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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 September 30, 2021
Commission File Number: 1-07094
EASTGROUP PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland |  | 13-2711135
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
400 W Parkway Place |  |
Suite 100 |  |
Ridgeland, | Mississippi |  | 39157
(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 class | Trading symbol(s) | Name of each exchange on which registered
Common stock, $0.0001 par value per share | EGP | New 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 Company | ☐ |  | Emerging 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 October 26, 2021 was 40,684,273.
-2-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2021

|  | Page
PART I. | FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Consolidated Balance Sheets, September 30, 2021 and December 31, 2020 (unaudited) | 4
| Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2021 and 2020 (unaudited) | 5
| Consolidated Statements of Changes in Equity for the nine months ended September 30, 2021 and 2020 (unaudited) | 6
| Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited) | 8
| Notes to Consolidated Financial Statements (unaudited) | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 43
Item 4. | Controls and Procedures | 43
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings | 44
Item 1A. | Risk Factors | 44
Item 6. | Exhibits | 44
SIGNATURES |  |
Authorized signatures |  | 45

-3-

PART I. FINANCIAL INFORMATION.
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

| September 30, 2021 |  | December 31, 2020
ASSETS |  |  |
Real estate properties | $ | 3,484,743 |  |  | 3,159,497 |
Development and value-add properties | 352,344 |  |  | 359,588 |
| 3,837,087 |  |  | 3,519,085 |
Less accumulated depreciation | (1,031,027) |  |  | (955,328) |
| 2,806,060 |  |  | 2,563,757 |
Unconsolidated investment | 7,111 |  |  | 7,446 |
Cash | 247 |  |  | 21 |
Other assets | 171,592 |  |  | 149,579 |
TOTAL ASSETS | $ | 2,985,010 |  |  | 2,720,803 |
LIABILITIES AND EQUITY |  |  |
LIABILITIES |  |  |
Unsecured bank credit facilities, net of debt issuance costs | $ | 58,719 |  |  | 124,194 |
Unsecured debt, net of debt issuance costs | 1,242,430 |  |  | 1,107,708 |
Secured debt, net of debt issuance costs | 35,466 |  |  | 78,993 |
Accounts payable and accrued expenses | 149,979 |  |  | 69,573 |
Other liabilities | 78,676 |  |  | 69,817 |
Total Liabilities | 1,565,270 |  |  | 1,450,285 |
EQUITY |  |  |
Stockholders’ Equity: |  |  |
Common shares; $0.0001 par value; 70,000,000 shares authorized; 40,684,273 shares issued and outstanding at September 30, 2021 and 39,676,828 at December 31, 2020 | 4 |  |  | 4 |
Excess shares; $0.0001 par value; 30,000,000 shares authorized; no shares issued | — |  |  | — |
Additional paid-in capital | 1,765,748 |  |  | 1,610,053 |
Distributions in excess of earnings | (344,378) |  |  | (329,667) |
Accumulated other comprehensive loss | (2,476) |  |  | (10,752) |
Total Stockholders’ Equity | 1,418,898 |  |  | 1,269,638 |
Noncontrolling interest in joint ventures | 842 |  |  | 880 |
Total Equity | 1,419,740 |  |  | 1,270,518 |
TOTAL LIABILITIES AND EQUITY | $ | 2,985,010 |  |  | 2,720,803 |

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 Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
REVENUES |  |  |  |  |  |  |
Income from real estate operations | $ | 104,584 |  |  | 92,000 |  |  | 302,063 |  |  | 270,077 |
Other revenue | 13 |  |  | 12 |  |  | 40 |  |  | 278 |
| 104,597 |  |  | 92,012 |  |  | 302,103 |  |  | 270,355 |
EXPENSES |  |  |  |  |  |  |
Expenses from real estate operations | 29,644 |  |  | 26,325 |  |  | 85,521 |  |  | 77,505 |
Depreciation and amortization | 32,263 |  |  | 29,211 |  |  | 93,925 |  |  | 85,673 |
General and administrative | 3,559 |  |  | 3,714 |  |  | 12,081 |  |  | 11,020 |
Indirect leasing costs | 133 |  |  | 248 |  |  | 597 |  |  | 522 |
| 65,599 |  |  | 59,498 |  |  | 192,124 |  |  | 174,720 |
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |
Interest expense | (8,416) |  |  | (8,347) |  |  | (24,873) |  |  | (25,150) |
Other | 210 |  |  | 244 |  |  | 621 |  |  | 711 |
NET INCOME | 30,792 |  |  | 24,411 |  |  | 85,727 |  |  | 71,196 |
Net income attributable to noncontrolling interest in joint ventures | (21) |  |  | (10) |  |  | (59) |  |  | (14) |
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | 30,771 |  |  | 24,401 |  |  | 85,668 |  |  | 71,182 |
Other comprehensive income (loss) - interest rate swaps | 1,325 |  |  | 1,362 |  |  | 8,276 |  |  | (16,252) |
TOTAL COMPREHENSIVE INCOME | $ | 32,096 |  |  | 25,763 |  |  | 93,944 |  |  | 54,930 |
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 0.76 |  |  | 0.62 |  |  | 2.14 |  |  | 1.82 |
Weighted average shares outstanding | 40,434 |  |  | 39,338 |  |  | 40,058 |  |  | 39,077 |
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 0.76 |  |  | 0.62 |  |  | 2.13 |  |  | 1.82 |
Weighted average shares outstanding | 40,567 |  |  | 39,450 |  |  | 40,165 |  |  | 39,168 |

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 nine months ended September 30, 2021:

| Common Shares |  | Additional Paid-In Capital |  | Distributions in Excess of Earnings |  | Accumulated Other Comprehensive Loss |  | Noncontrolling Interest in Joint Ventures |  | Total
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, 2021 | 4 |  |  | 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 |
Net income | — |  |  | — |  |  | 30,771 |  |  | — |  |  | 21 |  |  | 30,792 |
Net unrealized change in fair value of interest rate swaps | — |  |  | — |  |  | — |  |  | 1,325 |  |  | — |  |  | 1,325 |
Common dividends declared – $0.90 per share | — |  |  | — |  |  | (36,726) |  |  | — |  |  | — |  |  | (36,726) |
Stock-based compensation, net of forfeitures | — |  |  | 2,461 |  |  | — |  |  | — |  |  | — |  |  | 2,461 |
Issuance of 278,893 shares of common stock, common stock offering, net of expenses | — |  |  | 48,626 |  |  | — |  |  | — |  |  | — |  |  | 48,626 |
Net distributions to noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | (69) |  |  | (69) |
BALANCE, SEPTEMBER 30, 2021 | $ | 4 |  |  | 1,765,748 |  |  | (344,378) |  |  | (2,476) |  |  | 842 |  |  | 1,419,740 |

