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EP

EASTGROUP PROPERTIES INC (EGP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered steady operating performance: GAAP diluted EPS $1.26 vs $1.13 YoY and FFO/share $2.27 vs $2.13 YoY; total revenues were $182.1M vs $162.9M YoY .
  • Versus consensus, EGP slightly beat on EPS ($1.26 actual vs $1.2505 estimate) and revenue ($182.1M actual vs $182.0M estimate); EBITDA was below S&P consensus (see Estimates Context) *.
  • Guidance was refined: FY 2025 FFO/share range raised to $8.94–$8.98 (prior $8.89–$9.03); cash same-store NOI midpoint increased to ~6.7%, while development starts were reduced to $200M (~1.5M SF) reflecting slower large-tenant decisions .
  • Catalyst: 10.7% dividend increase to $1.55/quarter (annualized $6.20) and stronger balance sheet metrics (Debt/EBITDAre ~2.9x; coverage ~16.8x), positioning the stock for defensiveness and dividend yield appeal .

What Went Well and What Went Wrong

What Went Well

  • Robust leasing spreads and same-store growth: GAAP re-leasing spreads averaged 35.9% in Q3 and cash 22.1%; cash same-store NOI rose 6.9% and straight-line 7.7% YoY .
  • Strong balance sheet and capital access: settled 647,758 forward equity shares (~$117.1M), repaid $20M notes, post-quarter repaid $75M; Debt/EBITDAre 2.9x, coverage 16.8x .
  • Management tone constructive on demand normalization: “Market demand seems to be dusting itself off… limited availability in new modern facilities will put upward pressure on rents” (Marshall Loeb, CEO) .

What Went Wrong

  • Development leasing pace slower, pushing out starts and stabilization: Q3 development starts trimmed to $27M (Dallas 161k SF) and FY starts lowered to $200M; some projects converted prior to full occupancy .
  • Large-tenant decision timelines elongated: “Leases sent out haven’t always come back… a signed lease in Texas reversed within a week,” delaying development pipeline traction .
  • Regional softness persists in California (LA negative absorption) and Denver slower, despite resilience in Phoenix/Tucson and Florida/Texas .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Consensus Q3 2025
Total Revenues ($USD)$162.9M $177.3M $182.1M $182.0M*
GAAP Diluted EPS$1.13 $1.20 $1.26 $1.2505*
FFO per Diluted Share$2.13 $2.21 $2.27 N/A
EBITDAre ($USD)$114.0M $124.0M $128.8M EBITDA $128.6M estimate vs $119.7M actual*
Average Occupancy (Operating Portfolio)96.7% 95.9% 95.7% N/A

S&P Global disclaimer: *Values retrieved from S&P Global.

KPI trends

KPIQ1 2025Q2 2025Q3 2025
Same PNOI Growth (Straight-Line)+5.3% +6.6% +7.7%
Same PNOI Growth (Cash)+5.2% +6.4% +6.9%
Re-leasing Spreads (GAAP)46.9% 44.4% 35.9%
Re-leasing Spreads (Cash)N/AN/A22.1%
% Leased (End of Period)97.3% 97.1% 96.7%
% Occupied (End of Period)96.5% 96.0% 95.9%
Retention Rate (Weighted)N/AN/A79.8%

Select market/segment indicators

Market% LeasedQ3 2025 GAAP Rental Rate ChangeQ3 2025 Cash Rental Rate Change
Dallas (TX)99.2% 36.5% 22.1%
Phoenix (AZ)100.0% 45.7% 31.8%
Orlando (FL)100.0% 19.1% 14.9%
Los Angeles (CA)99.0% 54.9% 48.9%

Notes: Market table reflects operating properties rental rate changes reported for leases signed during the period.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FFO per ShareFY 2025$8.89–$9.03 $8.94–$8.98 Raised mid-point
Cash Same PNOI GrowthFY 20256.0%–7.0% 6.4%–7.0% Midpoint raised
Avg Month-end Occupancy (Operating)FY 202595.6%–96.4% 95.6%–96.2% Slightly lowered upper bound
Development Starts (SF)FY 20251.7M SF; $215M 1.5M SF; $200M Lowered
Operating AcquisitionsFY 2025$160M $170M Raised
Operating DispositionsFY 2025$60M $50M Lowered
Gross Capital ProceedsFY 2025$265M $465M Raised
G&A ExpenseFY 2025$23.4M $23.5M Slightly raised
Dividend (Quarterly)Q3 2025$1.40 (Q2) $1.55 Raised 10.7%

