10-Q 1 egp-20220630.htm 10-Q egp-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2022

                    
Commission File Number: 1-07094


egp-20220630_g1.jpg


EASTGROUP PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland13-2711135
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
400 W Parkway Place 
Suite 100 
Ridgeland,Mississippi39157
(Address of principal executive offices)(Zip code)

Registrant’s telephone number: (601) 354-3555

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareEGPNew York Stock Exchange

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 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No






-1-


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.   
Large Accelerated Filer Accelerated Filer
 
Non-accelerated Filer
 
Smaller Reporting CompanyEmerging Growth Company
                   
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No

The number of shares of common stock, $0.0001 par value, outstanding as of July 26, 2022 was 43,566,016.
-2-


EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS
FOR THE QUARTER ENDED JUNE 30, 2022 
  Page
 
   
 
   
 
   
 
   
 
   
 
  
 
   
   
   
   
 
   
   
  
   
 

-3-


PART I.      FINANCIAL INFORMATION.

ITEM 1.      FINANCIAL STATEMENTS.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
 June 30,
2022
December 31,
2021
ASSETS  
Real estate properties$4,155,513 3,546,711 
Development and value-add properties554,363 504,614 
 4,709,876 4,051,325 
Less accumulated depreciation(1,089,156)(1,035,617)
 3,620,720 3,015,708 
Real estate assets held for sale 5,695 
Unconsolidated investment7,376 7,320 
Cash5,555 4,393 
Other assets218,066 182,220 
TOTAL ASSETS$3,851,717 3,215,336 
LIABILITIES AND EQUITY  
LIABILITIES  
Unsecured bank credit facilities, net of debt issuance costs$204,573 207,066 
Unsecured debt, net of debt issuance costs1,416,876 1,242,570 
Secured debt, net of debt issuance costs2,087 2,142 
Accounts payable and accrued expenses156,208 109,760 
Other liabilities85,899 82,338 
Total Liabilities1,865,643 1,643,876 
EQUITY  
Stockholders’ Equity:  
Common shares; $0.0001 par value; 70,000,000 shares authorized; 43,566,016 shares issued and outstanding at June 30, 2022 and 41,268,846 at December 31, 2021
4 4 
Excess shares; $0.0001 par value; 30,000,000 shares authorized; zero shares issued
  
Additional paid-in capital2,263,072 1,886,820 
Distributions in excess of earnings(302,324)(318,056)
Accumulated other comprehensive income23,971 1,302 
Total Stockholders’ Equity1,984,723 1,570,070 
Noncontrolling interest in joint ventures1,351 1,390 
Total Equity1,986,074 1,571,460 
TOTAL LIABILITIES AND EQUITY$3,851,717 3,215,336 
 
See accompanying Notes to Consolidated Financial Statements (unaudited).


-4-


EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months EndedSix Months Ended
 June 30,June 30,
 2022202120222021
REVENUES  
Income from real estate operations$118,498 99,562 231,450 197,479 
Other revenue55 13 77 27 
 118,553 99,575 231,527 197,506 
EXPENSES  
Expenses from real estate operations32,546 28,057 63,610 55,877 
Depreciation and amortization37,461 31,349 73,802 61,662 
General and administrative4,226 4,486 8,536 8,522 
Indirect leasing costs116 134 291 464 
 74,349 64,026 146,239 126,525 
OTHER INCOME (EXPENSE)  
Interest expense(8,970)(8,181)(17,080)(16,457)
Gain on sales of real estate investments10,647  40,999  
Other284 210 562 411 
NET INCOME46,165 27,578 109,769 54,935 
Net income attributable to noncontrolling interest in joint ventures(26)(20)(50)(38)
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS46,139 27,558 109,719 54,897 
Other comprehensive income (loss) - interest rate swaps6,841 (1,263)22,669 6,951 
TOTAL COMPREHENSIVE INCOME$52,980 26,295 132,388 61,848 
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS  
Net income attributable to common stockholders$1.09 0.69 2.63 1.38 
Weighted average shares outstanding42,211 40,068 41,729 39,871 
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS  
Net income attributable to common stockholders$1.09 0.69 2.62 1.37 
Weighted average shares outstanding42,316 40,165 41,838 39,965 

