Earnings call transcript: EastGroup Properties beats Q1 2025 forecasts
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture. Financial performance is strong with a 7.1% increase in FFO per share and a healthy balance sheet, but there's uncertainty in leasing, particularly in LA, and vague management responses in the Q&A. Reduced development starts and capital proceeds indicate caution. The positive aspects are offset by concerns over leasing activity and management's lack of clarity, suggesting a neutral impact on stock price.
Key Financial Performance
Funds from Operations (FFO) per share $2.12 per share, up 7.1% from $1.98 in the same quarter last year, due to solid execution and performance of the portfolio.
Quarter end leasing 97.3% occupancy, with average quarterly occupancy at 95.8%, down 170 basis points from Q1 2024, attributed to market uncertainty.
Cash same store NOI Rose 5.2% for the quarter despite lower occupancy, indicating strong performance in existing properties.
Top 10 tenants' rent contribution Fell to 7.1% of rents, down 70 basis points from a year ago, reflecting improved tenant diversification.
Outstanding forward equity agreements $145,000,000 at an average weighted price of $183 per share, indicating strong balance sheet flexibility.
Debt to total market capitalization 13.7%, indicating a strong balance sheet.
Unadjusted debt to EBITDA ratio Increased to 3 times, reflecting stable financial health.
Interest and fixed charge coverage Increased to 15 times, indicating strong ability to cover interest expenses.
G&A expense Increased due to accelerated expense of newly granted equity-based compensation totaling approximately $2,500,000 during the quarter.
Bad debt as a percentage of revenue 0.49%, slightly ahead of historical averages, indicating healthy tenant collections.
Development starts forecast Projected to be $250,000,000 for 2025, reduced due to economic uncertainty.
Construction costs Have come down about 10-12% in the last year, with some materials like rebar up about 10%.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Development Starts: Forecasting 2025 starts to $250,000,000, with the majority expected in the second half of the year.
Leasing Volume: First quarter was the third best quarter historically for leasing volume, indicating strong demand despite market uncertainties.
Funds from Operations (FFO): FFO per share for the quarter was $2.12, up 7.1% from the prior year.
Occupancy Rates: Quarter end leasing was 97.3% with occupancy at 96.5%, average quarterly occupancy was 95.8%.
Cash Same Store NOI: Rose 5.2% for the quarter despite lower occupancy.
Tenant Collections: Tenant collections remain healthy, with bad debt as a percentage of revenue lower than in 2024.
Investment Strategy: Raised threshold for new investments and development starts due to market uncertainty.
Acquisition Strategy: Maintained acquisition guidance at $150,000,000 for the year but moved it to later in the year due to changes in capital markets.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Economic Uncertainty: The ongoing tariff discussions have raised market uncertainty regarding the severity and duration of a potential downturn, prompting the company to focus on maintaining occupancy and making quick leasing decisions.
Development Delays: Due to economic uncertainty, the company has reduced its forecast for development starts in 2025 to $250 million, with expectations for slower decision-making in the near term.
Supply Chain Challenges: The combination of limited availability of new modern facilities and higher development costs is expected to put upward pressure on rents as demand strengthens.
Occupancy Rates: Average quarterly occupancy has decreased by 170 basis points from the previous year, indicating potential challenges in maintaining high occupancy levels.
Tenant Health: While tenant collections remain healthy, there is a slight increase in bad debt as a percentage of revenue, which is projected to be in the 40 to 50 basis point range, slightly above historical averages.
Market Volatility: The company has noted that the capital markets are fluid, and they have adjusted their acquisition strategies due to increased cost of capital and market uncertainty.
Competitive Pressures: The company is facing competitive pressures in certain markets, particularly in Los Angeles, where negative absorption rates have been observed.
Economic Factors: The potential for a recession and its impact on consumer spending could affect tenant performance, particularly for small and medium businesses.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Development Starts: Forecasting 2025 starts to $250,000,000, with the majority expected in the second half of the year.
Leasing Strategy: Focusing on leasing to maintain occupancy and making quick leasing decisions due to market uncertainty.
Balance Sheet Strength: Outstanding forward equity agreements and a strong balance sheet position the company well for future investments.
Tenant Diversification: The top 10 tenants account for only 7.1% of rents, indicating a diversified rent roll.
Market Positioning: The company aims to capitalize on development opportunities earlier than private peers due to its balance sheet strength and existing tenant expansion needs.
FFO Guidance: Estimated FFO for Q2 to be in the range of $2.13 to $2.21 per share and $8.81 to $9.01 for the year, excluding involuntary conversion gains.
Cash Same Store Growth: Revised guidance increases the midpoint for cash same store growth by 40 basis points.
Occupancy Expectations: Increased average occupancy guidance by 10 basis points.
Capital Expenditures: Reduced development starts by $50,000,000 and capital proceeds by $190,000,000.
Bad Debt Projections: Estimated uncollectible rents to be in the 40 to 50 basis point range of revenues.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Common Shares Issued: During the quarter, we directly issued common shares for gross proceeds of $6,000,000.
Forward Shares Agreements Settled: Settled forward shares agreements for gross proceeds of $67,000,000 with an additional settlement of $45,000,000 after quarter end.
Average Price of Shares Issued: Collectively, those shares issued in the first quarter were initiated at an average price of $176 per share.
