MARYLAND
|
13-2711135
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(State or other jurisdiction
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(I.R.S. Employer
|
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of incorporation or organization)
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Identification No.)
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190 EAST CAPITOL STREET
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SUITE 400
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JACKSON, MISSISSIPPI
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39201
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(Address of principal executive offices)
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(Zip code)
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Registrant’s telephone number: (601) 354-3555
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Page
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PART I.
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FINANCIAL INFORMATION
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|
Item 1.
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Financial Statements
|
|
Consolidated Balance Sheets, March 31, 2012 (unaudited)
and December 31, 2011
|
3
|
|
Consolidated Statements of Income and Comprehensive Income for the three months
ended March 31, 2012 and 2011 (unaudited)
|
4
|
|
Consolidated Statement of Changes in Equity for the three months
ended March 31, 2012 (unaudited)
|
5
|
|
Consolidated Statements of Cash Flows for the three months
ended March 31, 2012 and 2011 (unaudited)
|
6
|
|
Notes to Consolidated Financial Statements (unaudited)
|
7
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|
Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
13
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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24
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Item 4.
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Controls and Procedures
|
25
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PART II.
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OTHER INFORMATION
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|
Item 1A.
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Risk Factors
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25
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Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
26
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Item 6.
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Exhibits
|
26
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SIGNATURES
|
||
Authorized signatures
|
27
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March 31, 2012
|
December 31, 2011
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|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Real estate properties
|
$ | 1,569,459 | 1,550,444 | |||||
Development
|
112,703 | 112,149 | ||||||
1,682,162 | 1,662,593 | |||||||
Less accumulated depreciation
|
(464,873 | ) | (451,805 | ) | ||||
1,217,289 | 1,210,788 | |||||||
Unconsolidated investment
|
2,846 | 2,757 | ||||||
Cash
|
205 | 174 | ||||||
Other assets
|
72,301 | 72,797 | ||||||
TOTAL ASSETS
|
$ | 1,292,641 | 1,286,516 | |||||
LIABILITIES AND EQUITY
|
||||||||
LIABILITIES
|
||||||||
Mortgage notes payable
|
$ | 672,393 | 628,170 | |||||
Unsecured term loan payable
|
50,000 | 50,000 | ||||||
Notes payable to banks
|
118,917 | 154,516 | ||||||
Accounts payable and accrued expenses
|
19,885 | 31,205 | ||||||
Other liabilities
|
16,926 | 17,016 | ||||||
Total Liabilities
|
878,121 | 880,907 | ||||||
EQUITY
|
||||||||
Stockholders’ Equity:
|
||||||||
Common shares; $.0001 par value; 70,000,000 shares authorized;
28,101,565 shares issued and outstanding at March 31, 2012 and
27,658,059 at December 31, 2011
|
3 | 3 | ||||||
Excess shares; $.0001 par value; 30,000,000 shares authorized;
no shares issued
|
– | – | ||||||
Additional paid-in capital on common shares
|
637,635 | 619,386 | ||||||
Distributions in excess of earnings
|
(225,932 | ) | (216,560 | ) | ||||
Total Stockholders’ Equity
|
411,706 | 402,829 | ||||||
Noncontrolling interest in joint ventures
|
2,814 | 2,780 | ||||||
Total Equity
|
414,520 | 405,609 | ||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 1,292,641 | 1,286,516 |
Three Months Ended
March 31,
|
||||||||
2012
|
2011
|
|||||||
REVENUES
|
||||||||
Income from real estate operations
|
$ | 46,784 | 43,255 | |||||
Other income
|
14 | 23 | ||||||
46,798 | 43,278 | |||||||
EXPENSES
|
||||||||
Expenses from real estate operations
|
13,101 | 12,460 | ||||||
Depreciation and amortization
|
15,929 | 14,247 | ||||||
General and administrative
|
3,116 | 2,969 | ||||||
Acquisition costs
|
19 | – | ||||||
32,165 | 29,676 | |||||||
OPERATING INCOME
|
14,633 | 13,602 | ||||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest expense
|
(9,441 | ) | (8,878 | ) | ||||
Other
|
171 | 178 | ||||||
INCOME FROM CONTINUING OPERATIONS
|
5,363 | 4,902 | ||||||
DISCONTINUED OPERATIONS
|
||||||||
Loss from real estate operations
|
(8 | ) | – | |||||
Gain on sales of nondepreciable real estate investments, net of tax
|
167 | – | ||||||
INCOME FROM DISCONTINUED OPERATIONS
|
159 | – | ||||||
NET INCOME
|
5,522 | 4,902 | ||||||
Net income attributable to noncontrolling interest in joint ventures
|
(119 | ) | (110 | ) | ||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
|
5,403 | 4,792 | ||||||
Other comprehensive income
|
– | – | ||||||
TOTAL COMPREHENSIVE INCOME
|
$ | 5,403 | 4,792 | |||||
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
|
||||||||
Income from continuing operations
|
$ | .19 | .18 | |||||
Income from discontinued operations
|
.01 | .00 | ||||||
Net income attributable to common stockholders
|
$ | .20 | .18 | |||||
Weighted average shares outstanding
|
27,647 | 26,809 | ||||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
|
||||||||
Income from continuing operations
|
$ | .19 | .18 | |||||
Income from discontinued operations
|
.00 | .00 | ||||||
Net income attributable to common stockholders
|
$ | .19 | .18 | |||||
Weighted average shares outstanding
|
27,718 | 26,873 | ||||||
AMOUNTS ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
|
||||||||
Income from continuing operations
|
$ | 5,244 | 4,792 | |||||
Income from discontinued operations
|
159 | – | ||||||
Net income attributable to common stockholders
|
$ | 5,403 | 4,792 | |||||
|
||||||||
See accompanying Notes to Consolidated Financial Statements (unaudited).