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 nine months ended September 30, 2020:

| Common Shares |  | Additional Paid-In Capital |  | Distributions in Excess of Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Noncontrolling Interest in Joint Ventures |  | Total
BALANCE, DECEMBER 31, 2019 | $ | 4 |  |  | 1,514,055 |  |  | (316,302) |  |  | 2,807 |  |  | 1,765 |  |  | 1,202,329 |
Net income | — |  |  | — |  |  | 23,297 |  |  | — |  |  | 1 |  |  | 23,298 |
Net unrealized change in fair value of interest rate swaps | — |  |  | — |  |  | — |  |  | (15,790) |  |  | — |  |  | (15,790) |
Common dividends declared – $0.75 per share | — |  |  | — |  |  | (29,366) |  |  | — |  |  | — |  |  | (29,366) |
Stock-based compensation, net of forfeitures | — |  |  | 1,781 |  |  | — |  |  | — |  |  | — |  |  | 1,781 |
Issuance of 105,837 shares of common stock, common stock offering, net of expenses | — |  |  | 14,734 |  |  | — |  |  | — |  |  | — |  |  | 14,734 |
Withheld 33,963 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | — |  |  | (4,589) |  |  | — |  |  | — |  |  | — |  |  | (4,589) |
Net distributions to noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | (34) |  |  | (34) |
BALANCE, MARCH 31, 2020 | 4 |  |  | 1,525,981 |  |  | (322,371) |  |  | (12,983) |  |  | 1,732 |  |  | 1,192,363 |
Net income | — |  |  | — |  |  | 23,484 |  |  | — |  |  | 3 |  |  | 23,487 |
Net unrealized change in fair value of interest rate swaps | — |  |  | — |  |  | — |  |  | (1,824) |  |  | — |  |  | (1,824) |
Common dividends declared – $0.75 per share | — |  |  | — |  |  | (29,551) |  |  | — |  |  | — |  |  | (29,551) |
Stock-based compensation, net of forfeitures | — |  |  | 2,694 |  |  | — |  |  | — |  |  | — |  |  | 2,694 |
Issuance of 243,621 shares of common stock, common stock offering, net of expenses | — |  |  | 29,647 |  |  | — |  |  | — |  |  | — |  |  | 29,647 |
Net distributions to noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | (19) |  |  | (19) |
BALANCE, JUNE 30, 2020 | 4 |  |  | 1,558,322 |  |  | (328,438) |  |  | (14,807) |  |  | 1,716 |  |  | 1,216,797 |
Net income | — |  |  | — |  |  | 24,401 |  |  | — |  |  | 10 |  |  | 24,411 |
Net unrealized change in fair value of interest rate swaps | — |  |  | — |  |  | — |  |  | 1,362 |  |  | — |  |  | 1,362 |
Common dividends declared –$0.79 per share | — |  |  | — |  |  | (31,322) |  |  | — |  |  | — |  |  | (31,322) |
Stock-based compensation, net of forfeitures | — |  |  | 2,036 |  |  | — |  |  | — |  |  | — |  |  | 2,036 |
Issuance of 238,086 shares of common stock, common stock offering, net of expenses | — |  |  | 31,362 |  |  | — |  |  | — |  |  | — |  |  | 31,362 |
Net distributions to noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | (28) |  |  | (28) |
BALANCE, SEPTEMBER 30, 2020 | $ | 4 |  |  | 1,591,720 |  |  | (335,359) |  |  | (13,445) |  |  | 1,698 |  |  | 1,244,618 |

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

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

| Nine Months Ended September 30,
| 2021 |  | 2020
OPERATING ACTIVITIES |  |  |
Net income | $ | 85,727 |  |  | 71,196 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 93,925 |  |  | 85,673 |
Stock-based compensation expense | 5,840 |  |  | 5,033 |
Gain on casualties and involuntary conversion on real estate assets | — |  |  | (161) |
Changes in operating assets and liabilities: |  |  |
Accrued income and other assets | (2,688) |  |  | 944 |
Accounts payable, accrued expenses and prepaid rent | 57,099 |  |  | 15,642 |
Other | 1,263 |  |  | 1,280 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 241,166 |  |  | 179,607 |
INVESTING ACTIVITIES |  |  |
Development and value-add properties | (189,955) |  |  | (129,997) |
Purchases of real estate | (104,006) |  |  | (6,231) |
Real estate improvements | (26,749) |  |  | (25,536) |
Leasing commissions | (22,791) |  |  | (12,741) |
Proceeds from casualties and involuntary conversion on real estate assets | — |  |  | 242 |
Repayments on mortgage loans receivable | — |  |  | 21 |
Changes in accrued development costs | 22,130 |  |  | (1,901) |
Changes in other assets and other liabilities | 856 |  |  | (13,539) |
NET CASH USED IN INVESTING ACTIVITIES | (320,515) |  |  | (189,682) |
FINANCING ACTIVITIES |  |  |
Proceeds from unsecured bank credit facilities | 316,893 |  |  | 423,270 |
Repayments on unsecured bank credit facilities | (380,877) |  |  | (458,506) |
Proceeds from unsecured debt | 175,000 |  |  | 100,000 |
Repayments on unsecured debt | (40,000) |  |  | (30,000) |
Repayments on secured debt | (43,591) |  |  | (6,733) |
Debt issuance costs | (2,647) |  |  | (596) |
Distributions paid to stockholders (not including dividends accrued) | (95,240) |  |  | (88,558) |
Proceeds from common stock offerings | 154,371 |  |  | 75,743 |
Other | (4,334) |  |  | (4,750) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 79,575 |  |  | 9,870 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 226 |  |  | (205) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 21 |  |  | 224 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 247 |  |  | 19 |
SUPPLEMENTAL CASH FLOW INFORMATION |  |  |
Cash paid for interest, net of amounts capitalized of $6,686 and $7,562 for 2021 and 2020, respectively | $ | 21,599 |  |  | 24,220 |
Cash paid for operating lease liabilities | 1,133 |  |  | 1,099 |
NON-CASH OPERATING ACTIVITY |  |  |
Operating lease liabilities arising from obtaining right of use assets | $ | 13,056 |  |  | 495 |

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, 2020 and the notes thereto. Certain reclassifications have been made in the 2020 consolidated financial statements to conform to the 2021 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 September 30, 2021 and December 31, 2020, 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 nine months ended September 30, 2021, EastGroup began construction of a 519,000 square foot building on the Otay Mesa land, known by the Company as Speed Distribution Center. As of both September 30, 2021 and December 31, 2020, 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 nine months ended September 30, 2021 and 2020:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands)
Lease income — operating leases | $ | 78,040 |  |  | 68,528 |  |  | 225,780 |  |  | 201,284 |
Variable lease income (1) | 26,544 |  |  | 23,472 |  |  | 76,283 |  |  | 68,793 |
Income from real estate operations | $ | 104,584 |  |  | 92,000 |  |  | 302,063 |  |  | 270,077 |

