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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.07pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.07pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.07pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+3
delay+2
disrupt+2
impair+1
delays+1
Positive rising
efficiency+1
Risk Factors (Item 1A)
6,063 words
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+2
closing+1
closed+1
Positive rising
improvement+1
positive+1
MD&A (Item 7)
7,841 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of results of operations and financial condition should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.
In addition to the other information contained or incorporated by reference in this document, readers should carefully consider the following risk factors. Any of these risks or the occurrence of any one or more of the uncertainties described below could have a material adverse effect on the Company’s financial condition and the performance of its business. Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial also may impair its business operations.
Real Estate Industry Risks
We face risks associated with local real estate conditions in areas where we own properties. We may be adversely affected by general economic conditions and local real estate conditions. For example, an oversupply of industrial properties in a local area or a decline in the attractiveness of our properties to tenants would have a negative effect on us. Other factors that may affect general economic conditions or local real estate conditions include:
• population and demographic trends;
• employment and personal income trends;
• income and other tax laws;
• changes in interest rates and availability and costs of financing;
• increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents;
• changes in the price of oil;
• construction costs; and
• weather-related and climate-related events.
We may be unable to compete for properties and tenants . The real estate business is highly competitive. We compete for interests in properties with other real estate investors and purchasers, some of whom have greater financial resources, revenues and geographical diversity than we have. Furthermore, we compete for tenants with other property owners. All of our industrial properties are subject to significant local competition. We also compete with a wide variety of institutions and other investors for capital funds necessary to support our investment activities and asset growth.
We are subject to significant regulation that constrains our activities. Local zoning and land use laws, environmental statutes and other governmental requirements restrict our expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the ADA may require us to modify our properties, and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose additional requirements. We cannot predict what requirements may be enacted or what changes may be implemented to existing legislation.
Risks Associated with Our Properties
We may be unable to lease space on favorable terms or at all. When a lease expires, a tenant may elect not to renew it. We may not be able to re-lease the property on favorable terms, if we are able to re-lease the property at all. The terms of renewal or re-lease (including the cost of required renovations and/or concessions to tenants) may be less favorable to us than the prior lease. We also routinely develop properties with no pre-leasing. If we are unable to lease all or a substantial portion of our properties, or if the rental rates upon such leasing are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and our ability to make expected distributions to stockholders may be adversely affected.
We may be affected negatively by tenant bankruptcies and leasing delays. At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may result in a decline in the demand for space at our industrial properties. As a result, our tenants may delay lease commencement, fail to make rental payments when due, or declare bankruptcy. Any such event could result in the termination of that tenant’s lease and losses to us, and funds available for distribution to investors may decrease. We receive a substantial portion of our income as rents under mid-term and long-term leases. If tenants are unable to comply with the terms of their leases for any reason, including because of rising costs or falling sales, we may deem it advisable to modify lease terms to allow tenants to pay a lower rent or a smaller share of taxes, insurance and other operating costs. If a tenant becomes or , we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any proceeding relating to the tenant. We also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes , the federal code will apply and, in some instances, may restrict the amount and recoverability of our the tenant. A tenant’s on its obligations to us could affect our financial condition and the cash we have available for distribution.
We face risks associated with our property development. We intend to continue to develop properties where we believe market conditions warrant such investment. Once made, our investments may not produce results in accordance with our expectations. Risks associated with our current and future development and construction activities include:
• the availability of favorable financing alternatives;
• the risk that we may not be able to obtain land on which to develop or that due to the increased cost of land, our activities may not be as profitable;
• construction costs exceeding original estimates due to tariffs or elevated interest rates and increases in the costs of materials and labor;
• disruption in supply and delivery chains;
• construction and lease-up delays resulting in increased debt service, fixed expenses and construction costs;
• expenditure of funds and devotion of management’s time to projects that we do not complete;
• fluctuations of occupancy and rental rates at newly completed properties, which depend on a number of factors, including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower return on our investment; and
• complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits, including delays or challenges arising from community opposition, administrative appeals, legal proceedings or other third-party actions that may increase costs, delay project completion or prevent development altogether.
We face risks associated with property acquisitions . We acquire individual properties and portfolios of properties and intend to continue to do so. Our acquisition activities and their success are subject to the following risks:
• when we are able to locate desired property, competition from other real estate investors may significantly increase the purchase price;
• acquired properties may fail to perform as we project;
• the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;
• acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures;
• we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected; and
• we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, to the transferor with respect to unknown liabilities. As a result, if a claim were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.
Coverage under our existing insurance policies may be inadequate to cover losses, or we may not be able to obtain adequate insurance for certain properties in the future . We generally maintain insurance policies related to our business, including casualty, general liability and other policies, covering our business operations, employees and assets as appropriate for the markets where our properties and business operations are located. However, we would be required to bear all losses that are not adequately covered by insurance. In addition, there may be certain losses that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so, or insurance coverage may not be available, including losses due to fire, floods, wind, earthquakes, acts of war, acts of terrorism or riots. If an uninsuredloss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could the capital we invested in the properties, as well as the anticipated future revenue from the properties. In addition, if the properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were .
We face risks due to lack of geographic and real estate sector diversity. Substantially all of our properties are located in high-growth regions of the United States with an emphasis in the states of Texas, Florida, California, Arizona and North Carolina. As of December 31, 2025, our largest markets were Houston and Dallas. We owned operating properties totaling 7,108,000 square feet in Houston and 6,428,000 square feet in Dallas, which represent 9.5% and 10.9%, respectively, of the Company’s total Real estate properties based on percentage of total annualized base rent (as defined in Item 2. Properties). A downturn in general economic conditions and local real estate conditions in these geographic regions, as a result of oversupply of or reduced demand for industrial properties, local business climate, business layoffs and changing demographics, would have a particularly strongadverse effect on us. In addition, our investments in real estate assets are concentrated in the industrial distribution sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included other sectors of the real estate industry.
We face risks due to the illiquidity of real estate which may limit our ability to vary our portfolio. Real estate investments are relatively illiquid. Our ability to vary our portfolio in response to changes in economic and other conditions will therefore be limited. In addition, because of our status as a REIT, the Internal Revenue Code limits our ability to sell our properties. If we must sell an investment, we cannot ensure that we will be able to dispose of the investment on terms favorable to the Company.
We are subject to environmental laws and regulations. Current and previous real estate owners and operators may be required under various federal, state and local laws, ordinances and regulations to investigate and clean up hazardous substances released at the properties they own or operate. They may also be liable to the government or to third parties for substantial property or natural resource damage, investigation costs and cleanup costs. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of such hazardous substances. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may adversely affect the owner’s ability to use, sell or lease real estate or to borrow using the real estate as collateral. We have no way of determining at this time the magnitude of any potential liability to which we may be subject arising out of environmental conditions or violations with respect to the properties we currently or formerly owned. Environmental laws today can impose liability on a previous owner or operator of a property that owned or operated the property at a time when or toxic substances were disposed of, released from, or present at the property. A conveyance of the property, therefore, may not relieve the owner or operator from liability. Although ESAs have been conducted at our properties to identify potential sources of contamination at the properties, such ESAs do not reveal all environmental liabilities or compliance that could arise from the properties. Moreover, material environmental liabilities or compliance may exist, of which we are currently , that in the future may have a material effect on our business, assets or results of operations.