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Additional
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Distributions
|
Noncontrolling
|
||||||||||||||||||
Common
|
Paid-In
|
In Excess
|
Interest in
|
|||||||||||||||||
Stock
|
Capital
|
Of Earnings
|
Joint Ventures
|
Total
|
||||||||||||||||
BALANCE, DECEMBER 31, 2011
|
$ | 3 | 619,386 | (216,560 | ) | 2,780 | 405,609 | |||||||||||||
Net income
|
– | – | 5,403 | 119 | 5,522 | |||||||||||||||
Common dividends declared – $.52 per share
|
– | – | (14,775 | ) | – | (14,775 | ) | |||||||||||||
Stock-based compensation, net of forfeitures
|
– | 1,492 | – | – | 1,492 | |||||||||||||||
Issuance of 368,158 shares of common stock,
common stock offering, net of expenses
|
– | 17,516 | – | – | 17,516 | |||||||||||||||
Issuance of 1,068 shares of common stock,
dividend reinvestment plan
|
– | 53 | – | – | 53 | |||||||||||||||
Withheld 17,927 shares of common stock to satisfy tax
withholding obligations in connection with the vesting of
restricted stock
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– | (812 | ) | – | – | (812 | ) | |||||||||||||
Distributions to noncontrolling interest
|
– | – | – | (85 | ) | (85 | ) | |||||||||||||
BALANCE, MARCH 31, 2012
|
$ | 3 | 637,635 | (225,932 | ) | 2,814 | 414,520 |
See accompanying Notes to Consolidated Financial Statements (unaudited).
|
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
|
Three Months Ended
March 31,
|
||||||||
2012
|
2011
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net income
|
$ | 5,522 | 4,902 | |||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization from continuing operations
|
15,929 | 14,247 | ||||||
Depreciation and amortization from discontinued operations
|
17 | – | ||||||
Stock-based compensation expense
|
1,334 | 815 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accrued income and other assets
|
991 | 240 | ||||||
Accounts payable, accrued expenses and prepaid rent
|
(11,073 | ) | (6,067 | ) | ||||
Other
|
(300 | ) | (80 | ) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
12,420 | 14,057 | ||||||
INVESTING ACTIVITIES
|
||||||||
Real estate development
|
(12,584 | ) | (2,786 | ) | ||||
Purchases of real estate
|
(3,475 | ) | – | |||||
Real estate improvements
|
(3,902 | ) | (6,288 | ) | ||||
Proceeds from sales of real estate investments
|
539 | – | ||||||
Changes in accrued development costs
|
158 | 157 | ||||||
Changes in other assets and other liabilities
|
(2,475 | ) | (1,908 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES
|
(21,739 | ) | (10,825 | ) | ||||
FINANCING ACTIVITIES
|
||||||||
Proceeds from bank borrowings
|
63,895 | 85,224 | ||||||
Repayments on bank borrowings
|
(99,494 | ) | (32,296 | ) | ||||
Proceeds from mortgage notes payable
|
54,000 | – | ||||||
Principal payments on mortgage notes payable
|
(9,736 | ) | (41,269 | ) | ||||
Debt issuance costs
|
(793 | ) | (34 | ) | ||||
Distributions paid to stockholders
|
(14,908 | ) | (13,972 | ) | ||||
Proceeds from common stock offerings
|
16,284 | – | ||||||
Proceeds from exercise of stock options
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– | 6 | ||||||
Proceeds from dividend reinvestment plan
|
64 | 61 | ||||||
Other
|
38 | (981 | ) | |||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
9,350 | (3,261 | ) | |||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
31 | (29 | ) | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
174 | 137 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 205 | 108 | |||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||
Cash paid for interest, net of amount capitalized of $1,042 and $839
for 2012 and 2011, respectively
|
$ | 8,967 | 8,649 | |||||
Fair value of common stock awards issued to employees and directors, net of forfeitures
|
4,492 | 3,536 | ||||||
See accompanying Notes to Consolidated Financial Statements (unaudited).