(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. 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
-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 nine month periods ended September 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 $26,599,000 and $77,604,000 for the three and nine months ended September 30, 2021, respectively, and $24,087,000 and $70,989,000 for the same periods in 2020.
The Company’s Real estate properties and Development and value-add properties at September 30, 2021 and December 31, 2020 were as follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Real estate properties: |  |  |
Land | $ | 533,792 |  |  | 502,739 |
Buildings and building improvements | 2,365,115 |  |  | 2,120,731 |
Tenant and other improvements | 562,785 |  |  | 524,954 |
Right of use assets — Ground leases (operating) (1) | 23,051 |  |  | 11,073 |
Development and value-add properties (2) | 352,344 |  |  | 359,588 |
| 3,837,087 |  |  | 3,519,085 |
Less accumulated depreciation | (1,031,027) |  |  | (955,328) |
| $ | 2,806,060 |  |  | 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.
(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. EastGroup determined that its real estate property acquisitions in 2020 and the first nine months of 2021 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company capitalized acquisition costs related to its 2020 and 2021 acquisitions.
-10-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 carrying 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 $1,647,000 and $4,385,000 for the three and nine months ended September 30, 2021, respectively, and $1,342,000 and $4,048,000 for the same periods in 2020. Amortization of above and below market lease intangibles increased rental income by $230,000 and $704,000 for the three and nine months ended September 30, 2021, respectively, and $332,000 and $1,078,000 for the same periods in 2020.
During the nine months ended September 30, 2021, EastGroup acquired the following properties:

REAL ESTATE PROPERTIES ACQUIRED IN 2021 |  | Location |  | Size |  | Date Acquired |  | Cost
|  |  |  | (Square feet) |  |  |  | (In thousands)
Operating properties acquired (1) |  |  |  |  |  |  |  |
Southpark Distribution Center 2 |  | Phoenix, AZ |  | 79,000 |  |  | 06/10/2021 |  | $ | 9,177 |
DFW Global Logistics Centre |  | Dallas, TX |  | 611,000 |  |  | 08/26/2021 |  | 89,829 |
Progress Center 3 |  | Atlanta, GA |  | 50,000 |  |  | 09/23/2021 |  | 5,000 |
Total operating property acquisitions |  |  |  | 740,000 |  |  |  |  | 104,006 |
Value-add properties acquired (2) |  |  |  |  |  |  |  |
Access Point 1 |  | Greenville, SC |  | 156,000 |  |  | 01/15/2021 |  | 10,501 |
Northpoint 200 |  | Atlanta, GA |  | 79,000 |  |  | 01/21/2021 |  | 6,516 |
Access Point 2 |  | Greenville, SC |  | 159,000 |  |  | 05/19/2021 |  | 10,743 |
Cherokee 75 Business Center 2 |  | Atlanta, GA |  | 105,000 |  |  | 06/17/2021 |  | 8,837 |
Total value-add property acquisitions |  |  |  | 499,000 |  |  |  |  | 36,597 |
Total acquired assets |  |  |  | 1,239,000 |  |  |  |  | $ | 140,603 |

(1)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.
(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.
-11-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the allocation of the consideration paid for the acquired assets and assumed liabilities in connection with the acquisitions identified in the table above which were acquired during the nine months ended September 30, 2021.

ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2021 |  | Cost
|  | (In thousands)
Land |  | $ | 6,596 |
Buildings and building improvements |  | 127,709 |
Tenant and other improvements |  | 1,969 |
Right of use assets — Ground leases (operating) |  | 12,708 |
Total real estate properties acquired |  | 148,982 |
In-place lease intangibles (1) |  | 5,763 |
Above market lease intangibles (1) |  | 5 |
Below market lease intangibles (2) |  | (1,439) |
Operating lease liabilities — Ground leases (3) |  | (12,708) |
Total assets acquired, net of liabilities assumed |  | $ | 140,603 |

(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 nine months ended September 30, 2021 had a weighted average remaining lease term at acquisition of approximately 2.8 years.
During 2020, EastGroup acquired the following properties:

REAL ESTATE PROPERTIES ACQUIRED IN 2020 |  | Location |  | Size |  | Date Acquired |  | Cost
|  |  |  | (Square feet) |  |  |  | (In thousands)
Operating properties acquired (1) |  |  |  |  |  |  |  |
Wells Point One |  | Austin, TX |  | 50,000 |  |  | 02/28/2020 |  | $ | 6,231 |
Cherokee 75 Business Center 1 |  | Atlanta, GA |  | 85,000 |  |  | 12/15/2020 |  | 8,323 |
The Rock |  | Dallas, TX |  | 212,000 |  |  | 12/17/2020 |  | 34,102 |
Total operating property acquisitions |  |  |  | 347,000 |  |  |  |  | 48,656 |
Value-add properties acquired (2) |  |  |  |  |  |  |  |
Rancho Distribution Center |  | Los Angeles, CA |  | 162,000 |  |  | 10/15/2020 |  | 27,862 |
Total acquired assets |  |  |  | 509,000 |  |  |  |  | $ | 76,518 |

(1)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.
(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.
-12-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the allocation of the consideration paid 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, 2020.

ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2020 |  | Cost
|  | (In thousands)
Land |  | $ | 23,565 |
Buildings and building improvements |  | 42,024 |
Tenant and other improvements |  | 7,971 |
Total real estate properties acquired |  | 73,560 |
In-place lease intangibles (1) |  | 3,257 |
Above market lease intangibles (1) |  | 104 |
Below market lease intangibles (2) |  | (403) |
Total assets acquired, net of liabilities assumed |  | $ | 76,518 |