Climate change and its effects, including compliance with new laws or regulations such as “green” building codes, may require us to make improvements to our existing properties or result in unanticipatedlosses that could affect our business and financial condition. Climate-related regulatory, legal or market initiatives, including evolving energy efficiency standards, emissions reduction requirements, benchmarking or reporting obligations, or tenant-driven sustainability expectations, could require additional capital expenditures, operational changes or increased administrative costs. To the extent that climate change causes an increase in catastrophic weather events, such as severe storms, fires or floods, our properties may be susceptible to an increase in weather-related damage. Even in the absence of direct physical damage to our properties, the occurrence of any natural disasters or a changing climate in the area of any of our properties could have a material effect on business, supply chains and the economy generally. Climate change could cause an increase in property and casualty insurance premiums or impact our ability to obtain insurance. The potential impacts of future climate change on our properties could affect our ability to lease, develop or sell our properties or to borrow using our properties as collateral. Additionally, climate-related considerations may influence tenant location decisions, lease terms, property valuations or lender underwriting standards, which could affect demand for our properties or the availability and cost of capital. In addition, any proposed legislation enacted to address climate change could increase the costs of energy, utilities and overall development. The resulting costs of any proposed legislation may affect our or our tenants' financial position, results of operations and cash flows.
Financing Risks
We face risks associated with the use of debt to fund acquisitions and developments, including refinancing risk. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In addition, certain of our debt will have significant outstanding principal balances on their maturity dates, commonly known as “balloon payments.” Therefore, we will likely need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of the existing debt.
We face risks associated with our dependence on external sources of capital. In order to qualify as a REIT, we are required each year to distribute to our stockholders at least 90% of our ordinary taxable income, and we are subject to tax on our income to the extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs from cash retained from operations. As a result, to fund capital needs, we rely on third-party sources of capital, which we may not be able to obtain on favorable terms, if at all. Our access to third-party sources of capital depends upon a number of factors, including (i) general market conditions; (ii) the market’s perception of our growth potential; (iii) our current and potential future earnings and cash distributions; and (iv) the market price of our capital stock. Additional debt financing may negatively impact our financial ratios, such as our debt-to-total market capitalization ratio, our debt-to-EBITDAre ratio and our fixed charge coverage ratio.
Covenants in our credit agreements could limit our flexibility and adversely affect our financial condition . The terms of our various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining minimum debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations. If we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flow and our financial condition would be adversely affected.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all. Our credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analysis of us. Our credit ratings can affect the amount and type of capital we can access, as well as the terms of any financings we may obtain. There can be no assurance that we will be able to maintain our current credit ratings. In the event our current credit ratings deteriorate, it may be more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. Also, a downgrade in our credit ratings would trigger additional costs or other potentially negative consequences under our current and future credit facilities and debt instruments.
Increases in interest rates would increase our interest expense. At December 31, 2025, we had $18,845,000 variable rate debt outstanding not protected by interest rate hedge contracts. We may incur variable rate debt in the future. If interest rates increase, then so would the interest expense on our unhedged variable rate debt, which would adversely affect our financial condition and results of operations. From time to time, we manage our exposure to interest rate risk with interest rate hedge contracts that effectively fix or cap a portion of our variable rate debt. In addition, we refinance fixed rate debt at times when we believe rates and terms are appropriate. Our efforts to manage these exposures may not be successful. Our use of interest rate hedge contracts to manage risk associated with interest rate volatility may expose us to additional risks, including a risk that a counterparty to a hedge contract may fail to honor its obligations. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the impact on our results of operations or financial condition. of interest rate hedge contracts typically involves costs, such as transaction fees or costs.
The number of shares of our common stock available for future sale and future offerings of debt or equity securities may be dilutive to existing stockholders and adversely affect the market price of our common stock. Our ability to execute our business strategy depends on our access to an appropriate blend of equity and debt financing, including common and preferred stock, lines of credit and other forms of secured and unsecured debt. We have filed a registration statement with the SEC allowing us to offer, from time to time, an indefinite amount of equity securities on an as-needed basis, including shares under our at-the-market (“ATM”) program. Sales of a substantial number of shares of our common stock (or the perception that such sales might occur), the issuance of common stock in connection with acquisitions and other equity issuances may dilute the holdings of our existing stockholders or reduce the market prices of our securities, or both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of future offerings reducing the market prices of our securities and diluting their proportionate ownership.
The lack of certain limitations on our debt could result in our becoming more highly leveraged . Our governing documents do not limit the amount of indebtedness we may incur. Accordingly, we may incur additional debt and would do so, for example, if it were necessary to maintain our status as a REIT. We might become more highly leveraged as a result, and our financial condition and cash available for distribution to stockholders might be negatively affected and the risk of default on our indebtedness could increase.
General Risk Factors
Inflation and related volatility in the economy could negatively impact our tenants, our results of operations and the value of our publicly-traded equity securities. Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any fiscal or other policy interventions by the U.S. government in reaction to such events, could negatively impact our tenants’ businesses or our results of operations. Changes in trade policy, including the imposition, expansion or modification of tariffs on imported goods, could further increase costs for certain of our tenants and could disrupt tenant inventory strategies, operating margins or expansion plans. Most of our leases require the tenants to pay their pro rata share of operating expenses, including real estate taxes, insurance and common area maintenance, although a limited number of tenants have capped the amount of these operating expenses they are responsible for under their lease. As a result, we believe that most of our leases mitigate our exposure to increases in costs and operating expenses resulting from inflation. However, there can be no assurance that our tenants would be able to absorb these expense increases and be able to continue to pay us
their portion of operating expenses, capital expenditures and rent. In addition, while most of our leases provide for scheduled rent increases, high levels of inflation could outpace these increases. To the extent tariffs or other trade restrictions contribute to sustained inflationary pressures or increased costs across supply chains, our tenants' ability to absorb such costs and maintain their operations could be adversely affected. As a result, our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our minimum debt service obligations and to pay dividends and distributions to shareholders could be adversely affected over time. There is no guarantee that we will be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation.
Additionally, inflationary pricing may have a negative effect on the construction costs necessary to complete our development projects, including, but not limited to, costs of construction materials, labor and services from third-party contractors and suppliers. Tariffs on construction materials, equipment or component parts, or supply-chain disruptions associated with trade policy changes, could further increase development and redevelopment costs or delay project timelines. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development and value-add projects. Although the Company has an obligation to complete development projects currently under construction, the Company does not have any obligation to start new development projects in the future. EastGroup evaluates new development projects on a case-by-case basis and considering many factors, including construction costs, potential yields, and tenant demand, and no assurance can be given that inflationary pricing will not have a material adverse impact on our development pipeline and future results.
The market value of our common stock could decrease based on our performance and market perception and conditions. The market value of our common stock may be affected by the market’s perception of our operating results, growth potential, and current and future cash dividends and may also be affected by the real estate market value of our underlying assets and by equity markets in general. The market price of our common stock may also be influenced by the dividend on our common stock relative to market interest rates. Rising interest rates may lead potential buyers of our common stock to expect a higher dividend rate, which would adversely affect the market price of our common stock. In addition, rising interest rates would result in increased expense, thereby adversely affecting cash flow and our ability to service our indebtedness and pay dividends.
