EastGroup Properties, Inc.

What they do

EastGroup develops, acquires and operates business distribution properties, primarily in the 20,000 to 100,000 square foot range, clustered near major transportation features in supply-constrained submarkets. As of December 31, 2025, it owned 550 industrial properties in 12 states, totaling approximately 65 million square feet, and was 97.0% leased to about 1,700 tenants. The company is internally managed with headquarters in Ridgeland, Mississippi, and regional offices in Dallas, Los Angeles and Atlanta.

Revenue drivers

• Business distribution properties — The largest property type, 510 properties totaling 59.3 million square feet, generating rental income from tenants in the 20,000-100,000 sq ft range.
• Bulk distribution properties — 19 properties totaling 4.9 million square feet, contributing rental income from larger distribution users.
• Business service properties — 21 properties totaling 800,000 square feet, providing smaller service-oriented rental space.
• Development and value-add program — As of December 31, 2025, 17 projects totaling 3.47 million square feet under construction or lease-up, which upon stabilization are transferred to the operating portfolio to generate new rental income.

Recent performance

For the second quarter of 2026, net income attributable to common stockholders was $1.40 per diluted share, up from $1.20 in the prior-year quarter, helped by $5.2 million in gains on real estate sales. Same Property Net Operating Income, excluding lease terminations, increased 6.2% on a straight-line basis and 8.3% on a cash basis year-over-year. The operating portfolio was 96.8% leased and 95.6% occupied as of June 30, 2026. In 2025, revenue grew to $721.3 million from $640.2 million in 2024, with diluted EPS of $4.87, and same-property PNOI increased 7.0%. Rental rates on new and renewal leases signed in Q2 2026 increased an average of 34.1% on a straight-line basis.

Strategy

EastGroup's strategy is to maximize shareholder value by owning premier distribution facilities clustered near major transportation features in supply-constrained submarkets within high-growth markets. The company focuses on development and value-add projects, starting construction based on leasing activity, and manages risk through a Board-approved maximum land development level. In 2025, it acquired 300.4 acres of land for $118.6 million, began construction on 1.4 million square feet, and transferred 2.1 million square feet to the operating portfolio. The company also accesses capital through ATM equity offerings and unsecured debt, raising approximately $160 million in Q2 2026 at a weighted average price of $203.15.

Risks

• Local real estate conditions — Oversupply of industrial properties or a decline in attractiveness to tenants in any of its markets would negatively affect occupancy and rental rates.
• Interest rate and inflation exposure — Higher interest rates increase the cost of debt financing and cannot be passed through to tenants, while inflation may increase operating expenses only partially mitigated by tenant expense reimbursements.
• Development and construction risks — Development projects may fail to perform as projected, face increased construction costs due to tariffs or inflation, or not materialize at all.
• Tenant credit and lease renewal risk — Potential tenant defaults or non-renewals, particularly in an uncertain economic environment, could reduce rental income and occupancy levels.

Outlook

Management noted that the leasing environment has normalized compared to 2025's protracted decision-making, and they are 'bullish' on external trends benefiting the shallow bay, last mile, high-growth market portfolio. They raised full-year development guidance to $325 million of starts for 2026, driven by record leasing activity. They also expect to continue executing on acquisitions, with subsequent-to-quarter-end deals in Phoenix and Austin totaling approximately $111 million.