EastGroup Properties, Inc. announced the results of its operations for the three months ended March 31, 2021.
Commenting on EastGroup’s performance, Marshall Loeb, CEO, stated, “Our team and portfolio solidly exceeded our expectations. The metrics produced made it one of the best quarters in the Company’s history. We are continuing to experience this momentum as we exit the pandemic. Our shallow bay last mile Sunbelt market portfolio is well suited for long term growth.”
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (“EPS”) were $0.69 for the three months ended March 31, 2021, compared to $0.60 for the same period of 2020. The Company’s property net operating income (“PNOI”) increased by $7,368,000 ($0.19 per share) for the three months ended March 31, 2021, as compared to the same period of 2020. Depreciation and amortization expense increased by $2,421,000 ($0.06 per share) during the three months ended March 31, 2021, as compared to the same period of 2020.
FUNDS FROM OPERATIONS AND PROPERTY NET OPERATING INCOME
For the three months ended March 31, 2021, funds from operations attributable to common stockholders (“FFO”) were $1.45 per share compared to $1.31 per share during the same period of 2020, an increase of 10.7%.
PNOI increased by $7,368,000, or 11.7%, during the three months ended March 31, 2021, compared to the same period of 2020. PNOI increased $3,914,000 from same property operations (based on the same property pool), $3,057,000 from newly developed and value-add properties, and $643,000 from 2020 acquisitions; PNOI decreased $234,000 from operating properties sold in 2020.
The same property pool PNOI Excluding Income from Lease Terminations increased 6.3% on a straight-line basis for the three months ended March 31, 2021, compared to the same period of 2020; on a cash basis (excluding straight-line rent adjustments and amortization of above/below market rent intangibles), Same PNOI increased 5.9%.
On a straight-line basis, rental rates on new and renewal leases (5.9% of total square footage) increased an average of 25.8% during the three months ended March 31, 2021.
The same property pool for the three months ended March 31, 2021 includes properties which were included in the operating portfolio for the entire period from January 1, 2020 through March 31, 2021; this pool is comprised of properties containing 41,305,000 square feet.
FFO, PNOI and Same PNOI are non-GAAP financial measures, which are defined under Definitions later in this release. Reconciliations of Net Income to PNOI and Same PNOI, and Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO are presented in the attached schedule “Reconciliations of GAAP to Non-GAAP Measures.”
As of April 26, 2021, the Company had collected 99.7% of its 2020 rental income and 99.5% of its first quarter 2021 rental income, which includes annual true-ups for 2020 tenant expense reimbursements. Also as of April 26, 2021, the Company had collected 97.8% of amounts due through March 31, 2021 pursuant to deferral agreements with tenants.
ACQUISITIONS
In January, EastGroup purchased Access Point 1, a recently constructed 156,000 square foot building, for $10.5 million. The property, which was 70% leased as of April 26, 2021, is located in the I-385 South submarket in Greenville, South Carolina, near the Company’s 385 Business Park building, which is 100% leased.
Also in January, EastGroup purchased Northpoint 200, another recently constructed distribution facility which contains 79,000 square feet, for $6.5 million. The 100% leased property is located within the Northwest submarket of Atlanta, where the Company’s recently acquired Cherokee 75 property is located.
DEVELOPMENT AND VALUE-ADD PROPERTIES
During the first quarter of 2021, EastGroup began construction of two new development projects in two different cities. The buildings will contain a total of 346,000 square feet and have projected total costs of $29.4 million.