On July 23, 2024, EastGroup Properties Inc (EGP, Financial) released its 8-K filing for the second quarter of 2024. EastGroup Properties Inc is an equity real estate investment trust engaged in the development, acquisition, and operation of industrial properties in Sunbelt markets throughout the United States, predominantly in Florida, Texas, Arizona, California, and North Carolina. The company manages a portfolio of industrial properties, primarily multi-tenant business distribution buildings that provide large warehousing and office space for customers, deriving its revenue in the form of rental income.
Q2 2024 Earnings Overview
EastGroup Properties Inc reported net income attributable to common stockholders of $1.14 per diluted share for Q2 2024, compared to $0.97 per diluted share for Q2 2023. This performance exceeded the analyst estimate of $1.10 per share. The company also reported funds from operations (FFO) excluding gain on involuntary conversion and business interruption claims of $2.05 per share, an 8.5% increase from $1.89 per share in Q2 2023.
Key Financial Metrics
EastGroup Properties Inc's property net operating income (PNOI) increased by $12.4 million, or 12.3%, during Q2 2024 compared to the same period in 2023. The operating portfolio was 97.4% leased and 97.1% occupied as of June 30, 2024, with an average occupancy of 97.0% for Q2 2024. Rental rates on new and renewal leases increased by an average of 59.7% on a straight-line basis.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Income per Diluted Share | $1.14 | $0.97 |
| FFO per Share | $2.05 | $1.89 |
| PNOI Increase | $12.4 million | - |
Balance Sheet and Cash Flow
EastGroup Properties Inc continues to maintain a strong and flexible balance sheet with a debt-to-total market capitalization of 16.9% as of June 30, 2024. The company's interest and fixed charge coverage ratio was 11.27x for Q2 2024. Additionally, EastGroup entered into the Sixth Amended and Restated Credit Agreement for its $625 million unsecured revolving credit facility, extending the maturity to July 2028.
Development and Acquisitions
During Q2 2024, EastGroup Properties Inc entered the Raleigh market with the acquisition of a 274,000 square foot property for approximately $53 million. The company also started construction on a new development project in Orlando totaling 85,000 square feet with projected total costs of approximately $13 million. Two development projects, containing 294,000 square feet, were transferred to the operating portfolio.
Dividend and Shareholder Returns
EastGroup declared a cash dividend of $1.27 per share in Q2 2024, marking the company's 178th consecutive quarterly cash distribution to shareholders. The annualized dividend rate of $5.08 per share yielded 2.7% on the closing stock price of $191.34 on July 22, 2024.
CEO Commentary
"Our strong performance continues as evidenced by FFO per share rising 8.5% for the quarter excluding involuntary conversions. Our portfolio remains resilient, producing a number of other strong metrics, such as our percent leased, year-to-date releasing spreads and same store net operating income growth. The leasing environment is slowly improving, which combined with a shrinking construction pipeline, makes me optimistic about the market in the coming year. Long term, I remain bullish on the continuing external secular trends which benefit our shallow bay, last mile Sunbelt market portfolio." - Marshall Loeb, CEO
Conclusion
EastGroup Properties Inc's Q2 2024 earnings report highlights the company's robust financial performance and strategic growth initiatives. With strong leasing metrics, a solid balance sheet, and continued development projects, EastGroup is well-positioned to capitalize on market opportunities in the industrial real estate sector.
Explore the complete 8-K earnings release (here) from EastGroup Properties Inc for further details.
