Mike Miller

Mike Miller asked if the 9% pre-leasing in EastGroup Properties' overall development pipeline (under construction and recently completed) influences decisions on new starts, specifically if there's a cap on spec development lease-up space or if decisions are purely opportunity-driven.

Answer

Marshall Loeb, CEO, confirmed that both factors play a role. He stated that EastGroup tracks risk at the entity level, considering unleased buildings and development as a percentage of assets, and has remained below internal thresholds. Day-to-day decisions are driven by park-by-park and submarket-by-submarket activity, aiming to stay slightly ahead of demand without pushing excess supply. Loeb explained that development starts were slowed because existing inventory is available, and while the operating portfolio has outperformed, development revenue has been lighter, creating future opportunity. He emphasized the strategy of going as fast or slow as the market dictates, prioritizing patience over being too early.

Mike Miller asked if the 9% pre-leasing level in the overall development pipeline (under construction and recently completed) influences decisions on new starts, or if new starts are purely opportunity-driven. He also inquired if there's a specific cap on spec development lease-up space.

Answer

CEO Marshall Loeb confirmed that both factors play a role. The company tracks risk at an entity level, considering unleased buildings and development as a percentage of assets, and has thankfully remained below historical caps. Day-to-day decisions are driven by park-by-park and submarket-by-submarket activity, with new starts being 'pulled' by field teams needing inventory. Loeb stated that they have slowed the 'manufacturing line' when inventory is available, preferring to be slightly late rather than too early, and are waiting for prospects to convert to signed leases to trigger the next round of starts.