EastGroup Props (NYSE:EGP) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://app.webinar.net/OQA2zMD6eEa
Summary
Eastgroup Properties Inc reported strong financial performance for Q1 2026, with funds from operations (FFO) of $2.30 per share, an 8.5% increase year-over-year, and a quarterly leasing rate of 96.5%.
The company highlighted strategic development initiatives, increasing its guidance for 2026 development starts to $265 million, driven by strong demand in its development pipeline and new projects across various markets.
Management expressed optimism for the future, with an increased midpoint for 2026 FFO guidance to $9.52 per share and a projection of continued strong cash same-store net operating income growth.
Operational highlights include a focus on geographic and tenant diversity, with a decrease in the rent concentration of top tenants and significant development leasing, particularly related to data center suppliers.
Management commented on the positive outlook for market demand, driven by factors such as population migration and nearshoring trends, and noted the company’s strong balance sheet with no current debt drawn on its unsecured bank credit facility.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to the Eastgroup Properties Inc First Quarter 2026 Earnings Conference Call and webcast. At this time all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press STAR zero for the operator. This call is being recorded on Thursday, April 23, 2026. I would now like to turn the conference over to Marshall Loeb, CEO. Please go ahead.
Marshall Loeb (CEO)
Good morning and thanks for calling in for our first quarter 2026 conference call. As always, we appreciate your interest. I’m happy to say that joining me on this morning’s call are Reed Dunbar, our President, Stacy Tyler, our CFO and Brent Wood, our COO. Since we’ll make forward looking statements, we ask that you listen to the following Please note that our conference call today will contain financial measures such as PNOI (Property Net Operating Income) and FFO that are non GAAP measures as defined in Regulation G. Please refer to our most recent financial Supplement and our Earnings Press release, both available on the Investor page of our website and to our periodic reports furnished or filed with the SEC for definitions and further information regarding our use of these non GAAP financial measures, including and a reconciliation of them to our GAAP results. Please also note that some statements during this call are forward looking statements as defined in and within the safe harbors under the SECurities act of 1933, the SECurities Exchange act of 1934 and the Private Securities Litigation Reform act of 1995. Forward looking statements in the Earnings Press release along with our remarks are made as of today and reflect our current views of the Company’s plans, intentions, expectations, strategies and prospects. Based on the information currently available to the Company and on assumptions it has made. We undertake no duty to update such statements or remarks, whether as a result of new information, future or actual results or otherwise. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Please see our SEC filings, including our most recent annual report on Form 10K, for more detail about these risks. Good morning. I’ll start by thanking our team. They started the year well and I’m proud of the results achieved. Our first quarter results demonstrate our portfolio quality and resiliency within the industrial market. Some of the stats produced include funds from operations omitting voluntary conversions of 230 per share up 8.5% quarter over quarter. For over a decade now, our quarterly FFO per share has exceeded the FFO per share reported in the same quarter prior year. Truly a Long term growth trend Quarter end leasing was 96.5% with occupancy at 95.9. Average quarterly occupancy was 96.1 which was up 30 basis points from first quarter 2025. And also notable was quarter end same store occupancy at 97.4%. This strength demonstrates the trend we’ve mentioned where the portfolio is well leased while development leasing has been taking a little longer. Quarterly re leasing spreads were 37% GAAP and 20% cash for leases signed during the quarter. Quarterly cash same store NOI rose a strong 9.2% reflecting this high same store occupancy. Finally, we have the most diversified rent roll in our sector with our top 10 tenants falling to 6.7% of rents down 40 basis points from prior year. We target geographic and tenant diversity as strategic paths to stabilize earnings regardless of the economic environment. In summary, we’re pleased with our results and excited about the quantity of development leasing signed during the quarter along prospect activity Reid will now walk you through more of our quarterly details.
Reed Dunbar (President)
Thank you Marshall and good morning. In the first quarter, development leasing continued to follow the same trend we saw in our fourth quarter results. Year to date, development leasing has already reached 54% of last year’s total. While we are encouraged by the continued demand in our development properties, businesses continue to operate amid headline volatility and decision cycles continue to remain extended. But as the markets continue to experience positive absorption and as new development starts remain limited, we anticipate users will be increasingly required to accelerate decision making. In the meantime, our development pipeline continues to lease at a more measured pace while maintaining our projected yields. The E3 platform and the depth of our team continue to drive strong returns in our development business. As our development starts are pulled by market demand, we are increasing our guidance for the year to 265 million. This quarter we commenced construction on four projects totaling 586,000 square feet, of which 27% is pre leased. New development sites in our targeted infill locations remain challenging to source and entitlements and zoning continue to be difficult and time consuming. As the supply of competing product continues to tighten and as demand stabilizes, it will place upward pressure on rents. And as demand improves, we believe the company is well positioned to capitalize on continued development opportunities in creating value from our land bank. Regarding new investments, we continue to modernize our portfolio with the acquisition of two Class A buildings in the Jacksonville market totaling 177,000 square feet and then subsequent to quarter close, we sold the 46,000 square foot building also in Jacksonville, along with our previously announced exit from the fresno market of 398,000 square feet. Stacey will now speak to several topics including assumptions within our updated 2026 guidance.
