EastGroup Properties (EGP) investor relations material

Key strategic highlights

• Maintains a focus on shallow-bay, last-mile industrial assets in high-growth Smile States, emphasizing infill locations near businesses and affluent residential areas.

• Achieved 51 consecutive quarters of FFO and same-store NOI growth, approaching 13 years of positive performance.

• Operates with the lowest debt to EBITDA in the sector (~3x) and a highly diversified tenant base, with top 10 tenants under 7% of revenue.

• Trades below its long-term FFO multiple, with a proven management team experienced through multiple economic cycles.

• Reduced debt by half over recent years, maintaining a conservative balance sheet and low overhead.

Leasing and market trends

• Development leasing activity accelerated in Q4, with 166,000 sq ft signed since early February, including a major expansion for a long-term tenant.

• Vacancy in shallow-bay buildings is about half the broader industrial market, with strong occupancy in key markets like Austin and Phoenix (99% leased despite high market vacancy rates).

• Tenant pool is deep in fast-growing metros, allowing for pricing power and resilience in occupancy.

• Development leasing cadence is unpredictable, with larger tenants requiring longer gestation periods due to increased decision-making complexity.

• Supply is at its lowest since 2018, and construction starts are phased based on leasing activity and market signals.

Development, capital allocation, and market outlook

• Development yields remain stable in the low 7% range, targeting 150 bps above market cap rates.

• 2024 development starts are projected at $250 million, with potential upside if pre-lease opportunities materialize.

• Land inventory exceeds 1,000 acres, providing flexibility for tenant expansion and new projects.

• Construction costs have declined due to reduced demand, and entitlement periods are lengthening, especially for permits and utilities.

• Data center demand is increasing competition for land and utilities, but is not a primary focus; industrial supply is expected to remain constrained, supporting rental growth.