See accompanying Notes to Consolidated Financial Statements (unaudited).
-5-


EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
For the six months ended June 30, 2022:
Common SharesAdditional
Paid-In Capital
Distributions in Excess of EarningsAccumulated Other Comprehensive IncomeNoncontrolling Interest in Joint VenturesTotal
BALANCE, DECEMBER 31, 2021$4 1,886,820 (318,056)1,302 1,390 1,571,460 
Net income  63,580  24 63,604 
Net unrealized change in fair value of interest rate swaps   15,828  15,828 
Common dividends declared – $1.10 per
   share
  (45,953)  (45,953)
Stock-based compensation, net of
   forfeitures
 2,594    2,594 
Issuance of 385,538 shares of common
   stock, common stock offering, net of
   expenses
 74,179    74,179 
Withheld 34,251 shares of common stock to
   satisfy tax withholding obligations in
   connection with the vesting of restricted
   stock
 (7,265)   (7,265)
Net distributions to noncontrolling interest    (58)(58)
BALANCE, MARCH 31, 20224 1,956,328 (300,429)17,130 1,356 1,674,389 
Net income  46,139  26 46,165 
Net unrealized change in fair value of interest rate swaps   6,841  6,841 
Common dividends declared – $1.10 per
   share
  (48,034)  (48,034)
Stock-based compensation, net of
   forfeitures
 3,062    3,062 
Issuance of 1,868,809 shares of common
   stock, net of expenses, in the purchase of real estate
 303,682    303,682 
Net distributions to noncontrolling interest    (31)(31)
BALANCE, JUNE 30, 2022$4 2,263,072 (302,324)23,971 1,351 1,986,074 

See accompanying Notes to Consolidated Financial Statements (unaudited).


-6-


EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
For the six months ended June 30, 2021:
Common SharesAdditional
Paid-In Capital
Distributions in Excess of EarningsAccumulated Other Comprehensive LossNoncontrolling Interest in Joint VenturesTotal
BALANCE, DECEMBER 31, 2020$4 1,610,053 (329,667)(10,752)880 1,270,518 
Net income  27,339  18 27,357 
Net unrealized change in fair value of interest rate swaps   8,214  8,214 
Common dividends declared – $0.79 per
   share
  (31,672)  (31,672)
Stock-based compensation, net of
   forfeitures
 2,147    2,147 
Issuance of 317,538 shares of common
   stock, common stock offering, net of
   expenses
 44,485    44,485 
Withheld 30,252 shares of common stock to
   satisfy tax withholding obligations in
   connection with the vesting of restricted
   stock
 (4,240)   (4,240)
Net distributions to noncontrolling interest    (11)(11)
BALANCE, MARCH 31, 20214 1,652,445 (334,000)(2,538)887 1,316,798 
Net income  27,558  20 27,578 
Net unrealized change in fair value of interest rate swaps   (1,263) (1,263)
Common dividends declared – $0.79 per
   share
  (31,981)  (31,981)
Stock-based compensation, net of
   forfeitures
 2,893    2,893 
Issuance of 370,177 shares of common
   stock, common stock offering, net of
   expenses
 59,318    59,318 
Net distributions to noncontrolling interest 5   (17)(12)
BALANCE, JUNE 30, 2021$4 1,714,661 (338,423)(3,801)890 1,373,331 

