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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 COMMISSION FILE NUMBER 1-7094
EASTGROUP PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 13-2711135
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (601) 354-3555
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
SHARES OF COMMON STOCK, $.0001 PAR VALUE,
SHARES OF SERIES A 9.00% CUMULATIVE REDEEMABLE PREFERRED, $.0001 PAR VALUE
NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES (x) NO ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this Chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( )
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of March 6, 2002 was $397,290,630.
The number of shares of common stock, $.0001 par value, outstanding
as of March 6, 2002 was 15,955,447.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE PROXY STATEMENT FOR THE 2002 ANNUAL MEETING OF SHAREHOLDERS ARE
INCORPORATED BY REFERENCE INTO PART III.
PART I
ITEM 1. BUSINESS.
Organization
EastGroup Properties, Inc. (the "Company" or "EastGroup") is an equity real
estate investment trust ("REIT") organized in 1969. The Company has elected to
be taxed as a real estate investment trust under Sections 856-860 of the
Internal Revenue Code (the Code), as amended, and intends to continue to qualify
to be so taxed.
Administration
The Company is self-administered (i.e., it provides its own investment and
administrative services internally through its employees) and maintains its
principal executive offices in Jackson, Mississippi. As of March 6, 2002,
EastGroup had 49 full-time and two part-time employees.
Current Operations
EastGroup is an equity real estate investment trust focused on the
acquisition, operation and development of industrial properties in major sunbelt
markets throughout the United States. Its strategy for growth is based on its
property portfolio orientation toward premier distribution facilities clustered
near major transportation centers. EastGroup's portfolio currently includes 18
million square feet with an additional 913,000 square feet of properties under
development.
During 2001, EastGroup expanded its portfolio by the transfer of eight
properties (640,000 square feet) from development to the portfolio with costs of
$28,775,000, through acquisition of three properties (300,000 square feet) and
11 parcels of land (48 acres) with total costs of $20,010,000 and through
capital improvements of $8,271,000 on existing and transferred development
properties. In addition to direct property acquisitions and developments,
EastGroup seeks to grow its portfolio through the acquisition of other public
and private real estate companies and REITs. In 2001, the Company invested
$5,258,000 in the stock of REITs.
The recycling of capital has been an important element of EastGroup's
growth strategy. Through recycling, EastGroup seeks to continually improve the
physical quality and location of its properties and increase the clustering of
assets in core submarkets. During 2001, the Company sold five industrial
properties for net proceeds of $11,316,000 with total gains for financial
reporting purposes of $4,311,000. In addition, the Company realized gains of
$2,967,000 on its investments in Pacific Gulf Properties (PAG) and other REITs
as the result of the sale and liquidation of these REIT shares. The Company may
receive further distributions from PAG in 2002 as PAG continues liquidation of
its assets intended for sale. See Management's Discussion and Analysis of
Financial Condition and Results of Operations.
EastGroup's portfolio square footage leased for 2001 decreased from 96.4%
to 91.6%. In 2001, leases for 23.4% of the portfolio's square footage expired
and EastGroup renewed or re-leased 61% of that space. In 2002, the expiring
leases are 15% of the portfolio.
The Company intends to continue to qualify as a REIT under the Code.
Ordinary taxable income will continue to be paid to the stockholders. The
Company has the option of (i) paying out capital gains to the stockholders with
no tax to the Company, or (ii) treating the capital gains as having been
distributed to the stockholders, paying the tax on the gain deemed distributed
and allocating the tax paid as a credit to the stockholders. The book value of
the property sold and the retained portion of capital gains, if any, are
generally reinvested by the Company.
EastGroup incurs short-term floating rate debt in connection with the
acquisition of real estate and payment of costs of development projects, and
attempts to replace floating rate debt with fixed-rate term loans secured by
real property or to repay the debt with the proceeds of sales of equity
securities as market conditions permit. EastGroup also may, in appropriate
circumstances, acquire one or more properties in exchange for EastGroup's equity
securities.
EastGroup holds its properties as long-term investments, but may determine
to sell certain properties that no longer meet its investment criteria. The
Company may provide financing in connection with such sales of property if
market conditions so require, but it does not presently intend to make loans
other than in connection with such transactions.
EastGroup has no present intentions of underwriting securities of other
issuers. The strategies and policies set forth above were determined and are
subject to review by EastGroup's Board of Directors, which may change such
strategies or policies based upon its evaluation of the state of the real estate
market, the performance of EastGroup's assets, capital and credit market
conditions, and other relevant factors. EastGroup provides annual reports to its
stockholders, which contain financial statements audited by the Company's
independent public accountants.
Environmental Matters
Under various federal, state and local laws, ordinances and regulations, an
owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. Such laws often
impose such liability without regard to whether the owner knows of, or was
responsible for, the presence of such hazardous or toxic substances. The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to use such property as collateral in its borrowings. All of
EastGroup's properties have been subjected to environmental audits by
independent environmental consultants. These reports have not revealed any
potential significant environmental liability. Management of EastGroup is not
aware of any environmental liability that would have a material adverse effect
on EastGroup's business, assets, financial position or results of operations.
ITEM 2. PROPERTIES.
The Company conducts its primary operations from approximately 12,000
square feet of rented office space located at 300 One Jackson Place, 188 East
Capitol Street, Jackson, Mississippi. In March 1998, EastGroup acquired Ensign
Properties, Inc., an independent industrial developer in Orlando. This
acquisition allowed EastGroup to become self-managed (i.e., providing management
and maintenance services through its employees) in all of its Florida markets.
It also significantly increased the Company's development capability in Florida.
In September 1998, EastGroup opened a western regional office based in Phoenix,
Arizona. This office manages the Company's operations in Arizona and California
that total 5.5 million square feet of industrial space. In November 2001,
EastGroup opened a southwestern office in Houston, Texas. This office manages
the Company's operations in Houston that total 2.2 million square feet of
industrial space.
At December 31, 2001, the Company did not own any single property that is
10% or more of total book value or 10% or more of total gross revenues and thus
is not subject to the requirements of Items 14 and 15 of Form S-11.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not presently involved in any material litigation nor, to
its knowledge, is any material litigation threatened against the Company or its
properties, other than routine litigation arising in the ordinary course of
business or which is expected to be covered by the Company's liability
insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
SHARES OF COMMON STOCK MARKET PRICES AND DIVIDENDS
The Company's shares of Common Stock are presently listed for trading on the New
York Stock Exchange under the symbol "EGP." The following table shows the high
and low share prices for each quarter reported by the New York Stock Exchange
during the past two years and per share distributions paid for each quarter.
Calendar 2001 Calendar 2000
--------------------------------------------------------- -----------------------------------------
Quarter High Low Distributions High Low Distributions
---------------- ------------ ---------- ---------------- -------------- --------- ----------------
First $23.56 21.69 $.45 $21.56 17.50 $.38
Second 23.55 20.80 .45 22.19 19.88 .38
Third 23.65 20.00 .45 24.00 20.56 .41
Fourth 24.25 20.50 .45 23.38 18.94 .41
---------------- ----------------
$1.80 $1.58
================ ================
As of March 6, 2002, there were approximately 1,300 holders of record of
the Company's 15,955,447 outstanding shares of common stock. Of the $1.80 per
common share total distributions paid in 2001, $1.7044 per share was taxable as
ordinary income for federal income tax purposes and $.0956 per share represented
a long-term 20% capital gain. All of the $1.58 per share distributions paid in
2000 was taxable as ordinary income for federal income tax purposes.
SHARES OF SERIES A PREFERRED STOCK MARKET PRICES AND DIVIDENDS
The Company's shares of Series A 9.00% Cumulative Redeemable Preferred Stock are
also listed for trading on the New York Stock Exchange and trade under the
symbol "EGP PrA." The following table shows the high and low preferred share
prices for each quarter reported by the New York Stock Exchange during the past
two years and per share distributions paid for each quarter.
Calendar 2001 Calendar 2000
--------------------------------------------------------- -----------------------------------------
Quarter High Low Distributions High Low Distributions
---------------- ------------ ---------- ---------------- -------------- --------- ----------------
First $24.49 21.75 $.5625 $21.00 18.38 $.5625
Second 24.80 23.75 .5625 21.25 19.63 .5625
Third 25.35 24.25 .5625 23.25 20.44 .5625
Fourth 25.15 24.51 .5625 23.19 20.88 .5625
---------------- ----------------
$2.2500 $2.2500
================ ================
As of March 6, 2002, there were 74 holders of record of the Company's
1,725,000 outstanding shares of Series A preferred stock. Of the $2.25 per
Series A preferred share total distributions paid in 2001, $2.1308 per share was
taxable as ordinary income for federal income tax purposes and $.1192 per share
represented a long-term 20% capital gain. All of the $2.25 per share
distributions paid in 2000 was taxable as ordinary income for federal income tax
purposes.
SHARES OF SERIES B PREFERRED STOCK MARKET PRICES AND DIVIDENDS
EastGroup has issued 2,800,000 shares of Series B 8.75% Cumulative Convertible
Preferred Stock to Five Arrows Realty Securities II, L.L.C., an investment fund
managed by Rothschild Realty, Inc., a member of the Rothschild Group. The Series
B Preferred Stock, which is convertible into common stock at a conversion price
of $22.00 per share (3,182,000 common shares), is entitled to quarterly
dividends in arrears equal to the greater of $0.547 per share or the dividend on
the number of shares of common stock into which a share of Series B Preferred
Stock is convertible. Of the $2.188 per Series B preferred share total
distributions paid in 2001, $2.0721 per share was taxable as ordinary income for
federal income tax purposes and $.1159 per share represented a long-term 20%
capital gain. All of the $2.188 per share distributions paid in 2000 was taxable
as ordinary income for federal income tax purposes.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this report.
Years Ended December 31,
-------------------------------------------------------------------------------
2001 2000 1999 1998 1997
--------------- --------------- --------------- --------------- ---------------
(In thousands, except per share data)
OPERATING DATA:
Revenues
Income from real estate operations $ 100,560 93,906 83,320 74,312 49,791
Interest 1,041 975 1,367 1,868 2,571
Gain on securities 2,967 2,154 30 - -
Other 727 1,068 1,519 548 1,260
--------------- --------------- --------------- --------------- ---------------
105,295 98,103 86,236 76,728 53,622
--------------- --------------- --------------- --------------- ---------------
Expenses
Operating expenses from real estate
operations 25,637 22,359 19,941 19,328 14,825
Interest 17,823 18,570 17,688 16,948 10,551
Depreciation and amortization 27,041 23,449 20,239 16,625 10,409
General and administrative 4,573 5,607 4,519 3,771 2,923
Minority interests in joint ventures 350 377 433 433 512
---------------- -------------- --------------- --------------- ---------------
75,424 70,362 62,820 57,105 39,220
---------------- -------------- --------------- --------------- ---------------
Income before gain on real estate
investments 29,871 27,741 23,416 19,623 14,402
Gain on real estate investments 4,311 8,771 15,357 9,713 6,377
---------------- -------------- --------------- --------------- ---------------
Income before cumulative effect of
change in accounting principle 34,182 36,512 38,773 29,336 20,779
Cumulative effect of change in
accounting principle - - 418 - -
---------------- --------------- --------------- --------------- ---------------
Net income 34,182 36,512 38,355 29,336 20,779
Preferred dividends-Series A 3,880 3,880 3,880 2,070 -
Preferred dividends-Series B 6,128 6,128 2,246 - -
---------------- --------------- --------------- --------------- ---------------
Net income available to common
stockholders $ 24,174 26,504 32,229 27,266 20,779
================ =============== =============== =============== ===============
BASIC PER SHARE DATA:
Net income available to common
stockholders $ 1.54 1.70 2.01 1.67 1.58
Weighted average shares outstanding 15,697 15,623 16,046 16,283 13,176
DILUTED PER SHARE DATA:
Net income available to common
stockholders $ 1.51 1.68 1.99 1.66 1.56
Weighted average shares outstanding 16,046 15,798 17,362 16,432 13,338
OTHER PER SHARE DATA:
Book value (at end of year) $ 16.19 16.55 16.47 16.12 15.88
Common distributions declared 1.80 1.58 1.48 1.40 1.34
Common distributions paid 1.80 1.58 1.48 1.40 1.34
OTHER DATA:
Funds from operations:
Net income $ 34,182 36,512 38,355 29,336 20,779
Preferred dividends-Series A (3,880) (3,880) (3,880) (2,070) -
Convertible preferred dividends-
Series B (6,128) (6,128) (2,246) - -
--------------- --------------- --------------- --------------- ---------------
Net income available to common
stockholders 24,174 26,504 32,229 27,266 20,779
Add:
Depreciation and amortization 27,041 23,449 20,239 16,625 10,409
Cumulative effect of change in
accounting principle (1) - - 418 - -
Convertible preferred dividends-
Series B 6,128 6,128 2,246 - -
Limited partnership units - 18 48 - -
Deduct:
Gain on depreciable real estate
investments, net (4,311) (8,151) (15,357) (9,713) (6,377)
Other (161) (158) (241) (324) (284)
---------------- --------------- --------------- --------------- ---------------
Funds from operations (2) $ 52,871 47,790 39,582 33,854 24,527
================ =============== =============== =============== ===============
Cash flows provided by (used in):
Operating activities $ 50,748 53,016 44,236 36,205 23,817
Investing activities (35,171) (43,147) (68,319) (130,757) (80,131)
Financing activities (16,671) (9,665) 23,956 96,038 57,174
BALANCE SHEET DATA (AT END OF YEAR):
Real estate investments, at cost (3) $ 741,755 703,846 649,754 582,565 419,857
Real estate investments, net of
accumulated depreciation and
allowance for losses (3) 649,554 633,726 598,175 539,729 387,545
Total assets 683,782 666,205 632,151 567,548 413,127
Mortgage, bond and bank loans payable 291,072 270,709 243,665 236,816 147,150
Total liabilities 313,072 290,813 262,839 251,524 155,812
Total stockholders' equity 370,710 375,392 369,312 316,024 257,315
(1) Represents previously capitalized start-up and organizational costs that
were expensed on January 1, 1999 in accordance with the requirements of
Statement of Position 98-5.
(2) EastGroup defines funds from operations (FFO), consistent with the National
Association of Real Estate Investment Trusts (NAREIT) definition, as net income
(loss)(computed in accordance with generally accepted accounting principles
(GAAP)), excluding gains or losses from sales of depreciable real estate
property, plus real estate related depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Effective
January 1, 2000, NAREIT clarified the definition of FFO to include gains from
sales of nondepreciable real estate (land). There were no gains on land in 2001.
Gains on land for 2000 have been included in FFO and gains on land for the
previous years have not been included in FFO. Gains on land were $348,000 for
1999, $44,000 for 1998 and $98,000 for 1997. The Company believes that FFO is an
appropriate measure of performance for equity real estate investment trusts. FFO
is not considered as an alternative to net income (determined in accordance with
GAAP) as an indication of the Company's financial performance or to cash flows
from operating activities (determined in accordance with GAAP) as a measure of
the Company's liquidity, nor is it indicative of funds available for the
Company's cash needs, including the ability to make distributions.
(3) Does not include the $500,000 land purchase-leaseback sold in 1999.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
The Company's management considers the following accounting policies to be
critical to the reported operations of the Company.
Real Estate Properties
During the industrial development stage, costs associated with development
(i.e., land, construction costs, interest expense during construction, property
taxes and indirect costs associated with development) are aggregated into the
total capitalization of the property. Indirect costs allocated to development
projects are based on management's estimates and assumptions.
The Company reviews its real estate investments to be held and used for
impairment of value whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. If any real estate
investment is considered permanently impaired, a loss is recorded to reduce the
carrying value of the property to its estimated fair value. Real estate assets
to be sold are reported at the lower of the carrying amount or fair value less
selling costs. The evaluation of real estate investments involves many
subjective assumptions dependent upon future economic events that affect the
ultimate value of the property. Currently, the Company's management is not aware
of any impairment issues nor has it experienced any significant impairment
issues in recent years.
Valuation of Receivables
The Company is subject to tenant defaults and bankruptcies that could affect the
collection of outstanding receivables. In order to mitigate these risks, the
Company performs credit review and analysis on prospective tenants before
significant leases are executed. The Company evaluates outstanding receivables
and estimates the allowance for uncollectible accounts. Management specifically
analyzes historical bad debts, aged receivables, customer credit-worthiness and
current economic trends when evaluating the adequacy of the allowance for
doubtful accounts.
Tax Status
EastGroup, a Maryland corporation, has qualified as a real estate investment
trust (REIT) under Sections 856-860 of the Internal Revenue Code and intends to
continue to qualify as such. To maintain its status as a REIT, the Company is
required to distribute 90% of its ordinary taxable income to its stockholders.
The Company has the option of (i) paying out capital gains to the stockholders
with no tax to the Company or (ii) treating the capital gains as having been
distributed to the stockholders, paying the tax on the gain deemed distributed
and allocating the tax paid as a credit to the stockholders. The Company
distributed all of its 2001, 2000 and 1999 taxable income to its stockholders.
