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.
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 impairment losses, 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 interruption claims
FFO ATTRIBUTABLE TO COMMON STOCKHOLDERS, EXCLUDING GAIN ON INVOLUNTARY CONVERSION AND BUSINESS INTERRUPTION CLAIMS
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 interruption claims
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 Interruption Claims, 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 interruption claims 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 interruption claims 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.
(4) Represents 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.
