EastGroup Properties

JACKSON, Miss., April 26  -- EastGroup
Properties, Inc. (NYSE: EGP) announced today the results of its operations
for the three months ended March 31, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030519/EGPLOGO)
FUNDS FROM OPERATIONS
For the quarter ended March 31, 2006, funds from operations (FFO) was
$.71 per share compared with $.64 for the same period of 2005, an increase
of 10.9% per share. The first quarter of 2006 included gains of $649,000
($.03 per share) from sales of land. FFO also increased due to higher
property net operating income (PNOI) of $2,388,000 (an 11.2% increase).
This increase in PNOI was primarily attributable to $1,005,000 from 2005
acquisitions, $584,000 from newly developed properties and $784,000 from
same property growth.
PNOI from same properties increased 3.8% for the quarter. Before
straight-line rent adjustments, the increase was 5.0%. Rental rate
increases on new and renewal leases averaged 8.9% for the quarter. Before
straight-line rent adjustments, rental rate increases on new and renewal
leases averaged 1.8%.
FFO and PNOI are non-GAAP financial measures, which are defined under
Definitions later in this release. Reconciliations of FFO and PNOI to Net
Income, the most directly comparable GAAP financial measure, are presented
in the attached schedule "Reconciliations of Other Reporting Measures to
Net Income."
David H. Hoster II, President and CEO, stated, "We are pleased with our
continuing growth in FFO per share with the first quarter of 2006
representing our seventh consecutive quarter of increased FFO as compared
to the previous year's quarter. It was also the eleventh consecutive
quarter of positive same property operations for results both with and
without the straight-lining of rents."
EARNINGS PER SHARE
On a diluted per share basis, earnings per common share (EPS) was $.25
for the three months ended March 31, 2006 compared with $.23 for the same
period of 2005. EPS increased due to higher FFO as indicated above;
however, this increase was offset by higher depreciation of $.05 per share.
The increase in depreciation was primarily attributable to property
acquisitions in 2005 and transfers from development to real estate
properties in 2005 and 2006.
DEVELOPMENT
EastGroup's current development program and properties transferred
during 2004 and 2005 to the portfolio increased PNOI by $584,000 in the
first quarter of 2006 compared to the same period in 2005.
During the quarter, EastGroup entered into a contract to purchase 17.7
acres of land in Phoenix which is projected to close during the second
quarter of 2006. The Company expects to begin development of approximately
271,000 square feet on this site in the fourth quarter.
In addition, the Company has 20 acres of land under contract for
purchase in Fort Myers, Florida which is scheduled to close in the third
quarter of 2006. This land is adjacent to a 10-acre tract of land that the
Company purchased for development in 2005. Construction on the first two
Fort Myers buildings is currently scheduled to commence early in the third
quarter of 2006.
During the first quarter, EastGroup transferred three properties
(207,000 square feet) to the portfolio with a combined investment of $14.1
million. These properties are 100% leased. The Company expects to transfer
one development property in the second quarter which is also 100% leased.
At March 31, 2006, EastGroup had 14 development properties containing
914,000 square feet with a projected total cost of approximately $66
million either in lease-up or under construction. These properties were
collectively 21% leased at March 31, 2006 and 29% at April 25, 2006.
Mr. Hoster stated, "We are continuing to expand EastGroup's development
program to reflect both the strong leasing activity at our development
properties and the overall firming of our development submarkets. Our land
inventory including the Fort Myers and Phoenix acquisitions contains 287
acres which will support approximately 3.7 million square feet of new
industrial development. Our development program has been and, we believe,
will continue to be a creator of shareholder value and a major contributor
to our future growth in FFO."
PROPERTY SALES
In January 2006, EastGroup sold its land investment in Madisonville,
Kentucky for $825,000, generating a gain of $777,000, of which $596,000 was
recognized in the first quarter and $181,000 will be deferred to future
periods. As part of the transaction, the Company took back a $185,000 note
at 7.00% from the buyer, which is being repaid over six years. The
remaining deferred gain will be recognized as payments on this note are
received from the buyer.
In March 2006, EastGroup sold three of its Memphis properties
containing a total of 534,000 square feet for a price of $15,175,000, which
generated a gain of $404,000. The assets sold were Senator I, Senator II
and Southeast Crossing. Mr. Hoster commented, "The sale of these properties
reflects our announced strategy of exiting Memphis as market conditions
permit and brings our total of Memphis sales to five assets over the past
15 months. These dispositions decrease our ownership in Memphis to less
than 500,000 square feet."
DIVIDENDS
EastGroup paid dividends of $.49 per share of common stock in the first
quarter of 2006, which was the 105th consecutive quarterly distribution to
EastGroup's common stockholders. This dividend represented an increase of
1% over the previous quarter's distribution and made 2006 the fourteenth
consecutive year of dividend increases. The annualized dividend rate of
$1.96 per share yields 4.4% on the closing stock price of $44.48 on April
25, 2006.
EastGroup also paid quarterly dividends of $.4969 per share on its
Series D Preferred Stock on April 15, 2006 to stockholders of record as of
March 31, 2006.
STRONG FINANCIAL POSITION
EastGroup's balance sheet continues to be strong and flexible with
debt- to-total market capitalization of 30.0% at March 31, 2006. For the
quarter, the Company had an interest coverage ratio of 3.5x and a fixed
charge coverage ratio of 3.2x. Total debt at March 31, 2006 was $465.9
million with floating rate bank debt comprising $121.4 million of that
total.
On March 9, 2006, the Company signed an application on a $38 million,
nonrecourse first mortgage loan secured by two properties. The loan is
expected to close in August 2006 and will have a fixed interest rate of
5.68%, a ten-year term and an amortization schedule of 20 years. The
proceeds of the note will be used to repay the maturing mortgages on these
properties of approximately $15 million and to reduce floating rate bank
borrowings.
OUTLOOK FOR 2006
FFO guidance for the second quarter and the year 2006 is presented
below. FFO per share for 2006 is estimated to be in the range of $2.77 to
$2.87. Diluted EPS for 2006 is estimated to be in the range of $.92 to
$1.02. The table below reconciles projected net income to projected FFO.
Low Range High Range
Q2 2006 Y/E 2006 Q2 2006 Y/E 2006
Net income $5,333 23,076 5,777 25,296