Accordingly, no provision for income taxes was necessary.
FINANCIAL CONDITION
Assets of EastGroup were $683,782,000 at December 31, 2001, an increase of
$17,577,000 from December 31, 2000. Liabilities (excluding minority interests)
increased $22,217,000 to $311,333,000 and stockholders' equity decreased
$4,682,000 to $370,710,000 during the same period. Book value per common share
decreased from $16.55 at December 31, 2000 to $16.19 at December 31, 2001. The
following paragraphs explain these changes in greater detail.
Industrial properties increased $58,900,000 during the year ended December
31, 2001 as compared to 2000. This increase was primarily due to the acquisition
of three properties and the remaining 20% minority interest in Wiegman
Associates for a total of $13,804,000, as detailed below; the transfer of eight
properties from development with total costs of $28,775,000; the transfer of two
properties from the category "held for sale" with total costs of $13,519,000 and
capital improvements of $8,233,000. These increases were offset by the transfer
of four properties and one parcel of land to the category "held for sale" with
costs of $5,431,000.
Industrial Properties
Industrial Properties Acquired Cost
in 2001 Location Size Date Acquired (In thousands)
- ---------------------------------- ------------------------- ----------------- ----------------- -------------------
World Houston 10 Houston, Texas 107,000 sq. ft. 01-04-01 $5,712
North Stemmons Dallas, Texas 123,000 sq. ft. 03-15-01 3,883
Wiegman Associates (20% Interest) Hayward, California 262,000 sq. ft. 05-30-01 553
Southpark Chandler, Arizona 70,000 sq. ft. 09-27-01 3,656
-------------------
Total Industrial Acquisitions $13,804
===================
Development increased $311,000 during the year ended December 31, 2001
compared to 2000. This increase resulted from year-to-date development costs of
$29,086,000 on existing and completed development properties, offset by
development properties transferred to industrial properties with costs of
$28,775,000, as detailed below.
Total cash outflows for development for 2001 were $32,340,000. In addition
to the costs incurred for the 12 months ended December 31, 2001 as detailed in
the table below, development costs included $1,649,000 for improvements on
properties transferred to the portfolio in the 12-month period following
transfer and first generation tenant leasing commission costs of $1,605,000.
These costs are reported in Industrial and Other Assets on the balance sheet,
respectively.
Development
Costs Incurred
---------------------------------------
Size at For the 12 Months Cumulative as Estimated
Completion Ended 12/31/01 of 12/31/01 Total Costs (1)
- --------------------------------------------------------------------------------------------------------------------
(Square feet) (In thousands)
Lease-Up:
Kyrene II
Tempe, Arizona 60,000 $1,240 3,049 3,710
Walden Distribution Center I
Tampa, Florida 90,000 2,761 3,540 4,240
Techway Southwest I
Houston, Texas 126,000 2,322 4,210 5,040
Sunport Center III
Orlando, Florida 66,000 3,225 3,225 4,000
--------------------------------------------------------------------------
Total Lease-up 342,000 9,548 14,024 16,990
--------------------------------------------------------------------------
Under Construction:
World Houston XIV
Houston, Texas 77,000 2,333 2,333 3,575
Americas 10 Business Center I
El Paso, Texas 97,000 2,287 2,287 3,320
World Houston XIII
Houston, Texas 51,000 1,299 1,299 2,795
World Houston XII
Houston, Texas 59,000 532 532 2,932
Metro Airport Commerce Center I
Jackson, Mississippi 32,000 326 326 1,700
Tower Automotive
Jackson, Mississippi 170,000 384 384 9,300
--------------------------------------------------------------------------
Total Under Construction 486,000 7,161 7,161 23,622
--------------------------------------------------------------------------
Prospective Development
(Principally Land):
Phoenix, Arizona 103,000 1,017 1,254 6,000
Tucson, Arizona 70,000 27 326 3,500
Tampa, Florida 230,000 436 2,271 9,200
Orlando, Florida 249,000 1,099 2,824 14,900
Fort Lauderdale, Florida 140,000 2,374 2,374 9,325
El Paso, Texas 251,000 1,923 1,923 7,580
Houston, Texas 1,057,000 (548) 5,044 50,153
Jackson, Mississippi 29,000 303 303 1,500
--------------------------------------------------------------------------
Total Prospective Development 2,129,000 6,631 16,319 102,158
--------------------------------------------------------------------------
2,957,000 $23,340 37,504 142,770
==========================================================================
Completed Development and
Transferred to Industrial
Properties During the Twelve
Months Ended December 31, 2001:
Interstate Commons II
Phoenix, Arizona 59,000 $ 559 2,768
Palm River North I & III
Tampa, Florida 116,000 765 5,693
Westlake II
Tampa, Florida 70,000 153 3,495
Beach Commerce Center
Jacksonville, Florida 46,000 345 2,374
Sunport Center II
Orlando, Florida 60,000 3,106 3,868
World Houston XI
Houston, Texas 129,000 681 4,402
Glenmont II
Houston, Texas 104,000 233 3,149
Sunport Center I
Orlando, Florida 56,000 (96) 3,026
---------------------------------------------------------
Total Transferred to Industrial 640,000 $ 5,746 28,775
=========================================================
(1) The information provided above includes forward-looking data based on
current construction schedules, the status of lease negotiations with
potential tenants and other relevant factors currently available to the
Company. There can be no assurance that any of these factors will not
change or that any change will not affect the accuracy of such
forward-looking data. Among the factors that could affect the accuracy of
the forward-looking statements are weather or other natural occurrence,
default or other failure of performance by contractors, increases in the
price of construction materials or the unavailability of such materials,
failure to obtain necessary permits or approvals from government entities,
changes in local and/or national economic conditions, increased competition
for tenants or other occurrences that could depress rental rates, and other
factors not within the control of the Company.
Other real estate properties increased by $7,069,000 as a result of the
transfer of an office building from the category "held for sale."
Real estate held for sale decreased $24,695,000 primarily due to the
transfer of three properties from held for sale to real estate properties with
total costs of $20,588,000 and the sale of five properties with total costs of
$9,576,000. (Several of the properties classified as held for sale were
transferred back to the portfolio as a result of a change in plans by the
Company due to market conditions.) These decreases were offset by the transfer
of four properties and one parcel of land from the portfolio to real estate held
for sale with total costs of $5,431,000.
Accumulated depreciation on real estate properties and real estate held for
sale increased $22,081,000 primarily due to depreciation expense of $24,439,000
on real estate properties, offset by the sale of five properties with total
accumulated depreciation of $2,352,000.
Mortgage loans receivable decreased $3,676,000 during 2001 as a result of
repayments of $4,740,000 that included the payoff of the World Houston 10 loan,
offset by advances of $1,064,000.
Investment in real estate investment trusts (REITs) decreased $1,616,000
during 2001 as a result of the sale and liquidation of REIT shares with a
carrying value of $7,444,000 offset by the purchase of other REIT shares for
$5,258,000 and unrealized gains of $570,000.
Other assets increased $4,459,000 during 2001 primarily as a result of net
increases in receivables, unamortized leasing commissions and loan costs, and
other prepaid assets. These increases were primarily offset by a net decrease in
cash escrows for Section 1031 tax deferred exchange transactions.
Mortgage notes payable increased $36,305,000 primarily as a result of the
Company's $45,000,000 nonrecourse mortgage loan obtained in April. This note has
an interest rate of 7.25%, a 25-year amortization and a 10-year maturity and is
secured by eight properties in Dallas, Houston and El Paso. The proceeds of this
note were used to pay down existing bank debt. This increase was offset by the
payoff of the Northwest Point mortgage loan of $3,829,000 in March, regularly
scheduled principal payments of $4,488,000 and the assumption of bonds payable
of $378,000 by the buyer of Nobel Business Center.
Notes payable to banks decreased $15,942,000. Bank debt was paid down with
funds obtained from the Company's $45 million nonrecourse mortgage loan as
discussed above. The Company's credit facilities are described in greater detail
under Liquidity and Capital Resources.
Other liabilities increased $2,845,000 during 2001. As part of the final
accounting of an external escrow account established for the redemption of
shares in the Company's 1998 acquisition of Meridian Point Realty Trust VIII,
the Company received the residual cash escrow of $2,701,000 from the external
agent and recorded a liability for the remaining unexchanged shares.
Accumulated other comprehensive income decreased $1,911,000 as a result of
unrealized holding gains of $1,056,000 recorded in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," offset by
realized gains of $2,967,000 on REIT shares.
Undistributed earnings decreased from $28,185,000 at December 31, 2000 to
$23,753,000 at December 31, 2001 as a result of dividends on common and
preferred stock of $38,614,000 exceeding net income for financial reporting
purposes of $34,182,000.
RESULTS OF OPERATIONS
2001 Compared to 2000
Net income available to common stockholders for 2001 was $24,174,000 ($1.54 per
basic share and $1.51 per diluted share) compared to net income available to
common stockholders in 2000 of $26,504,000 ($1.70 per basic share and $1.68 per
diluted share). Income before gain on real estate investments was $29,871,000 in
2001 compared to $27,741,000 in 2000. Gain on real estate investments was
$4,311,000 in 2001 compared to $8,771,000 in 2000. The paragraphs that follow
describe the results of operations in greater detail.
Property net operating income (PNOI) from real estate properties, defined
as income from real estate operations less property operating expenses (before
interest expense and depreciation), increased by $3,376,000 or 4.7% for 2001
compared to 2000. PNOI by property type and percentage leased for industrial
were as follows:
Property Net Operating Income
PNOI Percent
Years Ended December 31, Leased
----------------------------- -------------------------------
2001 2000 12-31-01 12-31-00
-------------- -------------- ---------------- --------------
(In thousands)
Industrial $73,887 69,121 91.6% 96.4%
Other 1,036 2,426
-------------- --------------
Total PNOI $74,923 71,547
============== ==============
PNOI from industrial properties increased $4,766,000 (6.9%) for 2001
compared to 2000 primarily due to acquisitions, rental rate increases and
development properties that achieved stabilized operations in 2000 and 2001.
Industrial properties held throughout 2001 and 2000 showed a decrease in PNOI of
1.6% for 2001. The Company experienced greater vacancies during 2001 primarily
due to a slowing of the economy and higher than average lease terminations.
PNOI from other properties decreased $1,390,000 (57.3%) for 2001 compared
to 2000. These decreases were primarily the result of the sale of the La Vista
Crossing Apartments in December 2000.
Mortgage loan interest income decreased $358,000 for 2001 compared to 2000
primarily due to the payoff of the World Houston 10 loan in early January.
Other interest income increased $424,000 for 2001 compared to 2000. This
increase was primarily the result of interest received from the final accounting
of an escrow account established for the redemption of shares in the Company's
1998 acquisition of Meridian Point Realty Trust VIII.
Gain on the sale and liquidation of REIT securities was $2,967,000 for 2001
compared to $2,154,000 for 2000. This increase was due to liquidating
distributions from Pacific Gulf Properties (PAG) and gains on sale of other REIT
shares in 2001 exceeding liquidating distributions from PAG and Franklin in
2000.
Bank interest expense (excluding amortization of loan costs of $264,000 for
both 2001 and 2000) decreased $3,643,000 from $8,393,000 in 2000 to $4,750,000
in 2001. Average bank borrowings were $82,898,000 in 2001 compared to
$107,221,000 in 2000 with average interest rates of 5.72% in 2001 compared to
7.83% in 2000. Bank interest rates at December 31, 2001 were 3.1875% on
$74,000,000, 3.00% on $11,500,000 and 4.00% on $558,000. Bank interest rates at
December 31, 2000 were 8.00% on $92,000,000 and 8.75% on $10,000,000. Interest
costs incurred during the period of construction of real estate properties are
capitalized and offset against the bank interest expense. The interest costs
capitalized on real estate properties for 2001 were $2,329,000 compared to
$2,060,000 for 2000. See Note 6 in the Notes to the Consolidated Financial
Statements for disclosure relating to the Company's notes payable to banks.
Mortgage interest expense on real estate properties (excluding amortization
of loan costs of $188,000 for 2001 and $169,000 for 2000) increased $3,146,000
from $11,804,000 in 2000 to $14,950,000 in 2001. These increases were primarily
the result of the issuance of two mortgage loans in 2000 and one mortgage loan
in 2001, offset by the payoff of several smaller loans in 2000 and 2001. See
Note 7 in the Notes to the Consolidated Financial Statements for disclosure
relating to the Company's mortgage notes payable.
Depreciation and amortization increased $3,592,000 in 2001 compared to
2000. This increase was primarily due to the industrial properties acquired and
development properties that achieved stabilized operations in both 2000 and 2001
and to the write-off of leasing commissions for lease buyouts. These increases
were offset by the sale of several properties in 2000 and 2001 and the transfer
of several properties to real estate held for sale (depreciation is not taken on
those properties in the category "real estate held for sale"). Three properties
were reclassified from the category "held for sale" back to the portfolio in
2001. Upon reclassification, depreciation was adjusted to reflect the carrying
amount of these properties as if they had never been classified as "held for
sale".
The decrease in general and administrative expenses of $1,034,000 for the
year ended December 31, 2001 compared to 2000 is due to several items. Incentive
restricted stock expense was lower in 2001 by $410,000 due to a one-time charge
in 2000. Also, taxes were $574,000 lower primarily due to reversal of accrued
taxes for Tennessee franchise taxes. The tax was repealed by the State of
Tennessee.
In 2001, the Company recognized gains of $4,311,000 primarily from the sale
of five properties. In 2000, the Company recognized gains of $8,771,000
consisting of the sale of two properties and one parcel of land and the
recognition of a deferred gain. See Note 2 in the Notes to the Consolidated
Financial Statements for details of these gains.
NAREIT has recommended supplemental disclosures concerning capital
expenditures and leasing costs. Capital expenditures for the years ended
December 31, 2001 and 2000 by category are as follows:
Capital Expenditures
2001 2000
---------------- --------------
(In thousands)
Upgrade on Acquisitions $ 270 2,754
Major Renovation 63 41
Tenant Improvements:
New Tenants 3,416 3,054
New Tenants (first generation)* 371 1,480
Renewal Tenants 581 901
Other 1,921 2,381
---------------- --------------
Total capital expenditures $ 6,622 10,611
================ ==============
*First generation refers to space that has never been occupied.
The Company's leasing costs are capitalized and included in other assets.
The costs are amortized over the terms of the leases and are included in
depreciation and amortization expense. A summary of these costs for the years
ended December 31, 2001 and 2000 is as follows:
Capitalized Leasing Costs
2001 2000
---------------- --------------
(In thousands)
Capitalized leasing costs:
First Generation-Development $1,605 1,743
New Tenants 1,127 1,091
Renewal Tenants 1,042 949
First Generation-Other (14) 145
---------------- --------------
Total capitalized leasing costs $3,760 3,928
================ ==============
Amortization of leasing costs $2,541 2,034
================ ==============
2000 Compared to 1999
Net income available to common stockholders for 2000 was $26,504,000 ($1.70 per
basic share and $1.68 per diluted share) compared to net income available to
common stockholders in 1999 of $32,229,000 ($2.01 per basic share and $1.99 per
diluted share). Income before gain on real estate investments was $27,741,000 in
2000 compared to $23,416,000 in 1999. Gain on real estate investments was
$8,771,000 in 2000 compared to $15,357,000 in 1999. Income before cumulative
effect of change in accounting principle was $36,512,000 in 2000 compared to
$38,773,000 in 1999. Cumulative effect of change in accounting principle was
zero in 2000 and $418,000 in 1999. The paragraphs that follow describe the
results of operations in greater detail.
PNOI from real estate properties, increased by $8,168,000 or 12.9% for 2000
compared to 1999. PNOI by property type and percentage leased for industrial
were as follows:
Property Net Operating Income
PNOI Percent
Years Ended December 31, Leased
----------------------------- -------------------------------
2000 1999 12-31-00 12-31-99
-------------- -------------- ---------------- --------------
(In thousands)
Industrial $69,121 59,954 96.4% 97.0%
Other 2,426 3,425
-------------- --------------
Total PNOI $71,547 63,379
============== ==============
PNOI from industrial properties increased $9,167,000 for 2000 compared to
1999 primarily due to acquisitions, rental rate increases and development
properties that achieved stabilized operations in 1999 and 2000. Industrial
properties held throughout 2000 and 1999 showed an increase in PNOI of 3.2% for
2000.
Gain on securities increased $2,124,000 for 2000 compared to 1999.
Bank interest expense (excluding amortization of loan costs of $264,000 for
2000 and $251,000 for 1999) increased $1,550,000 from $6,843,000 in 1999 to
$8,393,000 in 2000. Average bank borrowings were $107,221,000 in 2000 compared
to $104,335,000 in 1999 with average interest rates of 7.83% in 2000 compared to
6.56% in 1999. Bank interest rates at December 31, 2000 were 8.00% on
$92,000,000 and 8.75% on $10,000,000. Bank interest rates at December 31, 1999
were 7.50% on $77,000,000, 7.44% on $8,000,000 and 7.75% on $10,000,000.
