MARYLAND | 13-2711135 |
(State or other jurisdiction | (I.R.S. Employer |
of incorporation or organization) | Identification No.) |
190 EAST CAPITOL STREET | |
SUITE 400 | |
JACKSON, MISSISSIPPI | 39201 |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number: (601) 354-3555 |
Page | ||
March 31, 2013 | December 31, 2012 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Real estate properties | $ | 1,646,259 | 1,619,777 | |||
Development | 143,985 | 148,255 | ||||
1,790,244 | 1,768,032 | |||||
Less accumulated depreciation | (509,302 | ) | (496,247 | ) | ||
1,280,942 | 1,271,785 | |||||
Unconsolidated investment | 2,834 | 2,743 | ||||
Cash | 24 | 1,258 | ||||
Other assets | 79,855 | 78,316 | ||||
TOTAL ASSETS | $ | 1,363,655 | 1,354,102 | |||
LIABILITIES AND EQUITY | ||||||
LIABILITIES | ||||||
Mortgage notes payable | $ | 601,655 | 607,766 | |||
Unsecured term loans payable | 130,000 | 130,000 | ||||
Notes payable to banks | 91,595 | 76,160 | ||||
Accounts payable and accrued expenses | 23,939 | 28,914 | ||||
Other liabilities | 19,027 | 20,086 | ||||
Total Liabilities | 866,216 | 862,926 | ||||
EQUITY | ||||||
Stockholders’ Equity: | ||||||
Common shares; $.0001 par value; 70,000,000 shares authorized; 30,256,170 shares issued and outstanding at March 31, 2013 and 29,928,490 at December 31, 2012 | 3 | 3 | ||||
Excess shares; $.0001 par value; 30,000,000 shares authorized; no shares issued | — | — | ||||
Additional paid-in capital on common shares | 747,105 | 731,950 | ||||
Distributions in excess of earnings | (254,322 | ) | (245,249 | ) | ||
Accumulated other comprehensive loss | (170 | ) | (392 | ) | ||
Total Stockholders’ Equity | 492,616 | 486,312 | ||||
Noncontrolling interest in joint ventures | 4,823 | 4,864 | ||||
Total Equity | 497,439 | 491,176 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 1,363,655 | 1,354,102 |
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
REVENUES | |||||||
Income from real estate operations | $ | 48,228 | 46,383 | ||||
Other income | 47 | 14 | |||||
48,275 | 46,397 | ||||||
EXPENSES | |||||||
Expenses from real estate operations | 13,562 | 12,997 | |||||
Depreciation and amortization | 15,615 | 15,734 | |||||
General and administrative | 3,364 | 3,116 | |||||
Acquisition costs | 29 | 19 | |||||
32,570 | 31,866 | ||||||
OPERATING INCOME | 15,705 | 14,531 | |||||
OTHER INCOME (EXPENSE) | |||||||
Interest expense | (8,621 | ) | (9,441 | ) | |||
Other | 224 | 171 | |||||
INCOME FROM CONTINUING OPERATIONS | 7,308 | 5,261 | |||||
DISCONTINUED OPERATIONS | |||||||
Income from real estate operations | — | 94 | |||||
Gain on sales of nondepreciable real estate investments, net of tax | — | 167 | |||||
INCOME FROM DISCONTINUED OPERATIONS | — | 261 | |||||
NET INCOME | 7,308 | 5,522 | |||||
Net income attributable to noncontrolling interest in joint ventures | (154 | ) | (119 | ) | |||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | 7,154 | 5,403 | |||||
Other comprehensive income - cash flow hedge | 222 | — | |||||
TOTAL COMPREHENSIVE INCOME | $ | 7,376 | 5,403 | ||||
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||||||
Income from continuing operations | $ | 0.24 | 0.19 | ||||
Income from discontinued operations | — | 0.01 | |||||
Net income attributable to common stockholders | $ | 0.24 | 0.20 | ||||
Weighted average shares outstanding | 29,809 | 27,647 | |||||
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||||||
Income from continuing operations | $ | 0.24 | 0.18 | ||||
Income from discontinued operations | — | 0.01 | |||||
Net income attributable to common stockholders | $ | 0.24 | 0.19 | ||||
Weighted average shares outstanding | 29,890 | 27,718 | |||||
AMOUNTS ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||||||
Income from continuing operations | $ | 7,154 | 5,142 | ||||
Income from discontinued operations | — | 261 | |||||
Net income attributable to common stockholders | $ | 7,154 | 5,403 |
Common Stock | Additional Paid-In Capital | Distributions in Excess of Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest in Joint Ventures | Total | |||||||||||||
BALANCE, DECEMBER 31, 2012 | $ | 3 | 731,950 | (245,249 | ) | (392 | ) | 4,864 | 491,176 | |||||||||
Net income | — | — | 7,154 | — | 154 | 7,308 | ||||||||||||
Net unrealized change in fair value of interest rate swap | — | — | — | 222 | — | 222 | ||||||||||||
Common dividends declared – $.53 per share | — | — | (16,227 | ) | — | — | (16,227 | ) | ||||||||||
Stock-based compensation, net of forfeitures | — | 1,831 | — | — | — | 1,831 | ||||||||||||
Issuance of 245,010 shares of common stock, common stock offering, net of expenses | — | 13,798 | — | — | — | 13,798 | ||||||||||||
