EastGroup Properties Inc. (EGP) filed Quarterly Report for the period ended 2009-09-30.
EastGroup Properties is a self-administered real estate investment trust focused on ownership acquisition and selective development of industrial properties. The company pursues a three-pronged investment strategy that includes: the acquisition of industrial properties at favorable initial yields with opportunities to improve cash flow performance through management; selective development of industrial properties in markets where they already has a presence and where market conditions justify such investments; and the acquisition of existing public & private companies. Eastgroup Properties Inc. has a market cap of $967 million; its shares were traded at around $37.25 with and P/S ratio of 5.7. The dividend yield of Eastgroup Properties Inc. stocks is 5.6%. Eastgroup Properties Inc. had an annual average earning growth of 2.7% over the past 10 years.
Highlight of Business Operations:
The Company believes that the slowdown in the economy has affected and will continue to affect its operations. The Company has experienced decreases in occupancy and rental rates and has no plans for development starts. The current economic situation is also impacting lenders, and it is more difficult to obtain financing. Loan proceeds as a percentage of property value has decreased, and long-term interest rates have increased. The Company believes that its current lines of credit provide the capacity to fund the operations of the Company for the remainder of 2009 and 2010. The Company also believes that it can obtain mortgage financing from insurance companies and financial institutions and issue common equity as evidenced by the closing of a $67 million mortgage loan in May and the continuous equity offering program, which provided net proceeds to the Company of $30.2 million in the first nine months of 2009, as described in Liquidity and Capital Resources.
During the first nine months of 2009, the Company funded its acquisition and development programs through its $225 million lines of credit, the closing of a $67 million mortgage, and the proceeds from its $30.2 million common stock offering (as discussed in Liquidity and Capital Resources). As market conditions permit, EastGroup issues equity, including preferred equity, and/or employs fixed-rate, non-recourse first mortgage debt to replace short-term bank borrowings.
For the nine months ended September 30, 2009, FFO was $2.39 per share compared with $2.45 for the same period last year. PNOI increased 1.9% mainly due to additional PNOI of $3,624,000 from newly developed properties and $816,000 from 2008 and 2009 acquisitions, offset by a decrease of $2,875,000 from same property operations.
EastGroup s assets were $1,179,283,000 at September 30, 2009, an increase of $23,078,000 from December 31, 2008. Liabilities increased $9,064,000 to $751,893,000 and equity increased $14,014,000 to $427,390,000 during the same period. The paragraphs that follow explain these changes in detail.
The Company made capital improvements of $11,688,000 on existing and acquired properties (included in the Capital Expenditures table under Results of Operations). Also, the Company incurred costs of $4,368,000 on development properties subsequent to transfer to Real Estate Properties; the Company records these expenditures as development costs on the Consolidated Statements of Cash Flows during the 12-month period following transfer.
The investment in development at September 30, 2009, was $95,244,000 compared to $150,354,000 at December 31, 2008. Total capital invested for development during the first nine months of 2009 was $26,320,000, which consisted of costs of $21,952,000 as detailed in the development activity table and costs of $4,368,000 on developments transferred to Real Estate Properties during the 12-month period following transfer.
EGP is in the portfolios of Third Avenue Management.
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