Interest costs incurred during the period of construction of real estate
properties are capitalized and offset against the bank interest expense. The
interest costs capitalized on real estate properties for 2000 were $2,060,000
compared to $1,834,000 for 1999. See Note 6 in the Notes to the Consolidated
Financial Statements for disclosure relating to the Company's notes payable to
banks.
Mortgage interest expense on real estate properties (excluding amortization
of loan costs of $169,000 for 2000 and $152,000 for 1999) decreased $472,000
from $12,276,000 in 1999 to $11,804,000 in 2000, primarily as a result of the
payoffs of five mortgages in 1999 and two in 2000, offset by increases due to
the issuance of one mortgage and assumption of one mortgage in 1999 and to the
issuances of two mortgages in 2000. See Note 7 in the Notes to the Consolidated
Financial Statements for details of these transactions.
Depreciation and amortization increased $3,210,000 in 2000 compared to
1999. This increase was primarily due to the industrial properties acquired in
both 1999 and 2000 and development properties that achieved stabilized
operations in 1999 and 2000, offset by the sale of several properties in 1999
and 2000, and the transfer of several properties to real estate held for sale
(depreciation is not taken on those properties in the category "real estate held
for sale").
The increase in general and administrative expenses of $1,088,000 for the
year ended December 31, 2000 compared to 1999 is primarily due to compensation
expense of $782,000 in 2000 for the Company's incentive restricted stock program
established in 2000. See Note 8 in the Notes to the Consolidated Financial
Statements for disclosure as to this plan. Also, the Company increased its
franchise tax accrual largely in anticipation of Tennessee franchise tax
liabilities. This accrual was reversed in 2001 after the tax was repealed by the
State of Tennessee.
In 2000, the Company recognized gains of $8,771,000 consisting of the sale
of two properties and one parcel of land and the recognition of a deferred gain.
In 1999, the Company recognized gains of $15,357,000 consisting primarily of the
sale of three properties, two parcels of land and a land purchase leaseback, a
write-down of one property, and the recognition of other deferred gains. See
Note 2 in the Notes to the Consolidated Financial Statements for details of
these gains.
NAREIT has recommended supplemental disclosures concerning capital
expenditures and leasing costs. Capital expenditures for the years ended
December 31, 2000 and 1999 by category are as follows:
Capital Expenditures
2000 1999
---------------- --------------
(In thousands)
Upgrade on Acquisitions $ 2,754 3,060
Major Renovation 41 49
Tenant Improvements:
New Tenants 3,054 3,076
New Tenants (first generation) 1,480 204
Renewal Tenants 901 493
Other 2,381 2,515
---------------- --------------
Total capital expenditures $ 10,611 9,397
================ ==============
The Company's leasing costs are capitalized and included in other assets.
The costs are amortized over the terms of the leases and are included in
depreciation and amortization expense. A summary of these costs for the years
ended December 31, 2000 and 1999 is as follows:
Capitalized Leasing Costs
2000 1999
---------------- --------------
(In thousands)
Capitalized leasing costs:
First Generation-Development $1,743 1,137
New Tenants 1,091 1,041
Renewal Tenants 949 1,012
First Generation-Other 145 80
---------------- --------------
Total capitalized leasing costs $3,928 3,270
================ ==============
Amortization of leasing costs $2,034 1,538
================ ==============
NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for by using the purchase method of accounting and
addresses accounting for purchased goodwill and other intangibles. SFAS No. 142
addresses financial accounting and reporting for the impairment of goodwill and
other intangibles and is effective for fiscal years beginning after December 15,
2001. The Company had no business combinations since June 30, 2001. At December
31, 2001, the Company had unamortized goodwill of $990,000 resulting from the
acquisition of Ensign Properties in 1998. The Company periodically reviews the
recoverability of goodwill for possible impairment and will continue to do so
under the new statement. In management's opinion, no material impairment of
goodwill existed at December 31, 2001. The Company's current annual amortization
of goodwill is $61,000. Upon adoption of SFAS No. 142 in January 2002,
amortization of goodwill will cease.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," effective for financial statements issued for fiscal
years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The Company has
evaluated the effect of adopting this statement and believes the effect of
adoption would have no impact to its financial position or results of operation.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," effective for fiscal years
beginning after December 15, 2001. SFAS No. 144 addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. The Company's
adoption of this statement in January 2002 is expected to have little or no
effect on the Company's overall financial statements. SFAS No. 144 supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" and the accounting and reporting provisions
of Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions."
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $50,748,000 for the year ended
December 31, 2001. Other sources of cash were primarily from bank borrowings,
proceeds from mortgage notes payable, sales of real estate investments, sales
and liquidation of real estate investment trust shares and collections on
mortgage loans receivable. The Company distributed $28,271,000 in common and
$10,008,000 in preferred stock dividends. Other primary uses of cash were for
bank debt payments, construction and development of properties, purchases of
real estate investments, mortgage note payments, capital improvements at the
various properties, purchase of REIT shares, and advances on mortgage loans
receivable. Total debt at December 31, 2001 and 2000 was as follows:
December 31,
----------------------------------
2001 2000
---------------- -----------------
(In thousands)
Mortgage notes payable - fixed rate $205,014 168,709
Bank notes payable - floating rate 86,058 102,000
---------------- -----------------
Total debt $291,072 270,709
================ =================
The Company had a three-year $150,000,000 unsecured revolving credit
facility with a group of ten banks that matured in January 2002 and was
refinanced as specified below. The interest rate was based on the Eurodollar
rate plus 1.25% and was 3.1875% on $74,000,000 at December 31, 2001 and 8.00% on
$92,000,000 at December 31, 2000. An unused facility fee of .25% was also
assessed on this loan.
The Company had a one-year $10,000,000 unsecured revolving credit facility
with Chase Bank of Texas that matured in January 2002 and was refinanced as
specified below. The interest rate was based on Chase Bank of Texas, National
Association's prime rate less .75% and was 4.00% on $558,000 at December 31,
2001 and 8.75% on $10,000,000 at December 31, 2000.
The Company had a $15,000,000 unsecured discretionary line of credit with
Chase Bank of Texas. The interest rate for the line was negotiated at the time
of any advances. At December 31, 2001, the rate for this loan was 3.00% on a
balance of $11,500,000, payable on demand. At December 31, 2000, the outstanding
balance for this loan was zero.
The foregoing three credit facilities matured and were repaid in January
2002. In January 2002, the Company closed a new three-year, $175,000,000
unsecured revolving credit facility with a group of ten banks, which was
arranged by PNC Bank, NA. The interest rate on the facility is based on the
Eurodollar rate and varies according to debt-to-total asset value ratios.
EastGroup's current interest rate for this facility is the Eurodollar rate plus
1.15%. At the loan closing, EastGroup elected a six-month interest period for
$50,000,000 of its total outstanding line of $84,000,000 with an interest rate
of 3.14% and the remaining $34,000,000 for a one-month period at an interest
rate of 3.01%. The rate on the $34,000,000 is currently reset on a monthly basis
and was last reset on March 8, 2002 at 3.03%.
In January 2002, the Company also secured a one-year $12,500,000 unsecured
revolving credit facility with PNC Bank, NA that matures in January 2003. The
interest rate on this facility is based on the LIBOR rate and varies according
to debt-to-total asset value ratios. EastGroup's current interest rate for this
facility is the LIBOR rate plus 1.075%.
EastGroup's only mortgage note payable maturing in 2002 had a balance of
$8,100,000 at December 31, 2001, interest rate of 7.45% and maturity date of
February 28, 2002. The Company signed an application for a new nonrecourse
mortgage loan of $8,200,000. This new note is expected to close in late March
and will have a rate of 6.43%, a term of 10 years and an amortization period of
12 years.
EastGroup's Board of Directors has authorized the repurchase of up to
1,500,000 shares of its outstanding common stock. The shares may be purchased
from time to time in the open market or in privately negotiated transactions.
The Company did not repurchase any shares during 2001. Since September 30, 1998,
a total of 827,700 shares have been repurchased for $14,170,000 (an average of
$17.12 per share) with 672,300 shares still available for repurchase.
The Company anticipates that its current cash balance, operating cash
flows, and borrowings under its lines of credit will be adequate for the
Company's (i) operating and administrative expenses, (ii) normal repair and
maintenance expenses at its properties, (iii) debt service obligations, (iv)
distributions to stockholders, (v) capital improvements, (vi) purchases of
properties, (vii) development, and (viii) common stock repurchases.
INFLATION
In the last five years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate in the Company's geographic
areas of operation. Most of the leases require the tenants to pay their pro rata
share of operating expenses, including common area maintenance, real estate
taxes and insurance, thereby reducing the Company's exposure to increases in
operating expenses resulting from inflation. In addition, the Company's leases
typically have three to five year terms, which may enable the Company to replace
existing leases with new leases at a higher base if rents on the existing leases
are below the then-existing market rate.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to interest rate changes primarily as a result of its
lines of credit and long-term debt maturities. This debt is used to maintain
liquidity and fund capital expenditures and expansion of the Company's real
estate investment portfolio and operations. The Company's interest rate risk
management objective is to limit the impact of interest rate changes on earnings
and cash flows and to lower its overall borrowing costs. To achieve its
objectives, the Company borrows at fixed rates but also has several variable
rate bank lines as discussed under Liquidity and Capital Resources. The table
below presents the principal payments due and weighted average interest rates
for both the fixed rate and variable rate debt.
2002 2003 2004 2005 2006 Thereafter Total Fair Value
----------- --------- ------- --------- --------- ------------ ---------- -----------
Fixed rate debt (in thousands) $ 13,107 8,975 9,775 23,596 20,039 129,522 205,014 210,514
Weighted average interest rate 7.57% 8.23% 8.12% 8.06% 7.87% 7.42% 7.61%
Variable rate debt (in thousands) $ 11,500 558 - 74,000 - - 86,058 86,058
Weighted average interest rate 3.00% 4.00% - 3.19% - - 3.17%
As the table above incorporates only those exposures that exist as of
December 31, 2001, it does not consider those exposures or positions that could
arise after that date. The Company's ultimate economic impact with respect to
interest rate fluctuations will depend on the exposures that arise during the
period and interest rates. If the weighted average interest rate on the variable
rate bank debt as shown above changes by 10% or approximately 32 basis points,
interest expense and cash flows would increase or decrease by approximately
$273,000 annually.
FORWARD LOOKING STATEMENTS
In addition to historical information, certain sections of this Form 10-K
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
such as those pertaining to the Company's hopes, expectations, intentions,
beliefs, strategies regarding the future, the anticipated performance of
development and acquisition properties, capital resources, profitability and
portfolio performance. Forward-looking statements involve numerous risks and
uncertainties. The following factors, among others discussed herein, could cause
actual results and future events to differ materially from those set forth or
contemplated in the forward-looking statements: defaults or non-renewal of
leases, increased interest rates and operating costs, failure to obtain
necessary outside financing, difficulties in identifying properties to acquire
and in effecting acquisitions, failure to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended, environmental
uncertainties, risks related to natural disasters and the costs of insurance to
protect from such disasters, financial market fluctuations, changes in real
estate and zoning laws and increases in real property tax rates. The success of
the Company also depends upon the trends of the economy, including interest
rates, income tax laws, governmental regulation, legislation, population changes
and those risk factors discussed elsewhere in this Form. Readers are cautioned
not to place undue reliance on forward-looking statements, which reflect
management's analysis only as the date hereof. The Company assumes no obligation
to update forward-looking statements. See also the Company's reports to be filed
from time to time with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Registrant's Consolidated Balance Sheets as of December 31, 2001 and
2000, and its Consolidated Statements of Income, Changes in Stockholders' Equity
and Cash Flows and Notes to Consolidated Financial Statements for the years
ended December 31, 2001, 2000 and 1999 and the independent auditors' report
thereon are included under Item 14 of this report and are incorporated herein by
reference. Unaudited quarterly results of operations included in the notes to
the consolidated financial statements are also incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Registrant's definitive proxy statement which will be filed with the
Securities and Exchange Commission (the "Commission") pursuant to Regulation 14A
within 120 days of the end of Registrant's calendar year is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The Registrant's definitive proxy statement which will be filed with the
Commission pursuant to Regulation 14A within 120 days of the end of Registrant's
calendar year is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN COMMON STOCK OWNERS AND MANAGEMENT.
The Registrant's definitive proxy statement which will be filed with the
Commission pursuant to Regulation 14A within 120 days of the end of Registrant's
calendar year is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Registrant's definitive proxy statement which will be filed with the
Commission pursuant to Regulation 14A within 120 days of the end of Registrant's
calendar year is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Index to Financial Statements:
Page
(a) (1) Consolidated Financial Statements:
Independent Auditors' Report 23
Consolidated Balance Sheets - December 31, 2001 and 2000 24
Consolidated Statements of Income - Years ended December
31, 2001, 2000 and 1999 25
Consolidated Statements of Changes in Stockholders' Equity-
Years ended December 31, 2001, 2000 and 1999 26
Consolidated Statements of Cash Flows - Years ended December
31, 2001, 2000 and 1999 27
Notes to Consolidated Financial Statements 28
(2) Consolidated Financial Statement Schedules:
Schedule III - Real Estate Properties and Accumulated Depreciation 47
Schedule IV - Mortgage Loans on Real Estate 53
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted, or the required information is included in the notes to the
consolidated financial statements.
(3) Form 10-K Exhibits:
(a) Articles of Incorporation (incorporated by reference to
Appendix B to the Registrant's Proxy Statement dated
April 24, 1997).
(b) Bylaws of the Registrant (incorporated by reference to
Appendix C to the Registrant's Proxy Statement dated
April 24, 1997).
(c) Articles Supplementary of the Company relating to the
9.00% Series A Cumulative Redeemable Preferred Stock of
the Company (incorporated by reference to the Company's
Form 8-A filed June 15, 1998).
(d) Articles Supplementary of the Company relating to the
Series B Cumulative Convertible Preferred Stock
(incorporated by reference to the Company's Form 8-K filed
on October 1, 1998).
(e) Articles Supplementary of the Company relating to the
Series C Preferred Stock (incorporated by reference to the
Company's Form 8-A filed December 9, 1998).
(f) Certificate of Correction to Articles Supplementary with
respect to Series B Cumulative Convertible Preferred Stock
(incorporated by reference to the Registrant's Form 10-K
for the year ended December 31, 1998).
(10) Material Contracts:
(a) EastGroup Properties 1994 Management Incentive Plan, As
Amended (incorporated by reference to Appendix A of the
Registrant's Proxy Statement for its Annual Meeting of
Shareholders held on June 2, 1999).*
(b) EastGroup Properties 1991 Directors Stock Option Plan, As
Amended (incorporated by reference to Exhibit B of the
Registrant's Proxy Statement dated April 26, 1994).*
(c) EastGroup Properties 2000 Directors Stock Option Plan
(incorporated by reference to Appendix A to the
Registrant's Proxy Statement for its Annual Meeting of
Shareholders held on June 1, 2000.)*
(d) Form of Change in Control Agreement that Registrant has
entered into with certain executive officers
(Leland R. Speed, David H. Hoster II and N. Keith McKey)
(incorporated by reference to the Registrant's 1996 Annual
Report on Form 10-K).*
(e) Investment Agreement dated as of September 25, 1998 between
the Company and Five Arrows Realty Securities II, L.L.C.
(incorporated by reference to the Company's Form 8-K filed
October 1, 1998).
(f) Operating Agreement dated September 25, 1998 between the
Company and Five Arrows Realty Securities II, L.L.C.
(incorporated by reference to the Company's Form 8-K filed
October 1, 1998).
(g) Agreement and Waiver between the Company and Five Arrows
Realty Securities II, L.L.C. (incorporated by reference
to the Company's Form 8-K filed October 1, 1998).
(h) Credit Agreement dated January 8, 2002 among EastGroup
Properties, L.P.; EastGroup Properties, Inc.; PNC Bank,
National Association, as Administrative Agent; Commerzbank
Aktiengesellschaft, New York Branch, as Syndication Agent;
SouthTrust Bank, as Co-Syndication Agent; U.S. Bank,
National Association, as Documentation Agent; Wells Fargo
Bank, National Association, as Co-Documentation Agent;
AmSouth Bank, as Managing Agent; PNC Capital Market, Inc.,
as Lead Arranger and Lead Agent; and the Lenders
(incorporated by reference to the Registrant's Form 10-K
for the year ended December 31, 2001).
(21) Subsidiaries of Registrant (filed herewith).
(23) Consent of KPMG LLP (filed herewith).
(24) Powers of attorney (filed herewith).
(28) Agreement of Registrant to furnish the Commission with copies
of instruments defining the rights of holders of long-term
debt (incorporated by reference to Exhibit 28(e) of the
Registrant's 1986 Annual Report on Form 10-K).
(99) Rights Agreement dated as of December 3, 1998 between the
Company and Harris Trust and Savings Bank, as Rights Agent
(incorporated by reference to the Company's Form 8-A filed
December 9, 1998).
(b) None
*Indicates management or compensatory agreement.