Issuance of 933 shares of common stock, dividend reinvestment plan | — | 54 | — | — | — | 54 | ||||||||||||
Withheld 9,412 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | — | (528 | ) | — | — | — | (528 | ) | ||||||||||
Distributions to noncontrolling interest | — | — | — | — | (195 | ) | (195 | ) | ||||||||||
BALANCE, MARCH 31, 2013 | $ | 3 | 747,105 | (254,322 | ) | (170 | ) | 4,823 | 497,439 |
Three Months Ended March 31, | ||||||
2013 | 2012 | |||||
OPERATING ACTIVITIES | ||||||
Net income | $ | 7,308 | 5,522 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization from continuing operations | 15,615 | 15,734 | ||||
Depreciation and amortization from discontinued operations | — | 212 | ||||
Stock-based compensation expense | 1,370 | 1,334 | ||||
Gain on sales of land and real estate investments | — | (167 | ) | |||
Changes in operating assets and liabilities: | ||||||
Accrued income and other assets | (44 | ) | 991 | |||
Accounts payable, accrued expenses and prepaid rent | (6,910 | ) | (11,073 | ) | ||
Other | (98 | ) | (133 | ) | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 17,241 | 12,420 | ||||
INVESTING ACTIVITIES | ||||||
Real estate development | (17,254 | ) | (12,584 | ) | ||
Purchases of real estate | — | (3,475 | ) | |||
Real estate improvements | (4,577 | ) | (3,902 | ) | ||
Proceeds from sales of real estate investments | — | 539 | ||||
Repayments on mortgage loans receivable | 26 | 3 | ||||
Changes in accrued development costs | 473 | 158 | ||||
Changes in other assets and other liabilities | (2,194 | ) | (2,478 | ) | ||
NET CASH USED IN INVESTING ACTIVITIES | (23,526 | ) | (21,739 | ) | ||
FINANCING ACTIVITIES | ||||||
Proceeds from bank borrowings | 66,325 | 63,895 | ||||
Repayments on bank borrowings | (50,890 | ) | (99,494 | ) | ||
Proceeds from mortgage notes payable | — | 54,000 | ||||
Principal payments on mortgage notes payable | (6,106 | ) | (9,736 | ) | ||
Debt issuance costs | (1,441 | ) | (793 | ) | ||
Distributions paid to stockholders (not including dividends accrued on unvested restricted stock) | (15,975 | ) | (14,908 | ) | ||
Proceeds from common stock offerings | 13,798 | 16,284 | ||||
Proceeds from dividend reinvestment plan | 50 | 64 | ||||
Other | (710 | ) | 38 | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 5,051 | 9,350 | ||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,234 | ) | 31 | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,258 | 174 | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 24 | 205 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||
Cash paid for interest, net of amount capitalized of $1,291 and $1,042 for 2013 and 2012, respectively | $ | 8,257 | 8,967 |
(1) | BASIS OF PRESENTATION |
(2) | PRINCIPLES OF CONSOLIDATION |
(3) | USE OF ESTIMATES |
(4) | REAL ESTATE PROPERTIES |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Real estate properties: | ||||||
Land | $ | 246,347 | 244,199 | |||
Buildings and building improvements | 1,120,853 | 1,102,597 | ||||
Tenant and other improvements | 279,059 | 272,981 | ||||
Development | 143,985 | 148,255 | ||||
1,790,244 | 1,768,032 | |||||
Less accumulated depreciation | (509,302 | ) | (496,247 | ) | ||
$ | 1,280,942 | 1,271,785 |
(5) | DEVELOPMENT |
(6) | BUSINESS COMBINATIONS AND ACQUIRED INTANGIBLES |
(7) | REAL ESTATE HELD FOR SALE/DISCONTINUED OPERATIONS |
Three Months Ended March 31, | |||||||
DISCONTINUED OPERATIONS | 2013 | 2012 | |||||
(In thousands) | |||||||
Income from real estate operations | $ | — | 416 | ||||
Expenses from real estate operations | — | (110 | ) | ||||
Property net operating income from discontinued operations | — | 306 | |||||
Depreciation and amortization | — | (212 | ) | ||||
Income from real estate operations | — | 94 | |||||
Gain on sales of nondepreciable real estate investments, net of tax | — | 167 | |||||
Income from discontinued operations | $ | — | 261 |
(8) | OTHER ASSETS |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Leasing costs (principally commissions) | $ | 41,815 | 41,290 | |||
Accumulated amortization of leasing costs | (17,498 | ) | (17,543 | ) | ||
Leasing costs (principally commissions), net of accumulated amortization | 24,317 | 23,747 | ||||
Straight-line rents receivable | 22,233 | 22,153 | ||||
Allowance for doubtful accounts on straight-line rents receivable | (382 | ) | (409 | ) | ||
Straight-line rents receivable, net of allowance for doubtful accounts | 21,851 | 21,744 | ||||
Accounts receivable | 2,929 | 3,477 | ||||
Allowance for doubtful accounts on accounts receivable | (365 | ) | (373 | ) | ||
Accounts receivable, net of allowance for doubtful accounts | 2,564 | 3,104 | ||||