Dividends on preferred
shares (656) (2,624) (656) (2,624)
Net income available to
common stockholders 4,677 20,452 5,121 22,672
Depreciation and
amortization 10,316 41,391 10,316 41,391
Gain on sale of depreciable
real estate assets - (419) - (419)
Funds from operations $14,993 61,424 15,437 63,644

Diluted shares 22,208 22,214 22,208 22,214

Per share data (diluted):
Net income available to
common stockholders $0.21 .92 0.23 1.02
Funds from operations $0.68 2.77 0.70 2.87


The following assumptions were used for the year 2006:

- Average occupancy of 93% to 95%.
- Same Property NOI increase of 3% to 5%.
- Development properties not transferred to the portfolio by January 1,
2005 (therefore not same properties for the full year 2006) contributing
PNOI of $.21 per share, an increase of $.15 over 2005.
- Gain on sale of land (included in FFO) of $.03 per share in the first
quarter.
- Dispositions of $18.3 million in the first half of 2006 and $18 million
in the second half of 2006. Potential gains on sales of depreciable real
estate have not been included in earnings guidance.
- Acquisitions of income producing properties of $25 million on July 1,
2006.
- Floating rate bank debt at an average rate of 5.6%.
- New fixed rate debt of $38 million in August 2006 at 5.68%.
- Additional fixed rate debt of $62 million on October 1, 2006 at 6.25%.

DEFINITIONS
The Company's chief decision makers use two primary measures of
operating results in making decisions: property net operating income
(PNOI), defined as income from real estate operations less property
operating expenses (before interest expense and depreciation and
amortization), and funds from operations available to common stockholders
(FFO). EastGroup defines FFO consistent with the National Association of
Real Estate Investment Trusts' definition, as net income (loss) computed in
accordance with U.S. 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. FFO as
defined by the Company refers to FFO available to common stockholders as it
excludes dividends on preferred stock.
PNOI and FFO are supplemental industry reporting measurements used to
evaluate the performance of the Company's investments in real estate assets
and its operating results. The Company believes that the exclusion of
depreciation and amortization in the industry's calculations of PNOI and
FFO provides supplemental indicators of the properties' performance since
real estate values have historically risen or fallen with market
conditions. PNOI and FFO as calculated by the Company may not be comparable
to similarly titled but differently calculated measures for other REITs.
Investors should be aware that items excluded from or added back to FFO are
significant components in understanding and assessing the Company's
financial performance.
CONFERENCE CALL
EastGroup will host a conference call and webcast to discuss the
results of its first quarter and review the Company's current operations on
Thursday, April 27, 2006, at 11:00 A.M. Eastern Daylight Time (EDT). A live
broadcast of the conference call is available by dialing 1-800-362-0571
(conference ID EastGroup) or by webcast through a link on the Company's
website at http://www.eastgroup.net. If you are unable to listen to the live
conference call, a telephone and webcast replay will be available on
Thursday, April 27, 2006. The telephone replay will be available until
Thursday, May 4, 2006, and can be accessed by dialing 1-800-839-1162. Also,
the replay of the webcast can be accessed through a link on the Company's
website at http://www.eastgroup.net and will be available until Thursday, May 4,
2006.
SUPPLEMENTAL INFORMATION
Supplemental financial information is available by request by calling
the Company at 601-354-3555, or by accessing the report in the reports
section of the Company's website at http://www.eastgroup.net.
COMPANY INFORMATION
EastGroup Properties, Inc. is a self-administered equity real estate
investment trust focused on the development, acquisition and operation of
industrial properties in major Sunbelt markets throughout the United States
with an emphasis in the states of Florida, Texas, California and Arizona.
The Company's goal is to maximize shareholder value by being the leading
provider of functional, flexible, and quality business distribution space
for location sensitive customers primarily in the 5,000 to 50,000 square
foot range. The Company's strategy for growth is based on ownership of
premier distribution facilities generally clustered near major
transportation features in supply- constrained submarkets. EastGroup's
portfolio currently includes 21.4 million square feet with an additional
1,074,000 square feet of properties under development. EastGroup
Properties, Inc. press releases are also available on the Company's
website.
FORWARD-LOOKING STATEMENTS
In addition to historical information, certain statements in this
release are forward-looking, such as those pertaining to the Company's
hopes, expectations, intentions, plans, 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 nonrenewal 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 disasters and the costs of
insurance to protect from such disasters, financial market fluctuations,
changes in real estate and zoning laws, increases in real property tax
rates and risks relating to the Company's development program, including
weather, delays in construction schedules, contractor's failure to perform,
increases in the price of construction materials or the unavailability of
such materials, difficulty in obtaining necessary governmental approvals
and other matters outside the Company's control. The success of the Company
also depends upon the trends of the economy, including interest rates and
the effects to the economy from possible terrorism and related world
events, income tax laws, governmental regulation, legislation, population
changes and those risk factors discussed elsewhere in this release. 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.
EASTGROUP PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