The state of the economy, geopolitical conflict or adverse changes in general or local economic conditions may adversely affect our operating results and financial condition. Turmoil in the global financial markets may have an adverse impact on the availability of credit to businesses generally and could lead to a further weakening of the U.S. and global economies. Geopolitical tensions, changes in international trade relationships, and the imposition or escalation of tariffs or other trade restrictions could increase economic uncertainty, disrupt global and domestic supply chains, and adversely affect business confidence and investment decisions. Currently these conditions have not impaired our ability to access capital markets and finance our operations. However, our ability to access the capital markets may be restricted at a time when we would like, or need, to raise financing, which could have an impact on our flexibility to react to changing economic and business conditions. Furthermore, changes in industry conditions including business layoffs, , industry , trade policy uncertainty, nearshoring, reshoring, logistics automation and other similar factors that affect our customers, could impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and values in our real estate portfolio and in the collateral securing any loan investments we may make. Additionally, an economic situation could have an impact on our lenders or customers, causing them to to meet their obligations to us. No assurances can be given that the effects of an economic situation will not have a material effect on our business, financial condition and results of operations.
Deficiencies in internal control over financial reporting could adversely affect our business. The design and effectiveness of our procedures for internal control over financial reporting may not prevent all misstatements, errors or misrepresentations. While our management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no assurance that our internal control over financial reporting will be effective in achieving all control objectives without fail. Deficiencies could result in restatements of our financial statements or otherwise materially adversely affect our business.
We may fail to qualify as a REIT. If we fail to qualify as a REIT, we will not be allowed to deduct dividends to stockholders in computing our taxable income and will be subject to federal income tax at regular corporate rates. In addition, we may be barred from qualification as a REIT for the four years following disqualification. The additional tax incurred at regular corporate rates would significantly reduce the cash flow available for distribution to stockholders and for debt service. Furthermore, we would no longer be required by the Internal Revenue Code to make any dividends to our stockholders as a condition of REIT qualification. If we were to fail to qualify as a REIT, subject to certain limitations in the Internal Revenue Code, corporate stockholders may be eligible for the dividends received deduction, and individual, trust and estate stockholders may be eligible to treat the dividends received from us as qualified dividend income taxable as net capital gains under the provisions of Section 1(h)(11) of the Internal Revenue Code. However, non-corporate stockholders (including individuals) will
not be able to deduct 20% of certain dividends they receive from us in accordance with Section 199A of the Internal Revenue Code. The REIT qualification requirements are extremely complex, and interpretation of the U.S. federal income tax laws governing REIT qualification is limited. Although we believe we have operated and intend to operate in a manner that will continue to qualify us as a REIT, we cannot be certain that we have been or will be successful in continuing to be taxed as a REIT. In addition, facts and circumstances that may be beyond our control may affect our ability to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the federal income tax consequences of qualification.
Legislative or regulatory action with respect to tax laws and regulations could adversely affect the Company and our stockholders. We are subject to state and local tax laws and regulations. Changes in state and local tax laws or regulations may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition, results of operations and the amount of cash available for the payment of dividends. In addition, in recent years, numerous legislative, judicial and administrative changes have been made to the federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. We cannot assure you that future changes to tax laws and regulations will not have an adverse effect on an investment in our stock.
To maintain our status as a REIT, we limit the amount of shares any one stockholder can own . The Internal Revenue Code imposes certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code) during the last half of any taxable year. To protect our REIT status, our charter prohibits any holder from acquiring more than 9.8% (in value or in number, whichever is more restrictive) of our outstanding equity stock (defined as all of our classes of capital stock, except our excess stock (of which there is none outstanding)) unless our Board of Directors grants a waiver. The ownership limit may limit the opportunity for stockholders to receive a premium for their shares of common stock that might otherwise exist if an investor were attempting to assemble a block of shares in excess of 9.8% of the outstanding shares of equity stock or otherwise effect a change in control.
Certain tax and anti-takeover provisions of our charter and bylaws may inhibit a change of our control . Certain provisions contained in our charter and bylaws and the Maryland General Corporation Law may discourage a third party from making a tender offer or acquisition proposal to us. If this were to happen, it could delay, deter or prevent a change in control or the removal of existing management. These provisions also may delay or prevent our stockholders from receiving a premium for their common shares over then-prevailing market prices. These provisions include:
• the REIT ownership limit described above;
• special meetings of our stockholders may be called only by the chairman of the board, the chief executive officer, the president, a majority of the board or by stockholders possessing a majority of all the votes entitled to be cast at the meeting;
• our Board of Directors may authorize and issue securities without stockholder approval; and
• advance-notice requirements for proposals to be presented at stockholder meetings.
In addition, Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations and certain “business combinations” and “control share acquisitions.” Our bylaws contain provisions exempting us from the Maryland Control Share Acquisition Act and the Maryland Business Combination Act. Our bylaws prohibit the repeal, amendment or alteration of our Maryland Control Share Acquisition opt out without the approval by the Company’s stockholders; however, there can be no assurance that this provision will not be amended or eliminated at some time in the future.
The Company faces risks in attracting and retaining key personnel. Many of our senior executives have strong industry reputations, which aid us in identifying acquisition and development opportunities and negotiating with tenants and sellers of properties. The loss of the services of these key personnel could affect our operations because of diminished relationships with existing and prospective tenants, property sellers and industry personnel. Unanticipated turnover or inadequate succession planning could have a material adverse impact on the Company's business plans and opportunities. In addition, attracting new or replacement personnel may be difficult in a competitive market.
We have severance and change in control agreements with certain of our officers that may deter changes in control of the Company. If, within a certain time period (as set in the officer’s agreement) following a change in control, we terminate any
such officer’s employment other than for cause, or if any such officer elects to terminate his or her employment with us for reasons specified in the agreement, we will make a severance payment equal to the officer’s average annual compensation times an amount specified in the officer’s agreement, together with the officer’s base salary and vacation pay that have accrued but are unpaid through the date of termination. These agreements may deter a change in control because of the increased cost for a third party to acquire control of the Company.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or cyber-attack of that technology could harm our business. We rely on information technology networks and systems, including the internet and third-party cloud-based service providers, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, and to maintain personal identifying information and customer and lease data. In addition to enterprise information technology systems, we rely on technology and automated systems to operate and manage certain aspects of our properties and business processes. We purchase some of our information technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of data relating to our business operations (including our financial transactions and records) and confidential customer data (including individually identifiable information relating to financial accounts). Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems’ improper functioning or damage, or the access or disclosure of our business operations or personally identifiable information such as in the event of cybersecurity . Security , including physical or electronic -ins, computer viruses, phishing or spoofing attacks by hackers and similar , can create system , , of assets or disclosure of confidential information. In some cases, it may be to anticipate or immediately detect such and the they cause. Cybersecurity could also result in to tenant operations, our ability to provide services to tenants, or require us to incur significant costs to remediate systems, notify affected parties, comply with regulatory or contractual obligations, or respond to or governmental inquiries. Techniques used to obtain access to, disable or information technology systems are increasingly diverse and sophisticated, including as a result of emerging technologies, such as artificial intelligence and machine learning. Any to maintain proper function, security and availability of our information systems could our operations, our reputation, subject us to liability or regulatory and could have a materially effect on our business, financial condition and results of operations. Additionally, any cybersecurity may be , notwithstanding any cyber liability insurance we may carry. See “Item 1C. Cybersecurity” for further discussion.