Acquired in-place lease intangibles | 10,287 | 11,848 | ||||
Accumulated amortization of acquired in-place lease intangibles | (3,733 | ) | (4,516 | ) | ||
Acquired in-place lease intangibles, net of accumulated amortization | 6,554 | 7,332 | ||||
Acquired above market lease intangibles | 2,170 | 2,443 | ||||
Accumulated amortization of acquired above market lease intangibles | (840 | ) | (976 | ) | ||
Acquired above market lease intangibles, net of accumulated amortization | 1,330 | 1,467 | ||||
Mortgage loans receivable | 9,330 | 9,357 | ||||
Discount on mortgage loans receivable | (30 | ) | (34 | ) | ||
Mortgage loans receivable, net of discount | 9,300 | 9,323 | ||||
Loan costs | 8,471 | 8,476 | ||||
Accumulated amortization of loan costs | (3,837 | ) | (4,960 | ) | ||
Loan costs, net of accumulated amortization | 4,634 | 3,516 | ||||
Goodwill | 990 | 990 | ||||
Prepaid expenses and other assets | 8,315 | 7,093 | ||||
Total Other Assets | $ | 79,855 | 78,316 |
(9) | ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Property taxes payable | $ | 6,699 | 12,107 | |||
Development costs payable | 7,643 | 7,170 | ||||
Interest payable | 2,661 | 2,615 | ||||
Dividends payable on unvested restricted stock | 1,443 | 1,191 | ||||
Other payables and accrued expenses | 5,493 | 5,831 | ||||
Total Accounts Payable and Accrued Expenses | $ | 23,939 | 28,914 |
(10) | OTHER LIABILITIES |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Security deposits | $ | 9,978 | 9,668 | |||
Prepaid rent and other deferred income | 7,141 | 7,930 | ||||
Acquired below-market lease intangibles | 1,500 | 1,541 | ||||
Accumulated amortization of below-market lease intangibles | (440 | ) | (391 | ) | ||
Acquired below-market lease intangibles, net of accumulated amortization | 1,060 | 1,150 | ||||
Interest rate swap liability | 414 | 645 | ||||
Other liabilities | 434 | 693 | ||||
Total Other Liabilities | $ | 19,027 | 20,086 |
(11) | COMPREHENSIVE INCOME |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS: | |||||||
Balance at beginning of period | $ | (392 | ) | — | |||
Change in fair value of interest rate swap | 222 | — | |||||
Balance at end of period | $ | (170 | ) | — |
(12) | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
Interest Rate Derivative | Notional Amount | |
Interest Rate Swap | $80,000,000 |
Liability Derivatives As of March 31, 2013 | Liability Derivatives As of December 31, 2012 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivatives designated as cash flow hedges: | |||||||||||
Interest rate swaps | Other Liabilities | $ | 414,000 | Other Liabilities | $ | 645,000 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS | |||||||
Interest Rate Swaps: | |||||||
Amount of income recognized in Other Comprehensive Income on derivative | $ | 73 | — | ||||
Amount of loss reclassified from Accumulated Other Comprehensive Loss into Interest Expense | (149 | ) | — |
(13) | EARNINGS PER SHARE |
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||||||
Numerator – net income attributable to common stockholders | $ | 7,154 | 5,403 | ||||
Denominator – weighted average shares outstanding | 29,809 | 27,647 | |||||
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | |||||||
Numerator – net income attributable to common stockholders | $ | 7,154 | 5,403 | ||||
Denominator: | |||||||
Weighted average shares outstanding | 29,809 | 27,647 | |||||
Common stock options | 3 | 4 | |||||
Unvested restricted stock | 78 | 67 | |||||
Total Shares | 29,890 | 27,718 |
(14) | STOCK-BASED COMPENSATION |
Three Months Ended | |||||||
Award Activity: | March 31, 2013 | ||||||
Shares | Weighted Average Grant Date Fair Value | ||||||
Unvested at beginning of period | 212,206 | $ | 42.84 | ||||
Granted | 91,149 | 57.10 | |||||
Forfeited | — | — | |||||
Vested | (30,316 | ) | 52.32 | ||||
Unvested at end of period | 273,039 | $ | 46.55 |
(15) | RISKS AND UNCERTAINTIES |
(16) | RECENT ACCOUNTING PRONOUNCEMENTS |
(17) | FAIR VALUE OF FINANCIAL INSTRUMENTS |
March 31, 2013 | December 31, 2012 | |||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | |||||||||
(In thousands) | ||||||||||||
Financial Assets: | ||||||||||||
Cash and cash equivalents | $ | 24 | 24 | 1,258 | 1,258 | |||||||
Mortgage loans receivable, net of discount | 9,300 | 9,760 | 9,323 | 9,748 | ||||||||
Financial Liabilities: | ||||||||||||
Mortgage notes payable | 601,655 | 648,135 | 607,766 | 661,408 | ||||||||
Unsecured term loans payable | 130,000 | 131,747 | 130,000 | 130,776 | ||||||||
Notes payable to banks | 91,595 | 91,698 | 76,160 | 76,160 | ||||||||
Interest rate swap liability | 414 | 414 | 645 | 645 |
