EastGroup Properties Surpasses Q4 Earnings Expectations with Resilient Industrial Market Performance
EastGroup Properties, Inc., a leading industrial real estate investment trust (REIT), has reported a strong fourth quarter in 2024, exceeding expectations and solidifying its position as a major player in the industrial market. The company's President and CEO, Marshall Loeb, highlighted the quality of EastGroup Properties' portfolio and the continued resiliency of the industrial market during the recent Q4 conference call.
One of the key highlights from the quarter was the 5.9% increase in funds from operations (FFO) for the quarter and 7.9% for the year, excluding involuntary conversions in each year. This is a testament to EastGroup Properties' ability to maintain a high level of performance even in uncertain economic times.
Loeb also emphasized the company's focus on value creation through rent growth, acquisitions, and development. The company was able to raise rents throughout its portfolio, with quarterly re-leasing spreads reaching 47% GAAP and 29% cash, representing a significant increase from the previous quarter. Additionally, year-end results showed a 50%, 30% and 36% GAAP and cash re-leasing spread, respectively.
The company's geographic and revenue diversity have been key factors in its success, with the top 10 tenants making up only 7.2% of rents at year-end, down from 8.2% in 2023. This strategy has allowed EastGroup Properties to stabilize future earnings growth regardless of economic conditions.
Looking ahead, Loeb expressed optimism about the prospects for an improving economy and the lack of new supply in the industrial market. The company sees this as a potential opportunity to build on its momentum and drive further growth through acquisitions and development.
In line with this strategy, EastGroup Properties announced two major acquisition deals late last year, expanding its presence in the DFW Airport submarket and growing its stake in the [Season Valley] of Phoenix. These acquisitions were guided by a clear set of criteria, including being immediately accretive to earnings and raising the long-term growth profile of the portfolio.
EastGroup Properties' commitment to development is also driven by market demand within its parks. The company's approach has allowed it to maintain high occupancy rates, with year-end results showing 96.1% and quarterly average occupancy at 95.8%. While this represents a slight decline from Q4 2023, the company remains confident in its ability to adapt to changing market conditions.
With a record amount of square footage leased within the operating portfolio and an uptick in prospect activity, EastGroup Properties is poised for continued success in the industrial market. As Loeb noted, "Green shoots may be an overused term, but we're hopeful it continues," which should build into a stronger latter 2025 for the company.