We may be impacted by changes in U.S. social, political, regulatory and economic conditions or laws and policies. Any changes to U.S. tax laws, duties, tariffs, changes to bilateral or regional trade agreements, manufacturing, and development and investment in the territories and countries where we and our customers operate could adversely affect our operating results and our business.
OVERVIEW
EastGroup’s goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location-sensitive customers (primarily in the 20,000 to 100,000 square foot range). The Company develops, acquires and operates distribution facilities, the majority of which are clustered around major transportation features in supply-constrained submarkets in high-growth regions. The Company’s core markets are in the states of Texas, Florida, California, Arizona and North Carolina.
During 2025, economic uncertainty and stock market volatility continued due to a number of factors, including persistent inflation, interest rate uncertainty, concerns about tariffs, supply chain or trade disruptions and geopolitical conflict. While these factors did not have a significant adverse impact on EastGroup’s operations during 2025, they may adversely impact the Company in the future. Most of the Company’s leases require the tenants to pay their pro rata share of operating expenses, including real estate taxes, insurance and common area maintenance, thereby reducing the Company’s exposure to increases in operating expenses resulting from inflation or other factors. Additionally, most of the Company’s leases include scheduled rent increases. In the event inflation causes increases in the Company’s general and administrative expenses, or higher interest rates increase the Company’s cost of doing business, such increased costs would not be passed through to tenants and could adversely affect the Company’s results of operations. The Company continues to monitor inflation and interest rates, as well as the uncertainty resulting from the overall regulatory and economic environment.
EastGroup believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company, and the Company also believes it can issue common and/or preferred equity and obtain debt financing on currently acceptable terms.
During 2025, EastGroup sold, and subsequently settled the issuance of, 33,120 shares of common stock directly through sales agents under its at-the-market (“ATM”) common stock offering programs at a weighted average price of $183.15 per share, providing aggregate net proceeds to the Company of $6,005,000.
During 2025, EastGroup entered into forward equity sale agreements with certain financial institutions acting as forward counterparties under its ATM programs with respect to 1,063,825 shares of common stock with an initial weighted average forward price of $181.89 per share. The Company did not receive any proceeds from the sale of common shares by the forward counterparties at the time it entered into forward equity sale agreements. Also during 2025, the Company settled outstanding forward equity sale agreements that were previously entered into by issuing 1,449,078 shares of common stock in exchange for net proceeds of approximately $258,066,000.
During 2025, EastGroup also closed $250,000,000 of unsecured debt with a weighted average effectively fixed interest rate of 4.13%. EastGroup’s financing and equity issuances are further described in Liquidity and Capital Resources .
The Company’s primary source of revenue is rental income. During 2025, EastGroup executed leases on 9,270,000 square feet of operating properties (15.1% of EastGroup’s total square footage of 61,561,000 as of December 31, 2025). For new and renewal leases signed during 2025, average rental rates increased by 40.1% as compared to the former leases on the same spaces.
On a diluted per share basis, Net Income Attributable to EastGroup Properties, Inc. Common Stockholders was $4.87 for the year ended December 31, 2025, compared to $4.66 for 2024, a 4.5% increase. See the Company’s analysis of performance trends below for further details.
Property Net Operating Income (“PNOI”) Excluding Income from Lease Terminations from same properties (defined as operating properties owned during the entire current and prior year reporting periods – January 1, 2024 through December 31, 2025), increased 7.0% for 2025 compared to 2024.
EastGroup’s operating portfolio was 97.0% leased at December 31, 2025 compared to 97.1% at December 31, 2024. Occupancy at the end of 2025 for the operating portfolio was 96.5% compared to 96.1% at December 31, 2024. As of February 10, 2026, the operating portfolio was 96.5% leased and 96.1% occupied. As of December 31, 2025, leases approximating 13.1% of the operating portfolio, based on a percentage of annualized base rent, were scheduled to expire in 2026. This percentage was reduced to 12.4% as of February 10, 2026.
The Company generates new sources of leasing revenue through its acquisitions and also its development and value-add program. The Company mitigates risks associated with development through a Board-approved maximum level of land held for development and by adjusting development start dates according to leasing activity.
During the year ended December 31, 2025, EastGroup purchased 300.4 acres of land in four markets for a total of $118,584,000. The Company began construction of a redevelopment project and six development projects containing 1,439,000 square feet in five markets. Also in 2025, the Company transferred 11 development and value-add projects (2,109,000 square feet) in seven markets from its development and value-add program to real estate properties, with costs of $279,082,000 at the date of transfer. As of December 31, 2025, EastGroup’s development and value-add program consisted of 17 projects (3,473,000 square feet) located in 12 markets. The projected total cost for the development and value-add projects, which were collectively 18.8% leased as of February 10, 2026, is $499,900,000, of which $161,317,000 remained to be invested as of December 31, 2025.
During the year ended December 31, 2025, EastGroup acquired 739,000 square feet of operating properties in three markets for a total of $143,099,000. There were no value-add property acquisitions during the period.
During the year ended December 31, 2025, EastGroup sold a 12,000 square foot operating property in San Francisco, generating gross sales proceeds of $3,573,000. The Company did not recognize a gain or loss on this disposition.
The Company typically funds its development and acquisition programs through its $675,000,000 unsecured bank credit facilities (as discussed below in Liquidity and Capital Resources ). As market conditions permit, EastGroup issues equity and/or employs fixed rate debt, including variable rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace short-term bank borrowings. In May 2025, Moody’s Ratings affirmed EastGroup's issuer rating of Baa2 and changed its rating outlook from stable to positive. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. For future debt issuances, the Company intends to issue primarily unsecured fixed rate debt, including variable rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps. The Company may also access the public debt or convertible bond markets in the future as a means to raise capital.
Investors and industry analysts following the real estate industry primarily utilize two supplemental operating performance measures in analyzing the Company's operating results: (1) funds from operations attributable to common stockholders (“FFO”), and (2) property net operating income (“PNOI”).
FFO is computed in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit’s guidance allows preparers an option as it pertains to whether gains or losses on sale, or impairment charges, on real estate assets incidental to a REIT’s business are excluded from the calculation of FFO. EastGroup has made the election to exclude activity related to such assets that are incidental to our business.
FFO is calculated as net income (loss) attributable to common stockholders computed in accordance with U.S. generally accepted accounting principles (“GAAP”), excluding gains and losses from sales of real estate property (including other assets incidental to the Company’s business) and impairmentlosses, adjusted for real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is not considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance, nor is it a measure of the Company’s liquidity or indicative of funds available to provide for the Company’s cash needs, including its ability to make distributions. The Company’s key drivers affecting FFO are changes in PNOI (as discussed below), interest rates, the amount of leverage the Company employs and general and administrative expenses.
PNOI is defined as Income from real estate operations less Expenses from real estate operations (including market based internal management fee expense) plus the Company’s share of income and property operating expenses from its less-than-wholly-owned real estate investments.
EastGroup sometimes refers to PNOI from Same Properties as “Same PNOI”; the Company also presents Same PNOI Excluding Income from Lease Terminations. Same Properties is defined as operating properties owned during the entire
current period and prior year reporting period. Properties developed or acquired are excluded until held in the operating portfolio for both the current and prior year reporting periods. Properties sold during the current or prior year reporting periods are also excluded. For the year ended December 31, 2025, Same Properties includes properties which were included in the operating portfolio for the entire period from January 1, 2024 through December 31, 2025. The Company presents Same PNOI and Same PNOI Excluding Income from Lease Terminations as a property-level supplemental measure of performance used to evaluate the performance of the Company’s investments in real estate assets and its operating results on a same property basis.