Stacy Tyler (Chief Financial Officer)
Thanks Reid and good morning. We are proud of our first quarter results. They reflect the outstanding performance of our team and the strength of our portfolio. We are pleased to report that FFO exceeded the midpoint of our guidance range at $2.30 per share excluding gains on involuntary conversion. This represents an 8.5% increase over first quarter last year. The outperformance in first quarter was primarily driven by lower than anticipated G&A expense and higher than projected property net operating income reflecting the continued strong performance of our 62 million square operating portfolio. Our balance sheet remains strong and flexible. We were pleased to announce during first quarter that Moody’s ratings upgraded our issuer rating to Baa1 (Baa1 rating) with a stable outlook. We ended the quarter with no balance drawn on our unsecured bank credit facility leaving available capacity of 675 million. Our sector leading balance sheet metrics include debt to total market capitalization of 14% at quarter end, first quarter annualized debt to EBITDA ratio of 3x and interest and fixed charge coverage of 14.8 times. We remain well positioned to pursue growth opportunities that align with our time tested Strategy. FFO for second quarter is estimated to be in the range of 230 to 238 per share. Looking ahead to the remainder of the year, we increased the midpoint of our 2026 FFO guidance to $9.52 per share excluding gains on involuntary con. The updated Midpoint represents a 6.4% increase over 2025 actual results and is 30 basis points ahead of our initial guidance. We are projecting strong cash same property net operating income results to continue and we raised the midpoint of our guidance assumption by 10 basis points to 6.2%. These strong projections are driven by rental rate increases on in place and budgeted leases and expected same property occupancy of 96.4% which is also 10 basis points ahead of our initial guidance. We increased our projected 2026 development starts by $15 million to 265 million primarily driven by the 100,000 square foot pre leased building expansion that was not contemplated in our prior guidance figure. We began construction on four projects during first quarter and one project in April totaling $105 million and the remaining starts are projected for the second half of the year. While our guidance assumption for 2026 gross capital proceeds remains unchanged at $300 million. The nature of those proceeds has changed from 100% debt to a mix of debt and equity as we were opportunistic in accessing the equity market. During first quarter we issued $70 million in common stock through our common equity offering program at over $191 per share. We currently have an additional $50 million in forward equity sale agreements available for issuance at over 196 per share. We will continue to evaluate capital sources and remain flexible as the year progresses. Our rent collections currently remain healthy and our tenant watch list is steady. We are pleased with our strong performance in first quarter and as we look ahead through the remainder of the year 2026. We are confident in our experienced team and well located high quality portfolio to position us for long term success. Now Marshall will make some final comments.
Marshall Loeb (CEO)
Thanks Stacy. In closing, we’re pleased with how the year has begun. Market demand has momentum and we’re hopeful it’s sustainable regardless of the environment. Our goals are to drive FFO per share growth while retaining portfolio quality. If we do those, we’ll continue creating Net Asset Value (NAV) growth for our shareholders. Our executive team restructuring is nicely falling into place. I’m excited to welcome Jim Trainor to the team. I also want to express my and the company’s appreciation to John Coleman who is entering a well earned retirement on June 30th. And John, we still have your mobile number. Stepping back from the near term, I like our positioning as our portfolio is benefiting from several long term positive secular trends such as population migration, near shoring and onshoring trends to now include data center suppliers, evolving logistics chains and historically lower shallow bay market vacancies. We also have a proven management team with a long term public track record. Our portfolio quality in terms of buildings and markets improves each quarter, our balance sheet is stronger than ever and we’re upgrading our diversity in both our tenant base as well as our geography. We’d now like to take your questions.
OPERATOR
Thank you ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press Star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press Star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. We kindly ask that callers limit themselves to one question at a time. If you have a follow up question, please rejoin the queue. One moment please for your first question. Your first question comes from Craig Mailman with Citigroup. Your line is now open.
Craig Mailman (Equity Analyst)
Good morning. I guess Marshall and Reed, you both kind of pointed to development leasing taking a little bit longer still, but you guys had a significant ramp in kind of the activity since early February. Can you just talk a little bit about the gestation period on the deals that got done? And are you seeing some tenants start to move a little bit quicker now that the supply pipeline is emptying out here?
Reed Dunbar (President)
Yeah. Morning, Craig. This is Reed. Thanks for the question. And we are actually seeing some tenants move a little bit quicker than we have in the past. We had a good example of that in our Atlanta. One of one of our Atlanta projects where we had a vacancy in our second gen or first gentleman development portfolio. And we had two users that came and both wanted the space. And we were able to create some competition. The team did locally and ended up signing 107,000 square feet in that project. And that happened quicker than we anticipated, which was a good sign. And so as we look out in the market, as the demand continues to pick up and supply continues to get a little tighter, we anticipate that, that, that decision cycle will start to shorten some.