INDEPENDENT AUDITORS' REPORT
THE DIRECTORS AND STOCKHOLDERS
EASTGROUP PROPERTIES, INC.:
We have audited the consolidated financial statements of EastGroup
Properties, Inc. and subsidiaries, as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of EastGroup
Properties, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.
Jackson, Mississippi KPMG LLP
March 6, 2002
EASTGROUP PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
December 31, 2001 December 31, 2000
----------------------------------------------------
ASSETS
Real estate properties:
Industrial $ 689,760 630,860
Industrial development 37,504 37,193
Other 7,069 -
----------------------------------------------------
734,333 668,053
Less accumulated depreciation (92,060) (66,492)
----------------------------------------------------
642,273 601,561
----------------------------------------------------
Real estate held for sale 1,907 26,602
Less accumulated depreciation (141) (3,628)
----------------------------------------------------
1,766 22,974
----------------------------------------------------
Mortgage loans 5,515 9,191
Investment in real estate investment trusts 6,452 8,068
Cash 1,767 2,861
Other assets 26,009 21,550
----------------------------------------------------
TOTAL ASSETS $ 683,782 666,205
====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable $ 205,014 168,709
Notes payable to banks 86,058 102,000
Accounts payable & accrued expenses 12,801 13,792
Other liabilities 7,460 4,615
----------------------------------------------------
311,333 289,116
----------------------------------------------------
Minority interest in joint ventures 1,739 1,697
----------------------------------------------------
1,739 1,697
----------------------------------------------------
STOCKHOLDERS' EQUITY
Series A 9.00% Cumulative Redeemable Preferred
Shares and additional paid-in capital; $.0001 par value;
1,725,000 shares authorized and issued; stated
liquidation preference of $43,125 41,357 41,357
Series B 8.75% Cumulative Convertible Preferred
Shares and additional paid-in capital; $.0001 par value;
2,800,000 shares authorized and issued; stated
liquidation preference of $70,000 67,178 67,178
Series C Preferred Shares; $.0001 par value; 600,000
shares authorized; no shares issued - -
Common shares; $.0001 par value; 64,875,000
shares authorized; 15,912,060 shares issued at
December 31, 2001 and 15,849,318 at December 31, 2000 2 2
Excess shares; $.0001 par value; 30,000,000 shares
authorized; no shares issued - -
Additional paid-in capital on common shares 240,197 238,910
Undistributed earnings 23,753 28,185
Accumulated other comprehensive income 1,193 3,104
Unearned compensation (2,970) (3,344)
----------------------------------------------------
370,710 375,392
----------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 683,782 666,205
====================================================
See accompanying notes to consolidated financial statements.
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Years Ended December 31,
----------------------------------------------------
2001 2000 1999
----------------------------------------------------
REVENUES
Income from real estate operations $ 100,560 93,906 83,320
Interest:
Mortgage loans 481 839 1,123
Other interest 560 136 244
Gain on securities 2,967 2,154 30
Other 727 1,068 1,519
----------------------------------------------------
105,295 98,103 86,236
----------------------------------------------------
EXPENSES
Operating expenses from real estate operations 25,637 22,359 19,941
Interest 17,823 18,570 17,688
Depreciation and amortization 27,041 23,449 20,239
General and administrative 4,573 5,607 4,519
Minority interest in joint ventures 350 377 433
----------------------------------------------------
75,424 70,362 62,820
----------------------------------------------------
INCOME BEFORE GAIN ON
REAL ESTATE INVESTMENTS 29,871 27,741 23,416
Gain on real estate investments 4,311 8,771 15,357
----------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 34,182 36,512 38,773
Cumulative effect of change in accounting principle - - 418
----------------------------------------------------
NET INCOME 34,182 36,512 38,355
Preferred dividends-Series A 3,880 3,880 3,880
Preferred dividends-Series B 6,128 6,128 2,246
----------------------------------------------------
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $ 24,174 26,504 32,229
====================================================
BASIC PER SHARE DATA
Net income available to common stockholders $ 1.54 1.70 2.01
====================================================
Weighted average shares outstanding 15,697 15,623 16,046
====================================================
DILUTED PER SHARE DATA
Net income available to common stockholders $ 1.51 1.68 1.99
====================================================
Weighted average shares outstanding 16,046 15,798 17,362
====================================================
See accompanying notes to consolidated financial statements.
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
Accumulated
Additional Other
Preferred Common Paid-In Unearned Undistributed Comprehensive
Stock Stock Capital Compensation Earnings Income Total
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $ 50,999 2 246,340 - 18,076 607 316,024
Comprehensive income
Net income - - - - 38,355 - 38,355
Net unrealized change
in investment securities - - - - - 61 61
---------
Total comprehensive income 38,416
---------
Cash dividends declared-common,
$1.48 per share - - - - (23,651) - (23,651)
Preferred stock dividends declared - - - - (6,126) - (6,126)
Issuance of 8,009 shares of common stock,
incentive compensation - - 156 - - - 156
Issuance of 16,275 shares of common stock,
dividend reinvestment plan - - 295 - - - 295
Issuance of 22,210 shares of common stock,
exercise options - - 317 - - - 317
Issuance of 2,400,000 shares of
Series B preferred 57,536 - - - - - 57,536
Purchase of 2,070 common shares - - (34) - - - (34)
Purchase of 796,600 common shares,
stock repurchase plan - - (13,621) - - - (13,621)
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 108,535 2 233,453 - 26,654 668 369,312
Comprehensive income
Net income - - - - 36,512 - 36,512
Net unrealized change in
investment securities - - - - - 2,436 2,436
---------
Total comprehensive income 38,948
---------
Cash dividends declared-common,
$1.58 per share - - - - (24,973) - (24,973)
Preferred stock dividends declared - - - - (10,008) - (10,008)
Issuance of 9,638 shares of common stock,
incentive compensation - - 174 - - - 174
Issuance of 14,175 shares of common stock,
dividend reinvestment plan - - 312 - - - 312
Issuance of 122,250 shares of common stock,
exercise options - - 1,957 - - - 1,957
Issuance of 181,250 shares of common stock,
incentive restricted stock - - 3,716 (3,716) - - -
Amortization of unearned compensation,
incentive restricted stock - - - 372 - - 372
Repurchase limited partnership units - - (55) - - - (55)
Purchase of 23,500 common shares - - (457) - - - (457)
Purchase of 10,000 common shares,
stock repurchase plan - - (190) - - - (190)
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000 108,535 2 238,910 (3,344) 28,185 3,104 375,392
Comprehensive income
Net income - - - - 34,182 - 34,182
Net unrealized change in
investment securities - - - - - (1,911) (1,911)
---------
Total comprehensive income 32,271
---------
Cash dividends declared-common,
$1.80 per share - - - - (28,606) - (28,606)
Preferred stock dividends declared - - - - (10,008) - (10,008)
Issuance of 8,204 shares of common stock,
incentive compensation - - 179 - - - 179
Issuance of 15,788 shares of common stock,
dividend reinvestment plan - - 357 - - - 357
Issuance of 40,750 shares of common stock,
exercise options - - 753 - - - 753
Issuance of 15,000 shares of common stock,
incentive restricted stock - - 346 (346) - - -
Forfeiture of 17,000 shares of common stock,
incentive restricted stock - - (348) 281 - - (67)
Amortization of unearned compensation,
incentive restricted stock - - - 439 - - 439
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001 $ 108,535 2 240,197 (2,970) 23,753 1,193 370,710
======================================================================================
See accompanying notes to consolidated financial statements.
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Years Ended December 31,
----------------------------------------------------
2001 2000 1999
----------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 34,182 36,512 38,355
Adjustments to reconcile net income to
net cash provided by operating activities:
Cumulative effect of change in accounting principle - - 418
Depreciation and amortization 27,041 23,449 20,239
Gain on real estate investments, net (4,311) (8,771) (15,357)
Gain on real estate investment trust shares (2,967) (2,154) (30)
Amortization of unearned compensation 372 372 -
Minority interest depreciation and amortization (161) (158) (241)
Changes in operating assets and liabilities:
Accrued income and other assets (5,004) (568) 786
Accounts payable, accrued expenses and prepaid rent 1,596 4,334 66
----------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 50,748 53,016 44,236
----------------------------------------------------
INVESTING ACTIVITIES:
Payments on mortgage loans receivable 4,740 4,124 9,809
Advances on mortgage loans receivable (1,064) (4,609) (8,186)
Proceeds from sale of real estate investments 11,316 17,170 51,090
Real estate improvements (6,622) (10,611) (9,397)
Real estate development (30,735) (40,661) (45,846)
Purchases of real estate (13,804) (13,628) (56,569)
Purchases of real estate investment trust shares (5,258) (4,964) (10,172)
Proceeds from real estate investment trust shares 7,931 17,334 292
Changes in other assets and other liabilities (1,675) (7,302) 660
----------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (35,171) (43,147) (68,319)
----------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from bank borrowings 144,776 182,519 297,226
Principal payments on bank borrowings (160,718) (175,519) (316,548)
Proceeds from mortgage notes payable 45,000 37,800 47,000
Principal payments on mortgage notes payable (8,317) (17,756) (21,932)
Debt issuance costs (486) (316) (902)
Distributions paid to stockholders (38,279) (34,710) (28,245)
Purchases of limited partnership units - (705) -
Purchases of shares of common stock - (647) (13,655)
Proceeds from exercise of stock options 753 1,957 317
Net proceeds from issuance of shares of preferred stock - - 57,536
Proceeds from dividend reinvestment plan 357 312 295
Other 243 (2,600) 2,864
----------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (16,671) (9,665) 23,956
----------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,094) 204 (127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,861 2,657 2,784
----------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,767 2,861 2,657
====================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of amount capitalized $ 17,222 17,919 17,236
Debt assumed by the Company in purchase of real estate - - 1,103
Debt assumed by buyer of real estate 378 - -
Issuance of incentive restricted stock 346 3,716 -
Forfeiture of incentive restricted stock (348) - -
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
(1) SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the accounts of EastGroup
Properties, Inc. (the Company or EastGroup), its wholly-owned subsidiaries and
its investment in any joint ventures. At December 31, 2001, the Company had one
joint venture: the 80% owned University Business Center. At December 31, 2000
and 1999, the Company had two joint ventures: the 80% owned University Business
Center and the 80% owned IBG Wiegman Road Associates. The Company records 100%
of the joint ventures' assets, liabilities, revenues and expenses with minority
interests provided for in accordance with the joint venture agreements. All
significant intercompany transactions and accounts have been eliminated in
consolidation.
(b) Income Taxes
EastGroup, a Maryland corporation, has qualified as a real estate investment
trust (REIT) under Sections 856-860 of the Internal Revenue Code and intends to
continue to qualify as such. To maintain its status as a REIT, the Company is
required to distribute 90% of its ordinary taxable income to its stockholders.
The Company has the option of (i) paying out capital gains to the stockholders
with no tax to the Company or (ii) treating the capital gains as having been
distributed to the stockholders, paying the tax on the gain deemed distributed
and allocating the tax paid as a credit to the stockholders. The Company
distributed all of its 2001, 2000 and 1999 taxable income to its stockholders.
Accordingly, no provision for income taxes was necessary.
Of the $1.80 per common share total distributions paid in 2001, $1.7044 per
share was taxable as ordinary income for federal income tax purposes and $.0956
per share represented a long-term 20% capital gain. All of the $1.58 per share
distributions paid in 2000 and the $1.48 paid in 1999 were taxable as ordinary
income for federal income tax purposes.
Of the $2.25 per Series A preferred share total distributions paid in 2001,
$2.1308 per share was taxable as ordinary income for federal income tax purposes
and $.1192 per share represented a long-term 20% capital gain. All of the $2.25
per share distributions paid both in 2000 and 1999 were taxable as ordinary
income for federal income tax purposes.
Of the $2.188 per Series B preferred share total distributions paid in
2001, $2.0721 per share was taxable as ordinary income for federal income tax
purposes and $.1159 per share represented a long-term 20% capital gain. All of
the $2.188 per share distributions paid in 2000 and the $1.641 paid in 1999 were
taxable as ordinary income for federal income tax purposes.
The Company's income differs for tax and financial reporting purposes
principally because of (1) the timing of the deduction for the provision for
possible losses and losses on investments, (2) the timing of the recognition of
gains or losses from the sale of investments, (3) different depreciation methods
and lives, (4) mortgage loans having a different basis for tax and financial
reporting purposes, thereby producing different gains upon collection of these
loans, and (5) real estate properties having a different basis for tax and
financial reporting purposes.
(c) Income Recognition
Minimum rental income from real estate operations is recognized on a
straight-line basis.
Interest income on mortgage loans is recognized based on the accrual method
unless a significant uncertainty of collection exists. If a significant
uncertainty exists, interest income is recognized as collected. Certain mortgage
loan discounts are amortized over the lives of the loans using a method that
does not differ materially from the interest method.
The Company recognizes gains on sales of real estate in accordance with the
principles set forth in Statement of Financial Accounting Standards No. 66 (SFAS
66), "Accounting for Sales of Real Estate." Upon closing of real estate
transactions, the provisions of SFAS 66 require consideration for the transfer
of rights of ownership to the purchaser, receipt of an adequate cash down
payment from the purchaser and adequate continuing investment by the purchaser.
If the requirements for recognizing gains have not been met, the sale and
related costs are recorded, but the gain is deferred and recognized by the
installment method as collections are received.
(d) Real Estate Properties
Real estate properties are carried at cost less accumulated depreciation. Cost
includes the carrying amount of the Company's investment plus any additional
consideration paid, liabilities assumed, costs of securing title (not to exceed
fair market value in the aggregate) and improvements made subsequent to
acquisition. Depreciation of buildings and other improvements, including
personal property, is computed using the straight-line method over estimated
useful lives of generally 40 years for buildings and 3 to 10 years for
improvements and personal property. Building improvements are capitalized, while
maintenance and repair expenses are charged to expense as incurred. Significant
renovations and improvements that extend the useful life of or improve the
assets are capitalized. Geographically, the Company's investments are
concentrated in the major sunbelt market areas of the southeastern and
southwestern United States, primarily in the states of California, Florida,
Texas and Arizona.
(e) Capitalized Development Costs
During the industrial development stage, costs associated with development
(i.e., land, construction costs, interest expense during construction, property
taxes, etc.) are aggregated into the total capitalization of the property. As
the property becomes occupied, interest, depreciation and property taxes for the
percentage occupied only is expensed as incurred. When the property becomes 80%
occupied or one year after completion of the shell construction, whichever comes
first, the property is no longer considered a development property and becomes
an industrial property. When the property becomes classified as an industrial
property, the entire property is depreciated accordingly, and interest and
property taxes are expensed.
(f) Real Estate Held for Sale
Real estate properties that are currently offered for sale or are under contract
to sell have been shown separately on the consolidated balance sheets as "real
estate held for sale." Such assets are carried at the lower of current carrying
amount or fair market value less estimated selling costs and are not depreciated
while they are held for sale. At December 31, 2001, the Company had one
industrial property and two parcels of land held for sale. There can be no
assurances that such properties will be sold.
During 2001, three properties were reclassified from the category "real
estate held for sale" to the category "real estate properties." As noted above,
depreciation is not recorded for those properties while held for sale. As such,
upon the reclassification of these properties, depreciation was adjusted to
reflect the carrying amount of these properties as if they had never been
classified as "held for sale."
(g) Allowance for Possible Losses and Impairment Losses
The Company measures impaired and restructured loans at the present value of
expected future cash flows, discounted at the loan's effective interest rate or,
as a practical expedient, at the loan's market price or the fair value of
collateral if the loan is collateral dependent.
The Company applies SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121
requires that long-lived assets and certain identifiable intangibles to be held
and used by the Company be reviewed for impairment of value whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. This statement requires that long-lived assets and certain
identifiable intangibles to be disposed of be reported at the lower of carrying
amount or fair value less selling costs.
(h) Investment in Real Estate Investment Trusts
Marketable equity securities owned by the Company are categorized as available-
for-sale securities, as defined by SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Unrealized holding gains and losses
are reflected as a net amount in a separate component of stockholders' equity
until realized. Since the Company did not exercise significant influence over
any of its investments in REITs, these investments were accounted for under the
cost method. The costs of these investments were adjusted to fair market value
with an equity adjustment to account for unrealized gains/losses as indicated
above.
(i) Derivative Instruments and Hedging Activities
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and for hedging
activities. All derivatives are required to be recognized as either assets or
liabilities in the statement of financial position and measured at fair value.
Changes in fair value are to be reported either in earnings or outside of
earnings depending on the intended use of the derivative and the resulting
designation. Entities applying hedge accounting are required to establish at the
inception of the hedge the method used to assess the effectiveness of the
hedging derivative and the measurement approach for determining the ineffective
aspect of the hedge. The Company did not engage in any transactions involving
derivative or hedging instruments during any of the years presented.
(j) Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
(k) Amortization
Debt origination costs are deferred and amortized using the straight-line method
over the term of the loan. Leasing commissions are deferred and amortized using
the straight-line method over the term of the lease.
(l) Goodwill
In March 1998, EastGroup acquired Ensign Properties, Inc., the largest
independent industrial developer in Orlando. A portion of the total acquisition
price for Ensign included goodwill, which represents the excess of the purchase
price and related costs over the fair value assigned to the net tangible assets.