FFO and PNOI are supplemental industry reporting measurements used to evaluate the performance of the Company’s investments in real estate assets and its operating results. The Company believes that the exclusion of depreciation and amortization in the calculations of PNOI and FFO provides supplemental indicators of the properties’ performance since real estate values have historically risen or fallen with market conditions. PNOI and FFO as calculated by the Company may not be comparable to similarly titled but differently calculated measures for other REITs. Investors should be aware that items excluded from or added back to FFO are significant components in understanding and assessing the Company’s financial performance. These non-GAAP figures should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.
The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three fiscal years ended December 31, 2025, 2024 and 2023.
Years Ended December 31,
(In thousands)
NET INCOME
Gain on sales of real estate investments
Gain on sales of non-operating real estate
Interest income
Other revenue
Indirect leasing costs
Depreciation and amortization
Company’s share of depreciation from unconsolidated investment
Interest expense
General and administrative expense
Noncontrolling interest in PNOI of consolidated joint ventures
PROPERTY NET OPERATING INCOME (“PNOI”)
PNOI from 2024 and 2025 acquisitions
PNOI from 2024 and 2025 development and value-add properties
PNOI from 2024 and 2025 operating property dispositions
Other PNOI
SAME PNOI
Lease termination fee income from same properties
SAME PNOI, EXCLUDING INCOME FROM LEASE TERMINATIONS
* Same property metrics are not applicable to the year ended December 31, 2023, as the same property metrics for 2025 and 2024 are based on operating properties owned during the entire current and prior year reporting periods (January 1, 2024 through December 31, 2025).
PNOI was calculated as follows for the three fiscal years ended December 31, 2025, 2024 and 2023.
Years Ended December 31,
(In thousands)
Income from real estate operations
Expenses from real estate operations
Noncontrolling interest in PNOI of consolidated joint ventures
PNOI from 50% owned unconsolidated investment
PROPERTY NET OPERATING INCOME (“PNOI”)
Income from real estate operations is comprised of rental income, expense reimbursement pass-through income and other real estate income. Expenses from real estate operations is comprised of property taxes, insurance, utilities, repair and maintenance expenses, management fees and other operating costs. Generally, the Company’s most significant operating expenses are property taxes and insurance. Tenant leases may be net leases in which the total operating expenses are recoverable, modified gross leases in which some of the operating expenses are recoverable, or gross leases in which no expenses are recoverable (gross leases represent only a small portion of the Company’s total leases). Increases in property operating expenses are fully recoverable under net leases and recoverable to a high degree under modified gross leases. Modified gross leases often include base year amounts, and expense increases over these amounts are recoverable. The Company’s exposure to property operating expenses is primarily due to vacancies and leases for occupied space that limit the amount of expenses that can be recovered.
The following table presents reconciliations of Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO Attributable to Common Stockholders for the three fiscal years ended December 31, 2025, 2024 and 2023.
Years Ended December 31,
(In thousands, except per share data)
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
Depreciation and amortization
Company’s share of depreciation from unconsolidated investment
Depreciation and amortization attributable to noncontrolling interest
Gain on sales of real estate investments
Gain on sales of non-operating real estate
FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS
Gain on involuntary conversion and business interruptionclaims
FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS, EXCLUDING GAIN ON INVOLUNTARY CONVERSION AND BUSINESS INTERRUPTIONCLAIMS
Net income attributable to common stockholders per diluted share
FFO attributable to common stockholders per diluted share
FFO attributable to common stockholders per diluted share, excluding gain on
involuntary conversion and business interruptionclaims
Diluted shares for earnings per share and funds from operations
The Company analyzes the following performance trends in evaluating the revenues and expenses of the Company:
• Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the year ended December 31, 2025 was $257,402,000 ($4.88 per basic and $4.87 per diluted share) compared to $227,751,000 ($4.67 per basic and $4.66 per diluted share) for 2024. See Results of Operations for further analysis.
• The change in FFO per diluted share represents the increase or decrease in FFO per diluted share from the current year compared to the prior year. For 2025, FFO was $8.98 per diluted share compared with $8.35 per diluted share for 2024, an increase of 7.5%. FFO, Excluding Gain on Involuntary Conversion and Business InterruptionClaims, was $8.95 per diluted share for the year ended December 31, 2025 compared to $8.31 per diluted share for 2024, an increase of 7.7%. FFO increased during the year ended December 31, 2025, as compared to 2024, primarily due to the
increase in PNOI and the decrease in interest expense, partially offset by an increase in general and administrative expense.
• For the year ended December 31, 2025, PNOI increased by $63,350,000, or 13.6%, compared to 2024. PNOI increased $29,889,000 from same property operations, $23,178,000 from 2024 and 2025 acquisitions and $11,504,000 from newly developed and value-add properties.
• The change in Same PNOI represents the PNOI increase or decrease for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2024 through December 31, 2025). Same PNOI, excluding income from lease terminations, increased 7.0% for the year ended December 31, 2025, compared to 2024.
• Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2024 through December 31, 2025). Same property average occupancy for the year ended December 31, 2025 was 96.5% compared to 96.8% for 2024.
• The same property average rental rate calculated in accordance with GAAP represents the average annual rental rates of leases in place for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2024 through December 31, 2025). The same property average rental rate was $8.81 per square foot for the year ended December 31, 2025, compared to $8.25 per square foot for the year ended December 31, 2024.
• Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period. Occupancy at December 31, 2025 was 96.5%. Quarter-end occupancy ranged from 95.9% to 96.5% over the previous four quarters ended December 31, 2024 to September 30, 2025.
• Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases on the same space. Rental rate increases on new and renewal leases (15.1% of total square footage) averaged 40.1% for the year ended December 31, 2025.
FINANCIAL CONDITION
EastGroup’s Total Assets were $5,431,807,000 at December 31, 2025, an increase of $354,331,000 from December 31, 2024. Total Liabilities increased $150,287,000 to $1,935,219,000, and Total Equity increased $204,044,000 to $3,496,588,000 during the same period. The following paragraphs explain these changes in greater detail.
Assets
Real estate properties increased $486,344,000 during the year ended December 31, 2025. The increase was primarily due to: (i) the transfer of properties from Development and value-add properties to Real estate properties ; (ii) the acquisition of operating properties; (iii) capital improvements at the Company’s properties; and (iv) costs incurred on development and value-add projects subsequent to transfer to Real estate properties discussed below. These increases were partially offset by the sale of an operating property.
During 2025, EastGroup acquired the following operating properties:
REAL ESTATE PROPERTIES ACQUIRED IN 2025
Location
Size
Date
Acquired
Cost (1)
(Square feet)
(In thousands)
Operating properties acquired
LifeScience Logistics Center
Raleigh, NC
Lumley Logistics Center
Raleigh, NC
McKinney Airport Trade Center
Dallas, TX
EastGroup Point at Cheyenne
Las Vegas, NV
Total operating property acquisitions (2)(3)
(1) Cost is calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations, and represents the sum of the purchase price, closing costs and capitalized acquisition costs. Refer to Notes 1(j) and 2 in the Notes to Consolidated Financial Statements for further details.