|
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Real estate properties:
|
||||||||
Land
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$ | 237,851 | 235,394 | |||||
Buildings and building improvements
|
1,069,005 | 1,056,783 | ||||||
Tenant and other improvements
|
262,603 | 258,267 | ||||||
Development
|
112,703 | 112,149 | ||||||
1,682,162 | 1,662,593 | |||||||
Less accumulated depreciation
|
(464,873 | ) | (451,805 | ) | ||||
$ | 1,217,289 | 1,210,788 |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Leasing costs (principally commissions)
|
$ | 40,549 | 39,297 | |||||
Accumulated amortization of leasing costs
|
(17,064 | ) | (16,603 | ) | ||||
Leasing costs (principally commissions), net of accumulated amortization
|
23,485 | 22,694 | ||||||
Straight-line rents receivable
|
21,429 | 20,959 | ||||||
Allowance for doubtful accounts on straight-line rents receivable
|
(448 | ) | (351 | ) | ||||
Straight-line rents receivable, net of allowance for doubtful accounts
|
20,981 | 20,608 | ||||||
Accounts receivable
|
3,670 | 3,949 | ||||||
Allowance for doubtful accounts on accounts receivable
|
(536 | ) | (522 | ) | ||||
Accounts receivable, net of allowance for doubtful accounts
|
3,134 | 3,427 | ||||||
Acquired in-place lease intangibles
|
10,991 | 12,157 | ||||||
Accumulated amortization of acquired in-place lease intangibles
|
(4,214 | ) | (4,478 | ) | ||||
Acquired in-place lease intangibles, net of accumulated amortization
|
6,777 | 7,679 | ||||||
Acquired above market lease intangibles
|
2,831 | 2,904 | ||||||
Accumulated amortization of acquired above market lease intangibles
|
(1,062 | ) | (929 | ) | ||||
Acquired above market lease intangibles, net of accumulated amortization
|
1,769 | 1,975 | ||||||
Mortgage loans receivable
|
4,150 | 4,154 | ||||||
Discount on mortgage loans receivable
|
(41 | ) | (44 | ) | ||||
Mortgage loans receivable, net of discount
|
4,109 | 4,110 | ||||||
Loan costs
|
8,376 | 7,662 | ||||||
Accumulated amortization of loan costs
|
(4,647 | ) | (4,433 | ) | ||||
Loan costs, net of accumulated amortization
|
3,729 | 3,229 | ||||||
Goodwill
|
990 | 990 | ||||||
Prepaid expenses and other assets
|
7,327 | 8,085 | ||||||
$ | 72,301 | 72,797 |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Property taxes payable
|
$ | 5,518 | 9,840 | |||||
Development costs payable
|
6,086 | 5,928 | ||||||
Interest payable
|
2,958 | 2,736 | ||||||
Dividends payable on unvested restricted stock
|
1,282 | 1,415 | ||||||
Other payables and accrued expenses
|
4,041 | 11,286 | ||||||
$ | 19,885 | 31,205 |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Security deposits
|
$ | 9,105 | 9,184 | |||||
Prepaid rent and other deferred income
|
6,923 | 6,373 | ||||||
Other liabilities
|
898 | 1,459 | ||||||
$ | 16,926 | 17,016 |
Three Months Ended
March 31,
|
||||||||
2012
|
2011
|
|||||||
(In thousands)
|
||||||||
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP
PROPERTIES, INC. COMMON STOCKHOLDERS
|
||||||||
Numerator – net income attributable to common stockholders
|
$ | 5,403 | 4,792 | |||||
Denominator – weighted average shares outstanding
|
27,647 | 26,809 | ||||||
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP
PROPERTIES, INC. COMMON STOCKHOLDERS
|
||||||||
Numerator – net income attributable to common stockholders
|
$ | 5,403 | 4,792 | |||||
Denominator:
|
||||||||
Weighted average shares outstanding
|
27,647 | 26,809 | ||||||
Common stock options
|
4 | 8 | ||||||
Unvested restricted stock
|
67 | 56 | ||||||
Total Shares
|
27,718 | 26,873 |
Award Activity:
|
Three Months Ended
March 31, 2012
|
|||||||
Shares
|
Weighted Average Grant Date Fair Value
|
|||||||
Unvested at beginning of period
|
235,929 | $ | 38.90 | |||||
Granted
|
92,207 | 48.75 | ||||||
Forfeited
|
– | – | ||||||
Vested
|
(70,877 | ) | 41.27 | |||||
Unvested at end of period
|
257,259 | $ | 41.77 |
March 31, 2012
|
December 31, 2011
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 205 | 205 | 174 | 174 | |||||||||||
Mortgage loans receivable,
net of discount
|
4,109 | 4,316 | 4,110 | 4,317 | ||||||||||||
Financial Liabilities:
|
||||||||||||||||
Mortgage notes payable
|