Three Months Ended
March 31,
2006 2005

REVENUES
Income from real estate operations $32,737 29,532
Equity in earnings of unconsolidated
investment 74 162
Other income 19 70
32,830 29,764
EXPENSES
Expenses from real estate operations 9,058 8,241
Depreciation and amortization 10,482 8,868
General and administrative 1,808 1,898
Minority interest in joint venture 137 129
21,485 19,136

OPERATING INCOME 11,345 10,628

OTHER INCOME (EXPENSE)
Interest income 22 124
Interest expense (6,335) (5,937)
INCOME FROM CONTINUING OPERATIONS 5,032 4,815

DISCONTINUED OPERATIONS
Income from real estate operations 61 344
Gain on sale of real estate investments 1,068 377
INCOME FROM DISCONTINUED OPERATIONS 1,129 721

NET INCOME 6,161 5,536

Preferred dividends-Series D 656 656

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $5,505 4,880

BASIC PER COMMON SHARE DATA
Income from continuing operations $0.20 0.20
Income from discontinued operations 0.05 0.03
Net income available to common
stockholders $0.25 0.23

Weighted average shares outstanding 21,881 20,891

DILUTED PER COMMON SHARE DATA
Income from continuing operations $0.20 0.20
Income from discontinued operations 0.05 0.03
Net income available to common
stockholders $0.25 0.23

Weighted average shares outstanding 22,208 21,196

Dividends declared per common share $0.490 0.485



EASTGROUP PROPERTIES, INC.
RECONCILIATIONS OF OTHER REPORTING MEASURES TO NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

Three Months Ended
March 31,
2006 2005
RECONCILIATIONS OF OTHER REPORTING MEASURES
TO NET INCOME:

Income from real estate operations $32,737 29,532
Operating expenses from real estate
operations (9,058) (8,241)

PROPERTY NET OPERATING INCOME (PNOI) 23,679 21,291

Equity in earnings of unconsolidated
investment (before interest and depreciation) 196 199
Interest income 22 124
Other income 19 70
General and administrative expense (1,808) (1,898)

EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION (EBITDA) 22,108 19,786

Income from discontinued operations
(before depreciation and amortization) (A) 186 580
Interest expense (B) (6,335) (5,970)
Interest expense from unconsolidated
investment (89) -
Minority interest in earnings (before
depreciation and amortization) (174) (164)
Gain on sale of nondepreciable real estate 649 -
Dividends on Series D preferred shares (656) (656)

FUNDS FROM OPERATIONS (FFO) AVAILABLE
TO COMMON STOCKHOLDERS 15,689 13,576

Depreciation and amortization from
continuing operations (10,482) (8,868)
Depreciation and amortization from
discontinued operations (125) (203)
Depreciation from unconsolidated
investment (33) (37)
Minority interest depreciation and
amortization 37 35
Gain on sale of depreciable real
estate investments 419 377

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 5,505 4,880

Dividends on preferred shares 656 656

NET INCOME $6,161 5,536

DILUTED PER COMMON SHARE DATA: (C)
Income from continuing operations $0.20 0.20
Income from discontinued operations 0.05 0.03
Net income available to common
stockholders $0.25 0.23

Funds from operations available to
common stockholders $0.71 0.64

Weighted average shares outstanding
for EPS and FFO purposes 22,208 21,196

(A) Includes interest expense of zero and $33,000 for the three months
ended March 31, 2006 and 2005, respectively.

(B) Net of capitalized interest of $919,000 and $501,000 for the three
months ended March 31, 2006 and 2005, respectively.

(C) Assumes dilutive effect of common stock equivalents.



SOURCE EastGroup Properties, Inc.
Web Site: http://www.eastgroup.net/