See accompanying Notes to Consolidated Financial Statements (unaudited).
-7-


EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
 Six Months Ended June 30,
 20222021
OPERATING ACTIVITIES  
Net income                                                                                                       $109,769 54,935 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization                                                                                                       73,802 61,662 
Stock-based compensation expense4,320 4,011 
Gain on sales of real estate investments(40,999) 
Changes in operating assets and liabilities:  
Accrued income and other assets598 305 
Accounts payable, accrued expenses and prepaid rent28,104 19,783 
Other                                                                                                       558 714 
NET CASH PROVIDED BY OPERATING ACTIVITIES176,152 141,410 
INVESTING ACTIVITIES  
Development and value-add properties(283,451)(115,113)
Purchases of real estate(2,049)(9,177)
Real estate improvements(21,723)(18,094)
Net proceeds from sales of real estate investments51,006  
Leasing commissions(18,362)(16,813)
Changes in accrued development costs16,062 13,126 
Changes in other assets and other liabilities(2,621)526 
NET CASH USED IN INVESTING ACTIVITIES(261,138)(145,545)
FINANCING ACTIVITIES  
Proceeds from unsecured bank credit facilities 501,523 195,137 
Repayments on unsecured bank credit facilities(504,314)(320,137)
Proceeds from unsecured debt250,000 175,000 
Repayments on unsecured debt(75,000) 
Repayments on secured debt(60,047)(42,924)
Debt issuance costs(1,030)(2,475)
Distributions paid to stockholders (not including dividends accrued)(91,787)(63,403)
Proceeds from common stock offerings74,249 105,891 
Common stock offering related costs(70)(146)
Other(7,376)(4,264)
NET CASH PROVIDED BY FINANCING ACTIVITIES86,148 42,679 
INCREASE IN CASH AND CASH EQUIVALENTS1,162 38,544 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD4,393 21 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$5,555 38,565 
SUPPLEMENTAL CASH FLOW INFORMATION  
Cash paid for interest, net of amounts capitalized of $4,943 and $4,394 for 2022 and 2021,
   respectively
$15,382 15,760 
Cash paid for operating lease liabilities962 751 
Common stock issued in the purchase of real estate303,682  
Debt assumed in the purchase of real estate60,000  
NON-CASH OPERATING ACTIVITY
  Operating lease liabilities arising from obtaining right of use assets$398 348 

See accompanying Notes to Consolidated Financial Statements (unaudited).
-8-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(1)BASIS OF PRESENTATION
The accompanying unaudited financial statements of EastGroup Properties, Inc. (“EastGroup” or “the Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The financial statements should be read in conjunction with the financial statements contained in the Company’s annual report on Form 10-K for the year ended December 31, 2021 and the notes thereto. Certain reclassifications have been made in the 2021 consolidated financial statements to conform to the 2022 presentation.

(2)PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of EastGroup, its wholly owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest.

As of June 30, 2022 and December 31, 2021, EastGroup held a controlling interest in two joint venture arrangements. In 2019, the Company acquired 6.5 acres of land in San Diego, known by the Company as the Miramar land. Also in 2019, the Company acquired 41.6 acres of land in San Diego, known by the Company as the Otay Mesa land. During the year ended December 31, 2021, EastGroup began construction of Speed Distribution Center, a 519,000 square foot building on the Otay Mesa land, which was completed and transferred to the Company’s operating portfolio during the three months ended March 31, 2022. As of June 30, 2022 and December 31, 2021, EastGroup had a 95% controlling interest in the Miramar land and a 99% controlling interest in Speed Distribution Center.

The Company records 100% of the assets, liabilities, revenues and expenses of the buildings and land held in joint ventures with the noncontrolling interests provided for in accordance with the joint venture agreements. 

The equity method of accounting is used for the Company’s 50% undivided tenant-in-common interest in Industry Distribution Center II.  All significant intercompany transactions and accounts have been eliminated in consolidation.

(3) USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, 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.

(4)LEASE REVENUE
The Company’s primary revenue is rental income from business distribution space. The table below presents the components of Income from real estate operations for the three and six months ended June 30, 2022 and 2021:
Three Months Ended
June 30,
Six Months Ended June 30,
2022202120222021
(In thousands)
Lease income — operating leases$88,931 74,358 173,876 147,740 
Variable lease income (1)
29,567 25,204 57,574 49,739 
Income from real estate operations$118,498 99,562 231,450 197,479 

(1)Primarily includes tenant reimbursements for real estate taxes, insurance and common area maintenance.