(18) | SUBSEQUENT EVENTS |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
Income from real estate operations | $ | 48,228 | 46,383 | ||||
Expenses from real estate operations | (13,562 | ) | (12,997 | ) | |||
PROPERTY NET OPERATING INCOME | $ | 34,666 | 33,386 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
NET INCOME | $ | 7,308 | 5,522 | ||||
Equity in earnings of unconsolidated investment | (91 | ) | (89 | ) | |||
Interest income | (133 | ) | (82 | ) | |||
Other income | (47 | ) | (14 | ) | |||
Income from discontinued operations | — | (261 | ) | ||||
Depreciation and amortization from continuing operations | 15,615 | 15,734 | |||||
Interest expense | 8,621 | 9,441 | |||||
General and administrative expense | 3,364 | 3,116 | |||||
Acquisition costs | 29 | 19 | |||||
PROPERTY NET OPERATING INCOME | $ | 34,666 | 33,386 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
(In thousands, except per share data) | |||||||
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | $ | 7,154 | 5,403 | ||||
Depreciation and amortization from continuing operations | 15,615 | 15,734 | |||||
Depreciation and amortization from discontinued operations | — | 212 | |||||
Depreciation from unconsolidated investment | 33 | 33 | |||||
Depreciation and amortization from noncontrolling interest | (62 | ) | (61 | ) | |||
FUNDS FROM OPERATIONS (FFO) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 22,740 | 21,321 | ||||
Net income attributable to common stockholders per diluted share | $ | 0.24 | 0.19 | ||||
Funds from operations (FFO) attributable to common stockholders per diluted share | $ | 0.76 | 0.77 | ||||
Diluted shares for earnings per share and funds from operations | 29,890 | 27,718 |
• | 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. For the three months ended March 31, 2013, FFO was $0.76 per share compared with $0.77 per share for the same period of 2012, a decrease of 1.3% per share. |
• | For the three months ended March 31, 2013, PNOI increased by $1,280,000, or 3.8%, compared to the same period in 2012. PNOI increased $870,000 from 2012 acquisitions and $571,000 from newly developed properties, offset by a decrease of $120,000 from same property operations. |
• | The 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 decreased 0.4% for the three months ended March 31, 2013, compared to the same period in 2012. |
• | Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current period and prior year reporting period. Same property average occupancy for the three months ended March 31, 2013, was 93.2% compared to 93.9% for the same period of 2012. |
• | The same property average rental rate represents the average annual rental rates of leases in place for the same operating properties owned during the entire current period and prior year reporting period. The same property average rental rate was $5.16 per square foot for the three months ended March 31, 2013, compared to $5.20 per square foot for the same period of 2012. |
• | 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, 2013, was 93.6%. Quarter-end occupancy ranged from 93.1% to 94.6% over the period from March 31, 2012 to March 31, 2013. |
• | 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 (5.9% of total square footage) averaged 1.1% for the first quarter of 2013. |
• | Lease termination fee income for the three months ended March 31, 2013 was $427,000 compared to $170,000 for the same period of 2012. Bad debt expense for the three months ended March 31, 2013 was $47,000 compared to $223,000 for the same period last year. |
Costs Incurred | |||||||||||||||||
DEVELOPMENT | Costs Transferred in 2013(1) | For the Three Months Ended 3/31/2013 | Cumulative as of 3/31/2013 | Estimated Total Costs | Building Completion Date | ||||||||||||
(In thousands) | |||||||||||||||||
LEASE-UP | Building Size (Square feet) | ||||||||||||||||
World Houston 31B, Houston, TX | 35,000 | $ | — | 75 | 3,026 | 3,900 | 04/12 | ||||||||||
Thousand Oaks 1, San Antonio, TX | 36,000 | — | 414 | 3,953 | 4,900 | 05/12 | |||||||||||
Thousand Oaks 2, San Antonio, TX | 73,000 | — | 473 | 5,282 | 5,600 | 05/12 | |||||||||||
Beltway Crossing X, Houston, TX | 78,000 | — | 107 | 3,923 | 4,800 | 06/12 | |||||||||||
Beltway Crossing XI, Houston, TX | 87,000 | — | 378 | 3,978 | 4,900 | 02/13 | |||||||||||
Total Lease-Up | 309,000 | — | 1,447 | 20,162 | 24,100 | ||||||||||||
UNDER CONSTRUCTION | Anticipated Building Completion Date | ||||||||||||||||
World Houston 34, Houston, TX | 57,000 | — | 315 | 2,990 | 3,900 | 04/13 | |||||||||||
World Houston 35, Houston, TX | 45,000 | — | 255 | 2,368 | 2,800 | 04/13 | |||||||||||
