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EastGroup Properties Announces First Quarter 2009 Results
- Funds from Operations of
- Net Income Available to Common Stockholders of
- Same Property Net Operating Income Decline of 2.6%; 1.1% Decrease Without Straight-Line Rent Adjustments
- 93.4% Leased, 92.8% Occupied
- Customer Retention Rate of 67% for the First Quarter
- Paid 117th Consecutive Quarterly Dividend -
- Interest and Fixed Charge Coverages of 3.8x for the First Quarter
- Executed an Application on a
- 15 Development Projects with Estimated Costs to Complete of
- No Debt Maturities Requiring Balloon Payments for the Remainder of 2009 or for 2010
- Bank Line Capacity of
(Logo: http://www.newscom.com/cgi-bin/prnh/20030519/EGPLOGO )
FUNDS FROM OPERATIONS
For the first quarter ended
Same property operating results decreased 2.6% for the quarter; 1.1% without straight-line rent adjustments. Rental rates on new and renewal leases (5.0% of total square footage) decreased an average of 5.0% for the quarter; rental rates decreased 9.3% without straight-line rent adjustments.
FFO and PNOI are non-GAAP financial measures, which are defined under Definitions later in this release. Reconciliations of FFO and PNOI to Net Income, the most directly comparable GAAP financial measure, are presented in the attached schedule "Reconciliations of Other Reporting Measures to Net Income."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was
DEVELOPMENT
At
During the first quarter, EastGroup completed shell construction on three properties (319,000 square feet), which are located in
Also during the first quarter of 2009, EastGroup transferred two development properties to the portfolio as detailed below:
Real Estate Properties
Transferred Percent Projected
from Development Date Leased Stabilized
in 2009 Size Transferred Cost at 4/27/09 Yield (1)
(Square feet) (In thousands)
40th Avenue,
Phoenix, AZ 90,000 01/01/09 $6,645 100% 7.1%
Wetmore II,
Building B, San
Antonio, TX 55,000 02/01/09 3,659 55% 9.0%
Total Developments
Transferred 145,000 $10,304
(1) Based on 100% occupancy and rents computed with straight-line adjustments.
PROPERTY ACQUISITIONS and SALES
There have been no acquisitions or sales in 2009.
Dividends
EastGroup paid cash dividends of
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible. Debt-to-total market capitalization was 50.3% at
On
On
EastGroup has revolving credit facilities of
In March, EastGroup executed an application on a
OUTLOOK FOR 2009
EastGroup confirms its previous FFO per share guidance for 2009 of
Low Range High Range
Q2 2009 Y/E 2009 Q2 2009 Y/E 2009
(In thousands, except per share data)
Net income available to common
stockholders $5,654 22,874 6,156 25,884
Depreciation and amortization 13,365 54,497 13,365 54,497
Funds from operations available
to common stockholders $19,019 77,371 19,521 80,381
Diluted shares 25,074 25,076 25,074 25,076
Per share data (diluted):
Net income available to common
stockholders $0.23 0.91 0.25 1.03
Funds from operations available
to common stockholders $0.76 3.09 0.78 3.21
The following assumptions were used:
- Average occupancy of 90.5% to 92.5% for the year.
- No operating property acquisitions or dispositions during 2009.
- No development construction starts during the year.
- Bad debt, net of termination fees, of
$.04 per share for the remainder of the year. - Floating rate bank debt at an average rate of 2.0% for 2009.
- New fixed rate debt of
$67 million onMay 5, 2009 at 7.5%.
DEFINITIONS
The Company's chief decision makers use two primary measures of operating results in making decisions: property net operating income (PNOI), defined as income from real estate operations less property operating expenses (before interest expense and depreciation and amortization), and funds from operations available to common stockholders (FFO). EastGroup defines FFO consistent with the National Association of Real Estate Investment Trusts' definition, as net income (loss) computed in accordance with U.S. generally accepted accounting principles (GAAP), excluding gains or losses from sales of depreciable real estate property, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO as defined by the Company refers to FFO available to common stockholders as it excludes dividends on preferred stock.
PNOI and FFO are supplemental industry reporting measurements used to evaluate the performance of the Company's investments in real estate assets and its operating results. The Company believes that the exclusion of depreciation and amortization in the industry's calculations of PNOI and FFO provides supplemental indicators of the properties' performance since real estate values have historically risen or fallen with market conditions. PNOI and FFO as calculated by the Company may not be comparable to similarly titled but differently calculated measures for other REITs. Investors should be aware that items excluded from or added back to FFO are significant components in understanding and assessing the Company's financial performance.
CONFERENCE CALL
EastGroup will host a conference call and webcast to discuss the results of its first quarter and review the Company's current operations on
SUPPLEMENTAL INFORMATION
Supplemental financial information is available by request by calling the Company at 601-354-3555, or by accessing the report in the Reports section of the Company's website at www.eastgroup.net.