The Company amortizes goodwill on a straight-line basis over 20 years. The
Company will periodically review the recoverability of goodwill. The measurement
of possible impairment is based primarily on the ability to recover the balance
of the unamortized basis. In management's opinion, no material impairment
existed at December 31, 2001, 2000, and 1999. Amortization expense for goodwill
was $61,000 for each of the years ended December 31, 2001, 2000 and 1999.
(m) Earnings Per Share
The Company applies SFAS No. 128 "Earnings Per Share," which requires companies
to present basic earnings per share (EPS) and diluted EPS.
Basic EPS represents the amount of earnings for the year available to each
share of common stock outstanding during the reporting period. The Company's
basic EPS is calculated by dividing net income available to common shareholders
by the weighted average number of common shares outstanding.
Diluted EPS represents the amount of earnings for the year available to
each share of common stock outstanding during the period and to each share that
would have been outstanding assuming the issuance of common shares for all
dilutive potential common shares outstanding during the reporting period. The
Company's diluted EPS is calculated by totaling net income available to common
stockholders plus dividends on dilutive convertible preferred shares and limited
partnership (LP) dividends and dividing the sum by the weighted average number
of common shares outstanding plus the dilutive effect of stock options related
to outstanding employee stock options, LP units, nonvested restricted stock and
convertible preferred stock, had the options or conversions been exercised. The
dilutive effect of stock options and nonvested restricted stock was determined
using the treasury stock method which assumes exercise of the options as of the
beginning of the period or when issued, if later, and assuming proceeds from the
exercise of options are used to purchase common stock at the average market
price during the period. The treasury stock method was also used assuming
conversion of the convertible preferred stock.
(n) Stock Based Compensation
The Company applies SFAS No. 123, "Accounting for Stock-Based Compensation."
This standard defines a fair value based method of accounting for an employee
stock option or similar equity instrument. Companies are given the choice of
either recognizing related compensation cost by adopting the fair value method,
or to continue to use the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25 (APB No. 25), "Accounting for Stock Issued to
Employees," while supplementally disclosing the pro forma effect on net income
and net income per share using the new measurement criteria. The Company elected
to continue to follow the requirements of APB No. 25, and accordingly, there was
no effect on the results of operations.
The Company also accounts for restricted stock in accordance with APB No.
25, and accordingly, compensation expense is recognized over the expected
vesting period using the straight-line method.
(o) Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and revenues and expenses during the reporting period, and to
disclose material contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
(p) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for by using the purchase method of accounting and
addresses accounting for purchased goodwill and other intangibles. SFAS No. 142
addresses financial accounting and reporting for the impairment of goodwill and
other intangibles and is effective for fiscal years beginning after December 15,
2001. The Company had no business combinations since June 30, 2001. At December
31, 2001, the Company had unamortized goodwill of $990,000 resulting from the
acquisition of Ensign Properties in 1998. The Company periodically reviews the
recoverability of goodwill for possible impairment and will continue to do so
under the new statement. In management's opinion, no material impairment of
goodwill existed at December 31, 2001. The Company's current annual amortization
of goodwill is $61,000. Upon adoption of SFAS No. 142 in January 2002,
amortization of goodwill will cease.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," effective for financial statements issued for fiscal
years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The Company has
evaluated the effect of adopting this statement and believes the effect of
adoption would have no impact to its financial position or results of operation.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," effective for fiscal years
beginning after December 15, 2001. SFAS No. 144 addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. The Company's
adoption of this statement in January 2002 is expected to have little or no
effect on the Company's overall financial statements. SFAS No. 144 supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" and the accounting and reporting provisions
of Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions."
(q) Reclassifications
Certain reclassifications have been made in the 2000 and 1999 financial
statements to conform to the 2001 presentation.
(2) REAL ESTATE OWNED
At December 31, 2001, the Company was offering for sale the Carpenter
Distribution Center in Dallas, Texas with a carrying amount of $993,000 and 6.4
acres of land in the World Houston Business Park with a carrying amount of
$773,000. No loss is anticipated on the sale of these properties. The results of
operations (after depreciation) for real estate held for sale at December 31,
2001, amounted to $73,000, $62,000 and $41,000, respectively, for the years
ended December 31, 2001, 2000, and 1999. The results of operations (after
depreciation) for real estate held for sale at December 31, 2000, amounted to
$1,820,000 and $1,586,000, respectively, for the years ended December 31, 2000
and 1999.
The Company is currently developing the properties detailed below. Costs
incurred include capitalization of interest costs during the period of
construction. The interest costs capitalized on real estate properties for 2001
was $2,329,000 compared to $2,060,000 for 2000 and $1,834,000 for 1999.
Total cash outflows for development for 2001 were $32,340,000. In addition
to the costs incurred for the 12 months ended December 31, 2001 as detailed in
the table below, development costs included $1,649,000 for improvements on
properties transferred to the portfolio in the 12-month period following
transfer and first generation tenant leasing commission costs of $1,605,000.
These costs are reported in Industrial and Other Assets on the balance sheet,
respectively.
Development
Costs Incurred
---------------------------------------
Size at For the 12 Months Cumulative as Estimated
Completion Ended 12/31/01 of 12/31/01 Total Costs
- ----------------------------------------- ----------------- --------------------- ----------------- -----------------
(Unaudited) (Unaudited)
- ----------------------------------------- ----------------- ---------------------------------------------------------
(Square feet) (In thousands)
Lease-Up:
Kyrene II
Tempe, Arizona 60,000 $1,240 3,049 3,710
Walden Distribution Center I
Tampa, Florida 90,000 2,761 3,540 4,240
Techway Southwest I
Houston, Texas 126,000 2,322 4,210 5,040
Sunport Center III
Orlando, Florida 66,000 3,225 3,225 4,000
----------------- --------------------- ----------------- -----------------
Total Lease-up 342,000 9,548 14,024 16,990
----------------- --------------------- ----------------- -----------------
Under Construction:
World Houston XIV
Houston, Texas 77,000 2,333 2,333 3,575
Americas 10 Business Center I
El Paso, Texas 97,000 2,287 2,287 3,320
World Houston XIII
Houston, Texas 51,000 1,299 1,299 2,795
World Houston XII
Houston, Texas 59,000 532 532 2,932
Metro Airport Commerce Center I
Jackson, Mississippi 32,000 326 326 1,700
Tower Automotive
Jackson, Mississippi 170,000 384 384 9,300
----------------- --------------------- ----------------- -----------------
Total Under Construction 486,000 7,161 7,161 23,622
----------------- --------------------- ----------------- -----------------
Prospective Development
(Principally Land):
Phoenix, Arizona 103,000 1,017 1,254 6,000
Tucson, Arizona 70,000 27 326 3,500
Tampa, Florida 230,000 436 2,271 9,200
Orlando, Florida 249,000 1,099 2,824 14,900
Fort Lauderdale, Florida 140,000 2,374 2,374 9,325
El Paso, Texas 251,000 1,923 1,923 7,580
Houston, Texas 1,057,000 (548) 5,044 50,153
Jackson, Mississippi 29,000 303 303 1,500
----------------- --------------------- ----------------- -----------------
Total Prospective Development 2,129,000 6,631 16,319 102,158
----------------- --------------------- ----------------- -----------------
2,957,000 $23,340 37,504 142,770
================= ===================== ================= =================
Completed Development and
Transferred to Industrial
Properties During the Twelve
Months Ended December 31, 2001:
Interstate Commons II
Phoenix, Arizona 59,000 $ 559 2,768
Palm River North I & III
Tampa, Florida 116,000 765 5,693
Westlake II
Tampa, Florida 70,000 153 3,495
Beach Commerce Center
Jacksonville, Florida 46,000 345 2,374
Sunport Center II
Orlando, Florida 60,000 3,106 3,868
World Houston XI
Houston, Texas 129,000 681 4,402
Glenmont II
Houston, Texas 104,000 233 3,149
Sunport Center I
Orlando, Florida 56,000 (96) 3,026
----------------- --------------------- -----------------
Total Transferred to Industrial 640,000 $ 5,746 28,775
================= ===================== =================
A summary of gains (losses) on real estate investments for the years ended
December 31, 2001, 2000 and 1999 follows:
Gains (Losses) on Real Estate Investments
Net Recognized
Basis Sales Price Gain (Loss)
------------------------------------------------------
(In thousands)
2001
Real estate properties:
Nobel Business Center $ 2,113 5,250 3,137
West Palm II 1,274 1,350 76
109th Street Distribution Center 990 1,232 242
West Palm I 1,463 1,428 (35)
Lakeside Distribution Center 1,165 2,079 914
Other - (23) (23)
------------------------------------------------------
$ 7,005 11,316 4,311
======================================================
2000
Real estate properties:
LeTourneau Center of Commerce $ 1,592 1,593 1
8150 Leesburg Pike-deferred gain (94) - 94
La Vista Crossing Apartments 6,472 14,528 8,056
Estelle land 429 1,049 620
------------------------------------------------------
$ 8,399 17,170 8,771
======================================================
1999
Real estate properties:
8150 Leesburg Pike Office Building $13,917 28,082 14,165
2020 Exchange 867 997 130
Waldenbooks 21,360 21,077 (283)
West Palm write-down 448 - (448)
Mortgage loans:
Country Club-deferred gain (1,127) - 1,127
Gainesville-deferred gain (388) - 388
Country Club land purchase-leaseback 500 500 -
Estelle land 137 367 230
LNH land 19 137 118
Other - (70) (70)
------------------------------------------------------
$35,733 51,090 15,357
======================================================
The following schedule indicates approximate future minimum rental receipts
under noncancelable leases for the real estate properties by year as of December
31, 2001 (in thousands):
Future Minimum Rental Receipts Under Noncancelable Leases
Years Ended December 31,
2002 $75,588
2003 61,684
2004 46,170
2005 34,697
2006 25,180
Thereafter 51,568
----------------
Total minimum receipts $294,887
================
Ground Leases
As of December 31, 2001, the Company owned two properties in Florida, two
properties in Texas, and one property in Mississippi that are subject to ground
leases. These leases have terms of 40 to 75 years, expiration dates of August
2031 to November 2076, and renewal options of 15 to 35 years. Total lease
expenditures for the years ended December 31, 2001, 2000 and 1999 were $594,000,
$567,000 and $511,000, respectively. Payments on four of the properties are
subject to increases at 5 to 10 year intervals based upon the agreed or
appraised fair market value of the leased premises on the adjustment date. The
following schedule indicates approximate future minimum lease payments for these
properties by year as of December 31, 2001 (in thousands):
Future Minimum Ground Lease Payments
Years Ended December 31,
2002 $ 600
2003 600
2004 600
2005 600
2006 600
Thereafter 17,203
----------------
Total minimum payments $20,203
================
(3) MORTGAGE LOANS RECEIVABLE
A summary of mortgage loans follows:
December 31,
----------------------------
2001 2000
------------- --------------
(In thousands)
First mortgage loans:
Industrial (1 loan in 2001, 2 loans in 2000) $5,500 9,174
Other (1 loan) 15 17
------------- --------------
$5,515 9,191
============= ==============
The weighted average interest rate on the Company's mortgage loans for both
periods is approximately 9.0%. Deferred gains recognized on the payoff of
mortgage notes receivable were zero in 2001 and 2000 and $1,515,000 in 1999.
(4) INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS
The investment in real estate investment trusts (REITs) consists of the
following:
December 31, 2001 December 31, 2000
------------------------------ -------------------------
Estimated Estimated
Cost Fair Value Cost Fair Value
-------------- --------------- ----------- -------------
(In thousands)
Pacific Gulf Properties $ - 487 - 2,983
Other 5,258 5,965 4,964 5,085
-------------- --------------- ----------- -------------
$5,258 6,452 4,964 8,068
============== =============== =========== =============
During 2000, the Company received liquidating distributions from Franklin
Select Realty Trust and initial liquidating distributions from Pacific Gulf
Properties (PAG). The liquidating distributions received reduced the basis in
these investments to zero with the remainder recorded as gain on securities in
2000. During 2001, the Company received additional liquidating distributions
from PAG, which were recorded as realized gains when received. Final
distributions, if any, will also be recorded as realized gains when received.
(5) OTHER ASSETS
The Company's other assets are comprised of:
December 31,
----------------------------
2001 2000
-------------- -------------
(In thousands)
Leasing commissions, net of accumulated amortization $ 9,313 8,177
Receivables, net of allowance for doubtful accounts 8,473 5,673
Section 1031 tax deferred exchange cash escrows 2,074 4,027
Prepaid expenses and other assets 6,149 3,673
-------------- -------------
$26,009 21,550
============== =============
(6) NOTES PAYABLE TO BANKS
The Company had a three-year $150,000,000 unsecured revolving credit facility
with a group of ten banks that matured in January 2002 and was refinanced as
specified below. The interest rate was based on the Eurodollar rate plus 1.25%
and was 3.1875% on $74,000,000 at December 31, 2001 and 8.00% on $92,000,000 at
December 31, 2000. An unused facility fee of .25% was also assessed on this
loan.
The Company had a one-year $10,000,000 unsecured revolving credit facility
with Chase Bank of Texas that matured in January 2002 and was refinanced as
specified below. The interest rate was based on Chase Bank of Texas, National
Association's prime rate less .75% and was 4.00% on $558,000 at December 31,
2001 and 8.75% on $10,000,000 at December 31, 2000.
The Company had a $15,000,000 unsecured discretionary line of credit with
Chase Bank of Texas. The interest rate for the line was negotiated at the time
of any advances. At December 31, 2001, the rate for this loan was 3.00% on a
balance of $11,500,000, payable on demand. At December 31, 2000, the outstanding
balance for this loan was zero.
The foregoing three credit facilities matured and were repaid in January
2002. In January 2002, the Company closed a new three-year, $175,000,000
unsecured revolving credit facility with a group of ten banks, which was
arranged by PNC Bank, NA. The interest rate on the facility is based on the
Eurodollar rate and varies according to debt-to-total asset value ratios.
EastGroup's current interest rate for this facility is the Eurodollar rate plus
1.15%. At the loan closing, EastGroup elected a six-month interest period for
$50,000,000 of its total outstanding line of $84,000,000 with an interest rate
of 3.14% and the remaining $34,000,000 for a one-month period at an interest
rate of 3.01%. The rate on the $34,000,000 is currently reset on a monthly basis
and was last reset on March 8, 2002 at 3.03%.
In January 2002, the Company also secured a one-year $12,500,000 unsecured
revolving credit facility with PNC Bank, NA that matures in January 2003. The
interest rate on this facility is based on the LIBOR rate and varies according
to debt-to-total asset value ratios. EastGroup's current interest rate for this
facility is the LIBOR rate plus 1.075%.
Loan commitment fees of $37,500 per year were paid in 2001, 2000 and 1999.
Average bank borrowings were $82,898,000 in 2001 compared to $107,221,000
in 2000 with average interest rates of 5.72% in 2001 compared to 7.83% in 2000.
Amortization of bank loan costs was $264,000 in both 2001 and 2000. Average
interest rates including amortization of loan costs were 6.05% for 2001 and
8.07% for 2000.
(7) MORTGAGE NOTES PAYABLE
A summary of mortgage notes payable follows:
Carrying Amount
Of Securing Balance at December 31,
P&I Maturity Real Estate at ------------------------------
Property Rate Payment Date December 31, 2001 2001 2000
- --------------------------------------- ------------ ------------ ------------ ------------------- ---------------- -------------
(In thousands)
Northwest Point Business Park 7.750% $ 32,857 03/01/01 $ - - 3,837
University Business Center
(120 & 130 Cremona) 7.450% 74,235 02/28/02 10,434 8,105 8,380
Estrella Distribution Center 9.250% 23,979 01/02/03 4,834 2,404 2,461
Deerwood Distribution Center 8.375% 16,339 07/01/03 3,254 1,451 1,516
Eastlake Distribution Center 8.500% 57,115 07/05/04 9,097 3,819 4,164
56th Street Commerce Park 8.875% 21,816 08/01/04 4,436 1,898 1,987
Chamberlain Distribution Center 8.750% 21,376 01/01/05 3,614 2,326 2,372
Exchange Distribution Center 8.375% 21,498 08/01/05 2,988 2,096 2,175
Westport Commerce Center 8.000% 28,021 08/01/05 5,185 2,790 2,898
LakePointe Business Park 8.125% 81,675 10/01/05 9,323 10,312 10,437
Jetport, JetPort 515 & Jetport 516 8.125% 33,769 10/01/05 5,242 3,360 3,487
Huntwood Associates 7.990% 100,250 08/22/06 16,356 11,933 12,172
Wiegman Associates 7.990% 46,269 08/22/06 8,801 5,507 5,618
World Houston 1 & 2 7.770% 33,019 04/15/07 5,646 4,383 4,436
E. University, 7th St, 55th St,
Ethan Allen 8.060% 96,974 06/26/07 22,724 11,693 11,905
Lamar II Distribution Center 6.900% 16,925 12/01/08 6,248 2,030 2,090
Dominguez, Kingsview, Walnut,
Washington, Industry and Shaw 6.800% 358,770 03/01/09 59,626 43,655 44,945
Auburn Facility 8.875% 64,885 09/01/09 14,725 4,307 4,696
Interstate Distribution, Venture,
Stemmons, Glenmont, West Loop,
Butterfield, Founders, and Rojas 7.250% 325,263 05/01/11 49,535 44,619 -
America Plaza, Central Green,
World Houston 3&4, 5, 6, 7&8, 9 7.920% 191,519 05/10/11 30,489 26,057 26,282
University Business Center
(125 & 175 Cremona) 7.980% 88,607 06/01/12 14,321 11,255 11,413
Kyrene Distribution Center 9.000% 11,246 07/01/14 2,659 1,014 1,053
North Shore Improvement Bonds 6.3-7.750% Semiannual 09/02/16 - - 385
------------------- ---------------- -------------
$ 289,537 205,014 168,709
=================== ================ =============
Principal payments due during the next five years as of December 31, 2001 are as
follows (in thousands):
2002 $13,107
2003 8,975
2004 9,775
2005 23,596
2006 20,039
(8) STOCKHOLDERS' EQUITY
Management Incentive Plan-Stock Options/Incentive Awards
In 1994, the Company adopted the 1994 Management Incentive Plan, and the Plan
was amended in 1999. As amended, the Plan includes stock options (50% vested
after one year and the other 50% after two years), an annual incentive award and
restricted stock awards.