(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 year ended December 31, 2020 had a weighted average remaining lease term at acquisition of approximately 3.9 years.
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 nine month periods ended September 30, 2021 and 2020.
(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 September 30, 2021 and December 31, 2020.
In accordance with FASB ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, 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 had no sales during the nine months ended September 30, 2021 or 2020.
-13-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(9)OTHER ASSETS
A summary of the Company’s Other assets follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Leasing costs (principally commissions) | $ | 110,986 |  |  | 95,914 |
Accumulated amortization of leasing costs | (40,713) |  |  | (38,371) |
Leasing costs (principally commissions), net of accumulated amortization | 70,273 |  |  | 57,543 |
Acquired in-place lease intangibles | 29,606 |  |  | 28,107 |
Accumulated amortization of acquired in-place lease intangibles | (13,674) |  |  | (13,554) |
Acquired in-place lease intangibles, net of accumulated amortization | 15,932 |  |  | 14,553 |
Acquired above market lease intangibles | 1,815 |  |  | 1,825 |
Accumulated amortization of acquired above market lease intangibles | (1,399) |  |  | (1,231) |
Acquired above market lease intangibles, net of accumulated amortization | 416 |  |  | 594 |
Straight-line rents receivable | 49,919 |  |  | 43,079 |
Accounts receivable | 5,535 |  |  | 6,064 |
Interest rate swap assets | 511 |  |  | — |
Right of use assets — Office leases (operating) | 2,108 |  |  | 2,131 |
Receivable for common stock offerings | — |  |  | 1,942 |
Goodwill | 990 |  |  | 990 |
Receivable for tenant improvement cost reimbursements | 14,762 |  |  | 192 |
Prepaid expenses and other assets | 11,146 |  |  | 22,491 |
Total Other assets | $ | 171,592 |  |  | 149,579 |

(10) DEBT
The Company’s debt is detailed below.

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Unsecured bank credit facilities - variable rate, carrying amount | $ | 61,016 |  |  | 125,000 |
Unamortized debt issuance costs | (2,297) |  |  | (806) |
Unsecured bank credit facilities, net of debt issuance costs | 58,719 |  |  | 124,194 |
Unsecured debt - fixed rate, carrying amount (1) | 1,245,000 |  |  | 1,110,000 |
Unamortized debt issuance costs | (2,570) |  |  | (2,292) |
Unsecured debt, net of debt issuance costs | 1,242,430 |  |  | 1,107,708 |
Secured debt - fixed rate, carrying amount (1) | 35,490 |  |  | 79,096 |
Unamortized debt issuance costs | (24) |  |  | (103) |
Secured debt, net of debt issuance costs | 35,466 |  |  | 78,993 |
Total debt, net of debt issuance costs | $ | 1,336,615 |  |  | 1,310,895 |

(1)These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
-14-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Until June 29, 2021, EastGroup had $350 million and $45 million unsecured bank credit facilities with margins over LIBOR of 100 basis points, facility fees of 20 basis points and maturity dates of July 30, 2022. The Company amended and restated these credit facilities on June 29, 2021, expanding the capacity to $425 million and $50 million, as detailed below.
The $425 million unsecured bank credit facility is with a group of nine banks and has a maturity date of July 30, 2025. The credit facility contains options for two six-month extensions (at the Company's election) and a $325 million accordion (with agreement by all parties). The interest rate on each tranche is usually reset on a monthly basis and as of September 30, 2021, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points. As of September 30, 2021, the Company had $45,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 0.861%. The Company has a standby letter of credit of $674,000 pledged on this facility.
The Company's $50 million unsecured bank credit facility has a maturity date of July 30, 2025, or such later date as designated by the bank; the Company also has two six-month extensions available if the extension options in the $425 million facility are exercised. The interest rate is reset on a daily basis and as of September 30, 2021, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points. As of September 30, 2021, the interest rate was 0.855% on a balance of $16,016,000.
For both facilities, the margin and facility fee are subject to changes in the Company's credit ratings. Although the Company’s current credit rating is Baa2, given the strength of the Company’s key credit metrics, initial pricing for the credit facilities is based on the BBB+/Baa1 credit ratings level. This favorable pricing level will be retained provided that the Company’s consolidated leverage ratio, as defined in the applicable agreements, remains less than 32.5%. The facilities also include a sustainability-linked pricing component pursuant to which, if the Company meets certain sustainability performance targets, the applicable interest margin will be reduced by one basis point.
In March 2021, the Company closed a $50 million senior unsecured term loan with a four-year term and interest only payments, which bears interest at the annual rate of LIBOR plus an applicable margin (1.00% as of September 30, 2021) based on the Company’s senior unsecured long-term debt rating. The Company also entered into an interest rate swap agreement to convert the loan’s LIBOR rate component to a fixed interest rate for the entire term of the loan providing a total effective fixed interest rate of 1.55%.
In March 2021, EastGroup repaid (with no penalty) a mortgage loan with a balance of $40.8 million, an interest rate of 4.75% and an original maturity date of June 5, 2021.
In June 2021, the Company closed on the private placement of $125 million of senior unsecured notes with a fixed interest rate of 2.74% and a 10-year term. The notes dated April 8, 2021, were issued and sold on June 10, 2021, and require interest-only payments. The notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
In July 2021, the Company repaid a $40 million unsecured term loan at maturity with an effectively fixed interest rate of 2.34%.
In September 2021, the Company closed on the refinance of a $100 million senior unsecured term loan with five years remaining. The amended term loan provides for interest only payments currently at an interest rate of LIBOR plus 85 basis points, based on the Company’s current credit ratings and consolidated leverage ratio, which is a 65 basis point reduction in the credit spread compared to the original term loan. The Company has an interest rate swap agreement which converts the loan’s LIBOR rate component to a fixed interest rate for the entire term of the loan, providing a total effective fixed interest rate of 2.10%. The term loan also includes a sustainability-linked pricing component pursuant to which, if the Company meets certain sustainability performance targets, the applicable interest margin will be reduced by one basis point.
-15-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Scheduled principal payments on long-term debt, including Unsecured debt, net of debt issuance costs and Secured debt, net of debt issuance costs (not including Unsecured bank credit facilities, net of debt issuance costs), as of September 30, 2021, are as follows:

Years Ending December 31, |  | (In thousands)
2021 - Remainder of year |  | $ | 678 |
2022 |  | 107,770 |
2023 |  | 115,119 |
2024 |  | 120,122 |
2025 |  | 145,128 |
2026 and beyond |  | 791,673 |
Total |  | $ | 1,280,490 |

(11) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
A summary of the Company’s Accounts payable and accrued expenses follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Property taxes payable | $ | 46,949 |  |  | 3,524 |
Development costs payable | 28,557 |  |  | 6,427 |
Real estate improvements and capitalized leasing costs payable | 7,018 |  |  | 5,692 |
Interest payable | 8,863 |  |  | 6,537 |
Dividends payable | 37,816 |  |  | 32,677 |
Book overdraft (1) | 13,230 |  |  | 5,176 |
Other payables and accrued expenses | 7,546 |  |  | 9,540 |
Total Accounts payable and accrued expenses | $ | 149,979 |  |  | 69,573 |