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Leasing Demand & SpreadsQ1/Q2 reported strong GAAP spreads (46.9% Q1; 44.4% Q2) amid tariff-related uncertainty GAAP 35.9%, cash 22.1%; pipeline improving, smaller tenants converting faster than larger Moderating spreads; demand thawing
Development Starts & Leasing PaceQ2: starts in Nashville/Atlanta (469k SF) but cautious given macro Starts lowered to $200M; stabilization pushed for some projects; slower large-tenant decisions Pacing down near-term
Macro/Tariffs & SentimentQ1/Q2: tariff uncertainty clouded market Management sees sentiment improving; one rate cut noted; cautious optimism Improving sentiment
Regional TrendsFlorida/Texas strong; growth in Raleigh; early mentions of CA softness AZ strong, FL/TX solid; LA still weak, Denver slower Divergence persists
Costs/ConstructionN/AConstruction pricing down ~10–12% as contractors hungry; longer lead times on electrical gear Input cost tailwinds
Capital & Balance SheetQ1/Q2 forward equity use; revolver minimal Settled forwards; considering ~$200–$250M term loan at low-4% yields; coverage ~17x Ample flexibility

Management Commentary

  • CEO on portfolio positioning: “Our third-quarter results demonstrate our portfolio quality and resiliency… Quarterly releasing spreads were 36% GAAP and 22% cash… We’re pleased to see the growing pipeline” .
  • CFO on capital plan: “Guidance… FFO $2.30–$2.34 in Q4; year $8.94–$8.98… utilize credit facility ($475M capacity) and issue $200M of debt late Q4… debt-to-total market cap 14.1%, debt-to-EBITDA 2.9x, coverage 17x” .
  • CEO on secular drivers: “Limited availability… will put upward pressure on rents… portfolio benefiting from migration, near/on-shoring, evolving logistics chains” .

Q&A Highlights

  • Development leasing cadence: Management noted signed leases sometimes reversing and slower conversions; subdividing buildings (Dominguez LA) to enhance leasing flexibility .
  • Construction costs & yields: Pricing down ~10–12%; underwriting at today’s rents and costs; projects still pencil at ~7% yields; permitting/zoning getting harder .
  • Regional color: Florida, Nashville, Raleigh strong; Dallas fully leased but needs expansion land; LA negative absorption; Denver slower; AZ fully leased and pushing rents .
  • Bad debt and collections: Uncollectible rents steady at ~35–40 bps of revenue; watchlist unchanged, credit quality stable .
  • Capital markets: Revolver rate ~4.7%; potential unsecured term loan low 4.3–4.4% discussed; disciplined mix of equity/debt .

Estimates Context

  • EPS: Q3 EPS $1.26 vs S&P consensus $1.2505 → modest beat *.
  • Revenue: Q3 revenue $182.1M vs S&P consensus $182.0M → in line/slight beat *.
  • EBITDA: S&P consensus $128.6M vs S&P actual $119.7M → miss; note definitions may vary from company’s EBITDAre *.

S&P Global disclaimer: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Defensive quarter with incremental beats on EPS/revenue, guidance midpoint raised, and dividend up 10.7%; the balance sheet remains a competitive advantage for opportunistic capital deployment .
  • Leasing momentum is improving, led by small tenants; slower large-tenant decisions temper near-term development starts, but supply constraints and permitting hurdles support medium-term rent growth .
  • Regional dispersion continues: overweight to high-growth Sunbelt markets is helpful; caution warranted in LA/Denver, while AZ/FL/TX show strength .
  • Cash same-store NOI growth trajectory strengthened (midpoint to ~6.7%); retention near 80% suggests embedded rent growth and stable occupancy into Q4 .
  • Capital plan implies potential term loan at attractive rates; Debt/EBITDAre ~2.9x and coverage ~16.8x afford flexibility for acquisitions and selective development .
  • Near-term trading: dividend increase and raised FFO midpoint are supportive; watch for signs of accelerated large-tenant leasing and stabilization timelines as catalysts .
  • Medium-term thesis: limited new supply, zoning/permitting constraints, and secular logistics/onshoring trends underpin rent growth and NAV compounding, especially across EGP’s shallow-bay footprint .