Eastgroup Properties Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Craig Mailman - Citigroup - Analyst : Hey, good morning. Just want to follow up on the acquisitions, you know, it looks like you guys have close to $240 million implied in the guidance there. I know you said you give a little bit more info as you get closer to closing, but maybe there's just a little bit more than, than what you've already given in terms of timing, kind of, you know, expected yields, whether these are kind of stabilized versus value add, just anything that you can offer. And I guess, you know, as another part of that, but you said $275 million of expected capital proceeds and the balance, what's the that difference between kind of the acquisition guidance and that's right. Is it just money to pay for continued construction?

Question: Craig Mailman - Citigroup - Analyst : And just to clarify Marshall that higher 5% cap rate, that's if you roll the rents to market, right? That's a stabilized yield.

Question: Craig Mailman - Citigroup - Analyst : Great. Thank you.

Question: Rich Anderson - Wedbush Securities - Analyst : Thanks. Good morning everyone. So, last quarter, Marshall, you described the environment is improving slowly. And today, in this one, you said the word choppy. I'm wondering if there was in your mind an any kind of sort of reversal of trend between the second quarter and third-quarter. And then related to that when you, when you mentioned, you know, sort of your optimism for 2025. How are things trending into next year now versus how you viewed them trending three months ago? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 3:00PM, EGP.N - Q3 2024 Eastgroup Properties Inc Earnings Call

Question: Rich Anderson - Wedbush Securities - Analyst : Okay, great. Thanks very much.

Question: Andrew Berger - Bank of America - Analyst : Hey, good morning. Just maybe following up on the last question. I'm curious if you know, the brokers have, have talked at all about excess capacity or slack in the system if that's, you know, feeding into the slower decision making. You know, we've heard this a bit throughout the sector but not sure if it's as big of a factor for some of the smaller spaces. Just curious if you have any thoughts on that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 3:00PM, EGP.N - Q3 2024 Eastgroup Properties Inc Earnings Call

Question: Andrew Berger - Bank of America - Analyst : Got it. Thank you very much.

Question: Samir Khanal - Evercore ISI - Analyst : Hey, good morning, Marshall. Just in terms of market rents here, I mean, what's your updated view? You know, I know in the past you've talked about certainly being, I think correct me if I'm wrong, like mid-single digits, is that kind of where you are today or have you sort of revised your views given, what you're seeing on the demand side? Thanks.

Question: Samir Khanal - Evercore ISI - Analyst : Thank you.

Question: Todd Thomas - KeyBanc Capital Markets Inc - Analyst : Hi, thanks. Good morning. I wanted to ask about development and development leasing. You had a couple of leases signed in the quarter, but activity in the lease up portfolio slowed a little bit relative to prior quarters. And you've generally been ahead of conversions with regard to leasing so far during the cycle. Do you see that changing as you look to the schedule for, anticipated conversions in '25 which, which really starts to pick up a little bit into the second-quarter. And then I'm also just curious if you could elaborate a little bit on, on development starts as we, you know, think about 2025, a little bit just vis a vis your comments.

Question: Blaine Heck - Wells Fargo - Analyst : Great, thanks. Good morning. Marshall, you've alluded to the election a bit, but I think the discussions around the impact to industrial have had been focused on potential impacts from increased tariffs. So just wanted to get your updated thoughts on the subject and whether you have any concerns about the potential impact to your business, your markets or your tenants or on the flip side, maybe even think it could be an additional positive driver related to the near shoring and on shoring impact.

Question: Michael Carroll - RBC capital markets - Analyst : Yeah, thanks. I want to dive a little bit deeper into the guidance that you provided. I know there is two other updates that the lease termination income increased a decent amount. And then also your reserves for bad debt increased a smaller amount. Can you provide some color on what drove those termination fees higher and, and what's potentially driving bad debt a little bit higher?

Question: Michael Carroll - RBC capital markets - Analyst : Okay, great. Thanks, Brent.

Question: Alexander Goldfarb - Piper Sandler - Analyst : Hey, good morning. So just sort of wrapping it all together. Brent sounds like bad debt is really not a big issue and it sounds like it's mostly some California specific tenants that you're dealing with and then overall demand for the portfolio overall sounds pretty good. I didn't hear you guys talk about expectations for rent, you know, declines your ability not to push rent. So is this really just sort of a macro thing where overall tenant demand is for the most part good? You're a little nervous on development just because tenants aren't there to pre lease, but you're comfortable boosting acquisition. So really overall, it sounds like the portfolio is performing well. What you need to see is just some increased tenant confidence. It doesn't sound like there's tenant credit issues. It just sounds like people are operating well and you're just looking for them to feel better about expanding. It sounds like that's really the key.

Question: Alexander Goldfarb - Piper Sandler - Analyst : Okay, thanks and hopefully get some chicken soup for your throat.

Question: Alexander Goldfarb - Piper Sandler - Analyst : Sorry.

Question: Nick Thillman - Robert W. Baird - Analyst : Hey, good morning guys just wanted to touch on development because fourth-quarter still implies almost $125 million of starts. Should we just view this as like where, where the field kind of seeing the demand is that in your traditional Florida and Texas markets where the current pipeline is? Are you starting to see a little bit broadening out of the opportunity set?

Question: Michael Mueller - J.P. Morgan - Analyst : Yeah, Hi, speaking with development, it, it looks like your lease up developments have about a 68 yield expectation. What's under construction is about a 7.5%? I guess how much of the pickup there is being driven by the movement in the 10 year versus kind of what you're perceiving for market risks. And as a follow up to that is as you're thinking about new projects, you may go on the ground on is 7.5% more in the zip code of what you're expecting there.

Question: Michael Mueller - J.P. Morgan - Analyst : Got it. Okay. Thank you.

Question: Jessica Zheng - Green Street - Analyst : Good morning. So you guys have done a few acquisitions and developments in Austin this year and you also have a pretty large land bank there as well. Just knowing it's been a market with relatively higher supply deliveries lately. Could you please just share some color around what you guys are seeing there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 3:00PM, EGP.N - Q3 2024 Eastgroup Properties Inc Earnings Call

Question: Jessica Zheng - Green Street - Analyst : Great. Thank you.

Question: John Kim - BMO Capital Markets - Analyst : Thank you. Just wanted to get back to bad debt which looks like it's about 65 basis points of APR this year. Where does that compare to your historical average? How do you see that trending next year? And do you have any exposure to some of the bankers, bankers that have been out there including [cons]. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 3:00PM, EGP.N - Q3 2024 Eastgroup Properties Inc Earnings Call

Question: John Kim - BMO Capital Markets - Analyst : Some of the second part of bankruptcies.

Question: John Kim - BMO Capital Markets - Analyst : If I could just follow up, do you have like a watch list that you could share with us and how that's trended?

Question: John Kim - BMO Capital Markets - Analyst : Sorry, I just wanted to follow up. So I just wanted to clarify what you mentioned earlier, Brent, but is cons included in the bad debt reserve for the year.

Question: John Kim - BMO Capital Markets - Analyst : Right? Okay. Thank you.

Question: Brendan Lynch - Barclays - Analyst : Great. Thanks for taking my question. This has been a topic with some of your peers and I was wondering if you could talk about the potential for converting some of your land bank into data center assets. What markets that makes sense and what are the considerations you're balancing when thinking about these opportunities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 3:00PM, EGP.N - Q3 2024 Eastgroup Properties Inc Earnings Call

Question: Brendan Lynch - Barclays - Analyst : Great. Thank you.