(2) Operating properties are defined as stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio; included in Real estate properties on the Consolidated Balance Sheets.
(3) Excludes acquired development land as discussed below.
During the year ended December 31, 2025, EastGroup sold a 12,000 square foot operating property in San Francisco, generating gross sales proceeds of $3,573,000. The Company did not recognize a gain or loss on this disposition.
During the year ended December 31, 2025, the Company made capital improvements of $75,653,000 on existing and acquired properties (included in the Real Estate Improvements table under Results of Operations ). Also, the Company incurred costs of $7,125,000 on development and value-add projects subsequent to transfer to Real estate properties ; the Company records these expenditures as development and value-add costs on the Consolidated Statements of Cash Flows.
Development and value-add properties at December 31, 2025 consisted of properties in lease-up and under construction of $338,583,000 and prospective development (primarily land) of $371,617,000. The Company’s total investment in Development and value-add properties at December 31, 2025 was $710,200,000 compared to $674,472,000 at December 31, 2024. Total capital invested for development and value-add properties during 2025 was $321,934,000, which primarily consisted of improvement costs of $196,225,000 on development and value-add properties, $118,584,000 for new land investments, and costs of $7,125,000 on properties subsequent to transfer to Real estate propertie s. The capitalized costs incurred on development and value-add projects subsequent to transfer to Real estate properties include capital improvements at the properties and do not include other capitalized costs associated with development (i.e., interest expense, property taxes and internal personnel costs).
EastGroup capitalized internal development costs of $7,451,000 during the year ended December 31, 2025, compared to $8,181,000 during 2024. The decrease was due to variations in timing and volume of development projects starting during the year ended December 31, 2025, as compared to the same period of 2024.
There were no value-add acquisitions during the year ended December 31, 2025.
Also during 2025, EastGroup purchased 300.4 acres of development land in four markets for $118,584,000. Costs associated with these acquisitions are included below in the Development and Value-Add Properties table. These increases were offset by the transfer of 11 development and value-add projects to Real estate properties with a total investment of $279,082,000 as of the date of transfer.
A summary of the Company’s Development and Value-Add Properties for the year ended December 31, 2025 follows:
Actual or Estimated Building Size
Cumulative Costs Incurred as of 12/31/2025
Projected Total Costs (1)
(Square feet)
(In thousands)
Lease-up
Under construction
Total lease-up and under construction
Prospective development (primarily land)
Total Development and value-add properties as of December 31, 2025
Total Development and value-add properties transferred to Real estate
properties during the year ended December 31, 2025
(1) Included in these costs are development obligations of $94,201,000 and tenant improvement obligations of $9,552,000 on properties under development.
(2) Represents cumulative costs at the date of transfer.
Accumulated depreciation on real estate, development and value-add properties increased $167,956,000 during 2025 due primarily to depreciation expense of $176,180,000 and partially offset by write-offs of fully depreciated assets.
Cash and cash equivalents decreased $16,522,000 during 2025. Refer to the Consolidated Statements of Cash Flows and Liquidity and Capital Resources for further details.
Other assets, net increased $17,178,000 during 2025. See Note 4 in the Notes to Consolidated Financial Statements for further details.
Liabilities
Unsecured bank credit facilities, net of debt issuance costs increased $19,844,000 during the year ended December 31, 2025, mainly due to borrowings of $340,344,000, partially offset by repayments of $321,499,000 and debt issuance cost activity during the period. The Company’s credit facilities are described in greater detail in Liquidity and Capital Resources .
Unsecured debt, net of debt issuance costs increased $103,869,000 during the year ended December 31, 2025, primarily due to closing $250,000,000 of unsecured debt, partially offset by repayments of $145,000,000 of unsecured debt and debt issuance costs activity during the period. The borrowings and repayments on Unsecured debt, net of debt issuance costs are described in greater detail under Liquidity and Capital Resources .
Accounts payable and accrued expenses increased $22,603,000 during 2025. See Note 7 in the Notes to Consolidated Financial Statements for further details.
Other liabilities increased $3,971,000 during 2025. See Note 8 in the Notes to Consolidated Financial Statements for further details.
Equity
Additional paid-in capital increased $273,399,000 during the year ended December 31, 2025, primarily due to the issuance of common stock under the Company’s ATM programs (as discussed in Note 9 in the Notes to Consolidated Financial Statements) and activity related to stock-based compensation (as discussed in Note 10 in the Notes to Consolidated Financial Statements).
Distributions in excess of earnings increased $55,781,000 during the year ended December 31, 2025, as a result of dividends on common stock of $313,183,000 exceeding Net Income Attributable to EastGroup Properties, Inc. Common Stockholders of $257,402,000.
Accumulated other comprehensive income decreased $13,596,000 during 2025. The decrease resulted from the change in fair value of the Company’s interest rate swaps (cash flow hedges) which are further discussed in Notes 11 and 12 in the Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
2025 Compared to 2024
Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the year ended December 31, 2025 was $257,402,000 ($4.88 per basic and $4.87 per diluted share) compared to $227,751,000 ($4.67 per basic and $4.66 per diluted share) for the year ended December 31, 2024. The following paragraphs provide further details with respect to these changes:
• PNOI was $528,345,000 ($10.00 per diluted share) for the year ended December 31, 2025, compared to $464,995,000 ($9.51 per diluted share) for the year ended December 31, 2024. PNOI increased $29,889,000 from same property operations, $23,178,000 from 2024 and 2025 acquisitions and $11,504,000 from newly developed and value-add properties. Income recognized from straight-lining of rent increased by $5,777,000 for the year ended December 31, 2025, as compared to the same period of 2024.
• EastGroup did not recognize Gains on sales of real estate investments during 2025. During the year ended December 31, 2024, EastGroup recognized $8,751,000 ($0.18 per diluted share) in Gains on sales of real estate investments . The Company’s sales transactions are described in Note 2 of the Notes to Consolidated Financial Statements.
• Depreciation and amortization was $216,732,000 ($4.10 per diluted share) for the year ended December 31, 2025, compared to $189,411,000 ($3.87 per diluted share) for the year ended December 31, 2024. The increase is primarily due to the operating properties acquired by the Company in 2024 and 2025 and the properties transferred from Development and value-add properties in 2024 and 2025. These increases are partially offset by operating properties sold in 2024 and 2025.
• Interest expense recognized was $32,113,000 ($0.61 per diluted share) during 2025, compared to $38,956,000 ($0.80 per diluted share) during 2024, which was a decrease of $0.19 per share. See the table below for details.
• EastGroup recognized gains on involuntary conversion and business interruptionclaims of $1,763,000 ($0.03 per diluted share) during 2025, compared to $1,708,000 ($0.03 per diluted share) during 2024. Gains on involuntary conversion and business interruptionclaims are included in Other revenue on the Consolidated Statements of Income and Comprehensive Income.
• Weighted average shares outstanding increased by 3,903,000, on a diluted basis, during 2025 compared to 2024. The increase is primarily due to issuance of shares through common stock offerings, as discussed in Liquidity and Capital Resources .
EastGroup entered into 156 leases with certain rent concessions on 4,555,000 square feet during 2025 with total rent concessions of $10,894,000 over the terms of the leases, compared to 133 leases with rent concessions on 4,932,000 square feet with total rent concessions of $12,192,000 over the terms of the leases in 2024.