(5)REAL ESTATE PROPERTIES
EastGroup has one reportable segment – industrial properties, consistent with the Company’s manner of internal reporting, measurement of operating results and allocation of the Company’s resources.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows (including estimated future expenditures necessary to substantially complete the asset) expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated
-9-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.  During the six month periods ended June 30, 2022 and 2021, the Company did not identify any impairment charges which should be recorded.

Depreciation of buildings and other improvements is computed using the straight-line method over estimated useful lives of generally 40 years for buildings and 3 to 15 years for improvements.  Building improvements are capitalized, while maintenance and repair expenses are charged to expense as incurred.  Significant renovations and improvements that improve or extend the useful life of the assets are capitalized.  Depreciation expense was $30,715,000 and $60,107,000 for the three and six months ended June 30, 2022, respectively, and $25,858,000 and $51,005,000 for the same periods in 2021.

The Company’s Real estate properties and Development and value-add properties at June 30, 2022 and December 31, 2021 were as follows:
 June 30,
2022
December 31,
2021
 (In thousands)
Real estate properties:  
   Land$689,195 544,505 
   Buildings and building improvements2,840,948 2,408,944 
   Tenant and other improvements605,251 570,627 
   Right of use assets — Ground leases (operating) (1)
20,119 22,635 
Development and value-add properties (2)
554,363 504,614 
 4,709,876 4,051,325 
   Less accumulated depreciation(1,089,156)(1,035,617)
 $3,620,720 3,015,708 

(1)EastGroup applies the principles of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 842, Leases, and its related Accounting Standards Updates (“ASUs”) to account for its ground leases, which are classified as operating leases. The related operating lease liabilities for ground leases are included in Other liabilities on the Consolidated Balance Sheets.
(2)Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use.  Acquired properties meeting either of the following two conditions are considered value-add properties:  (1) Less than 75% occupied as of the acquisition date (or will be less than 75% occupied within one year of acquisition date based on near term lease roll), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.

(6)DEVELOPMENT AND VALUE-ADD PROPERTIES
For properties under development and value-add properties acquired in the development stage, costs associated with development (i.e., land, construction costs, interest expense, property taxes and other costs associated with development) are aggregated into the total capitalized costs of the property.  Included in these costs are management’s estimates for the portions of internal costs (primarily personnel costs) deemed related to such development activities. The internal costs are allocated to specific development projects based on development activity. As the property becomes occupied, depreciation commences on the occupied portion of the building, and costs are capitalized only for the portion of the building that remains vacant. The Company transfers properties from the development and value-add program to Real estate properties as follows: (i) for development properties, at the earlier of 90% occupancy or one year after completion of the shell construction, and (ii) for value-add properties, at the earlier of 90% occupancy or one year after acquisition. Upon the earlier of 90% occupancy or one year after completion of the shell construction, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).

(7)REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES
Upon acquisition of real estate properties, EastGroup applies the principles of FASB ASC 805, Business Combinations. The FASB Codification provides a framework for determining whether transactions should be accounted for as acquisitions of assets or businesses. Under the guidance, companies are required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business. Criteria considered in grouping similar assets include geographic location, market and operational risks and the physical characteristics of the assets. EastGroup determined that its real estate property acquisitions in 2021 and the first six months of 2022 are considered to be acquisitions of groups of similar identifiable assets;
-10-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company capitalized acquisition costs related to its 2021 and 2022 acquisitions.

The FASB Codification also provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their respective fair values.  The allocation to tangible assets (land, building and improvements) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models. Land is valued using comparable land sales specific to the applicable market, provided by a third party. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties.  The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.  

The purchase price is also allocated among the following categories of intangible assets:  the above or below market component of in-place leases, the value of in-place leases, and the value of customer relationships.  The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term and (ii) management’s estimate of the amounts that would be paid using current market rents over the remaining term of the lease.  

