EastGroup Properties (EGP) Q2 2024 earnings summary

Executive summary

• FFO per share rose 9.4% year-over-year in Q2 2024, with net income attributable to common stockholders up 29% to $55.3M, driven by strong leasing, development, and lower interest expense.

• Portfolio occupancy was 97.4% leased and 97.1% occupied as of June 30, 2024, with average quarterly occupancy at 97.0%.

• Rental rates on new and renewal leases increased 59.7% on a straight-line basis in Q2 2024, with robust re-leasing spreads and continued positive rent growth.

• Same property net operating income (PNOI) increased 5.3% year-over-year for Q2 2024 on both cash and straight-line basis.

• The company focuses on multi-tenant, infill, last-mile, and shallow bay industrial properties in high-growth Sunbelt markets, with a portfolio of 60.2 million square feet as of June 30, 2024.

Financial highlights

• FFO per diluted share was $2.09 for Q2 2024 and $4.07 for the six months, up from $1.91 and $3.75 in 2023.

• Total revenues for Q2 2024 were $159.1M, up from $139.9M in Q2 2023; six-month revenues reached $313.3M.

• Debt-to-EBITDA ratio improved to 3.8x, interest/fixed charge coverage reached 11.3x, and leverage ratio remained below 32.5%.

• Issued $50M in common shares and settled $77M in forward share agreements in Q2 2024, with $100M more available.

• Dividend FFO payout ratio was 57% for Q2 2024, with annualized dividend rate at $5.08 per share.

Outlook and guidance

• 2024 FFO per share guidance raised to $8.28–$8.38, a 6.9% increase over 2023 at the midpoint; Q3 guidance set at $2.06–$2.12 per share.

• Same property NOI growth (cash basis) projected at 5.6%–6.6% for 2024, with average occupancy expected between 96.6% and 97.6%.

• Development starts for 2024 projected at 1.9M sq ft with $260M investment, weighted toward late 2024.

• Management expects current cash flow, credit facilities, and access to equity and debt markets to be sufficient for ongoing operations, development, and acquisitions.