The Company’s percentage of leased square footage for the operating portfolio was 97.0% at December 31, 2025, compared to 97.1% at December 31, 2024. Occupancy at the end of 2025 for the operating portfolio was 96.5% compared to 96.1% at December 31, 2024.
Interest Expense decreased $6,843,000 for the year ended December 31, 2025 compared to the year ended December 31, 2024. The following table presents the components of Interest Expense for 2025 and 2024:
Years Ended December 31,
Increase (Decrease)
(In thousands)
VARIABLE RATE INTEREST EXPENSE
Unsecured bank credit facilities interest — Variable rate
(excluding amortization of facility fees and debt issuance costs)
Amortization of facility fees — Unsecured bank credit facilities
Amortization of debt issuance costs — Unsecured bank credit facilities
Total variable rate interest expense
FIXED RATE INTEREST EXPENSE
Unsecured debt interest (excluding amortization of debt issuance costs) (1)
Amortization of debt issuance costs — Unsecured debt
Total fixed rate interest expense
Total interest
Less capitalized interest
TOTAL INTEREST EXPENSE
(1) Includes interest on the Company’s unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 12 in the Notes to Consolidated Financial Statements.
EastGroup’s variable rate interest expense increased by $1,174,000 for 2025 as compared to 2024 primarily due to an increase in average borrowings, partially offset by a decrease in the Company’s weighted average variable interest rates on its unsecured bank credit facilities as shown in the following table:
Years Ended December 31,
Increase
(Decrease)
(In thousands, except rates of interest)
Average borrowings on unsecured bank credit facilities — Variable rate
Weighted average variable interest rates
(excluding amortization of facility fees and debt issuance costs)
The Company’s fixed rate interest expense decreased by $6,110,000 for 2025 as compared to 2024 primarily as a result of the unsecured debt activity described below.
The following table presents the details of unsecured debt repayments during 2024 and 2025:
UNSECURED DEBT REPAID IN 2024 AND 2025
Interest Rate
Date Repaid
Principal Amount
(In thousands)
$50 Million Senior Unsecured Term Loan
$60 Million Senior Unsecured Notes
$60 Million Senior Unsecured Notes
$50 Million Senior Unsecured Term Loan
$20 Million Senior Unsecured Notes
$25 Million Senior Unsecured Notes
$50 Million Senior Unsecured Notes
Weighted Average Effectively Fixed Interest Rate and Total Principal
Amount for 2024 and 2025
In January 2025, the Company refinanced a $100,000,000 senior unsecured term loan, reducing the credit spread by 30 basis points to a total effectively fixed interest rate of 4.97%. The loan, which previously had five years remaining, was modified to a three year maturity with two one-year extension options, at the Company's election.
In November 2025, the Company entered into amendments related to five senior unsecured term loans totaling $475,000,000, which reduced the credit spread by 10 basis points on each loan.
During 2024, EastGroup did not enter into or refinance any unsecured debt agreements.
The decrease in interest expense from unsecured debt was partially offset by new unsecured debt obtained during the year ended December 31, 2025:
NEW UNSECURED DEBT IN 2025
Margin
Effectively Fixed Interest Rate
Date Obtained
Maturity Date
Principal Amount
(In thousands)
$100 Million Senior Unsecured Term Loan (1)
$150 Million Senior Unsecured Term Loan (1)
Weighted Average Interest Rate/Total Principal
Amount for 2025
(1) The interest rate on this unsecured term loan is comprised of Daily Secured Overnight Financing Rate ( “ SOFR ” ) plus a margin which is subject to a pricing grid for changes in the Company’s coverage ratings. The Company entered into interest rate swap agreements (further described in Note 12 in the Notes to Consolidated Financial Statements) to convert the loan’s SOFR rate to an effectively fixed interest rate. The interest rate in the table above is the effectively fixed interest rate for the loan, including the effect of the interest rate swaps, as of December 31, 2025.
EastGroup's financing and debt maturities are further described in Liquidity and Capital Resources .
Interest costs during the period of construction of real estate properties are capitalized and offset against interest expense. Capitalized interest increased by $1,907,000 for 2025 as compared to 2024, due to changes in development activity and spending.
Real Estate Improvements
Real estate improvements for EastGroup’s operating properties for the years ended December 31, 2025 and 2024 were as follows:
Estimated Useful Life
Years Ended December 31,
(In thousands)
Upgrade on acquisitions
40 years
Tenant improvements:
New tenants
Lease Term
Renewal tenants
Lease Term
Building improvements
5 - 40 years
Roofs
5 - 15 years
Parking lots
3 - 5 years
Other
5 years
Total real estate improvements (1)
(1) Reconciliation of Total real estate improvements to Real estate improvements on the Consolidated Statements of Cash Flows:
Years Ended December 31,
(In thousands)
Total real estate improvements
Change in real estate property payables
Change in construction in progress
Real estate improvements on the Consolidated Statements of Cash Flows
Capitalized Leasing Costs
The Company’s leasing costs (principally third party commissions) are capitalized and included in Other assets, net . The costs are amortized over the terms of the associated leases, and the amortization is included in Depreciation and amortization expense. Capitalized leasing costs for the years ended December 31, 2025 and 2024 were as follows:
Estimated Useful Life
Years Ended December 31,
(In thousands)
Development and value-add
Lease Term
New tenants
Lease Term
Renewal tenants
Lease Term
Total capitalized leasing costs (1)
Amortization of leasing costs
(1) Reconciliation of Total capitalized leasing costs to Leasing commissions on the Consolidated Statements of Cash Flows:
Years Ended December 31,
(In thousands)
Total capitalized leasing costs
Change in leasing commissions payables
Leasing commissions on the Consolidated Statements of Cash Flows
2024 Compared to 2023
A discussion of changes in the Company’s results of operations between 2024 and 2023 has been omitted from this Form 10-K and can be found in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “2024 Compared to 2023” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 12, 2025.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates that its current cash balance, operating cash flows, borrowings under its unsecured bank credit facilities, proceeds from new debt and/or proceeds from the issuance of equity instruments will be adequate for (i) operating and administrative expenses, (ii) normal repair and maintenance expenses at its properties, (iii) debt service obligations, (iv) maintaining compliance with its debt covenants, (v) distributions to stockholders, (vi) capital improvements, (vii) purchases of properties, (viii) development, and (ix) any other normal business activities of the Company, both in the short-term and long-term. The Company expects liquidity sources and needs in future years to be consistent in nature with those for the year ended December 31, 2025.
As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace the short-term bank borrowings. The Company believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company. The Company also believes it can obtain debt financing and issue common and/or preferred equity.
For future debt issuances, the Company intends to issue primarily unsecured fixed-rate debt, including variable rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps. The Company may also access the public debt or convertible bond markets in the future as a means to raise capital.
As of December 31, 2025, EastGroup had total immediate liquidity of approximately $654,574,000, comprised of $1,007,000 of cash and cash equivalents and $653,567,000 of availability on our unsecured bank credit facilities. See further details discussed below.
Net cash provided by operating activities was $480,734,000 for the year ended December 31, 2025. The primary other sources of cash were from borrowings on unsecured bank credit facilities and unsecured debt and proceeds from common stock offerings. The Company distributed $302,507,000 in common stock dividends during 2025. Other primary uses of cash were repayments on unsecured bank credit facilities and unsecured debt; the construction and development of properties; purchases of real estate properties; capital improvements at various properties; and leasing commissions.
