Q2 Financial Results: EastGroup Properties

The last time we looked at EastGroup Properties (NYSE: EGP), we had to put it on our watchlist. We believed it had great growth rates, and indeed, it was managing as well as the rest of the industrial REIT space. Last week, EastGroup released its second-quarter earnings results, so over the next weeks, we will revisit the sector and check to see if that has changed, thus gaining a clearer idea of the sector performance.

EastGroup has one of the best metrics in its sector in terms of occupancy, which management thinks will continue 96 percent although there were some move-outs in Houston.

FFO-per-share for the quarter was $0.92 — a 9.5 percent increase over $0.84 for the same quarter last year. Price-to-FFO is now 16.4× — one of the lowest entry points. Debt-to-total market capitalization inched upward from 33.1 to 34.9 percent between the first two quarters of 2015.

Management is not concerned that the industrial real estate cycle is ending. The markets of most concern — especially Texas, where over ⅓ of the annualized base rent is generated — show no signs of overdevelopment as supply has declined and absorption still exists. Management added that the decrease in oil prices has not affected them last year or recently, either in Dallas or in San Antonio.

Additionally, management thinks the share drop will not affect development in the long term. During the first half, share prices dropped 11 percent, compared with 11 percent, on average, for peers. STAG Industrial was pounded and declined 18%.

Check out on the calendar below other second-quarter release dates for pure-play Industrial REITS whose equity market capitalization exceeds $1 billion.

  • Prologis, July 21
  • STAG Industrial, July 23
  • DCT Industrial, July 30
  • First Industrial Realty, July 30

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Source: EastGroup Properties, Fast Graphs

Written by Heli Brecailo

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.​