Craig Mailman (Equity Analyst)
Just if I could sneak a second quick one in, how much availability do you still have left of the projects that you delivered last year that came in a little bit under leased?
Reed Dunbar (President)
Yeah, so what we’re calling, you know, first gen space, we’ve got about 775,000 square feet.
Craig Mailman (Equity Analyst)
Great, thank you.
OPERATOR
Your next question comes from Blaine Heck with Wells Fargo. Your line is now open.
Blaine Heck (Equity Analyst)
Great, thanks. And good morning. Just with respect to guidance, can you talk about how much speculative development leasing is assumed in guidance for the rest of the year and whether at this point you think that could be a risk or a source of upside?
Stacy Tyler (Chief Financial Officer)
Hey, Blaine, good morning. Yes, we have about 4 cents of NOI for speculative development leasing in the second half of the year. We’re not assuming anything in second quarter at this point for spec development leasing, and it ramps up the third and fourth quarter for a total of 4 cents for the year. We see that more as an opportunity. Certainly we have work to do and we need to sign some more leases to achieve that 4 cents. But we believe that that’s an opportunity between the projects that we have currently in the development pipeline and the 775,000 that Reid referred to in first generation. So definitely see that as an opportunity, particularly if the pace of development leasing can remain strong and steady as it has been over the last couple months.
OPERATOR
Your next question comes from Samir Kanal. With bank of America. Your line is now open.
Samir Kanal (Equity Analyst)
Good morning, everybody. I guess, Marshall, it’s certainly good to see the development leasing picking up here, but maybe expand on your comments on kind of what you’re seeing from the customer as it relates to kind of overall decision making given kind of inflation, given macro volatility, I guess what are you seeing on the ground? Thanks.
Marshall Loeb (CEO)
You’re welcome. Good morning, Samir. I agree with Reid and that maybe going back a year ago after Liberation Day, it felt like later into second quarter and certainly through third quarter, things were slow. You know, we were getting small development leases signed. We weren’t seeing many expansions. Fourth quarter it picked up. That was our by far our biggest development leasing quarter. And then again then we beat that number this quarter. So a couple of strong quarters in a row where some of that development leasing, we picked up a couple of expansions. You saw the building expansion in Arizona. There’s one in Texas where it’s an expansion. So it feels like in spite of and I got the question, you know, the unrest in the Middle East, is it slowing down decision making? And I could give you two answers. The current one is no, it really we have not seen people say I’m not ready to make a decision because of that or not yet. We do worry about gasoline prices and what impact, how that will affect the consumer over time could affect us. But today I feel better, for what it’s worth, I feel better about this year today than when we had our fourth quarter call, in spite of all the headlines and things like that. And maybe I’m overanalyzing our customers. People are more, they need to run their businesses and they’re getting more used to the volatile headlines that the Strait of Hormuz is open, it’s closed, it’s this and that. And that business is generally good. And we’re seeing new leasing and develop and expansions again, a little more than we did a year ago. I just hope it lasts.
OPERATOR
Thank you, Marshall. Sure. You’re welcome. Your next question comes from Todd Thomas with KeyBanc. Your line is now open.
Todd Thomas (Equity Analyst)
Yeah, thanks. Marshall. You mentioned seeing some tailwinds around demand due to data center suppliers. And, you know, I was just curious if you could talk about that a little bit, perhaps quantify or characterize that demand a bit in the context of what was, you know, what’s been signed, you know, sort of year to date, whether it’s data center suppliers or advanced manufacturing. Any thoughts there?
Marshall Loeb (CEO)
Good morning, Todd. I think it started with us with maybe the advanced manufacturing or the chip plants. We’ve got suppliers in Phoenix and in Dallas for the chip plants that kind of picked up maybe two years ago. Call it. I’m trying to think the exact time frame has been. And those are still tenancies we have today. And then with data centers we’re seeing mostly on the supply side, but a couple that you saw and our kind of on our development program it’s more H Vac or racking equipment and things like that where a couple of full building users that were related to data center basically that have been built and they’re supplying them. We’ve got another prospect or two that are related to data center construction. So we’re look, I’m thrilled to have a new source of demand and we what we love about our buildings is how flexible the use can be that our long standing tenants are still there. Look, I’d love home building to pick up again one of these days, but I’m glad that we picked up more and more advanced manufacturing and now we seem to be picking up ancillary demand which has been really helpful last quarter to relate it to all the data centers that are being built around our markets.
Reed Dunbar (President)
Yeah, maybe just to add a stat to help quantify some of the numbers of our 685,000 square feet of development leasing that we’ve …
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