for these properties by year as of September 30, 2019: Future Minimum Ground Lease Payments
As noted above, the Company adopted the new lease accounting guidance effective January 1, 2019. Since the Company has applied the provisions on a prospective basis, the following represents approximate future minimum ground lease payments by year as of December 31, 2018, as applicable under ASC 840, Leases, prior to the adoption of ASC 842. Future Minimum Ground Lease Payments
|
OTHER ASSETS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | OTHER ASSETS A summary of the Company’s Other assets follows:
(1) See Note 20 for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets for office leases.
|
RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Right of use assets - Office Leases (operating) | [1] | $ 2,223,000 | $ 2,223,000 | $ 0 | ||||||||
Right of use assets - Ground leases (operating) | [2] | 12,242,000 | 12,242,000 | $ 0 | ||||||||
Indirect leasing costs | $ 110,000 | $ 0 | $ 306,000 | $ 0 | ||||||||
Accounting Standards Update 2016-02 [Member] | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Right of use assets - Office Leases (operating) | $ 2,376,000 | |||||||||||
Right of use assets - Ground leases (operating) | $ 10,226,000 | |||||||||||
Right of use asset and lease liability for ground leases and office leases, estimated percentage of total assets | less than 1% | |||||||||||
Atlanta office lease commencing in June 2019 [Member] | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Right of use assets - Office Leases (operating) | $ 155,000 | |||||||||||
Logistics Center 6 & 7 [Member] | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Right of use assets - Ground leases (operating) | $ 2,679,000 | |||||||||||
|
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
||
---|---|---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||||
Property taxes payable | $ 38,258 | $ 10,718 | ||
Development costs payable | 19,356 | 15,410 | ||
Real estate improvements and capitalized leasing costs payable | 6,729 | 3,911 | ||
Interest payable | 6,070 | 4,067 | ||
Dividends payable | 30,133 | 27,738 | ||
Book Overdraft | [1] | 13,912 | 15,048 | |
Other payables and accrued expenses | 7,969 | 9,671 | ||
Accounts payable and accrued expenses | $ 122,427 | $ 86,563 | ||
|
EARNINGS PER SHARE (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
BASIC EPS COMPUTATION FOR NET INCOME AVAILABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS [Abstract] | ||||
Numerator - net income attributable to common stockholders | $ 22,571 | $ 23,010 | $ 72,053 | $ 69,950 |
Denominator - Weighted average shares outstanding | 37,771 | 35,716 | 37,064 | 35,204 |
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||||
Numerator - net income attributable to common stockholders | $ 22,571 | $ 23,010 | $ 72,053 | $ 69,950 |
Denominator - Weighted average shares outstanding | 37,771 | 35,716 | 37,064 | 35,204 |
Unvested restricted stock | 98 | 82 | 72 | 61 |
Total Shares | 37,869 | 35,798 | 37,136 | 35,265 |
LEASE REVENUE LEASE REVENUE (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|||
Lease Revenue [Line Items] | |||||||
Operating Lease, Lease Income, Lease Payments | $ 62,901,000 | $ 183,271,000 | |||||
Operating Lease, Variable Lease Income | [1] | 21,012,000 | 61,062,000 | ||||
Lease Income | 83,913,000 | 244,333,000 | |||||
Operating Leases, Future Minimum Payments Receivable, Current | 62,995,000 | 62,995,000 | $ 226,330,000 | ||||
Operating Leases, Future Minimum Payments Receivable, in Two Years | 242,199,000 | 242,199,000 | 195,850,000 | ||||
Operating Leases, Future Minimum Payments Receivable, in Three Years | 200,587,000 | 200,587,000 | 151,564,000 | ||||
Operating Leases, Future Minimum Payments Receivable, in Four Years | 156,626,000 | 156,626,000 | 112,007,000 | ||||
Operating Leases, Future Minimum Payments Receivable, in Five Years | 120,445,000 | 120,445,000 | 82,262,000 | ||||
Operating Leases, Future Minimum Payments Receivable, Thereafter | 249,075,000 | 249,075,000 | 163,499,000 | ||||
Total minimum receipts | 1,031,927,000 | 1,031,927,000 | $ 931,512,000 | ||||
Indirect leasing costs | $ 110,000 | $ 0 | $ 306,000 | $ 0 | |||
|
EARNINGS PER SHARE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:
|
REAL ESTATE SOLD AND HELD FOR SALE DISCONTINUED OPERATIONS (Details) |
3 Months Ended | 9 Months Ended | 12 Months Ended |
---|---|---|---|
Mar. 31, 2018
USD ($)
a
|
Sep. 30, 2019
USD ($)
ft²
Integer
|
Dec. 31, 2018
USD ($)
ft²
Integer
|
|
Property Held-for-Sale [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Number of real estate properties classified as held for sale | Integer | 3 | ||
2019 Operating Property Sales [Member] [Domain] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Square Footage of Real Estate Property | ft² | 237,000 | ||
Gain (Loss) on Sale of Properties | $ 11,400,000 | ||
Proceeds from Sale of Property, Plant, and Equipment | $ 18,700,000 | ||
2018 Operating Property Sales [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Square Footage of Real Estate Property | ft² | 339,000 | ||
Gain (Loss) on Sale of Properties | $ 14,300,000 | ||
Proceeds from Sale of Property, Plant, and Equipment | $ 22,900,000 | ||