The amounts allocated to above and below market lease intangibles are included in Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based upon management’s assessment of their respective values.  Factors considered by management in the allocation include an estimate of foregone rents and avoided leasing costs during the expected lease-up periods considering current market conditions and costs to execute similar leases.  These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease or the anticipated life of the customer relationship, as applicable.

Amortization expense for in-place lease intangibles was $2,198,000 and $4,663,000 for the three and six months ended June 30, 2022, respectively, and $1,307,000 and $2,738,000 for the same periods in 2021. Amortization of above and below market lease intangibles increased rental income by $507,000 and $1,352,000 for the three and six months ended June 30, 2022, respectively, and $245,000 and $474,000 for the same periods in 2021.


-11-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
During the six months ended June 30, 2022, EastGroup acquired the following properties:
REAL ESTATE PROPERTIES ACQUIRED IN 2022
LocationSizeDate
Acquired
Cost (1)
  (Square feet) (In thousands)
Operating properties acquired (2)
Cebrian Distribution Center and Reed Distribution
Center (3)
Sacramento, CA329,000 06/01/2022$49,726 
6th Street Business Center, Benicia Distribution
Center 1-5, Ettie Business Center, Laura
Alice Business Center, Preston
Distribution Center, Sinclair Distribution
Center, Transit Distribution Center and
Whipple Business Center (3)
San Francisco, CA1,377,000 06/01/2022309,404 
Total operating property acquisitions1,706,000 359,130 
Value-add properties acquired (4)
Cypress Preserve 1 & 2Houston, TX516,000 03/28/202254,462 
Zephyr Distribution CenterSan Francisco, CA82,000 04/08/202229,017 
Mesa Gateway Commerce CenterPhoenix, AZ147,000 04/15/202218,315 
Total value-add property acquisitions745,000 101,794 
Total acquired assets2,451,000 $460,924 
(1)Cost is calculated in accordance with FASB ASC 805, Business Combinations, and represents the sum of the purchase price, closing costs and capitalized acquisition costs.
(2)Operating properties are defined as stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio; included in Real estate properties on the Consolidated Balance Sheets.
(3)The Company acquired these operating properties along with two land parcels, also in Sacramento, CA and San Francisco, CA, in connection with its acquisition of Tulloch Corporation in June 2022. Size and cost are presented on an aggregate basis for the properties located in Sacramento, CA and San Francisco, CA, respectively. In consideration for this acquisition, the Company assumed a $60,000,000 loan and issued 1,868,809 shares of the Company’s common stock. The acquisition date fair value of the loan assumed was $60,000,000, and the acquisition date fair value of the common shares, which was based on the closing share price on the acquisition date, was $303,756,000.
(4)Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use.  Acquired properties meeting either of the following two conditions are considered value-add properties:  (1) Less than 75% occupied as of the acquisition date (or will be less than 75% occupied within one year of acquisition date based on near term lease roll), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.


-12-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the allocation of the total consideration for the acquired assets and assumed liabilities in connection with the acquisition identified in the table above which was acquired during the six months ended June 30, 2022.
ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2022
Cost
 (In thousands)
Land $126,067 
Buildings and building improvements315,996 
Tenant and other improvements11,502 
Total real estate properties acquired453,565 
In-place lease intangibles (1)
11,418 
Below market lease intangibles (2)
(4,059)
Total assets acquired, net of liabilities assumed$460,924 
(1)In-place lease intangibles and above market lease intangibles are each included in Other assets on the Consolidated Balance Sheets. These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.
(2)Below market lease intangibles are included in Other liabilities on the Consolidated Balance Sheets. These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.  

The leases in the properties acquired during the six months ended June 30, 2022 had a weighted average remaining lease term at acquisition of approximately 3.7 years.

Also during the six months ended June 30, 2022, the Company acquired 177.5 acres of development land in Miami, Houston, Phoenix, San Francisco, Sacramento and Atlanta for $54,751,000. The land acquisitions in San Francisco and Sacramento were acquired in connection with the Company’s acquisition of Tulloch Corporation in June 2022.