As of December 31, 2025, the Company was contractually obligated to pay the dividend declared in December 2025, which was paid in January 2026. An amount for dividends payable of $84,725,000 was included in Accounts payable and accrued expenses at December 31, 2025, which includes dividends payable on unvested restricted stock of $2,173,000, which are subject to continued service and will be paid upon vesting in future periods.
Scheduled principal payments on long-term debt, including Unsecured debt, net of debt issuance costs (not including Unsecured bank credit facilities, net of debt issuance costs ), as of December 31, 2025, are as follows:
MATURITY DATES
Weighted Average Interest Rate (1)
Principal Payments Maturing
(In thousands)
October 10, 2026
December 15, 2026
Year 2027
Year 2028
Year 2029
Year 2030
Year 2031 and beyond
Total Unsecured Debt
(1) These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
The Company currently intends to repay its debt obligations, both in the short-term and long-term, through its operating cash flows, borrowings under its unsecured bank credit facilities, proceeds from new debt (primarily unsecured), and/or proceeds from the issuance of equity instruments.
In January 2025, EastGroup refinanced a $100,000,000 senior unsecured term loan, reducing the credit spread by 30 basis points to a total effectively fixed interest rate of 4.97%. The loan, which previously had five years remaining, was modified to a three year maturity with two one-year extension options, at the Company's election.
In March 2025, EastGroup repaid a $50,000,000 senior unsecured term loan at maturity with an effectively fixed interest rate of 1.58%.
In August 2025, EastGroup repaid senior unsecured notes at maturity. The notes had a principal balance of $20,000,000 and a fixed interest rate of 3.80%.
In October 2025, the Company repaid two maturing senior unsecured notes totaling $75,000,000. Senior unsecured notes with a principal balance of $25,000,000 had a fixed interest rate of 3.97%. The other senior unsecured notes with a principal balance of $50,000,000 had a fixed interest rate of 3.99%.
In November 2025, the Company entered into a term loan agreement, separated into two tranches. One tranche provides a $100,000,000 term loan with a term of approximately 4.5 years and an effectively fixed interest rate of 4.11% with interest-only payments. The second tranche provides a $150,000,000 term loan with a term of approximately 5.5 years and an effectively fixed interest rate of 4.15% with interest-only payments. At the Company's option, the term loans bear interest at an annual rate of the Daily Simple SOFR (as defined in the term loan agreement) plus an applicable margin (0.85% as of December 31, 2025) based on the Company’s senior unsecured long-term debt rating. The Company also entered into interest rate swap agreements to convert the loans' SOFR rate component to a fixed interest rate for the entire terms of the loans, providing effectively fixed interest rates for each loan.
Also in November 2025, the Company entered into amendments related to five senior unsecured term loans totaling $475,000,000, which reduced the credit spread by 10 basis points on each loan.
The Company has a $625,000,000 unsecured bank credit facility with a group of 10 banks, which has a maturity date of July 31, 2028. As of December 31, 2025, the interest rate was 4.451% with no outstanding balance. The Company also has a $50,000,000 unsecured bank credit facility with a maturity date of July 31, 2028. As of December 31, 2025, the Company had variable rate borrowings totaling $18,845,000 on this unsecured bank credit facility and an interest rate of 4.545%. The Company's unsecured bank credit facilities are further discussed in Note 5 in the Notes to Consolidated Financial Statements.
On December 5, 2025, we established an ATM common stock offering program pursuant to which we are able to sell from time to time shares of our common stock having an aggregate gross sales price of up to $1,000,000,000 (the “Current ATM Program”). The Current ATM Program replaced our previous $1,000,000,000 ATM program (the “Prior ATM Program”), which was established on October 25, 2024, under which we had sold shares of our common stock having an aggregate gross sales price of $479,899,000 through December 5, 2025.
In connection with the Current ATM program, we may sell shares of our common stock through sales agents or through certain financial institutions acting as forward counterparties whereby, at our discretion, the forward counterparties, or their agents or affiliates, may borrow from third parties and subsequently sell shares of our common stock. The use of a forward equity sale agreement allows us to lock in a share price on the sale of shares of our common stock but defer settling and receiving the proceeds from the sale of shares until a later date. Additionally, the forward price that we expect to receive upon settlement of an agreement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends during the term of the agreement.
During the year ended December 31, 2025, EastGroup sold, and subsequently settled the issuance of, 33,120 shares of common stock directly through sales agents under its ATM programs at a weighted average price of $183.15 per share, providing aggregate net proceeds to the Company of $6,005,000.
During the year ended December 31, 2025, EastGroup entered into forward equity sale agreements with certain financial institutions acting as forward counterparties under its ATM programs with respect to 1,063,825 shares of common stock with an initial weighted average forward price of $181.89 per share. The Company did not receive any proceeds from the sale of common shares by the forward counterparties at the time it entered into forward equity sale agreements. Also during the year ended December 31, 2025, the Company settled outstanding forward equity sale agreements that were previously entered into under its ATM programs by issuing 1,449,078 shares of common stock in exchange for net proceeds of approximately $258,066,000. As of February 11, 2026, the Company had no outstanding forward shares available for settlement.
As of February 11, 2026, $1,000,000,000 of common stock remains available to be sold under the Current ATM Program. Future sales, if any, will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.
EastGroup’s other material cash requirements from known contractual and other obligations as of December 31, 2025 were as follows:
Cash Requirements (1)
(In thousands)
Real estate property obligations (2)
Development and value-add obligations (3)
Tenant improvements obligations (4)
Operating lease obligations - Ground leases (5)
Total
(1) Cash requirement due in less than one year; there were no related long-term cash requirements (other than ground lease payments, described below).
(2) Represents commitments on real estate properties, except for tenant improvement allowance obligations.
(3) Represents commitments on properties in the Company’s development and value-add program, except for tenant improvement allowance obligations.
(5) Represents ground lease payments due within one year. The Company also estimates future minimum ground lease payments of $161,476,000, due in years 2027 and thereafter, based on the current lease terms of its ground leases. With the renewal options excluded, expiration dates range from August 2031 to December 2085.
The Company has no material off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s management considers the following accounting policies and estimates to be critical to the reported operations of the Company.
Acquisition and Development of Real Estate Properties
The FASB Codification provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their relative fair values. Factors considered by management in allocating the cost of the properties acquired include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The allocation to tangible assets (land, building and improvements) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models. Land is valued using comparable land sales specific to the applicable market, provided by a third party. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.
The purchase price is also allocated among the following categories of intangible assets: the above or below market component of in-place leases and the value of in-place leases at the time of the acquisition. The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using current market rents over the remaining term of the lease. The amounts allocated to above and below market lease intangibles are included in Other assets, net and Other liabilities , respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. In-place lease intangibles are valued based upon management’s assessment of factors such as an estimate of forgone rents and avoided leasing costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. These intangible assets are included in Other assets, net on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease.
The significance of this accounting policy will fluctuate given the transaction activity during the period.
For properties included in Development and value-add properties , costs associated with development (i.e., land, construction costs, interest expense, property taxes and other costs associated with development) are aggregated into the total capitalized costs of the property. Included in these costs are management’s estimates for the portions of internal costs (primarily personnel costs) deemed related to such development activities. The internal costs are allocated to specific development projects based on development activity.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1(p) in the Notes to Consolidated Financial Statements.