Number of real estate properties transferred to held for sale and sold | Integer | 3 | ||
Land [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Size (in acres) of land sold | a | 11 | ||
Proceeds from Sale of Property, Plant, and Equipment | $ 2,600,000 | ||
Gain on sales of land | $ 86,000 |
SUBSEQUENT EVENTS (Notes) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS In October 2019, the Company closed a $100 million senior unsecured term loan with a seven-year term and interest only payments. It bears interest at the annual rate of LIBOR plus an applicable margin (currently 1.50%) based on the Company’s senior unsecured long-term debt rating. The Company also entered into an interest rate swap agreement to convert the loan’s LIBOR rate component to a fixed interest rate for the entire term of the loan providing a total effective fixed interest rate of 2.75%. Subsequent to September 30, 2019, EastGroup acquired Siempre Viva Distribution Center II, a 60,000 square foot distribution building in the Otay Mesa submarket of San Diego. The 100% leased building was purchased for $8.6 million and is located in the same business park as Siempre Viva Distribution Center I, also a fully occupied property, which was acquired by the Company in 2018. Also in October 2019, EastGroup acquired Interstate Commons Distribution Center in the southwest submarket of Phoenix for $9.2 million. Through eminent domain procedures, the Company previously sold the property to the Arizona Department of Transportation for $10.0 million in 2016. The two value-add, multi-tenant distribution buildings, which are located adjacent to existing EastGroup assets, contain 142,000 square feet and will be re-developed by the Company with a projected total investment of $12 million. EastGroup is currently under contract to purchase Southwest Commerce Center, a three building complex in Las Vegas. The recently-developed, multi-tenant buildings contain 196,000 square feet and are currently 48% leased. The total projected investment for this value-add property is $30 million; the Company plans to close the acquisition during the fourth quarter of 2019. The Company is also under contract to purchase Rocky Point Distribution Center in San Diego. The $45 million acquisition of two recently constructed, multi-tenant distribution buildings, which contain a total of 227,000 square feet, is expected to close during the fourth quarter of 2019. The 118,000 square foot building is currently 100% leased, and the 109,000 square foot building is considered a value-add property with no leasing to-date. The Company and its joint venture partner are currently under contract to sell University Business Center 130, a 40,000 square foot building in Santa Barbara, for $11.5 million. EastGroup owns 80% of the building through a joint venture arrangement. The sale is expected to close during the fourth quarter of 2019, and the Company expects to record a gain on the sale. The Company is also under contract to sell University Business Center 125 and 175 (125,000 square feet) in Santa Barbara for a combined sales price of $24.3 million. The sales are expected to close during the fourth quarter of 2019, and EastGroup expects to record gains on the sales. |
COMPREHENSIVE INCOME |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | COMPREHENSIVE INCOME Total Comprehensive Income is comprised of net income plus all other changes in equity from non-owner sources and is presented on the Consolidated Statements of Income and Comprehensive Income. The components of Accumulated other comprehensive income are presented in the Company’s Consolidated Statement of Changes in Equity and are summarized below. See Note 14 for information regarding the Company’s interest rate swaps.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820, Fair Value Measurement, 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, 2019 and December 31, 2018.
(1) Carrying amounts shown in the table are included on the Consolidated Balance Sheets under the indicated captions, except as explained in the notes below. (2) Carrying amounts and fair values shown in the table exclude debt issuance costs (see Note 10 for additional information). 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 (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). Interest rate swap assets (included in Other assets on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 14 for additional information on the Company’s interest rate swaps. Unsecured bank credit facilities: The fair value of the Company’s unsecured bank credit facilities is estimated by discounting expected cash flows at current market rates (Level 2 input), excluding the effects of debt issuance costs. Unsecured debt: The fair value of the Company’s unsecured 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 (Level 2 input), excluding the effects of debt issuance costs. Secured debt: The fair value of the Company’s secured 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 (Level 2 input), excluding the effects of debt issuance costs. Interest rate swap liabilities (included in Other liabilities on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 14 for additional information on the Company’s interest rate swaps.