Stock option activity for the 1994 plan is as follows:
Years Ended December 31,
------------------------------------------------------------------------------
2001 2000 1999
------------------------- --------------------------- ------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------- ----------- ------------- ------------- ------------ -----------
Outstanding at beginning of year 714,923 $17.801 861,423 17.680 645,633 16.600
Granted 24,500 22.591 50,750 20.766 239,000 20.320
Exercised (40,750) 18.487 (108,000) 16.578 (22,210) 14.340
Expired (2,250) 20.542 (89,250) 19.809 (1,000) 22.000
------------- ------------ ------------
Outstanding at end of year 696,423 17.921 714,923 17.801 861,423 17.680
============= ============ ============
Exercisable at end of year 647,923 $17.634 575,798 17.156 618,923 16.640
Available for grant at end of year 187,095 - 222,378 - 376,505 -
Price range of options:
Outstanding $12.670-23.400 12.670-22.375 12.000-22.375
Exercised 12.670-22.125 12.000-22.000 12.000-18.170
Exercisable 12.670-22.375 12.670-22.375 12.000-22.375
The weighted average contractual life of the options outstanding as of
December 31, 2001 was 5.52 years.
The annual incentive award program began in 1995 and the Compensation
Committee determines awards based on actual funds from operations per share
("FFO") compared to goals set for the year. The 2001, 2000 and 1999 awards were
expensed in these years and approximated $382,000, $448,000 and $435,000,
respectively. The awards for each year were payable 60% in cash and 40% in stock
of the Company.
On December 5, 2000, under the 1994 Management Incentive Plan, the
Compensation Committee granted 181,250 shares of restricted stock to all
employees, effective January 1, 2000. The purpose of the plan is to act as a
retention device since it allows participants to benefit from dividends as well
as potential stock appreciation. The stock price on the grant date was $20.50.
The restricted period for the stock is 10 years and vesting is 20% at the end of
the sixth year through the tenth year or, if certain performance goals are
achieved, vesting could reach up to 40% at the end of the fourth year with 10%
at the end of the fifth year through the tenth year. The Company recorded
$3,716,000 as additional paid-in capital when the shares were granted, offset by
unearned compensation of the same amount. The unearned compensation was deducted
from stockholders' equity and is being amortized 10% each year over the
restricted period. In 2001, 15,000 additional shares were granted and 17,000
shares were forfeited. Compensation expense for the restricted stock was
$372,000 each year for both 2001 and 2000. During the restricted period, the
Company accrues dividends and holds the certificates for the shares; however,
the employee can vote the shares. Share certificates and dividends will be
delivered to the employee as they vest.
Directors Stock Option Plan
The Company has a Directors Stock Option Plan, as amended in 1994, under which
an aggregate of 150,000 shares of common stock were reserved for issuance upon
exercise of any options granted. An additional 150,000 shares were reserved in
2000. Under the Directors plan, each Non-Employee Director is granted an initial
7,500 options and 2,250 additional options on the date of any Annual Meeting at
which the Director is reelected to the Board.
Stock option activity for the Director plan is as follows:
Years Ended December 31,
-----------------------------------------------------------------------------
2001 2000 1999
------------------------- ------------------------- -------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
----------- ------------- ----------- ------------- ----------- -------------
Outstanding at beginning of year 96,000 $17.231 96,750 15.780 78,000 14.710
Granted 13,500 21.400 13,500 21.750 18,750 20.250
Exercised - - (14,250) 11.695 - -
Expired - - - - - -
----------- ----------- -----------
Outstanding at end of year 109,500 17.744 96,000 17.231 96,750 15.780
=========== =========== ===========
Exercisable at end of year 109,500 $17.744 96,000 17.231 96,750 15.780
Available for grant at end of year 129,750 - 143,250 - 6,750 -
Price range of options:
Outstanding $11.250-21.750 11.250-21.750 10.670-20.625
Exercised - 10.670-14.580 -
Exercisable 11.250-21.750 11.250-21.750 10.670-20.625
The weighted average contractual life of the options outstanding as of
December 31, 2001 was 5.94 years.
Series A 9.00% Cumulative Redeemable Preferred Stock
In June 1998, EastGroup sold 1,725,000 shares of Series A 9.00% Cumulative
Redeemable Preferred Stock at $25.00 per share in a public offering. The
preferred stock, which may be redeemed by the Company at $25.00 per share, plus
accrued and unpaid dividends, on or after June 19, 2003, has no stated maturity,
sinking fund or mandatory redemption and is not convertible into any other
securities of the Company.
The Company declared dividends of $2.25 per share of Series A Preferred for
each year in 2001, 2000 and 1999.
Series B 8.75% Cumulative Convertible Preferred Stock
In September 1998, EastGroup entered into an agreement with Five Arrows Realty
Securities II, L.L.C. (Five Arrows), an investment fund managed by Rothschild
Realty, Inc., a member of the Rothschild Group, providing for the sale of
2,800,000 shares of Series B 8.75% Cumulative Convertible Preferred Stock at a
net price of $24.50 per share. In December 1998, EastGroup sold $10,000,000 of
the Series B Preferred Stock to Five Arrows. The Company sold the remaining
$60,000,000 to Five Arrows in September 1999. In connection with this offering,
EastGroup has entered into certain related agreements with Five Arrows,
providing, among other things, for certain registration rights with respect to
the Series B Preferred Stock.
The Series B Preferred Stock, which is convertible into common stock at a
conversion price of $22.00 per share (3,182,000 common shares), is entitled to
quarterly dividends in arrears equal to the greater of $0.547 per share or the
dividend on the number of shares of common stock into which a share of Series B
Preferred Stock is convertible.
The Series B Preferred Stock is not redeemable by the Company at its option
prior to the fifth anniversary of the original date of issuance of the Series B
Preferred Stock. On and after January 1, 2004, the Series B Preferred Stock is
redeemable by the Company at its option. Beginning in 2004, the Series B
Preferred Stock is redeemable at 104% of par, plus accrued and unpaid dividends,
declining to 103%, 102% and 101% of par in each subsequent year. Beginning
January 1, 2008 and thereafter, the Series B Preferred Stock is redeemable at
par. Holders of shares of the Series B Preferred Stock have 30 days following
the Company's written notice of redemption to exercise their conversion rights.
The Series B Preferred Stock may be redeemed in part so long as the initial
redemption is for not less than 50% of the outstanding shares.
The Company declared dividends of $2.188 per share of Series B Preferred
for each year in 2001, 2000 and 1999.
Common Stock Repurchase Plan
EastGroup's Board of Directors has authorized the repurchase of up to 1,500,000
shares of its outstanding common stock. The shares may be purchased from time to
time in the open market or in privately negotiated transactions. The Company did
not repurchase any shares during 2001. Since September 30, 1998, a total of
827,700 shares have been repurchased for $14,170,000 (an average of $17.12 per
share) with 672,300 shares still available for repurchase.
Shareholder Rights Plan
In December 1998, EastGroup adopted a Shareholder Rights Plan designed to
enhance the ability of all of the Company's stockholders to realize the
long-term value of their investment. Under the Plan, Rights were distributed as
a dividend on each share of Common Stock (one Right for each share of Common
Stock) held as of the close of business on December 28, 1998. A Right was also
delivered with all shares of Common Stock issued after December 28, 1998 and
1.1364 Rights were delivered with all shares of EastGroup's Series B Cumulative
Convertible Preferred Stock issued after December 28, 1998. The Rights will
expire at the close of business on December 3, 2008.
Each whole Right will entitle the holder to buy one one-thousandth (1/1000)
of a newly issued share of EastGroup's Series C Preferred Stock at an exercise
price of $70.00. The Rights attach to and trade with the shares of the Company's
Common Stock and Series B Preferred Stock. No separate Rights Certificates will
be issued unless an event triggering the Rights occurs. The Rights will detach
from the Common Stock and Series B Preferred Stock and will initially become
exercisable for shares of Series C Preferred Stock if a person or group acquires
beneficial ownership of, or commences a tender or exchange offer which would
result in such person or group beneficially owning 15% or more of EastGroup's
Common Stock, except through a tender or exchange offer for all shares which the
Board determines to be fair and otherwise in the best interests of EastGroup and
its shareholders. The Rights will also detach from the Common Stock and Series B
Preferred Stock if the Board determines that a person holding at least 9.8% of
EastGroup's Common Stock intends to cause EastGroup to take certain actions
adverse to it and its shareholders or that such holder's ownership would have a
material adverse effect on EastGroup.
If any person becomes the beneficial owner of 15% or more of EastGroup's
Common Stock (except for Five Arrows either as a result of the ownership of the
Series B Preferred Stock or in the event of conversion of the Series B Preferred
Stock into common) and the Board of Directors does not within 10 days thereafter
redeem the Rights, or a 9.8% holder is determined by the Board to be an adverse
person, each Right not owned by such person or related parties will then enable
its holder to purchase, at the Right's then-current exercise price, EastGroup
Common Stock (or, in certain circumstances as determined by the Board, a
combination of cash, property, common stock or other securities) having a value
of twice the Right's exercise price.
Under certain circumstances, if EastGroup is acquired in a merger or
similar transaction with another person, or sells more than 50% of its assets,
earning power or cash flow to another entity, each Right that has not previously
been exercised will entitle its holder to purchase, at the Right's then-current
exercise price, common stock of such other entity having a value of twice the
Right's exercise price.
EastGroup will generally be entitled to redeem the Rights at $0.0001 per
Right at any time until the 10th day following public announcement that a 15%
position has been acquired, or until the Board has determined a 9.8% holder to
be an adverse person. Prior to such time, the Board of Directors may extend the
redemption period.
Dividend Reinvestment Plan
The Company has a dividend reinvestment plan that allows stockholders to
reinvest cash distributions in new shares of the Company.
Fair Value of Stock Options
In accordance with SFAS No. 123, the following additional disclosures are
required related to options granted after January 1, 1995. The fair value of
each option grant is estimated on the grant date using the Black-Scholes option
pricing model with the following weighted-average assumptions used for 2001,
2000 and 1999, respectively: risk-free interest rates of 4.31%, 5.04%, and
6.49%; dividend yields of 11.42%, 12.13% and 9.75%; volatility factors of 20.0%,
19.3%, and 17.0%, and expected option lives of five years for all years
presented.
The Company applies APB No. 25 and related interpretations in accounting
for its plans. Accordingly, no compensation cost has been recognized for its
stock option plans. Had compensation cost been determined based on fair value at
the grant dates for awards under the plan consistent with the method prescribed
by SFAS No. 123, the Company's net income and net income per basic share would
have been reduced to the pro forma amounts indicated below:
------------- ---------- ------------
2001 2000 1999
------------- ---------- ------------
(In thousands, except per share data)
Net income available to common stockholders
as reported $24,174 26,504 32,229
Net income available to common stockholders
pro forma 24,107 26,414 32,058
Net income per basic share - as reported 1.54 1.70 2.01
Net income per basic share - pro forma 1.54 1.69 2.00
Weighted average fair value of options
granted during year .68 .55 .97
Earnings Per Share
The Company applies SFAS No. 128, "Earnings Per Share," which requires companies
to present basic EPS and diluted EPS. Reconciliation of the numerators and
denominators in the basic and diluted EPS computations is as follows:
Reconciliation of Numerators and Denominators
----------- ------------ -----------
2001 2000 1999
----------- ------------ -----------
(In thousands)
Basic EPS Computation
Numerator-net income available to common stockholders $24,174 26,504 32,229
Denominator-weighted average shares outstanding 15,697 15,623 16,046
Diluted EPS Computation
Numerator-net income available to common stockholders plus
convertible preferred stock dividends ($2,246 in 1999)
and limited partnership distributions ($18 in 2000
and $48 in 1999) $24,174 26,522 34,523
Denominator:
Weighted average shares outstanding 15,697 15,623 16,046
Common stock options 164 147 112
Nonvested restricted stock 185 13 -
Limited partnership units - 15 32
Convertible preferred stock - - 1,172
----------- ------------ -----------
Total Shares 16,046 15,798 17,362
=========== ============ ===========
The Series B Preferred Stock, which is convertible into common stock at a
conversion price of $22.00 per share, was not included in the computation of
diluted earnings per share for the years ended December 31, 2001 and 2000 due to
its antidilutive effect.
Comprehensive Income
Comprehensive income comprises net income plus all other changes in equity from
nonowner sources. The components of comprehensive income for 2001, 2000 and 1999
are presented in the Company's Consolidated Statements of Changes in
Stockholders' Equity. The unrealized change in investment securities is net of
realized gains on real estate investment trust securities included in net income
as shown below:
2001 2000 1999
----------- ----------- -----------
(In thousands)
Other comprehensive income:
Unrealized holding gains during the period $ 1,056 4,590 91
Less reclassification adjustment for gains included in net income (2,967) (2,154) (30)
----------- ----------- -----------
Net unrealized change in investment securities ($1,911) 2,436 61
=========== =========== ===========
(9) QUARTERLY RESULTS OF OPERATIONS - UNAUDITED
----------------------------------------------- -----------------------------------------------
2001 2000
Quarter Ended Quarter Ended
----------------------------------------------- -----------------------------------------------
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31
(In thousands, except per share data)
Revenues $ 24,774 26,357 27,695 26,469 23,141 23,606 24,601 26,755
Expenses (17,961) (18,646) (19,085) (19,732) (16,177) (17,211) (17,667) (19,307)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before gain (loss)
on real estate investments 6,813 7,711 8,610 6,737 6,964 6,395 6,934 7,448
Gain (loss) on real estate
investments - 3,455 (35) 891 1 620 94 8,056
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income 6,813 11,166 8,575 7,628 6,965 7,015 7,028 15,504
Preferred dividends (2,502) (2,502) (2,502) (2,502) (2,502) (2,502) (2,502) (2,502)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income available to
common stockholders $ 4,311 8,664 6,073 5,126 4,463 4,513 4,526 13,002
=========== =========== =========== =========== =========== =========== =========== ===========
BASIC PER SHARE DATA
Net income available to
common stockholders $ 0.28 0.55 0.39 0.33 0.29 0.29 0.29 0.83
=========== =========== =========== =========== =========== =========== =========== ===========
Weighted average shares
oustanding 15,673 15,692 15,702 15,719 15,569 15,624 15,643 15,656
=========== =========== =========== =========== =========== =========== =========== ===========
DILUTED PER SHARE DATA
Net income available to
common stockholders $ 0.27 0.53 0.38 0.32 0.28 0.29 0.29 0.76
=========== =========== =========== =========== =========== =========== =========== ===========
Weighted average shares
oustanding 16,029 19,208 16,045 16,084 15,732 15,785 15,828 19,022
=========== =========== =========== =========== =========== =========== =========== ===========
The above quarterly earnings per share calculations are based on the weighted
average number of common shares outstanding during each quarter for basic
earnings per share and the weighted average number of outstanding common shares
and common share equivalents during each quarter for diluted earnings per share.
The annual earnings per share calculations in the Consolidated Statements of
Income are based on the weighted average number of common shares outstanding
during each year for basic earnings per share and the weighted average number of
outstanding common shares and common share equivalents during each year for
diluted earnings per share.
The Series B Preferred Stock, which is convertible into common stock, was
included in the computation of diluted earnings per share for the quarters ended
June 30, 2001, and December 31, 2000 due to its dilutive effect in such
quarters.
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 2001 and 2000. SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments," defines the fair value
of a financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties.
