REAL ESTATE PROPERTIES

6 Months Ended

Jun. 30, 2021

Real Estate Investment Property, Net [Abstract]

REAL ESTATE PROPERTIES

EastGroup has one reportable segment – industrial properties. These properties are primarily located in major Sunbelt regions of the United States. The Company’s properties have similar economic characteristics and as a result, have been aggregated into one reportable segment.

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

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, 2021 and 2020, 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 $25,858,000 and $51,005,000 for the three and six months ended June 30, 2021, respectively, and $23,813,000 and $46,902,000 for the same periods in 2020.

The Company’s Real estate properties and Development and value-add properties at June 30, 2021 and December 31, 2020 were as follows:


	June 30, 2021		December 31, 2020
	(In thousands)
Real estate properties:
Land	$	526,326	502,739
Buildings and building improvements	2,247,617		2,120,731
Tenant and other improvements	551,637		524,954
Right of use assets — Ground leases (operating) (1)	10,639		11,073
Development and value-add properties (2)	320,005		359,588
	3,656,224		3,519,085
Less accumulated depreciation	(1,004,428)		(955,328)
	$	2,651,796	2,563,757

(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.