(1)Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the Company’s working cash line of credit, which is included in the Company’s Unsecured bank credit facilities.
(12) OTHER LIABILITIES
A summary of the Company’s Other liabilities follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Security deposits | $ | 27,277 |  |  | 22,140 |
Prepaid rent and other deferred income | 15,529 |  |  | 14,694 |
Operating lease liabilities — Ground leases | 23,250 |  |  | 11,199 |
Operating lease liabilities — Office leases | 2,157 |  |  | 2,167 |
Acquired below market lease intangibles | 10,368 |  |  | 9,019 |
Accumulated amortization of below market lease intangibles | (6,964) |  |  | (6,168) |
Acquired below market lease intangibles, net of accumulated amortization | 3,404 |  |  | 2,851 |
Interest rate swap liabilities | 2,987 |  |  | 10,752 |
Prepaid tenant improvement cost reimbursements | 556 |  |  | 364 |
Other liabilities | 3,516 |  |  | 5,650 |
Total Other liabilities | $ | 78,676 |  |  | 69,817 |

-16-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(13) COMPREHENSIVE INCOME
Total Comprehensive Income is comprised of net income plus all other changes in equity from non-owner sources and is presented on the Consolidated Statements of Income and Comprehensive Income. The components of Accumulated other comprehensive income (loss) are presented in the Company’s Consolidated Statement of Changes in Equity and are summarized below. See Note 14 for information regarding the Company’s interest rate swaps.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): |  |  |
Balance at beginning of period | $ | (3,801) |  |  | (14,807) |  |  | (10,752) |  |  | 2,807 |
Other comprehensive income (loss) - interest rate swaps | 1,325 |  |  | 1,362 |  |  | 8,276 |  |  | (16,252) |
Balance at end of period | $ | (2,476) |  |  | (13,445) |  |  | (2,476) |  |  | (13,445) |

(14) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.
Specifically, the Company has entered into derivative instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative instruments, described below, are used to manage differences in the amount, timing and duration of the Company’s known or expected cash payments principally related to certain of the Company’s borrowings.
The Company’s objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
As of September 30, 2021, the Company had five interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans. All of the Company’s interest rate swaps convert the related loans’ LIBOR rate components to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective.
The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in Other comprehensive income (loss) and are subsequently reclassified into earnings through Interest expense as interest payments are made or received on the Company’s variable-rate debt in the period that the hedged forecasted transaction affects earnings. The Company estimates that an additional $3,342,000 will be reclassified from Other comprehensive income (loss) as an increase to Interest expense over the next twelve months.
The Company’s valuation methodology for over-the-counter (“OTC”) derivatives is to discount cash flows based on Overnight Index Swap (“OIS”) rates. Uncollateralized or partially-collateralized trades are discounted at OIS rates, but include appropriate economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. The Company calculates its derivative valuations using mid-market prices.
On March 5, 2021, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced that USD-LIBOR will no longer be published after June 30, 2023. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR.
-17-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The Company anticipates that LIBOR will continue to be available substantially in its current form at least until June 30, 2023. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. The Company has material contracts that are indexed to USD-LIBOR and is monitoring this activity and evaluating the related risks.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
As of September 30, 2021 and December 31, 2020, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk:

Interest Rate Derivative |  | Notional Amount as of September 30, 2021 |  | Notional Amount as of December 31, 2020
|  | (In thousands)
Interest Rate Swap |  | $75,000 |  | $75,000
Interest Rate Swap |  | $65,000 |  | $65,000
Interest Rate Swap |  | — |  | $40,000
Interest Rate Swap |  | $100,000 |  | $100,000
Interest Rate Swap |  | $100,000 |  | $100,000
Interest Rate Swap |  | $50,000 |  | —

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020. See Note 17 for additional information on the fair value of the Company’s interest rate swaps.

| Derivatives As of September 30, 2021 |  | Derivatives As of December 31, 2020
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
| (In thousands)
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Interest rate swap assets | Other assets |  | $ | 511 |  |  | Other assets |  | $ | — |
Interest rate swap liabilities | Other liabilities |  | 2,987 |  |  | Other liabilities |  | 10,752 |

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2021 and 2020:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands)
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS |  |  |  |  |  |  |
Interest Rate Swaps: |  |  |  |  |  |  |
Amount of income (loss) recognized in Other comprehensive income (loss) on derivatives | $ | 247 |  |  | (75) |  |  | 5,015 |  |  | (18,647) |
Amount of (income) loss reclassified from Accumulated other comprehensive income (loss) into Interest expense | 1,078 |  |  | 1,437 |  |  | 3,261 |  |  | 2,395 |

See Note 13 for additional information on the Company’s Accumulated other comprehensive income (loss) resulting from its interest rate swaps.
-18-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with financial institutions the Company regards as credit-worthy.
The Company has an agreement with its derivative counterparties containing a provision stating that the Company could be declared in default on its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender. If the Company breached any of these provisions it would be required to settle its obligations under the agreements at their termination value of $2,517,000 as of September 30, 2021.
(15) EARNINGS PER SHARE
The Company applies ASC 260, Earnings Per Share, which requires companies to present basic and diluted earnings per share (“EPS”). Basic EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting period. The Company’s basic EPS is calculated by dividing Net Income Attributable to EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested.
Diluted EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting 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 calculates diluted EPS by dividing Net Income Attributable to EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding plus the dilutive effect of unvested restricted stock. The dilutive effect of unvested restricted stock is determined using the treasury stock method.
Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands)
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Numerator – net income attributable to common stockholders | $ | 30,771 |  |  | 24,401 |  |  | 85,668 |  |  | 71,182 |
Denominator – weighted average shares outstanding | 40,434 |  |  | 39,338 |  |  | 40,058 |  |  | 39,077 |
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Numerator – net income attributable to common stockholders | $ | 30,771 |  |  | 24,401 |  |  | 85,668 |  |  | 71,182 |
Denominator: |  |  |  |  |  |  |
Weighted average shares outstanding | 40,434 |  |  | 39,338 |  |  | 40,058 |  |  | 39,077 |
Unvested restricted stock | 133 |  |  | 112 |  |  | 107 |  |  | 91 |
Total Shares | 40,567 |  |  | 39,450 |  |  | 40,165 |  |  | 39,168 |