Outstanding Forward Agreements: As of today, we have $145,000,000 in outstanding forward agreements at an average weighted price of $183 per share.
Credit Facilities: We have full capacity of our $675,000,000 credit facilities.
Debt to Total Market Capitalization: Our debt to total market capitalization was 13.7%.
Unadjusted Debt to EBITDA Ratio: Unadjusted debt to EBITDA ratio increased to three times.
Interest and Fixed Charge Coverage: Our interest and fixed charge coverage increased to 15 times.
FFO Guidance for the Year: We estimate FFO guidance for the year to be in the range of $8.81 to $9.01 per share.
Cash Same Store Growth: Our revised guidance increases the midpoint for cash same store growth by 40 basis points.
Average Occupancy: We increased average occupancy by 10 basis points.
Development Starts Projection: We’re forecasting 2025 starts to $250,000,000.
Reduction in Development Starts: We reduced development starts by $50,000,000.
Reduction in Capital Proceeds: We reduced our capital proceeds by $190,000,000.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you just touch a little bit more about the pace of leasing you’re seeing thus far in the second quarter, whether you’re seeing a notable pullback in activity and whether that’s any more apparent in specific markets or if there are any that are more insulated?
A:We’ve been really pleased with our leasing volume. The fourth quarter was our best quarter ever in terms of square footage leased and our first quarter was our third best quarter ever. However, in LA, we’ve seen some tenants put things on hold until there’s more certainty.
Q:Are you willing to be a little bit more flexible with tenants in terms of their demands, mean what are you giving up on your end to kind of get the leases through just is it lower rents to gain the occupancy?
A:We are trying to move as quickly as we can in responding to tenant requests. We haven’t really thrown in more tenant improvements and things like that, but we would stretch a little more in markets like Los Angeles where we would probably be more flexible to make a deal.
Q:Was it always the plan to put the Dominguez Building in redevelopment after Starship left or was that because of some of the commentary you were getting from potential tenants?
A:We had it scheduled for redevelopment in 2021, but Starship took it as is. Now we’re modernizing the building and have several prospects, but they’ve put things on hold until there’s more certainty.
Q:Can you give us a sense of what you actually need to lease up this year to kind of hit the middle of the guide or even maybe the low end of the guide?
A:We have de minimis almost no FFO or leasing income projected for the second and third quarter. We hope that proves to be a conservative approach.
Q:Can you discuss just how much additional development leasing that has not yet occurred is included within FFO guidance?
A:We’ve not put an exact number out there because the leasing is fluid. It’s more in the $0.05 to $0.06 range total for the year in terms of spec amount that we would need to accomplish.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer when discussing the specific impacts of tariffs on tenant behavior and leasing decisions. Their responses were vague regarding how much flexibility they would offer tenants in terms of rent adjustments, and they did not provide specific data on the anticipated timeline for leasing the Dominguez Building after redevelopment.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO EastGroup
CFO EastGroup
Kunal Bank
Los Angeles
Properties development
Sameer Kunal
agreement
building tenant
consumer
conversation
deal
facility
figure
footage
guide
leasing environment
leasing volume
likelihood
market uncertainty
percent
place
plant
recession
redevelopment
releasing
rent tenant
revenue
seller
standpoint
tariff discussion
tenant health
tenant improvement
term leasing
trade
uncertainty opportunity
utilization space
yield
EGP Transcript
EastGroup Properties, Inc. (EGP) Q3 2025 Earnings Call Transcript
Unknown10-24
The earnings call reveals mixed signals: while there is optimism about re-leasing spreads and demand from manufacturing onshoring, development leasing is slower than expected. Financial guidance shows slight improvements, but concerns remain about regional weaknesses and unclear management responses. The neutral sentiment reflects balanced positive and negative factors.
EastGroup Properties, Inc. (EGP) Q2 2025 Earnings Call Transcript
Unknown7-24
The earnings call reveals mixed sentiments: while there are positive aspects such as a strong balance sheet, diversified tenant base, and strategic market positioning, there are also concerns about leasing activity delays and bad debt, particularly in California. The Q&A section highlights uncertainties in development leasing and management's vague responses to certain questions. Although there are optimistic guidance and strategic market expansions, the overall sentiment remains balanced due to these concerns and lack of clear catalysts for immediate growth.
EastGroup Properties, Inc. (EGP) Q1 2025 Earnings Call Transcript
Unknown4-24
The earnings call presents a mixed picture. Financial performance shows resilience with a 7.1% increase in FFO per share and a strong balance sheet. However, occupancy rates have declined, and there are concerns about leasing activity, particularly in California. The Q&A reveals some management evasiveness, especially about redevelopment plans and stress test specifics, which may cause investor uncertainty. Despite strong interest coverage and strategic acquisitions, the lack of clear guidance and market uncertainties result in a neutral sentiment.
Earnings call transcript: EastGroup Properties beats Q1 2025 forecasts
Unknown4-24
The earnings call presents a mixed picture. Financial performance is strong with a 7.1% increase in FFO per share and a healthy balance sheet, but there's uncertainty in leasing, particularly in LA, and vague management responses in the Q&A. Reduced development starts and capital proceeds indicate caution. The positive aspects are offset by concerns over leasing activity and management's lack of clarity, suggesting a neutral impact on stock price.
EGP Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