------------------------------- ---------------------------
2001 2000
---------------- -------------- ------------ --------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------------- -------------- ------------ --------------
(In thousands)
Financial Assets
Cash and cash equivalents $ 1,767 1,767 2,861 2,861
Investment in real estate
investment trusts 6,452 6,452 8,068 8,068
Mortgage loans receivable 5,515 5,517 9,191 9,193
Financial Liabilities
Mortgage notes payable 205,014 210,514 168,709 175,592
Notes payable to banks 86,058 86,058 102,000 102,000
Carrying amounts shown in the table are included in the balance sheet under the
indicated captions.
The following methods and assumptions were used to estimate fair value of
each class of financial instruments:
Cash and Cash Equivalents: The carrying amounts approximate fair value
because of the short maturity of those instruments.
Investment in Real Estate Investment Trusts: The carrying amount is the
fair value of this equity investment based on quoted market prices.
Mortgage Loans: The fair value of performing mortgage loans is either
estimated using discounted cash flows at current interest rates for loans with
similar terms and maturities or based on the estimated value of the underlying
collateral adjusted for the borrower's payment history and financial strength.
The Company has no nonperforming loans for the periods presented.
Mortgage Notes Payable: The fair value of the Company's mortgage notes
payable is estimated based on the quoted market prices for similar issues or by
discounting expected cash flows at the rates currently offered to the Company
for debt of the same remaining maturities, as advised by the Company's bankers.
Notes Payable to Banks: The carrying amounts approximate fair value because
of the variable rates of interest on the debt.
(11) SEGMENT REPORTING
The Company applies SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information." This statement establishes standards for the reporting
of information about operating segments in annual and interim financial
statements. Operating segments are defined as components of an enterprise for
which separate financial information is available that is evaluated regularly by
the chief operating decision makers in deciding how to allocate resources and in
assessing performance.
EastGroup has one reportable segment--industrial properties. These
properties are concentrated in major sunbelt regions of the United States and
have similar economic characteristics and also meet the other criteria that
permit the industrial properties to be aggregated into one reportable segment.
The Company's chief decision makers use two primary measures of operating
results in making decisions, such as allocating resources: property net
operating income (PNOI), defined as real estate operating revenues less real
estate operating expenses (before interest expense and depreciation), and funds
from operations (FFO), defined as net income (loss) (computed in accordance with
generally accepted accounting principles (GAAP)), excluding gains or losses from
sales of depreciable real estate property, plus real estate related depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Effective January 1, 2000, NAREIT clarified the definition of
FFO to include gains from sales of nondepreciable real estate (land). The
Company uses FFO as a measure of the performance of its industry as an equity
real estate investment trust. FFO is not considered as an alternative to net
income (determined in accordance with GAAP) as an indication of the Company's
financial performance or to cash flows from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs, including its
ability to make distributions. The table below presents on a comparative basis
for the three fiscal years reported PNOI, followed by reconciliations of PNOI to
FFO and FFO to net income.
-------------- ------------ ------------
2001 2000 1999
-------------- ------------ ------------
(In thousands)
Property Revenues:
Industrial $99,070 90,176 77,677
Other 1,490 3,730 5,643
-------------- ------------ ------------
100,560 93,906 83,320
-------------- ------------ ------------
Property Expenses:
Industrial (25,183) (21,055) (17,723)
Other (454) (1,304) (2,218)
-------------- ------------ ------------
(25,637) (22,359) (19,941)
-------------- ------------ ------------
Property Net Operating Income:
Industrial 73,887 69,121 59,954
Other 1,036 2,426 3,425
-------------- ------------ ------------
Total Property Net Operating Income 74,923 71,547 63,379
-------------- ------------ ------------
Gain on securities 2,967 2,154 30
Gain on nondepreciable real estate investments - 620 -
Other income 1,768 2,043 2,886
Interest expense (17,823) (18,570) (17,688)
General and administrative expense (4,573) (5,607) (4,519)
Minority interest in earnings (511) (535) (674)
Dividends on Series A preferred shares (3,880) (3,880) (3,880)
Limited partnership unit distributions - 18 48
-------------- ------------ ------------
Funds From Operations 52,871 47,790 39,582
Depreciation and amortization (27,041) (23,449) (20,239)
Share of joint venture depreciation and amortization 161 158 241
Gain on depreciable real estate investments 4,311 8,151 15,357
Limited partnership unit distributions - (18) (48)
Dividends on Series B convertible preferred shares (6,128) (6,128) (2,246)
Cumulative effect of change in accounting principle - - (418)
-------------- ------------ ------------
Net Income Available to Common Stockholders 24,174 26,504 32,229
Dividends on preferred shares 10,008 10,008 6,126
-------------- ------------ ------------
NET INCOME $34,182 36,512 38,355
============== ============ ============
Assets:
Industrial $727,264 668,053 616,078
Other 7,069 - 6,919
-------------- ------------ ------------
734,333 668,053 622,997
Less accumulated depreciation (92,060) (66,492) (46,829)
-------------- ------------ ------------
642,273 601,561 576,168
-------------- ------------ ------------
Real estate held for sale 1,907 26,602 18,051
Less accumulated depreciation (141) (3,628) (4,750)
-------------- ------------ ------------
1,766 22,974 13,301
-------------- ------------ ------------
Mortgage loans 5,515 9,191 8,706
Investment in real estate investment trusts 6,452 8,068 15,708
Cash 1,767 2,861 2,657
Other assets 26,009 21,550 15,611
-------------- ------------ ------------
Total Assets $683,782 666,205 632,151
============== ============ ============
REAL ESTATE INVESTMENT CAPITAL EXPENDITURES
Acquisitions $13,804 13,628 57,672
Developments 30,735 40,661 45,846
(12) ACCOUNTING CHANGE
Organization Costs
In April 1998, Statement of Position (SOP) No. 98-5, "Reporting on the Costs of
Start-Up Activities," was issued. This SOP provides guidance on the financial
reporting of start-up costs and organization costs, and requires that these
costs be expensed as incurred effective for fiscal years beginning after
December 15, 1998. Unamortized organization costs of $418,000 were written off
in first quarter 1999 and accounted for as a cumulative effect of a change in
accounting principle. The accounting change reduced basic and diluted earnings
per share $.03 and $.02, respectively, in 1999.
(13) RELATED PARTY TRANSACTIONS
EastGroup and Parkway Properties, Inc. currently share the services and expenses
of the Company's Chairman of the Board and his administrative assistant.
In July 1999, EastGroup acquired the remaining 25% ownership interests in
Jetport Commerce Park and 56th Street Commerce Park in Tampa from our partner,
an officer of the Company, Anthony J. Bruno, for $3,588,000 giving the Company
100% ownership of these two complexes.
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
THE DIRECTORS AND STOCKHOLDERS
EASTGROUP PROPERTIES, INC.:
Under date of March 6, 2002 we reported on the consolidated balance sheets
of EastGroup Properties, Inc., and subsidiaries, as of December 31, 2001 and
2000, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2001, which are included in the 2001 Annual Report on
Form 10-K. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related consolidated financial
statement schedules as listed in Item 14 (a)(2) of Form 10-K. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Jackson, Mississippi KPMG LLP
March 6, 2002
SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001 (IN THOUSANDS)
Costs Capitalized
Initial Cost to Subsequent to Gross Amount at Which
the Company Acquisition Carried at Close of Period
---------------------- ----------------- ---------------------------
Accumulated
Buildings and Capitalized Buildings and Depreciation Year Year
Description Encumbrances Land Improvements Costs Other Land Improvements Total Dec. 31, 2001 Acquired Constructed
- ------------------------------------------------------------------------------------------------------------------------------------
Real estate
properties
(c) and (d):
Industrial:
FLORIDA
56th Street $ 1,898 843 3,567 1,509 - 843 5,076 5,919 1,483 1993 1981/86/97
Airport
Commerce - 1,257 4,012 483 - 1,257 4,495 5,752 469 1998 1998
Altamonte - 1,518 2,661 296 - 1,518 2,957 4,475 487 1999 1980/1982
Benjamin I & II - 843 3,963 54 40 883 4,017 4,900 713 1997 1996
Blue Heron - 975 3,626 768 - 975 4,394 5,369 476 1999 1986
Chancellor
Distribution - 291 1,711 16 - 291 1,727 2,018 383 1996/97 1996/97
Cypress Creek - - 2,465 568 - - 3,033 3,033 495 1997 1986
Deerwood 1,451 1,147 1,799 1,159 - 1,147 2,958 4,105 851 1989 1978
Ellis Dist.
Center - 540 7,513 426 - 540 7,939 8,479 1,046 1997 1977
Exchange
Distribution 2,096 603 2,414 854 - 603 3,268 3,871 883 1994 1975
Interstate
Commerce - 485 2,652 314 - 485 2,966 3,451 591 1998 1988
Jetport
517 & 518 - 541 2,175 152 - 541 2,327 2,868 360 1999 1981/1982
JetPort Commerce
Park 3,360 1,034 4,416 1,673 - 1,034 6,089 7,123 1,881 1993/94/95 1974/79/85
John Young Commerce
Center II - 512 3,613 (363) - 512 3,250 3,762 409 1998 1999
John Young Commerce
Center I - 497 2,444 282 - 497 2,726 3,223 367 1997/98 1997/98
Sunbelt II - 191 575 190 - 191 765 956 321 1989 1974
Lake Pointe 10,312 3,442 6,450 2,529 - 3,442 8,979 12,421 3,098 1993 1986/87
Linpro
Distribution - 613 2,243 470 3 616 2,713 3,329 569 1996 1986
Lockhart Dist.
Center - - 3,489 772 - - 4,261 4,261 662 1997 1986
Benjamin III - 407 1,503 8 - 407 1,511 1,918 391 1999 1988
Palm River I - 540 2,131 240 - 540 2,371 2,911 370 1997 1990
Palm River II - 650 2,494 197 - 650 2,691 3,341 725 1997/98 1997/98
Palm River North II - 724 4,418 60 (90) 634 4,478 5,112 250 1997/98 1999
Phillips - 1,375 2,961 1,965 - 1,375 4,926 6,301 1,392 1994 1984/95
Premier Beverage - 1,110 6,126 133 (1) 1,109 6,259 7,368 599 1998 1998
Sample 95 II - 815 3,242 (122) - 815 3,120 3,935 362 1998 1999
Sample I-95 - 1,565 6,262 318 - 1,565 6,580 8,145 1,441 1996 1990
Sunbelt - 1,034 5,056 707 - 1,034 5,763 6,797 2,029 1989 1987
Sunbelt II - 249 114 1,989 - 249 2,103 2,352 308 1997/98 1997/98
Walden II - 465 - 4,033 - 465 4,033 4,498 539 1998 1998
Westlake Dist.
Center - 613 4,223 104 - 613 4,327 4,940 592 1998 1999
Westlake II - 720 2,775 191 - 720 2,966 3,686 80 1998 1998
Westport 2,790 980 3,800 1,538 - 980 5,338 6,318 1,133 1994 1983/87
Westside Dist.
Center - 1,170 12,400 1,701 - 1,170 14,101 15,271 1,929 1997 1984
Sunport - 555 1,564 832 - 555 2,396 2,951 104 1999 1999
Sunport II - 597 3,868 (224) - 597 3,644 4,241 153 1999 2001
Beach Commerce
Center - 476 1,899 92 - 476 1,991 2,467 22 2000 2000
Palm River
North I & III - 1,005 4,688 129 - 1,005 4,817 5,822 65 1998 2000
CALIFORNIA
Chestnut Dist.
Center - 1,674 3,465 30 - 1,674 3,495 5,169 248 1998 1999
Dominguez
Dist. (f) 7,126 2,006 8,025 856 - 2,006 8,881 10,887 1,464 1996 1977
Eastlake Dist.
Center 3,819 3,046 6,888 188 - 3,046 7,076 10,122 1,025 1997 1989
Ethan Allen (g) 5,954 2,544 10,175 95 - 2,544 10,270 12,814 1,222 1998 1980
Huntwood
Associates 11,933 3,842 15,368 126 - 3,842 15,494 19,336 2,980 1996 1988
Industry
Dist. (f) 15,034 10,230 12,373 365 - 10,230 12,738 22,968 1,786 1998 1959
Kingsview
Indus. (f) 2,105 643 2,573 - - 643 2,573 3,216 418 1996 1980
Main Street - 1,606 4,103 138 - 1,606 4,241 5,847 337 1999 1999
San Clemente - 893 2,004 - - 893 2,004 2,897 218 1997 1978
Shaw Commerce (f) 9,544 2,465 11,627 489 - 2,465 12,116 14,581 1,650 1998 1978/81/87
University Bus.
Center 19,361 5,517 22,067 1,171 3 5,520 23,238 28,758 4,003 1996 1987/88
Walnut Bus.
Center (f) 5,451 2,885 5,274 169 - 2,885 5,443 8,328 1,020 1996 1966/90
Washington (f) 4,394 1,636 4,900 177 - 1,636 5,077 6,713 729 1997 1996/97
Wiegman
Associates 5,507 2,197 8,788 716 111 2,308 9,504 11,812 1,423 1996 1986/87
Yosemite - 259 7,058 115 - 259 7,173 7,432 764 1999 1974/1987
TEXAS
Ambassador Row - 1,156 4,625 1,125 - 1,156 5,750 6,906 962 1998 1958/1965
America Plaza (h) 3,765 662 4,660 - - 662 4,660 5,322 745 1998 1996
Butterfield Trail
Industrial (i) 16,026 - 19,842 1,694 - - 21,536 21,536 3,469 1997 1995
Central Green (h) 3,369 566 4,031 12 - 566 4,043 4,609 619 1999 1998
Founders Business
Center (i) 1,840 - 2,302 171 - - 2,473 2,473 118 2000 1987
Glenmont I (i) 3,096 496 3,735 (70) - 496 3,665 4,161 220 1998 1999
Glenmont II (i) 2,889 440 2,681 762 - 440 3,443 3,883 169 1998 2000
Interstate III - 520 2,008 52 - 520 2,060 2,580 145 2000 1979
Interstate
I & II (i) 5,947 1,757 4,941 1,294 - 1,757 6,235 7,992 2,514 1988 1978
Lockwood Dist.
Center - 749 5,444 254 - 749 5,698 6,447 705 1997 1968/69
Northwest Point - 1,243 5,640 813 - 1,243 6,453 7,696 1,352 1994 1984/85
Rojas (i) 4,042 900 3,659 873 - 900 4,532 5,432 837 1999 1986
Stemmons Circle
(i) 1,870 363 2,014 136 - 363 2,150 2,513 543 1998 1977
North Stemmons - 619 3,264 47 - 619 3,311 3,930 119 2001 1979
Venture Warehouses
(i) 4,562 1,452 3,762 916 - 1,452 4,678 6,130 1,965 1988 1979
Viscount - 395 1,578 259 - 395 1,837 2,232 290 1998 1965
West Loop I (i) 1,929 465 1,872 255 - 465 2,127 2,592 156 2000 1980
West Loop II (i) 2,418 440 2,511 298 - 440 2,809 3,249 435 1997 1980
World Houston
1 and 2 4,383 660 5,893 240 - 660 6,133 6,793 1,147 1998 1996
World Houston
3,4,5 (h) 5,250 1,025 6,413 138 - 1,025 6,551 7,576 1,230 1998 1998
World Houston
6 (h) 2,378 425 2,423 38 - 425 2,461 2,886 427 1998 1998
World Houston
7 & 8 (h) 6,044 680 4,584 3,035 - 680 7,619 8,299 1,348 1998 1998
World Houston
9 (h) 5,251 800 4,355 1,422 - 800 5,777 6,577 411 1998 1998
World Houston
10 - 933 4,779 7 - 933 4,786 5,719 185 2001 1999
World Houston
11 - 638 3,816 357 - 638 4,173 4,811 85 1999 1999
World Houston
Land (e) - 1,147 - 34 - 1,181 - 1,181 - 2000 n/a
ARIZONA
35th Avenue - 418 2,381 71 - 418 2,452 2,870 311 1997 1967
51st Avenue - 300 2,029 95 - 300 2,124 2,424 339 1998 1987
55th Avenue Dist.
Center (g) 2,191 912 3,717 81 5 917 3,798 4,715 457 1998 1987
7th Street Dist.
Center (g) 903 373 1,490 81 - 373 1,571 1,944 196 1998 1987
Airport Dist. - 1,103 4,672 8 - 1,103 4,680 5,783 550 1998 1995
Broadway Indus.