(16) STOCK-BASED COMPENSATION
EastGroup applies the provisions of ASC 718, Compensation - Stock Compensation, to account for its stock-based compensation awards. ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued.
The Compensation Committee of the Company’s Board of Directors (the “Committee”) approves long-term and annual equity compensation awards for the Company’s executive officers. The long-term compensation awards include components based on the Company’s total shareholder return over the upcoming three-year period and the employee’s continued service as of the vesting dates. The total shareholder return component is subject to bright-line tests that compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The Company
-19-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
begins recognizing expense for these awards based on the grant date fair value of the awards which is determined using a simulation pricing model developed to specifically accommodate the unique features of the award. These market based awards are expensed on a straight-line basis over the requisite service period (75% vests at the end of the three-year performance period and 25% vests the following year). The long term awards subject only to continuing employment are expensed on a straight-line basis over the requisite service period. The annual equity compensation awards include components based on certain annual Company performance measures and individual annual performance goals over the upcoming year. The certain Company performance measures for 2021 are: (i) FFO per share, (ii) cash same property net operating income change, (iii) debt-to-EBITDAre ratio, and (iv) fixed charge coverage. The Company begins recognizing expense for its estimate of the shares that could be earned pursuant to these awards on the grant date; the expense is adjusted to estimated performance levels during the performance period and to actual upon the determination of the awards. The shares are expensed using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period. Any shares issued pursuant to the individual annual performance goals are determined by the Committee in its discretion following the performance period. The Company begins recognizing the expense for the shares on the grant date and will expense on a straight-line basis over the remaining service period. Equity compensation is also awarded to the Company’s non-executive officers and directors, which are subject to service only conditions and expensed on a straight-line basis over the required service period.
The Committee has adopted an Equity Award Retirement Policy (the “retirement policy”) which allows for accelerated vesting of unvested shares for retirement-eligible employees (defined as employees who meet certain age and years of service requirements). In order to qualify for accelerated vesting upon retirement, the eligible employees must provide required notification under the retirement policy and must retire from the Company. The Company has adjusted its stock-based compensation expense to accelerate the recognition of expense for retirement-eligible employees.
Stock-based compensation cost for employees was $2,458,000 and $6,791,000 for the three and nine months ended September 30, 2021, of which $632,000 and $1,661,000 were capitalized as part of the Company’s development costs. For the three and nine months ended September 30, 2020, stock-based compensation cost for employees was $1,945,000 and $5,617,000, of which $424,000 and $1,478,000 were capitalized as part of the Company’s development costs.
Stock-based compensation expense for directors was $3,000 and $710,000 for the three and nine months ended September 30, 2021, respectively, and $91,000 and $894,000 for the same periods in 2020.
Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to participants with the related weighted average grant date fair value share prices. Of the shares that vested in the nine months ended September 30, 2021, the Company withheld 30,252 shares to satisfy the tax obligations for those participants who elected this option as permitted under the applicable equity plan. As of the grant dates, the fair value of shares that were granted during the nine months ended September 30, 2021 was $7,682,000. As of the vesting dates, the aggregate fair value of shares that vested during the nine months ended September 30, 2021 was $10,343,000.

| Three Months Ended |  | Nine Months Ended
Award Activity: | September 30, 2021 |  | September 30, 2021
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Unvested at beginning of period | 97,134 |  |  | $ | 111.44 |  |  | 113,403 |  |  | $ | 100.89 |
Granted (1) (2) | 9,200 |  |  | 168.35 |  |  | 66,623 |  |  | 115.30 |
Forfeited | — |  |  | — |  |  | — |  |  | — |
Vested | (122) |  |  | 102.30 |  |  | (73,814) |  |  | 91.61 |
Unvested at end of period | 106,212 |  |  | $ | 116.38 |  |  | 106,212 |  |  | $ | 116.38 |

(1) Includes shares granted in prior years for which performance conditions have been satisfied and the number of shares have been determined.
(2) Does not include the restricted shares that may be earned if the performance goals established in 2019 and 2020 for long-term performance and in 2021 for annual and long-term performance are achieved. Depending on the actual level of achievement of the goals at the end of the open performance periods, the number of shares earned could range from zero to 118,911.
(17) FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. The Codification requires disclosure of the level within the fair value
-20-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820 at September 30, 2021 and December 31, 2020.

| September 30, 2021 |  | December 31, 2020
| Carrying Amount (1) |  | Fair Value |  | Carrying Amount (1) |  | Fair Value
| (In thousands)
Financial Assets: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 247 |  |  | 247 |  |  | 21 |  |  | 21 |
Interest rate swap assets | 511 |  |  | 511 |  |  | — |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |
Unsecured bank credit facilities - variable rate (2) | 61,016 |  |  | 61,026 |  |  | 125,000 |  |  | 124,820 |
Unsecured debt (2) | 1,245,000 |  |  | 1,293,658 |  |  | 1,110,000 |  |  | 1,141,803 |
Secured debt (2) | 35,490 |  |  | 35,874 |  |  | 79,096 |  |  | 80,435 |
Interest rate swap liabilities | 2,987 |  |  | 2,987 |  |  | 10,752 |  |  | 10,752 |