672,393 | 721,420 | 628,170 | 674,462 | ||||||||||||
Unsecured term loan payable
|
50,000 | 50,626 | 50,000 | 50,000 | ||||||||||||
Notes payable to banks
|
118,917 | 118,492 | 154,516 | 153,521 |
Three Months Ended March 31,
|
||||||||
2012
|
2011
|
|||||||
(In thousands)
|
||||||||
Income from real estate operations
|
$ | 46,784 | 43,255 | |||||
Expenses from real estate operations
|
(13,101 | ) | (12,460 | ) | ||||
PROPERTY NET OPERATING INCOME
|
$ | 33,683 | 30,795 |
Three Months Ended March 31,
|
||||||||
2012
|
2011
|
|||||||
(In thousands)
|
||||||||
NET INCOME
|
$ | 5,522 | 4,902 | |||||
Equity in earnings of unconsolidated investment
|
(89 | ) | (86 | ) | ||||
Interest income
|
(82 | ) | (83 | ) | ||||
Other income
|
(14 | ) | (23 | ) | ||||
Gain on sales of land
|
– | (9 | ) | |||||
Income from discontinued operations
|
(159 | ) | – | |||||
Depreciation and amortization from continuing operations
|
15,929 | 14,247 | ||||||
Interest expense
|
9,441 | 8,878 | ||||||
General and administrative expense
|
3,116 | 2,969 | ||||||
Acquisition costs
|
19 | – | ||||||
PROPERTY NET OPERATING INCOME
|
$ | 33,683 | 30,795 |
Three Months Ended March 31,
|
||||||||
2012
|
2011
|
|||||||
(In thousands, except per share data)
|
||||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
|
$ | 5,403 | 4,792 | |||||
Depreciation and amortization from continuing operations
|
15,929 | 14,247 | ||||||
Depreciation and amortization from discontinued operations
|
17 | – | ||||||
Depreciation from unconsolidated investment
|
33 | 33 | ||||||
Noncontrolling interest depreciation and amortization
|
(61 | ) | (54 | ) | ||||
FUNDS FROM OPERATIONS (FFO) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | 21,321 | 19,018 | |||||
Net income attributable to common stockholders per diluted share
|
$ | .19 | .18 | |||||
Funds from operations (FFO) attributable to common stockholders per diluted share
|
.77 | .71 | ||||||
Diluted shares for earnings per share and funds from operations
|
27,718 | 26,873 |
·
|
The FFO change per share represents the increase or decrease in FFO per share from the current period compared to the same period in the prior year. FFO per share for the first quarter of 2012 was $.77 per share compared with $.71 per share for the same period of 2011, an increase of 8.5% per share.
|
·
|
Same property net operating income change represents the PNOI increase or decrease for the same operating properties owned during the entire current period and prior year reporting period. PNOI from same properties increased 2.8% for the three months ended March 31, 2012, compared to the same period of 2011.
|
·
|
Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period. Occupancy at March 31, 2012, was 94.0%. Quarter-end occupancy ranged from 90.5% to 94.0% over the period from March 31, 2011 to March 31, 2012.
|
·
|
Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases on the same space. Rental rate decreases on new and renewal leases (6.2% of total square footage) averaged 0.1% for the first quarter of 2012.
|
·
|
Termination fee income for the three months ended March 31, 2012 was $170,000 compared to $455,000 for the same period of 2011. Bad debt expense for the three months ended March 31, 2012 was $223,000 compared to $134,000 for the same quarter last year.
|
REAL ESTATE PROPERTY ACQUIRED IN 2012
|
Location
|
Size
|
Date
Acquired
|
Cost (1)
|
|||||||
(Square feet)
|
(In thousands)
|
||||||||||
Madison Distribution Center
|
Tampa, FL
|
72,000 |
01/31/12
|
$ | 3,273 |
(1)
|
Total cost of the property acquired was $3,475,000, of which $3,273,000 was allocated to Real Estate Properties as indicated above. Intangibles associated with the purchase of real estate were allocated as follows: $190,000 to in-place lease intangibles, $20,000 to above market leases (both included in Other Assets on the Consolidated Balance Sheets) and $8,000 to below market leases (included in Other Liabilities on the Consolidated Balance Sheets). All of these costs are amortized over the remaining lives of the associated leases in place at the time of acquisition. During the first quarter of 2012, the Company expensed acquisition-related costs of $19,000.