Center - 837 3,349 390 - 837 3,739 4,576 851 1996 1971
Broadway Indus. #2 - 455 482 79 - 455 561 1,016 77 1999 1971
Broadway Indus. #3 - 775 1,742 24 - 775 1,766 2,541 219 2000 1983
Broadway Indus. #4 - 380 1,652 - - 380 1,652 2,032 102 2000 1986
Chamberlain 2,326 506 3,564 13 - 506 3,577 4,083 469 1997 1994
East University
I and II (g) 2,645 1,120 4,482 90 - 1,120 4,572 5,692 566 1998 1989/87
Estrella East 2,404 628 4,694 98 - 628 4,792 5,420 586 1998 1988
Interstate
Commons - 798 3,632 179 - 798 3,811 4,609 423 1999 1988
Interstate
Commons II - 320 2,447 - - 320 2,447 2,767 26 1999 2000
Kyrene 1,014 850 2,044 47 - 850 2,091 2,941 282 1999 1981
Metro Business
Park - 1,927 7,708 729 - 1,927 8,437 10,364 1,594 1996 1977/79
Southpointe - - 3,982 1,752 - - 5,734 5,734 573 1999 1989
Southpark 918 2,738 68 - 918 2,806 3,724 - 2001 2000
TENNESSEE
Airpark II - 66 263 34 - 66 297 363 40 1998 1975
Airpark Dist. - 250 1,916 138 - 250 2,054 2,304 234 1998 1975
Delp I, II, & III - 1,049 4,197 372 - 1,049 4,569 5,618 639 1998 1977
Getwell - 151 603 109 - 151 712 863 91 1998 1972
JC Penney - 486 1,946 1 - 486 1,947 2,433 230 1998 1972
Lamar I & II 2,030 1,332 5,398 234 - 1,332 5,632 6,964 716 1998 1978/80
Senator Street - 540 2,187 275 - 540 2,462 3,002 316 1997 1982
Senator Street II - 435 1,742 97 - 435 1,839 2,274 206 1998 1968
Southeast Crossing - 1,802 10,267 486 - 1,802 10,753 12,555 1,350 1999 1987/1997
LOUISIANA
Elmwood Business
Park - 2,861 6,337 740 - 2,861 7,077 9,938 1,791 1997 1979
Riverbend Business
Park - 2,592 17,623 665 - 2,592 18,288 20,880 3,573 1997 1984
COLORADO
Rampart - 1,023 3,861 431 - 1,023 4,292 5,315 1,601 1988 1987
Rampart II - 230 2,977 86 - 230 3,063 3,293 744 1996/97 1996/97
Rampart III - 1,098 - 5,053 - 1,098 5,053 6,151 346 1997/98 1999
OKLAHOMA
Braniff Park West - 1,066 4,641 791 - 1,066 5,432 6,498 1,178 1996 1974
Northpointe
Commerce - 777 3,113 1 - 777 3,114 3,891 284 1998 1996/1997
MISSISSIPPI
Interchange Bus.
Park - 343 5,007 458 - 343 5,465 5,808 1,056 1997 1981
MICHIGAN
Auburn Facility 4,307 3,230 12,922 129 - 3,230 13,051 16,281 1,556 1998 1986
---------------------------------------------------------------------------------------------
205,014 122,307 508,637 58,745 71 122,412 567,348 689,760 91,083
---------------------------------------------------------------------------------------------
Industrial Development:
FLORIDA
Orlando Central
Park - lot 60 - 309 - 53 - 309 53 362 - 2000 n/a
Palm River South - 1,309 - 376 - 1,309 376 1,685 - 2000 n/a
Sabal - 351 - 235 - 351 235 586 - 1998 n/a
Walden - 337 - 3,203 - 337 3,203 3,540 75 1997/98 1999
Executive Airport
Commerce Center - 1,987 - 384 4 1,991 384 2,375 - 2001 n/a
Sunport III & IV - 310 - 3,776 - 1,285 2,801 4,086 - 1999 n/a
Sunport V & VI 1,422 - 179 - 1,422 179 1,601 - 2001 n/a
TEXAS
Techway Southwest I - 729 - 3,481 - 729 3,481 4,210 - 2000 2000
Techway Southwest II - 841 - 201 - 841 201 1,042 - 2000 n/a
Techway Southwest III - 841 - 201 - 841 201 1,042 - 1999 n/a
World Houston Land - 2,534 - 427 - 2,961 - 2,961 - 2000 n/a
Americas Ten - 1,997 - 2,212 - 1,997 2,212 4,209 - 2001 n/a
World Houston 14 - 477 - 1,856 - 477 1,856 2,333 - 2000 n/a
World Houston 13 - 282 - 1,017 - 282 1,017 1,299 - 2000 n/a
World Houston 12 - 340 - 192 - 340 192 532 - 2000 n/a
ARIZONA
Kyrene II - 640 - 2,408 - 640 2,408 3,048 38 1999 2000
Airport II - 299 - 27 - 300 26 326 - 2000 n/a
Interstate
Commons III - 237 - 85 - 242 80 322 - 2000 n/a
SanTan 10 - 820 - 112 - 846 86 932 - 2001 n/a
MISSISSIPPI
Metro Airport
Commerce Center - 583 - 45 1 584 45 629 - 2001 n/a
Tower Automotive - - - 384 - - 384 384 - 2001 n/a
---------------------------------------------------------------------------------------------
- 16,645 - 20,854 5 18,084 19,420 37,504 113
---------------------------------------------------------------------------------------------
Office Buildings:
CALIFORNIA
Los Angeles
Corporate Center - 1,363 5,453 253 - 1,363 5,706 7,069 864 1996 1986
----------------------------------------------------------------------------------------------
- 1,363 5,453 253 - 1,363 5,706 7,069 864
----------------------------------------------------------------------------------------------
Operating Properties Held For Sale:
Industrial:
TEXAS
World Houston
land (e) - 765 - 8 - 773 - 773 - 2000 n/a
Carpenter - 208 833 93 - 208 926 1,134 141 1998 1958
----------------------------------------------------------------------------------------------
- 973 833 101 - 981 926 1,907 141
----------------------------------------------------------------------------------------------
Total real estate
owned (a)(b) $205,014 141,288 514,923 79,953 76 142,840 593,400 736,240 92,201
===============================================================================================
(a) Changes in Real Estate Properties follow:
Years Ended December 31,
------------------------
2001 2000 1999
-------------- ------------ ------------
(In thousands)
Balance at beginning of year $694,655 641,048 573,751
Improvements 37,357 51,272 55,243
Purchase of real estate properties 13,804 13,628 57,672
Carrying amount of investments sold (9,576) (11,293) (45,170)
Write-off of depreciated assets - - (448)
------------ ------------ ------------
Balance at end of year (1) $736,240 694,655 641,048
============ ============ ============
(1) Includes 20% minority interest in University Business Center totaling
$5,752,000 at December 31, 2001 and 20% minority interest in University Business
Center and IBG Wiegman Road Associates totaling $7,998,000 at December 31, 2000.
Changes in the accumulated depreciation on real estate properties follow:
Years Ended December 31,
------------------------
2001 2000 1999
-------------- ------------ ------------
(In thousands)
Balance at beginning of year $70,120 51,579 42,836
Depreciation expense 24,439 21,354 18,640
Accumulated depreciation on assets sold (2,352) (2,813) (9,897)
Other (6) - -
------------ ------------ ------------
Balance at end of year $92,201 70,120 51,579
============ ============ ============
(b) The aggregate cost for federal income tax purposes is approximately
$565,068,000. The federal income tax return for the year ended December 31, 2001
has not been filed and, accordingly, the income tax basis of real estate
properties as of December 31, 2001 is based on preliminary data.
(c) Reference is made to impairment losses on real estate investments in the
notes to consolidated financial statements.
(d) The Company computes depreciation using the straight-line method over the
estimated useful lives of the buildings (generally 40 years) and improvements (3
to 10 years).
(e) The investment is not producing income to the Company as of December 31,
2001 and 2000.
(f) EastGroup has a $43,655,000 nonrecourse first mortgage loan with
Metropolitan Life secured by Dominguez, Kingsview, Walnut, Washington, Industry
and Shaw.
(g) EastGroup has an $11,693,000 nonrecourse first mortgage loan with Prudential
Life secured by East University I & II, 7th Street, 55th Street and Ethan Allen.
(h) EastGroup has a $26,057,000 nonrecourse first mortgage loan with New York
Life secured by America Plaza, Central Green and World Houston 3 through 9.
(i) EastGroup has a $44,619,000 nonrecourse first mortgage loan with
Metropolitan Life secured by Interstate Distribution, Venture, Stemmons,
Glenmont I & II, West Loop I & II, Butterfield, Founders and Rojas.
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2001
(In Thousands)
Number of Interest Final Periodic
Loans Rate Maturity Date Payment Terms
------------ ---------------- --------------- -------------------
First mortgage loans (c):
INDUSTRIAL:
Freeport, Houston, Texas 1 9.00% 12/02 Interest monthly
OTHER 1 8.50% 01/08 P&I monthly
------------
Total first mortgage loans 2
============
Principal
Face Amount Carrying Amount of Loans
of Mortgages Amount of Subject to Delinquent
Dec. 31, 2001 Mortgages Principal or Interest (d)
---------------- ------------ -------------------------
First mortgage loans (c):
INDUSTRIAL:
Freeport, Houston, Texas $5,500 $5,500 -
OTHER 15 15 -
---------------- ------------ -------------------------
Total first mortgage loans $5,515 $5,515 (a)(b) -
================ ============ =========================
Notes:
(a) Changes in mortgage loans follow:
Years Ended December 31,
------------------------
2001 2000 1999
--------------------------------------------------------
(In thousands)
--------------------------------------------------------
Balance at beginning of year $9,191 8,706 8,814
Advances on mortgage notes receivable 1,064 4,609 8,186
Payments on mortgage notes receivable (4,740) (4,124) (10,139)
Amortization of discount on loans, net - - 330
Deferred gains - - 1,515
--------------------------------------------------------
Balance at end of year $5,515 9,191 8,706
========================================================
(b) The aggregate cost for federal income tax purposes is approximately
$5,515,000.
(c) Reference is made to allowance for possible losses on real estate
investments in the notes to consolidated financial statements.
(d) Interest or principal in arrears for three months or less is disregarded in
computing principal amount of loans subject to delinquent principal or interest.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EASTGROUP PROPERTIES, INC.
By: /s/ David H. Hoster II
David H. Hoster II, Chief Executive
Officer, President & Director
March 13, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
* *
D. Pike Aloian, Director Alexander G. Anagnos, Director
March 12, 2002 March 12, 2002
* *
H. C. Bailey, Jr., Director Hayden C. Eaves III, Director
March 12, 2002 March 12, 2002
* *
Fredric H. Gould, Director David M. Osnos, Director
March 12, 2002 March 12, 2002
* * /s/ N. Keith McKey
Leland R. Speed, Chairman of the Board By N. Keith McKey, Attorney-in-fact
(Principal Executive Officer) March 13, 2002
March 12, 2002
/s/ Bruce Corkern
Bruce Corkern, Sr. Vice President & Controller
(Principal Accounting Officer)
March 13, 2002
/s/ N. Keith McKey
N. Keith McKey, Executive Vice-President,
Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer)
March 13, 2002
EXHIBIT INDEX
The following exhibits are included in this Form 10-K or are incorporated by
reference as noted in the following table:
(3) Form 10-K Exhibits:
(a) Articles of Incorporation (incorporated by reference to Appendix B to
the Registrant's Proxy Statement dated April 24, 1997).
(b) Bylaws of the Registrant (incorporated by reference to Appendix C to the
Registrant's Proxy Statement dated April 24, 1997).
(c) Articles Supplementary of the Company relating to the 9.00% Series A
Cumulative Redeemable Preferred Stock of the Company (incorporated by
reference to the Company's Form 8-A filed June 15, 1998).
(d) Articles Supplementary of the Company relating to the Series B
Cumulative Convertible Preferred Stock (incorporated by reference to the
Company's Form 8-K filed on October 1, 1998).
(e) Articles Supplementary of the Company relating to the Series C Preferred
Stock (incorporated by reference to the Company's Form 8-A filed
December 9, 1998).
(f) Certificate of Correction to Articles Supplementary with respect to
Series B Cumulative Convertible Preferred Stock (incorporated by
reference to the Registrant's Form 10-K for the year ended December 31,
1998).
(10) Material Contracts:
(a) EastGroup Properties 1994 Management Incentive Plan, As Amended
(incorporated by reference to Appendix A of the Registrant's Proxy
Statement for its Annual Meeting of Shareholders held on June 2, 1999).*
(b) EastGroup Properties 1991 Directors Stock Option Plan, As Amended
(incorporated by reference to Exhibit B of the Registrant's Proxy
Statement dated April 26, 1994).*
(c) EastGroup Properties 2000 Directors Stock Option Plan (incorporated by
reference to Appendix A to the Registrant's Proxy Statement for its
Annual Meeting of Shareholders held on June 1, 2000.)*
(d) Form of Change in Control Agreement that Registrant has entered into with
certain executive officers (Leland R. Speed, David H. Hoster II and
N. Keith McKey) (incorporated by reference to the Registrant's
1996 Annual Report on Form 10-K).*
(e) Investment Agreement dated as of September 25, 1998 between the Company
and Five Arrows Realty Securities II, L.L.C. (incorporated by reference
to the Company's Form 8-K filed October 1, 1998).
(f) Operating Agreement dated September 25, 1998 between the Company and Five
Arrows Realty Securities II, L.L.C. (incorporated by reference to the
Company's Form 8-K filed October 1, 1998).
(g) Agreement and Waiver between the Company and Five Arrows Realty
Securities II, L.L.C. (incorporated by reference to the Company's
Form 8-K filed October 1, 1998).
(h) Credit Agreement dated January 8, 2002 among EastGroup Properties, L.P.;
EastGroup Properties, Inc.; PNC Bank, National Association, as
Administrative Agent; Commerzbank Aktiengesellschaft, New York Branch,
as Syndication Agent; SouthTrust Bank, as Co-Syndication Agent; U.S.
Bank, National Association, as Documentation Agent; Wells Fargo Bank,
National Association, as Co-Documentation Agent; AmSouth Bank, as
Managing Agent; PNC Capital Market, Inc., as Lead Arranger and Lead
Agent; and the Lenders (incorporated by reference to the Registrant's
Form 10-K for the year ended December 31, 2001).
(22) Subsidiaries of Registrant (filed herewith).
(23) Consent of KPMG LLP (filed herewith).
(24) Powers of attorney (filed herewith).
(29) Agreement of Registrant to furnish the Commission with copies of
instruments defining the rights of holders of long-term debt (incorporated
by reference to Exhibit 28(e) of the Registrant's 1986 Annual Report on
Form 10-K).
(99) Rights Agreement dated as of December 3, 1998 between the Company and
Harris Trust and Savings Bank, as Rights Agent (incorporated by reference
to the Company's Form 8-A filed December 9, 1998).
(b) None
*Indicates management or compensatory agreement.
PART IV (Exhibit 21)
ITEM 25. LIST OF SUBSIDIARIES
100% Owned Subsidiaries of EastGroup Properties, Inc.
EastGroup Properties General Partners, Inc.
EastGroup Properties Holdings, Inc.
Nash IND Corporation
EastGroup TRS, Inc.
Partnerships and LLC's with Partners and Members Indented:
EastGroup Properties, LP
99% EastGroup Properties Holdings, Inc.
1% EastGroup Properties General Partners, Inc.
M.O.R. XXXVI Associates Limited
99% EastGroup Properties, Inc.
1% EastGroup Properties LP
Sample I-95 Associates
99% EastGroup Properties LP
1% EastGroup Properties General Partners, Inc.
EastGroup Tennessee Properties, LP
95% EastGroup Properties Holdings, Inc.
5% Nash IND Corporation
University Business Center Associates
80% Profit interest EastGroup Properties, LP
49% Capital interest EastGroup Properties, LP
31% Capital interest EastGroup Properties, Inc.
20% JCB Limited
EastGroup Southbay, LLC
100% EastGroup Properties, LP
EastGroup Property Services, LLC
100% EastGroup Properties, LP
EastGroup Property Services of Florida, LLC
100% EastGroup Property Services, LLC
Exhibit (23)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
EastGroup Properties, Inc.
We consent to incorporation by reference in the registration statement (No.
333-29193) on Form S-3 and the registration statement (No. 33-60909) on Form S-8
of EastGroup Properties, Inc. of our reports dated March 6, 2002, relating to
the consolidated balance sheets of EastGroup Properties, Inc. and subsidiaries
as of December 31, 2001 and 2000, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for each of the years in
the three-year period ended December 31, 2001, and all related schedules, which
reports appear in the December 31, 2001 Annual Report on Form 10-K of EastGroup
Properties, Inc.
Jackson, Mississippi KPMG LLP
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ D. Pike Aloian
D. Pike Aloian
Director
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ Alexander G. Anagnos
Alexander G. Anagnos
Director
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ H. C. Bailey, Jr.
H. C. Bailey, Jr.
Director
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ Hayden C. Eaves III
Hayden C. Eaves III
Director
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ Fredric H. Gould
Fredric H. Gould
Director
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ David M. Osnos
David M. Osnos
Director
March 12, 2002
Exhibit (24)
EASTGROUP PROPERTIES, INC.
POWER OF ATTORNEY
The undersigned Director of EastGroup Properties, Inc., a State of
Maryland corporation, hereby constitutes and appoints N. Keith McKey as the true
and lawful Attorney-in-fact and Agent of the undersigned to sign on behalf of
the undersigned: (a) the Annual Report of the Company on Form 10-K (or such
other form as may be required) for the year ended December 31, 2001 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any and all
amendments to such Report as may be required to be filed with the SEC.
/s/ Leland R. Speed
Leland R. Speed
Chairman of the Board
March 12, 2002