Ten West Crossing 1, Houston, TX | 30,000 | — | 1,495 | 3,237 | 3,800 | 05/13 | |||||||||||
Thousand Oaks 3, San Antonio, TX | 66,000 | 1,232 | 1,479 | 2,711 | 4,600 | 07/13 | |||||||||||
Southridge X, Orlando, FL | 71,000 | 1,979 | 890 | 2,869 | 5,100 | 08/13 | |||||||||||
Ten West Crossing 2, Houston, TX | 46,000 | 908 | 1,035 | 1,943 | 5,100 | 08/13 | |||||||||||
Ten West Crossing 3, Houston, TX | 68,000 | 693 | 1,434 | 2,127 | 4,800 | 08/13 | |||||||||||
World Houston 37, Houston, TX | 101,000 | — | 1,569 | 3,243 | 6,800 | 08/13 | |||||||||||
World Houston 36, Houston, TX | 60,000 | — | 1,065 | 2,502 | 5,900 | 09/13 | |||||||||||
World Houston 38, Houston, TX | 129,000 | — | 810 | 3,027 | 9,000 | 10/13 | |||||||||||
Chandler Freeways, Phoenix, AZ | 126,000 | 1,811 | 320 | 2,131 | 8,900 | 10/13 | |||||||||||
Total Under Construction | 799,000 | 6,623 | 10,667 | 29,148 | 60,700 | ||||||||||||
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND) | Estimated Building Size (Square feet) | ||||||||||||||||
Phoenix, AZ | 404,000 | (1,811 | ) | 87 | 3,973 | 30,800 | |||||||||||
Tucson, AZ | 70,000 | — | — | 417 | 4,900 | ||||||||||||
Denver, CO | 84,000 | — | 75 | 786 | 7,700 | ||||||||||||
Fort Myers, FL | 663,000 | — | 108 | 17,754 | 48,100 | ||||||||||||
Orlando, FL | 1,355,000 | (1,979 | ) | 1,580 | 26,201 | 88,000 | |||||||||||
Tampa, FL | 519,000 | — | 153 | 6,298 | 30,800 | ||||||||||||
Jackson, MS | 28,000 | — | — | 706 | 2,000 | ||||||||||||
Charlotte, NC | 95,000 | — | 18 | 1,353 | 6,800 | ||||||||||||
Dallas, TX | 120,000 | — | 3 | 1,238 | 7,800 | ||||||||||||
El Paso, TX | 251,000 | — | — | 2,444 | 11,300 | ||||||||||||
Houston, TX | 2,227,000 | (1,601 | ) | 2,371 | 29,203 | 147,500 | |||||||||||
San Antonio, TX | 412,000 | (1,232 | ) | 70 | 4,302 | 27,200 | |||||||||||
Total Prospective Development | 6,228,000 | (6,623 | ) | 4,465 | 94,675 | 412,900 | |||||||||||
7,336,000 | $ | — | 16,579 | 143,985 | 497,700 | ||||||||||||
DEVELOPMENTS COMPLETED AND TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2013 | Building Size (Square feet) | Building Completion Date | |||||||||||||||
Southridge IX, Orlando, FL | 76,000 | $ | — | 18 | 6,318 | 03/12 | |||||||||||
Southridge XI, Orlando, FL | 88,000 | — | 37 | 5,502 | 09/12 | ||||||||||||
World Houston 33, Houston, TX | 160,000 | — | (169 | ) | 8,915 | 02/13 | |||||||||||
Total Transferred to Real Estate Properties | 324,000 | $ | — | (114 | ) | 20,735 | (2) |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Leasing costs (principally commissions) | $ | 41,815 | 41,290 | |||
Accumulated amortization of leasing costs | (17,498 | ) | (17,543 | ) | ||
Leasing costs (principally commissions), net of accumulated amortization | 24,317 | 23,747 | ||||
Straight-line rents receivable | 22,233 | 22,153 | ||||
Allowance for doubtful accounts on straight-line rents receivable | (382 | ) | (409 | ) | ||
Straight-line rents receivable, net of allowance for doubtful accounts | 21,851 | 21,744 | ||||
Accounts receivable | 2,929 | 3,477 | ||||
Allowance for doubtful accounts on accounts receivable | (365 | ) | (373 | ) | ||
Accounts receivable, net of allowance for doubtful accounts | 2,564 | 3,104 | ||||
Acquired in-place lease intangibles | 10,287 | 11,848 | ||||
Accumulated amortization of acquired in-place lease intangibles | (3,733 | ) | (4,516 | ) | ||
Acquired in-place lease intangibles, net of accumulated amortization | 6,554 | 7,332 | ||||
Acquired above market lease intangibles | 2,170 | 2,443 | ||||
Accumulated amortization of acquired above market lease intangibles | (840 | ) | (976 | ) | ||
Acquired above market lease intangibles, net of accumulated amortization | 1,330 | 1,467 | ||||
Mortgage loans receivable | 9,330 | 9,357 | ||||
Discount on mortgage loans receivable | (30 | ) | (34 | ) | ||
Mortgage loans receivable, net of discount | 9,300 | 9,323 | ||||
Loan costs | 8,471 | 8,476 | ||||
Accumulated amortization of loan costs | (3,837 | ) | (4,960 | ) | ||
Loan costs, net of accumulated amortization | 4,634 | 3,516 | ||||
Goodwill | 990 | 990 | ||||
Prepaid expenses and other assets | 8,315 | 7,093 | ||||
Total Other Assets | $ | 79,855 | 78,316 |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Property taxes payable | $ | 6,699 | 12,107 | |||
Development costs payable | 7,643 | 7,170 | ||||
Interest payable | 2,661 | 2,615 | ||||
Dividends payable on unvested restricted stock | 1,443 | 1,191 | ||||
Other payables and accrued expenses | 5,493 | 5,831 | ||||
Total Accounts Payable and Accrued Expenses | $ | 23,939 | 28,914 |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Security deposits | $ | 9,978 | 9,668 | |||