|
Costs Incurred
|
|||||
DEVELOPMENT
|
Size
|
Costs
Transferred
in 2012(1)
|
For the Three
Months Ended
3/31/12
|
Cumulative
as of
3/31/12
|
Estimated
Total Costs
|
(Square feet)
|
(In thousands)
|
LEASE-UP
|
||||||||||||||||||||
World Houston 31A, Houston, TX
|
44,000 | $ | – | 208 | 4,051 | 4,600 | ||||||||||||||
Southridge IX, Orlando, FL
|
76,000 | – | 808 | 6,170 | 7,100 | |||||||||||||||
Total Lease-Up
|
120,000 | – | 1,016 | 10,221 | 11,700 | |||||||||||||||
UNDER CONSTRUCTION
|
||||||||||||||||||||
Thousand Oaks 1, San Antonio, TX
|
36,000 | – | 665 | 3,074 | 4,600 | |||||||||||||||
Thousand Oaks 2, San Antonio, TX
|
73,000 | – | 794 | 3,958 | 5,000 | |||||||||||||||
World Houston 31B, Houston, TX
|
35,000 | – | 1,154 | 2,514 | 3,900 | |||||||||||||||
Beltway Crossing IX, Houston, TX
|
45,000 | – | 608 | 1,749 | 2,500 | |||||||||||||||
Beltway Crossing X, Houston, TX
|
78,000 | – | 1,068 | 3,074 | 4,500 | |||||||||||||||
Southridge XI, Orlando, FL
|
88,000 | 2,298 | 1,250 | 3,548 | 6,200 | |||||||||||||||
Total Under Construction
|
355,000 | 2,298 | 5,539 | 17,917 | 26,700 | |||||||||||||||
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
|
||||||||||||||||||||
Phoenix, AZ
|
524,000 | – | 1,629 | 5,090 | 39,900 | |||||||||||||||
Tucson, AZ
|
70,000 | – | – | 417 | 4,900 | |||||||||||||||
Fort Myers, FL
|
659,000 | – | 108 | 17,311 | 48,100 | |||||||||||||||
Orlando, FL
|
1,426,000 | (2,298 | ) | 1,291 | 23,590 | 93,000 | ||||||||||||||
Tampa, FL
|
519,000 | – | 1,333 | 5,819 | 30,800 | |||||||||||||||
Jackson, MS
|
28,000 | – | – | 706 | 2,000 | |||||||||||||||
Charlotte, NC
|
95,000 | – | 18 | 1,264 | 7,100 | |||||||||||||||
Dallas, TX
|
70,000 | – | 16 | 780 | 4,100 | |||||||||||||||
El Paso, TX
|
251,000 | – | – | 2,444 | 9,600 | |||||||||||||||
Houston, TX
|
2,044,000 | – | 917 | 22,032 | 129,600 | |||||||||||||||
San Antonio, TX
|
484,000 | – | 96 | 5,112 | 32,200 | |||||||||||||||
Total Prospective Development
|
6,170,000 | (2,298 | ) | 5,408 | 84,565 | 401,300 | ||||||||||||||
6,645,000 | $ | – | 11,963 | 112,703 | 439,700 | |||||||||||||||
DEVELOPMENTS COMPLETED AND TRANSFERRED
|
||||||||||||||||||||
TO REAL ESTATE PROPERTIES DURING 2012
|
||||||||||||||||||||
Beltway Crossing VIII, Houston, TX
|
88,000 | $ | – | 43 | 5,242 | |||||||||||||||
World Houston 32, Houston, TX
|
96,000 | – | 66 | 6,276 | ||||||||||||||||
Total Transferred to Real Estate Properties
|
184,000 | $ | – | 109 | 11,518 | (2) |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Leasing costs (principally commissions)
|
$ | 40,549 | 39,297 | |||||
Accumulated amortization of leasing costs
|
(17,064 | ) | (16,603 | ) | ||||
Leasing costs (principally commissions), net of accumulated amortization
|
23,485 | 22,694 | ||||||
Straight-line rents receivable
|
21,429 | 20,959 | ||||||
Allowance for doubtful accounts on straight-line rents receivable
|
(448 | ) | (351 | ) | ||||
Straight-line rents receivable, net of allowance for doubtful accounts
|
20,981 | 20,608 | ||||||
Accounts receivable
|
3,670 | 3,949 | ||||||
Allowance for doubtful accounts on accounts receivable
|
(536 | ) | (522 | ) | ||||
Accounts receivable, net of allowance for doubtful accounts
|
3,134 | 3,427 | ||||||
Acquired in-place lease intangibles
|
10,991 | 12,157 | ||||||
Accumulated amortization of acquired in-place lease intangibles
|
(4,214 | ) | (4,478 | ) | ||||
Acquired in-place lease intangibles, net of accumulated amortization
|
6,777 | 7,679 | ||||||
Acquired above market lease intangibles
|
2,831 | 2,904 | ||||||
Accumulated amortization of acquired above market lease intangibles
|
(1,062 | ) | (929 | ) | ||||
Acquired above market lease intangibles, net of accumulated amortization
|
1,769 | 1,975 | ||||||
Mortgage loans receivable
|
4,150 | 4,154 | ||||||
Discount on mortgage loans receivable
|
(41 | ) | (44 | ) | ||||
Mortgage loans receivable, net of discount
|
4,109 | 4,110 | ||||||
Loan costs
|
8,376 | 7,662 | ||||||
Accumulated amortization of loan costs
|
(4,647 | ) | (4,433 | ) | ||||
Loan costs, net of accumulated amortization
|
3,729 | 3,229 | ||||||
Goodwill
|
990 | 990 | ||||||