(1) Carrying amounts shown in the table are included on the Consolidated Balance Sheets under the indicated captions, except as explained in the notes below.
(2) Carrying amounts and fair values shown in the table exclude debt issuance costs (see Note 10 for additional information).
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents: The carrying amounts approximate fair value due to the short maturity of those instruments.
Interest rate swap assets (included in Other assets on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 14 for additional information on the Company’s interest rate swaps.
Unsecured bank credit facilities: The fair value of the Company’s unsecured bank credit facilities is estimated by discounting expected cash flows at current market rates (Level 2 input), excluding the effects of debt issuance costs.
Unsecured debt: The fair value of the Company’s unsecured debt is estimated 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 (Level 2 input), excluding the effects of debt issuance costs.
Secured debt: The fair value of the Company’s secured debt is estimated 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 (Level 2 input), excluding the effects of debt issuance costs.
Interest rate swap liabilities (included in Other liabilities on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 14 for additional information on the Company’s interest rate swaps.
(18) RISKS AND UNCERTAINTIES
The state of the overall economy can significantly impact the Company’s operational performance and thus impact its financial position. Should EastGroup experience a significant decline in operational performance due to the current coronavirus (“COVID-19”) pandemic or other general economic conditions, it may affect the Company’s ability to make distributions to its shareholders, service debt, or meet other financial obligations. Although COVID-19 has had an overall minimal impact on the Company in 2020 and during the first nine months of 2021, EastGroup remains unable to predict any future impact that it may have on its business, financial condition, results of operations and cash flows.
(19) LEGAL MATTERS
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.
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EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(20) RECENT ACCOUNTING PRONOUNCEMENTS
EastGroup has evaluated all ASUs recently released by the FASB through the date the financial statements were issued and determined that the following ASU applies to the Company.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
(21) SUBSEQUENT EVENTS
In October 2021, the Company repaid (with no penalty) a mortgage loan with a balance of $33.1 million, an interest rate of 4.09% and an original maturity date of January 5, 2022.
Subsequent to September 30, 2021, EastGroup acquired 157.7 acres of development land in Charlotte for $11.5 million. The Company plans to construct seven buildings totaling 1,107,000 square feet on the site, known by the Company as Skyway Logistics Park Land.
Also in October 2021, the Company acquired 8.8 acres of land in Austin for $4.0 million. The site is currently being leased through December 2022; however, once the lease expires, the Company plans to tear down the existing building and construct two buildings totaling 129,000 square feet.
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of results of operations and financial condition should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect EastGroup’s expectations and projections about the Company’s future results, performance, prospects and opportunities. The Company has attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. These forward-looking statements are based on information currently available to the Company and are subject to a number of known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, those discussed below. The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. The Company does not undertake publicly to update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or new information, future events or otherwise, except as may be required to satisfy the Company’s obligations under federal securities law.
The following are some, but not all, of the risks, uncertainties and other factors that could cause the Company’s actual results to differ materially from those presented in the Company’s forward-looking statements (the Company refers to itself as “we,” “us” or “our” in the following):
•international, national, regional and local economic conditions;
•the duration and extent of the impact of the coronavirus (“COVID-19”) pandemic, including as a result of any COVID-19 variants or as affected by the efficacy of COVID-19 vaccines, and any related lockdowns or other orders on our business operations or the business operations of our tenants (including their ability to timely make rent payments) and the economy generally;
•disruption in supply and delivery chains;
•the general level of interest rates and ability to raise equity capital on attractive terms;
•financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest, and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;
•our ability to retain our credit agency ratings;
•our ability to comply with applicable financial covenants;
•the competitive environment in which the Company operates;
•fluctuations of occupancy or rental rates;
•potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants, or our ability to lease space at current or anticipated rents, particularly in light of the significant uncertainty as to the conditions under which current or potential tenants will be able to operate physical locations in the future;
•potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws or real estate investment trust (“REIT”) or corporate income tax laws, and potential increases in real property tax rates;
•our ability to maintain our qualification as a REIT;
•acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections;
•natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;
•pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19;
•the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;
•credit risk in the event of non-performance by the counterparties to our interest rate swaps;
•lack of or insufficient amounts of insurance;
•litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;
•our ability to attract and retain key personnel;
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•the consequences of future terrorist attacks or civil unrest; and
•environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us.
All forward-looking statements should be read in light of the risks identified in Part I, Item 1A. Risk Factors within the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In addition, the Company’s current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended, or the Code, and depends on the Company’s ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.
OVERVIEW
EastGroup’s goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location-sensitive customers (primarily in the 15,000 to 70,000 square foot range). The Company develops, acquires and operates distribution facilities, the majority of which are clustered around major transportation features in supply constrained submarkets in major Sunbelt regions. The Company’s core markets are in the states of Florida, Texas, Arizona, California and North Carolina.
The COVID-19 pandemic has not had a substantially disruptive effect on EastGroup’s operations, occupancy or rent collections to date. However, EastGroup cannot predict the severity and duration of the economic uncertainty related to the pandemic, and the pandemic’s effect on EastGroup’s customers and on the Company’s business, future financial condition and operating results cannot be predicted with certainty at this time. We have received a limited number of, and may in the future receive additional, rent relief requests from our tenants. As of September 30, 2021, we do not believe that these rent relief requests will have a material impact on our rental revenues. The discussions below, including without limitation with respect to liquidity, are subject to the future effects of the COVID-19 pandemic and the related actions to curb its spread, which continue to evolve.
EastGroup believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company, and the Company also believes it can issue common and/or preferred equity and obtain debt financing on currently acceptable terms. During the three months ended September 30, 2021, EastGroup issued 278,893 shares of common stock through its continuous common equity offering program, providing net proceeds to the Company of $48.6 million. During the nine months ended September 30, 2021, EastGroup issued 966,608 shares of common stock through its continuous common equity offering program, providing net proceeds to the Company of $152.4 million. Also during the nine months ended September 30, 2021, the Company closed a $50 million senior unsecured term loan with an effective fixed interest rate of 1.55% and the private placement of $125 million of senior unsecured notes with a fixed interest rate of 2.74%. The Company amended and restated its two unsecured bank credit facilities on June 29, 2021, expanding the capacity from $350 million and $45 million with maturity dates of July 30, 2022 to $425 million and $50 million, respectively, with maturity dates of July 30, 2025. EastGroup’s financing and equity issuances are further described in Liquidity and Capital Resources below.
The Company’s primary revenue is rental income. During the nine months ended September 30, 2021, EastGroup executed new and renewal leases on 7,311,000 square feet (15.7% of EastGroup’s total square footage of 46,522,000). For new and renewal leases signed during first nine months of 2021, average rental rates increased by 31.1% as compared to the former leases on the same spaces.
Property Net Operating Income (“PNOI”) Excluding Income from Lease Terminations from same properties (defined as operating properties owned during the entire current and prior year reporting periods – January 1, 2020 through September 30, 2021), increased 6.4% for the nine months ended September 30, 2021 as compared to the same period in 2020.
EastGroup’s portfolio was 98.8% leased and 97.6% occupied as of September 30, 2021, compared to 97.8% and 96.4%, respectively, at September 30, 2020. As o f October 26, 2021, the portfolio was 98.7% leased and 97.1% occupied. Leases scheduled to expire for the remainder of 2021 were 3.2% of the portfolio on a square foot basis at September 30, 2021, and this percentage was reduced to 2.6% as of October 26, 2021.
The Company generates new sources of leasing revenue through its development and acquisition programs. The Company mitigates risks associated with development through a Board-approved maximum level of land held for development and by adjusting development start dates according to leasing activity.
During the nine months ended September 30, 2021, EastGroup acquired four value-add properties containing 499,000 square feet in Greenville and Atlanta for $36.6 million. EastGroup also acquired 101 acres of development land in Austin, Atlanta, and Greenville for $11.9 million. During the same period, the Company began construction of 16 development projects containing
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2,629,000 square feet in Orlando, Tampa, Miami, Fort Myers, Dallas, Austin, Houston, San Antonio, El Paso, San Diego, Atlanta and Charlotte. EastGroup also transferred 13 development projects and value-add acquisitions (1,928,000 square feet) in Miami, Fort Myers, Dallas, Austin, Houston, San Antonio, Phoenix, Los Angeles and Atlanta from its development and value-add program to real estate properties, with costs of $197.0 million at the date of transfer. As of September 30, 2021, EastGroup’s development and value-add program consisted of 23 projects (3,941,000 square feet) located in 15 cities. The projected total investment for the development and value-add projects, which were collectively 41% leased as of October 26, 2021, is $447 million, of which $197 million remained to be funded as of September 30, 2021.
During the nine months ended September 30, 2021, EastGroup acquired 740,000 square feet of operating properties in Phoenix, Dallas and Atlanta for $104.0 million.
There were no property sales during the nine months ended September 30, 2021.
The Company typically initially funds its development and acquisition programs through its unsecured bank credit facilities, the total capacity of which was increased in June 2021 to $475 million (as discussed in Liquidity and Capital Resources). As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace short-term bank borrowings. In June 2019, Moody’s Investors Service affirmed EastGroup’s issuer rating of Baa2 with a stable outlook. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. For future debt issuances, the Company intends to issue primarily unsecured fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps. The Company may also access the public debt market in the future as a means to raise capital.
EastGroup has one reportable segment – industrial properties. These properties, primarily located in major Sunbelt regions of the United States, have similar economic characteristics and, as a result, have been aggregated into one reportable segment.
The Company’s chief decision makers use two primary measures of operating results in making decisions: (1) funds from operations attributable to common stockholders (“FFO”), and (2) property net operating income (“PNOI”).
FFO is computed in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. (“Nareit”). Nareit’s guidance allows preparers an option as it pertains to whether gains or losses on sale, or impairment charges, on real estate assets incidental to a REIT's business are excluded from the calculation of FFO. EastGroup made the election to exclude activity related to such assets that are incidental to our business.
FFO is calculated as net income (loss) attributable to common stockholders computed in accordance with U.S. generally accepted accounting principles (“GAAP”), excluding gains and losses from sales of real estate property (including other assets incidental to the Company’s business) and impairment losses, adjusted for real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is not considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance, nor is it a measure of the Company’s liquidity or indicative of funds available to provide for the Company’s cash needs, including its ability to make distributions. The Company’s key drivers affecting FFO are changes in PNOI (as discussed below), interest rates, the amount of leverage the Company employs and general and administrative expenses.
PNOI is defined as Income from real estate operations less Expenses from real estate operations (including market-based internal management fee expense) plus the Company’s share of income and property operating expenses from its less-than-wholly-owned real estate investments.
EastGroup sometimes refers to PNOI from Same Properties as “Same PNOI”; the Company also presents Same PNOI Excluding Income from Lease Terminations. Same Properties is defined as operating properties owned during the entire current period and prior year reporting period. Properties developed or acquired are excluded until held in the operating portfolio for both the current and prior year reporting periods. Properties sold during the current or prior year reporting periods are also excluded. For the three and nine months ended September 30, 2021, Same Properties includes properties which were included in the operating portfolio for the entire period from January 1, 2020 through September 30, 2021. The Company presents Same PNOI and Same PNOI Excluding Income from Lease Terminations as a property-level supplemental measure of performance used to evaluate the performance of the Company’s investments in real estate assets and its operating results on a same property basis. It is calculated on a lease-by-lease basis by averaging the customers’ rent payments over the life of each individual lease.
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FFO and PNOI are supplemental industry reporting measurements used to evaluate the performance of the Company’s investments in real estate assets and its operating results. The Company believes that the exclusion of depreciation and amortization in the calculations of PNOI and FFO provides supplemental indicators of the properties’ performance since real estate values have historically risen or fallen with market conditions. PNOI and FFO as calculated by the Company may not be comparable to similarly titled but differently calculated measures for other real estate investment trusts (“REITs”). Investors should be aware that items excluded from or added back to FFO are significant components in understanding and assessing the Company’s financial performance. These non-GAAP figures should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP.
PNOI was calculated as follows for the three and nine months ended September 30, 2021 and 2020.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands)
Income from real estate operations | $ | 104,584 |  |  | 92,000 |  |  | 302,063 |  |  | 270,077 |
Expenses from real estate operations | (29,644) |  |  | (26,325) |  |  | (85,521) |  |  | (77,505) |
Noncontrolling interest in PNOI of consolidated joint ventures | (15) |  |  | (46) |  |  | (46) |  |  | (130) |
PNOI from 50% owned unconsolidated investment | 242 |  |  | 242 |  |  | 717 |  |  | 728 |
PROPERTY NET OPERATING INCOME (“PNOI”) | $ | 75,167 |  |  | 65,871 |  |  | 217,213 |  |  | 193,170 |