Prepaid rent and other deferred income | 7,141 | 7,930 | ||||
Acquired below-market lease intangibles | 1,500 | 1,541 | ||||
Accumulated amortization of below-market lease intangibles | (440 | ) | (391 | ) | ||
Acquired below-market lease intangibles, net of accumulated amortization | 1,060 | 1,150 | ||||
Interest rate swap liability | 414 | 645 | ||||
Other liabilities | 434 | 693 | ||||
Total Other Liabilities | $ | 19,027 | 20,086 |
Three Months Ended March 31, | ||||||||||
2013 | 2012 | Increase (Decrease) | ||||||||
(In thousands, except rates of interest) | ||||||||||
Average bank borrowings | $ | 78,420 | 107,345 | (28,925 | ) | |||||
Weighted average variable interest rates (excluding loan cost amortization) | 2.12 | % | 1.52 | % | ||||||
VARIABLE RATE INTEREST EXPENSE | ||||||||||
Bank loan interest (excluding loan cost amortization) | $ | 410 | 406 | 4 | ||||||
Amortization of bank loan costs | 102 | 86 | 16 | |||||||
Total variable rate interest expense | 512 | 492 | 20 | |||||||
FIXED RATE INTEREST EXPENSE | ||||||||||
Mortgage loan interest (excluding loan cost amortization) | 8,159 | 9,298 | (1,139 | ) | ||||||
Unsecured term loan interest (excluding loan cost amortization) | 1,020 | 486 | 534 | |||||||
Amortization of mortgage loan costs | 180 | 197 | (17 | ) | ||||||
Amortization of unsecured term loan costs | 41 | 10 | 31 | |||||||
Total fixed rate interest expense | 9,400 | 9,991 | (591 | ) | ||||||
Total interest | 9,912 | 10,483 | (571 | ) | ||||||
Less capitalized interest | (1,291 | ) | (1,042 | ) | (249 | ) | ||||
TOTAL INTEREST EXPENSE | $ | 8,621 | 9,441 | (820 | ) |
NEW MORTGAGE IN 2012 | Interest Rate | Date | Maturity Date | Amount | ||||||
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 |
MORTGAGE LOANS REPAID IN 2012 | Interest Rate | Date Repaid | Payoff Amount | |||||
Oak Creek Distribution Center IV | 5.68% | 03/01/12 | $ | 3,463,000 | ||||
University Business Center (125 & 175 Cremona) | 7.98% | 04/02/12 | 8,679,000 | |||||
University Business Center (120 & 130 Cremona) | 6.43% | 05/01/12 | 1,910,000 | |||||
51st Avenue, Airport Distribution, Broadway I, III & IV, Chestnut, Interchange Business Park, Main Street, North Stemmons I land, Southpark, Southpointe and World Houston 12 & 13 | 6.86% | 06/04/12 | 31,724,000 | |||||
Interstate Distribution Center - Jacksonville | 5.64% | 09/04/12 | 4,123,000 | |||||
Weighted Average/Total Amount | 6.86% | $ | 49,899,000 |
Three Months Ended March 31, | ||||||||
Estimated Useful Life | 2013 | 2012 | ||||||
(In thousands) | ||||||||
Upgrade on Acquisitions | 40 yrs | $ | 83 | 104 | ||||
Tenant Improvements: | ||||||||
New Tenants | Lease Life | 2,260 | 1,543 | |||||
New Tenants (first generation) (1) | Lease Life | 68 | 29 | |||||
Renewal Tenants | Lease Life | 815 | 970 | |||||
Other: | ||||||||
Building Improvements | 5-40 yrs | 585 | 670 | |||||
Roofs | 5-15 yrs | 937 | 589 | |||||
Parking Lots | 3-5 yrs | 148 | 44 | |||||
Other | 5 yrs | 64 | 121 | |||||
Total Capital Expenditures | $ | 4,960 | 4,070 |
(1) | First generation refers only to space that has never been occupied under EastGroup’s ownership. |
Three Months Ended March 31, | ||||||||
Estimated Useful Life | 2013 | 2012 | ||||||
(In thousands) | ||||||||
Development | Lease Life | $ | 606 | 777 | ||||
New Tenants | Lease Life | 665 | 904 | |||||
New Tenants (first generation) (1) | Lease Life | 2 | 63 | |||||
Renewal Tenants | Lease Life | 1,078 | 851 | |||||
Total Capitalized Leasing Costs | $ | 2,351 | 2,595 | |||||
Amortization of Leasing Costs (2) | $ | 1,780 | 1,798 |
(1) | First generation refers only to space that has never been occupied under EastGroup’s ownership. |
(2) | Includes discontinued operations. |
Three Months Ended March 31, | |||||||
DISCONTINUED OPERATIONS | 2013 | 2012 | |||||
(In thousands) | |||||||
Income from real estate operations | $ | — | 416 | ||||
Expenses from real estate operations | — | (110 | ) | ||||
Property net operating income from discontinued operations | — | 306 | |||||
Depreciation and amortization | — | (212 | ) | ||||
Income from real estate operations | — | 94 | |||||
Gain on sales of nondepreciable real estate investments, net of tax | — | 167 | |||||
Income from discontinued operations | $ | — | 261 |
March 31, 2013 | December 31, 2012 | |||||
(In thousands) | ||||||
Mortgage notes payable – fixed rate | $ | 601,655 | 607,766 | |||
Unsecured term loans payable – fixed rate | 130,000 | 130,000 | ||||
Notes payable to banks – variable rate | 91,595 | 76,160 | ||||
Total debt | $ | 823,250 | 813,926 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
April – December 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Total | Fair Value | |||||||||||||||||||