Prepaid expenses and other assets
|
7,327 | 8,085 | ||||||
$ | 72,301 | 72,797 |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Property taxes payable
|
$ | 5,518 | 9,840 | |||||
Development costs payable
|
6,086 | 5,928 | ||||||
Interest payable
|
2,958 | 2,736 | ||||||
Dividends payable on unvested restricted stock
|
1,282 | 1,415 | ||||||
Other payables and accrued expenses
|
4,041 | 11,286 | ||||||
$ | 19,885 | 31,205 |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Security deposits
|
$ | 9,105 | 9,184 | |||||
Prepaid rent and other deferred income
|
6,923 | 6,373 | ||||||
Other liabilities
|
898 | 1,459 | ||||||
$ | 16,926 | 17,016 |
Three Months Ended
March 31,
|
||||||||||||
2012
|
2011
|
Increase
(Decrease)
|
||||||||||
(In thousands, except rates of interest)
|
||||||||||||
Average bank borrowings
|
$ | 107,345 | 115,982 | (8,637 | ) | |||||||
Weighted average variable interest rates
(excluding loan cost amortization)
|
1.52 | % | 1.46 | % | ||||||||
VARIABLE RATE INTEREST EXPENSE
|
||||||||||||
Bank loan interest (excluding loan cost amortization)
|
$ | 406 | 418 | (12 | ) | |||||||
Amortization of bank loan costs
|
86 | 77 | 9 | |||||||||
Total variable rate interest expense
|
492 | 495 | (3 | ) | ||||||||
FIXED RATE INTEREST EXPENSE
|
||||||||||||
Mortgage loan interest (excluding loan cost amortization)
|
9,298 | 9,018 | 280 | |||||||||
Unsecured term loan interest (excluding loan cost amortization)
|
486 | – | 486 | |||||||||
Amortization of mortgage loan costs
|
197 | 204 | (7 | ) | ||||||||
Amortization of unsecured term loan costs
|
10 | – | 10 | |||||||||
Total fixed rate interest expense
|
9,991 | 9,222 | 769 | |||||||||
Total interest
|
10,483 | 9,717 | 766 | |||||||||
Less capitalized interest
|
(1,042 | ) | (839 | ) | (203 | ) | ||||||
TOTAL INTEREST EXPENSE
|
$ | 9,441 | 8,878 | 563 |
NEW MORTGAGES IN 2011 AND 2012
|
Interest Rate
|
Date
|
Maturity Date
|
Amount
|
|||||||
America Plaza, Central Green, Glenmont I & II,
Interstate I, II & III, Rojas, Stemmons Circle, Venture,
West Loop I & II and World Houston 3-9
|
4.75 | % |
05/31/11
|
06/05/21
|
$ | 65,000,000 | |||||
Arion 18, Beltway VI & VII, Commerce Park II & III,
Concord, Interstate V, VI & VII, Lakeview, Ridge
Creek II, Southridge IV & V and World Houston 32
|
4.09 | % |
01/04/12
|
01/05/22
|
54,000,000 | ||||||
Weighted Average/Total Amount
|
4.45 | % | $ | 119,000,000 |
MORTGAGE LOANS REPAID IN 2011 AND 2012
|
Interest Rate
|
Date Repaid
|
Payoff Amount
|
||||||
Butterfield Trail, Glenmont I & II, Interstate I, II & III,
Rojas, Stemmons Circle, Venture and West Loop I & II
|
7.25 | % |
01/31/11
|
$ | 36,065,000 | ||||
America Plaza, Central Green and World Houston 3-9
|
7.92 | % |
05/10/11
|
22,832,000 | |||||
Oak Creek Distribution Center IV
|
5.68 | % |
03/01/12
|
3,463,000 | |||||
Weighted Average/Total Amount
|
7.41 | % | $ | 62,360,000 |
Three Months Ended
March 31,
|
|||||||||
Estimated
Useful Life
|
2012
|
2011
|
|||||||
(In thousands)
|
|||||||||
Upgrade on Acquisitions
|
40 yrs
|
$ | 104 | 22 | |||||
Tenant Improvements:
|
|||||||||
New Tenants
|
Lease Life
|
1,543 | 2,511 | ||||||
New Tenants (first generation) (1)
|
Lease Life
|
29 | 652 | ||||||
Renewal Tenants
|
Lease Life
|
970 | 1,186 | ||||||
Other:
|
|||||||||
Building Improvements
|
5-40 yrs
|
670 | 1,236 | ||||||
Roofs
|
5-15 yrs
|
589 | 91 | ||||||
Parking Lots
|
3-5 yrs
|
44 | 235 | ||||||
Other
|
5 yrs
|
121 | 22 | ||||||
Total Capital Expenditures
|
$ | 4,070 | 5,955 |
(1)
|
First generation refers to space that has never been occupied under EastGroup’s ownership.
|
Three Months Ended
March 31,
|
|||||||||
Estimated
Useful Life
|
2012
|
2011
|
|||||||
(In thousands)
|
|||||||||
Development
|
Lease Life
|
$ | 777 | 260 | |||||
New Tenants
|
Lease Life
|
904 | 912 | ||||||
New Tenants (first generation) (1)
|
Lease Life
|
63 | 95 | ||||||
Renewal Tenants
|
Lease Life
|
851 | 815 | ||||||
Total Capitalized Leasing Costs
|
$ | 2,595 | 2,082 | ||||||
Amortization of Leasing Costs
|
$ | 1,798 | 1,601 |
(1)
|
First generation refers to space that has never been occupied under EastGroup’s ownership.