During 2021, EastGroup acquired the following properties:
REAL ESTATE PROPERTIES ACQUIRED IN 2021LocationSizeDate
Acquired
Cost (1)
(Square feet)(In thousands)
Operating properties acquired (2)
Southpark Distribution Center 2Phoenix, AZ79,000 06/10/2021$9,177 
DFW Global Logistics CentreDallas, TX611,000 08/26/202189,829 
Progress Center 3Atlanta, GA50,000 09/23/20215,000 
Texas AvenueAustin, TX20,000 10/15/20214,143 
Total operating property acquisitions760,000 108,149 
Value-add properties acquired (3)
Access Point 1Greenville, SC156,000 01/15/202110,501 
Northpoint 200Atlanta, GA79,000 01/21/20216,516 
Access Point 2Greenville, SC159,000 05/19/202110,743 
Cherokee 75 Business Center 2Atlanta, GA105,000 06/17/20218,837 
Siempre Viva Distribution Center 3-6San Diego, CA547,000 12/01/2021134,479 
Total value-add property acquisitions1,046,000 171,076 
Total acquired assets1,806,000 $279,225 
(1)Represents the sum of the purchase price, closing costs and capitalized acquisition costs.
(2)Operating properties are defined as stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio; included in Real estate properties on the Consolidated Balance Sheets.
(3)Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use.  Acquired properties meeting either of the following two conditions are considered value-add properties:  (1) Less than 75% occupied as of the acquisition date (or will be less than 75% occupied within one year of acquisition date based on near term lease roll), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.
-13-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the allocation of the total consideration for the acquired assets and assumed liabilities in connection with the acquisitions identified in the table above which were acquired during the year ended December 31, 2021.
ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2021
Cost
 (In thousands)
Land $42,554 
Buildings and building improvements225,645 
Tenant and other improvements4,907 
Right of use assets — Ground leases (operating)12,708 
Total real estate properties acquired285,814 
In-place lease intangibles (1)
9,949 
Above market lease intangibles (1)
6 
Below market lease intangibles (2)
(3,836)
Operating lease liabilities — Ground leases (3)
(12,708)
Total assets acquired, net of liabilities assumed$279,225 
(1)In-place lease intangibles and above market lease intangibles are each included in Other assets on the Consolidated Balance Sheets. These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.
(2)Below market lease intangibles are included in Other liabilities on the Consolidated Balance Sheets. These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.
(3)Operating lease liabilities - Ground leases are included in Other liabilities on the Consolidated Balance Sheets.

The leases in the properties acquired during the year ended December 31, 2021 had a weighted average remaining lease term at acquisition of approximately 2.9 years.

Also during 2021, the Company acquired 365.8 acres of development land in Austin, Houston, Charlotte, Greenville and Atlanta for $41,065,000.

The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment.  No impairment of goodwill or other intangibles existed during the three and six month periods ended June 30, 2022 and 2021.

(8)REAL ESTATE SOLD AND HELD FOR SALE
The Company considers a real estate property to be held for sale when it meets the criteria established under ASC 360, Property, Plant and Equipment, including when it is probable that the property will be sold within a year. Real estate properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. The Company did not classify any properties as held for sale as of June 30, 2022. As of December 31, 2021, the Company owned one operating property that was classified as held for sale on the December 31, 2021 Consolidated Balance Sheet. The property was sold, and a gain on the sale was recorded in the three months ended March 31, 2022.

In accordance with ASC 360 and ASC 205, Presentation of Financial Statements, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.

The Company sold operating properties during the six months ended June 30, 2022, as shown in the table below. The results of operations and gains and losses on sales for the properties sold are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains and losses on sales are included in Gain on sales of real estate investments. The Company did not consider its sales in 2022 to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results.
-14-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of Gain on sales of real estate investments for the six months ended June 30, 2022 and the year ended December 31, 2021 follows:
REAL ESTATE PROPERTIES SOLDLocationSizeDate SoldNet Sales PriceBasisRecognized Gain
  (In square feet) (In thousands)
2022
Metro Business ParkPhoenix, AZ189,00001/06/2022$32,851 5,880