Fixed rate mortgage debt (in thousands) | $ | 51,803 | 98,920 | 102,287 | 92,717 | 58,145 | 197,783 | 601,655 | 648,135 | (1) | ||||||||||||||||
Weighted average interest rate | 4.99 | % | 5.66 | % | 5.36 | % | 5.79 | % | 5.50 | % | 5.20 | % | 5.40 | % | ||||||||||||
Fixed rate unsecured term loans (in thousands) | $ | — | — | — | — | — | 130,000 | 130,000 | 131,747 | (1) | ||||||||||||||||
Weighted average interest rate | — | — | — | — | — | 3.18 | % | 3.18 | % | |||||||||||||||||
Variable rate debt (in thousands) | $ | — | — | — | — | 91,595 | (2) | — | 91,595 | 91,698 | (3) | |||||||||||||||
Weighted average interest rate | — | — | — | — | 1.38 | % | (4) | — | 1.38 | % |
(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 2017 and is comprised of two lines of credit with balances of $85,000,000 on the $225 million line of credit and $6,595,000 on the $25 million working capital line of credit as of March 31, 2013. |
(3) | The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates. |
(4) | Represents the weighted average interest rate as of March 31, 2013. |
ITEM 4. | CONTROLS AND PROCEDURES. |
ITEM 1A. | RISK FACTORS. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
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 | ||||||||
01/01/13 thru 01/31/13 | 2,797 | (1) | $ | 53.81 | — | — | ||||||
02/01/13 thru 02/28/13 | — | — | — | — | ||||||||
03/01/13 thru 03/31/13 | 6,615 | (1) | 57.10 | — | — | |||||||
Total | 9,412 | $ | 56.12 | — |
(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. |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 6. | EXHIBITS. |
(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, 2013, 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 |
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 22, 2013 |
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 22, 2013 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DAVID H. HOSTER II | |
DAVID H. HOSTER II | |
Chief Executive Officer | |
April 22, 2013 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ N. KEITH MCKEY | |
N. KEITH MCKEY | |
Chief Financial Officer | |
April 22, 2013 |
7
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REAL ESTATE PROPERTIES (Details) (USD $)
|
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Dec. 31, 2012
|
|
Real Estate Properties [Line Items] | |||
Depreciation Expense During the Period | $ 13,057,000 | $ 13,079,000 | |
Real Estate Properties | |||
Land | 246,347,000 | 244,199,000 | |
Building and building improvements | 1,120,853,000 | 1,102,597,000 | |
Tenant and other improvements | 279,059,000 | 272,981,000 | |
Development | 143,985,000 | 148,255,000 | |
Real estate and development properties | 1,790,244,000 | 1,768,032,000 | |
Less accumulated depreciation | (509,302,000) | (496,247,000) | |
Real estate, net | $ 1,280,942,000 | $ 1,271,785,000 | |
Building [Member]
|
|||
Real Estate Properties [Line Items] | |||
Property, Plant and Equipment, Useful Life | 40 years | ||
Minimum [Member] | Improvements [Member]
|
|||
Real Estate Properties [Line Items] | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Maximum [Member] | Improvements [Member]
|
|||
Real Estate Properties [Line Items] | |||
Property, Plant and Equipment, Useful Life | 15 years |
EARNINGS PER SHARE (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||
Numerator – net income attributable to common stockholders | $ 7,154 | $ 5,403 |
Denominator - Weighted average shares outstanding | 29,809 | 27,647 |
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | ||
Numerator – net income attributable to common stockholders | $ 7,154 | $ 5,403 |
Denominator - Weighted average shares outstanding | 29,809 | 27,647 |
Common stock options | 3 | 4 |
Unvested restricted stock | 78 | 67 |
Total Shares | 29,890 | 27,718 |
COMPREHENSIVE INCOME (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
COMPREHENSIVE INCOME [Abstract] | ||
Balance at Beginning of Period, Accumulated Other Comprehensive Loss, Net of Tax | $ (392) | $ 0 |
Net unrealized change in fair value of interest rate swap | 222 | 0 |
Balance at End of Period, Accumulated Other Comprehensive Loss, Net of Tax | $ (170) | $ 0 |
COMPREHENSIVE INCOME (Tables)
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Mar. 31, 2013
|
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COMPREHENSIVE INCOME [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The components of Accumulated Other Comprehensive Loss are presented in the Company's Consolidated Statement of Changes in Equity and are summarized below. See Note 12 for information regarding the Company's interest rate swap.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