|
Three Months Ended March 31,
|
||||||||
Discontinued Operations
|
2012
|
2011
|
||||||
(In thousands)
|
||||||||
Income from real estate operations
|
$ | 15 | – | |||||
Expenses from real estate operations
|
(6 | ) | – | |||||
Property net operating income from discontinued operations
|
9 | – | ||||||
Depreciation and amortization
|
(17 | ) | – | |||||
Loss from real estate operations
|
(8 | ) | – | |||||
Gain on sales of nondepreciable real estate investments, net of tax
|
167 | – | ||||||
Income from discontinued operations
|
$ | 159 | – |
March 31, 2012
|
December 31, 2011
|
|||||||
(In thousands)
|
||||||||
Mortgage notes payable – fixed rate
|
$ | 672,393 | 628,170 | |||||
Unsecured term loan payable – fixed rate
|
50,000 | 50,000 | ||||||
Notes payable to banks – variable rate
|
118,917 | 154,516 | ||||||
Total debt
|
$ | 841,310 | 832,686 |
April – December 2012
|
2013
|
2014
|
2015
|
2016
|
Thereafter
|
Total
|
Fair Value
|
|||||||||||||||||||||||||
Fixed rate mortgage debt (in thousands)
|
$ | 60,528 | 62,014 | 98,920 | 102,287 | 92,716 | 255,928 | 672,393 | 721,420 | (1) | ||||||||||||||||||||||
Weighted average interest rate
|
6.58 | % | 5.07 | % | 5.66 | % | 5.36 | % | 5.79 | % | 5.27 | % | 5.51 | % | ||||||||||||||||||
Fixed rate unsecured term loan (in thousands)
|
$ | – | – | – | – | – | 50,000 | 50,000 | 50,626 | (1) | ||||||||||||||||||||||
Weighted average interest rate
|
– | – | – | – | – | 3.91 | % | 3.91 | % | |||||||||||||||||||||||
Variable rate debt (in thousands)
|
$ | – | 118,917 | (2) | – | – | – | – | 118,917 | 118,492 | (3) | |||||||||||||||||||||
Weighted average interest rate
|
– | 1.12 | % | – | – | – | – | 1.12 | % |
(1)
|
The fair value of the Company’s fixed rate debt is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers.
|
(2)
|
The variable rate debt matures in January 2013 and is comprised of two lines of credit with balances of $116,000,000 on the $200 million line of credit and $2,917,000 on the $25 million working capital line of credit as of March 31, 2012.
|
(3)
|
The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates.
|
Period
|
Total Number
of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
|
||||||||||||
01/01/12 thru 01/31/12
|
11,880 | (1) | $ | 43.48 | – | – | ||||||||||
02/01/12 thru 02/29/12
|
– | – | – | – | ||||||||||||
03/01/12 thru 03/31/12
|
6,047 | (1) | 48.76 | – | – | (2) | ||||||||||
Total
|
17,927 | $ | 45.26 | – |
(1)
|
As permitted under the Company's equity compensation plans, these shares were withheld by the Company to satisfy the tax withholding obligations for those employees who elected this option in connection with the vesting of shares of restricted stock. Shares withheld for tax withholding obligations do not affect the total number of remaining shares available for repurchase under the Company’s common stock repurchase plan.
|
(2)
|
During the first quarter of 2012, EastGroup's Board of Directors terminated its previous plan which authorized the repurchase of up to 1,500,000 shares of its outstanding common stock. Under the common stock repurchase plan, the Company purchased a total of 827,700 shares for $14,170,000 (an average of $17.12 per share). The Company has not repurchased any shares under this plan since 2000.
|
(a) | Form 10-Q Exhibits: | |||
(31) | Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) | |||
(a) | David H. Hoster II, Chief Executive Officer | |||
(b) | N. Keith McKey, Chief Financial Officer | |||
(32) | Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) | |||
(a) | David H. Hoster II, Chief Executive Officer | |||
(b) | N. Keith McKey, Chief Financial Officer | |||
(101) | The following materials from EastGroup Properties, Inc.’s Quarterly Report on Form 10-Q for | |||
the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): | ||||
(i) consolidated balance sheets, (ii) consolidated statements of income and comprehensive income, | ||||
(iii) consolidated statement of changes in equity, (iv) consolidated statements of cash flows, and | ||||
(v) the notes to the consolidated financial statements.** | ||||
** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are | ||||
deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or | ||||
12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of | ||||
the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability | ||||
under those sections. |
EASTGROUP PROPERTIES, INC.
|
||
/s/ BRUCE CORKERN
|
||
Bruce Corkern, CPA
|
||
Senior Vice President, Controller and
|
||
Chief Accounting Officer
|
||
/s/ N. KEITH MCKEY
|
||
N. Keith McKey, CPA
|
||
Executive Vice President,
|
||
Chief Financial Officer, Treasurer and Secretary
|
7
M<683RXIEX^4JN,CC&*_//_A_OJG_`$3>T&/^HD<#_P`=XJY??\%VO$>E0I)=
M?"DVT
Certification of Chief Executive Officer |
Exhibit 31(a)
|
EastGroup Properties, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of EastGroup Properties, Inc.; |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ DAVID H. HOSTER II
|
|
DAVID H. HOSTER II
|
|
Chief Executive Officer
|
|
April 25, 2012
|
Certification of Chief Financial Officer |
Exhibit 31(b)
|
EastGroup Properties, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of EastGroup Properties, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ N. KEITH MCKEY
|
|
N. KEITH MCKEY
|
|
Chief Financial Officer
|
|
April 25, 2012
|
Certification of Chief Executive Officer |
Exhibit 32(a)
|
EastGroup Properties, Inc.