|
A8-([/.8 8^'(?BDC
MJ6Y[\FBE\BX;K)<6Z26U*(L^I/1.TY,AX-BM-K)A5LZ6Y%)Y%"GCP9)ID612
MB[*@/VCIRC,'% NGIE"4"R49R:-(&0T63(L$DUJ4Y:ZFK6W8CB,;9EVE*%=*
M,I)'D3( I,0B478UZ"\:7*Z2X(
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M8SR@E-T=CE"+'VPQ%-0^'#_@V4YC-AG>]/,/8LLW+OX"4$L#!!0 ( ,]P
M64\@@-L/N $ -(# 9 >&PO=V]R:W-H965T K0A>J]T4 B$"!Z.L>6$=FX;JC3C(ZAC"")RGZNC#7"M1Y@(B0
M&\9ZQC8V^S;T])D,@?P>.^!7O1!!E[NQ(W-3[7L0GWA\Y]J:*SM2*
M=(?B/7JO)3]D.;M&HCGF-,7P5$OSPA\+;
M;8)LDR!+!-E_2]R*N?LK"5OU5(-KTS1Y4MG!I$E>>9>!?>3I37Z'3]/^6;A6
M&D\N-N#+IOXWU@9 *;L;'*$./]AB*&A"/-[CV4UC-AG!]O,/8LLW+G\!4$L#
M!!0 ( ,]P64^@K(&HN $ -(# 9 >&PO=V]R:W-H965T
C3/M@9PY$5);5-:.]<>&;-Y#4K8&VQ!^YL2C1+.FZ9BMC4@B@A2DO'5
M:L^4:#3-DN@[FRS!SLE&P]D0VRDES/\32.Q3NJ9OCH>FJEUPL"QI106/X/ZT
M9^,M-K$4C0)M&]3$0)G2N_7QM WQ,>!O [V=G4FHY(+X'(R?14I701!(R%U@
M$'Z[PCU(&8B\C'\C)YU2!N#\_,;^/=;N:[D("_'I(!@ 2"0 !D !X;"]W
M;W)K
+?+
M/<8.F.U^(DJ5:R&"EW?-@3)W5C#@#0=:90T'WG*@,5ENCH$3)S/H9,;>-\E(
ME'*H( =1"F;W
&P12B63&8"
OB[4L[C,B?GPW#
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M9Q!53JXE)-J:_4J"DA6M$E=:U%*8RCA'.]]O'K>+A\W'_%?G=TMOK^L^]/SWJOO
MWR-P8_J/9Q>OW\K%%P&O3_KO'0"O=Z,P%Y-^NO5[_3SU[UG\GNO?VWRJ?/QG
ME[=?A/#/Z?+Q^65U]FVQ7B_F5_VGP1\6BW7;34@SZDS@J9W>O_\Q:Q_6_:]]
M]LER^_T#VS_6B]>K[9
;H\ CID8#[& ??"!CN&VPVCE%+CPK4J=M@%/5'K+=8=Q?N'VPVD/Z"
MF ,8+PI[7O]P\Q"H>?1W%0#RB*?9<5HGGXP6A^HH75I;=LZY3%9KM3FNSXD\
M.6GK"SQ>8F#] 8]7T/H]#L=KD6-S1R1([$30#D'C=?VMX'PZ6W]I_(R+0Y*7
MUBOCXO17G='VC'$J,H'N1)4>Q<=-
M.8TWK3Y/YVG![5!O^QM02P,$% @ SW!93W 14A6B@0 \SH" !0 !X
M;"]S:&%R9613=')I;F=S+GAM;.R]:7,;V94H^/G-K[CA8;TA(Y(P$CND;D=
M%"3!IDB:(.7V..9#$DB2Z0(ST9F */K7S]GNE@L JE1N=[_J:)<((/,NYYY[
M]N7?BF*COCVMTN+??_>XV:S?_/[WQ>(Q?HJ*5K:.4_CE/LN?H@U\S!]^7ZSS
M.%H6CW&\>5K]OM-N#W[_%"7I[]0V3?YS&Y]EVW3S[[\;AL/?_>'?BN0/_[;Y
MPUGV-<[5J2H>HSPN_NWWFS_\V^_Q%_YUK#YGZ>:Q4--T&2_+O\[C=4MUVX'J
MM,-Q^+Q::E.KWZ'WG6=?00M\H_O<\6VZ
LKP"N?,HASU,
M%HL8GH)GEOQ\PUCSIVBU4N^V!>!_45G??;0JFJ[0]"G.'W"W0&">-X^ .4_K
M**TL1\_S&,,\NY^1,Y_SF<^)-ZC+[0;P.<4S;:3!'Y("T?&O,:#'!_BRLH\Z
MTEM^6PAY[?M_[E;P4P[=G;J)!YR>AIW3;N4.36#V):]@%54VIV$"O^