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Mar. 31, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. The Codification requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3). The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820 at March 31, 2013 and December 31, 2012.
(1) Carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions, except as explained in the notes below. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying amounts approximate fair value due to the short maturity of those instruments. Mortgage loans receivable, net of discount (included in Other Assets on the Consolidated Balance Sheets): The fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (Level 2 input). Mortgage notes payable: The fair value of the Company’s mortgage notes payable 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 (Level 2 input). Unsecured term loans payable: The fair value of the Company’s unsecured term loans payable 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 (Level 2 input). Notes payable to banks: The fair value of the Company’s notes payable to banks is estimated by discounting expected cash flows at current market rates (Level 2 input). Interest rate swap liability (included in Other Liabilities on the Consolidated Balances Sheets): The instrument is recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 12 for additional information on the Company's interest rate swap. |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
|
Dec. 31, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|---|---|
Financial Assets: | ||||
Cash and Cash Equivalents, at Carrying Value | $ 24 | $ 1,258 | $ 205 | $ 174 |
Carrying Amount [Member]
|
||||
Financial Assets: | ||||
Cash and Cash Equivalents, at Carrying Value | 24 | 1,258 | ||
Mortgage loans receivable, net of discount | 9,300 | 9,323 | ||
Financial Liabilities: | ||||
Mortgage notes payable | 601,655 | 607,766 | ||
Unsecured term loans payable | 130,000 | 130,000 | ||
Notes payable to banks | 91,595 | 76,160 | ||
Interest rate swap liability | 414 | 645 | ||
Fair Value [Member]
|
||||
Financial Assets: | ||||
Cash and Cash Equivalents, Fair Value Disclosure | 24 | 1,258 | ||
Mortgage loans receivable, net of discount | 9,760 | 9,748 | ||
Financial Liabilities: | ||||
Mortgage notes payable | 648,135 | 661,408 | ||
Unsecured term loans payable | 131,747 | 130,776 | ||
Notes payable to banks | 91,698 | 76,160 | ||
Interest rate swap liability | $ 414 | $ 645 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)
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Mar. 31, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying amounts and fair value of financial instruments | The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820 at March 31, 2013 and December 31, 2012.
(1) Carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions, except as explained in the notes below. |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) (USD $)
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3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2013
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Dec. 31, 2012
|
Mar. 31, 2013
Interest Rate Swap [Member]
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Mar. 31, 2012
Interest Rate Swap [Member]
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Mar. 31, 2013
Designated as Hedging Instrument [Member]
Other Liabilities [Member]
Interest Rate Swap [Member]
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Dec. 31, 2012
Designated as Hedging Instrument [Member]
Other Liabilities [Member]
Interest Rate Swap [Member]
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Derivative [Line Items] | ||||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 73,000 | $ 0 | ||||
Notional Amount of Interest Rate Derivatives | 80,000,000 | 80,000,000 | ||||
Interest Rate Swap Liability | 414,000 | 645,000 | 414,000 | 645,000 | ||
Cash flow hedge amount to be reclassified to Interest Expense in next 12 months [Line Items] | 579,000 | |||||
Interest rate swap cash flow hedge termination value | 394,000 | |||||
Cash Flow Hedge Loss Reclassified to Interest Expense | $ 149,000 | $ 0 |
BASIS OF PRESENTATION
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3 Months Ended |
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Mar. 31, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 2012 annual report on Form 10-K and the notes thereto. Certain reclassifications have been made in the 2012 consolidated financial statements to conform to the 2013 presentation. |
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