|
/s/ DAVID H. HOSTER II
|
|
DAVID H. HOSTER II
|
|
Chief Executive Officer
|
|
April 25, 2012
|
Certification of Chief Financial Officer |
Exhibit 32(b)
|
EastGroup Properties, Inc.
|
/s/ N. KEITH MCKEY
|
|
N. KEITH MCKEY
|
|
Chief Financial Officer
|
|
April 25, 2012
|
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Financial Assets | ||
Cash | $ 205 | $ 174 |
Carrying (Reported) Amount, Fair Value Disclosure [Member]
|
||
Financial Assets | ||
Cash | 205 | 174 |
Mortgage loans receivable, net of discount | 4,109 | 4,110 |
Financial Liabilities | ||
Mortgage notes payable Fair Value Disclosure | 672,393 | 628,170 |
Unsecured term loan payable | 50,000 | 50,000 |
Notes payable To Banks Fair Value Disclosure | 118,917 | 154,516 |
Estimate of Fair Value, Fair Value Disclosure [Member]
|
||
Financial Assets | ||
Cash | 205 | 174 |
Mortgage loans receivable, net of discount | 4,316 | 4,317 |
Financial Liabilities | ||
Mortgage notes payable Fair Value Disclosure | 721,420 | 674,462 |
Unsecured term loan payable | 50,626 | 50,000 |
Notes payable To Banks Fair Value Disclosure | $ 118,492 | $ 153,521 |
EARNINGS PER SHARE (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:
|
PRINCIPLES OF CONSOLIDATION (Policies)
|
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
PRINCIPLES OF CONSOLIDATION [Abstract] | |
Consolidation Policy | The consolidated financial statements include the accounts of EastGroup, its wholly-owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest. At March 31, 2012 and December 31, 2011, the Company had a controlling interest in two joint ventures: the 80% owned University Business Center and the 80% owned Castilian Research Center. The Company records 100% of the joint ventures' assets, liabilities, revenues and expenses with noncontrolling interests provided for in accordance with the joint venture agreements. The equity method of accounting is used for the Company's 50% undivided tenant-in-common interest in Industry Distribution Center II. All significant intercompany transactions and accounts have been eliminated in consolidation. |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Summary of accounts payable and accrued expenses [Abstract] | ||
Property taxes payable | $ 5,518 | $ 9,840 |
Development costs payable | 6,086 | 5,928 |
Interest payable | 2,958 | 2,736 |
Dividends payable on nonvested restricted stock | 1,282 | 1,415 |
Other payables and accrued expenses | 4,041 | 11,286 |
Accounts payable and accrued expenses | $ 19,885 | $ 31,205 |
REAL ESTATE PROPERTIES (Details) (USD $)
|
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
|
REAL ESTATE PROPERTIES [Abstract] | |||
Depreciation Expense During the Period | $ 13,079,000 | $ 12,089,000 | |
Estimated useful lives for buildings (in years) | 40 | ||
Estimated useful lives of improvements and personal property - minimum (in years) | 3 | ||
Estimated useful lives of improvements and personal property - maximum (in years) | 15 | ||
Real estate properties component balances [Abstract] | |||
Land | 237,851,000 | 235,394,000 | |
Buildings and building improvements | 1,069,005,000 | 1,056,783,000 | |
Tenant and other improvements | 262,603,000 | 258,267,000 | |
Development | 112,703,000 | 112,149,000 | |
Real estate and development properties | 1,682,162,000 | 1,662,593,000 | |
Less accumulated depreciation | (464,873,000) | (451,805,000) | |
Real estate, net | $ 1,217,289,000 | $ 1,210,788,000 |
SUBSEQUENT EVENTS (Details) (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Apr. 25, 2012
|
|
Common stock issuance - Continous common equity program [Member]
|
||
Subsequent Event [Line Items] | ||
Subsequent event date | April 25, 2012 | |
Common shares issued and sold (in shares) | 143,213 | |
Average price (in dollars per share) | $ 50.62 | |
Proceeds from issuance of common stock | $ 7,200,000.0 | |
Common stock remaining to sell under the program (in shares) | 901,652 | |
Repayment of mortgage loan [Member]
|
||
Subsequent Event [Line Items] | ||
Loan balance repayment | $ 8,700,000.0 | |
Interest rate | 7.98% | |
Maturity date | Jun. 01, 2012 | |
Subsequent event date | April 2, 2012 |
BASIS OF PRESENTATION
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3 Months Ended |
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Mar. 31, 2012
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BASIS OF PRESENTATION [Abstract] | |
Basis of Presentation | (1) BASIS OF PRESENTATION The accompanying unaudited financial statements of EastGroup Properties, Inc. ("EastGroup" or "the Company") have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The financial statements should be read in conjunction with the financial statements contained in the 2011 annual report on Form 10-K and the notes thereto. Certain reclassifications have been made in the 2011 consolidated financial statements to conform to the 2012 presentation. |