COMPANY INFORMATION
EastGroup Properties, Inc. is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout
FORWARD-LOOKING STATEMENTS
The Company's assumptions and financial projections in this release are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not in the present or past tense and can be identified by the words "will," "anticipates," "expects," "believes," or other words or phrases that indicate future trends or events. All statements that address operating performance, events or developments that the Company expects or anticipates will occur in the future, including statements relating to rent and occupancy growth, development activity, the acquisition or sale of properties, general conditions in the geographic areas where the Company operates and the availability of capital, are forward-looking statements. Forward-looking statements are inherently subject to known and unknown risks and uncertainties, many of which the Company cannot predict, including, without limitation:
- changes in general economic conditions;
- the extent of tenant defaults or of any early lease terminations;
- the Company's ability to lease or re-lease space at current or anticipated rents;
- the availability of financing;
- changes in the supply of and demand for industrial/warehouse properties;
- increases in interest rate levels;
- increases in operating costs;
- natural disasters, terrorism, riots and acts of war, and the Company's ability to obtain adequate insurance;
- changes in governmental regulation, tax rates and similar matters; and
- other risks associated with the development and acquisition of properties, including risks that development projects may not be completed on schedule, development or operating costs may be greater than anticipated or acquisitions may not close as scheduled.
Although the Company believes that the expectations reflected in the forward-looking statements are based upon reasonable assumptions at the time made, the Company can give no assurance that such expectations will be achieved. The Company assumes no obligation whatsoever to publicly update or revise any forward-looking statements. See also disclosures contained in the Company's reports filed or to be filed from time to time with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
2009 2008
REVENUES
Income from real estate operations $43,310 40,079
Other income 15 195
43,325 40,274
EXPENSES
Expenses from real estate operations 12,591 10,839
Depreciation and amortization 13,044 12,375
General and administrative 2,561 2,081
28,196 25,295
OPERATING INCOME 15,129 14,979
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated investment 81 80
Gain on sale of non-operating real estate 8 7
Gain on sales of securities - 435
Interest income 124 37
Interest expense (7,501) (7,373)
INCOME FROM CONTINUING OPERATIONS 7,841 8,165
DISCONTINUED OPERATIONS
Income from real estate operations - 82
INCOME FROM DISCONTINUED OPERATIONS - 82
NET INCOME 7,841 8,247
Net income attributable to noncontrolling
interest in joint ventures (163) (156)
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES,
INC. 7,678 8,091
Dividends on Series D preferred shares - 656
NET INCOME AVAILABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS $7,678 7,435
BASIC PER COMMON SHARE DATA FOR INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
Income from continuing operations $0.31 0.31
Income from discontinued operations 0.00 -
Net income available to common stockholders $0.31 0.31
Weighted average shares outstanding 24,999 23,684
DILUTED PER COMMON SHARE DATA FOR INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
Income from continuing operations $0.31 0.31
Income from discontinued operations 0.00 -
Net income available to common stockholders $0.31 0.31
Weighted average shares outstanding 25,070 23,829
AMOUNTS ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
Income from continuing operations $7,678 7,353
Income from discontinued operations - 82
Net income available to common stockholders $7,678 7,435
Dividends declared per common share $0.52 0.52
EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
2009 2008
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET
INCOME:
Income from real estate operations $43,310 40,079
Expenses from real estate operations (12,591) (10,839)
PROPERTY NET OPERATING INCOME (PNOI) 30,719 29,240
Gain on sales of securities - 435
Equity in earnings of unconsolidated investment
(before interest and depreciation) 197 198
Interest income 124 37
Other income 15 195
General and administrative expense (1) (2,561) (2,081)
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) 28,494 28,024
Income from discontinued operations
(before depreciation and amortization) - 125
Interest expense (2) (7,501) (7,373)
Interest expense from unconsolidated investment (83) (85)
Noncontrolling interest in earnings
(before depreciation and amortization) (214) (205)
Gain on sale of non-operating real estate 8 7
Dividends on Series D preferred shares - (656)
FUNDS FROM OPERATIONS (FFO) AVAILABLE TO COMMON
STOCKHOLDERS 20,704 19,837
Depreciation and amortization from continuing
operations (13,044) (12,375)
Depreciation and amortization from discontinued
operations - (43)
Depreciation from unconsolidated investment (33) (33)
Noncontrolling interest depreciation and amortization 51 49
NET INCOME AVAILABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS 7,678 7,435
Dividends on Series D preferred shares - 656
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. $7,678 8,091
DILUTED PER COMMON SHARE DATA FOR INCOME ATTRIBUTABLE
TO EASTGROUP PROPERTIES, INC.:
Income from continuing operations $0.31 0.31
Income from discontinued operations 0.00 0.00
Net income available to common stockholders $0.31 0.31
Funds from operations available to common stockholders $0.83 0.83
Weighted average shares outstanding for EPS and FFO
purposes 25,070 23,829
(1) Net of capitalized development costs of
(2) Net of capitalized interest of
SOURCE EastGroup Properties, Inc.