Income from real estate operations is comprised of rental income, net of reserves for uncollectible rent, expense reimbursement pass-through income and other real estate income including lease termination fees. Expenses from real estate operations is comprised of property taxes, insurance, utilities, repair and maintenance expenses, management fees and other operating costs. Generally, the Company’s most significant operating expenses are property taxes and insurance. Tenant leases may be net leases in which the total operating expenses are recoverable, modified gross leases in which some of the operating expenses are recoverable, or gross leases in which no expenses are recoverable (gross leases represent only a small portion of the Company’s total leases). Increases in property operating expenses are fully recoverable under net leases and recoverable to a high degree under modified gross leases. Modified gross leases often include base year amounts, and expense increases over these amounts are recoverable. The Company’s exposure to property operating expenses is primarily due to vacancies and leases for occupied space that limit the amount of expenses that can be recovered.
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The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three and nine months ended September 30, 2021 and 2020.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands)
NET INCOME | $ | 30,792 |  |  | 24,411 |  |  | 85,727 |  |  | 71,196 |
Interest income | (2) |  |  | (36) |  |  | (6) |  |  | (86) |
Other revenue | (13) |  |  | (12) |  |  | (40) |  |  | (278) |
Indirect leasing costs | 133 |  |  | 248 |  |  | 597 |  |  | 522 |
Depreciation and amortization | 32,263 |  |  | 29,211 |  |  | 93,925 |  |  | 85,673 |
Company’s share of depreciation from unconsolidated investment | 34 |  |  | 34 |  |  | 102 |  |  | 103 |
Interest expense | 8,416 |  |  | 8,347 |  |  | 24,873 |  |  | 25,150 |
General and administrative expense | 3,559 |  |  | 3,714 |  |  | 12,081 |  |  | 11,020 |
Noncontrolling interest in PNOI of consolidated joint ventures | (15) |  |  | (46) |  |  | (46) |  |  | (130) |
PROPERTY NET OPERATING INCOME (“PNOI”) | 75,167 |  |  | 65,871 |  |  | 217,213 |  |  | 193,170 |
PNOI from 2020 and 2021 acquisitions | (1,447) |  |  | (129) |  |  | (2,903) |  |  | (300) |
PNOI from 2020 and 2021 development and value-add properties | (7,184) |  |  | (3,367) |  |  | (18,501) |  |  | (8,210) |
PNOI from 2020 operating property dispositions | — |  |  | (282) |  |  | — |  |  | (826) |
Other PNOI | 77 |  |  | 65 |  |  | 178 |  |  | 169 |
SAME PNOI | 66,613 |  |  | 62,158 |  |  | 195,987 |  |  | 184,003 |
Net lease termination fee income from same properties | (353) |  |  | (192) |  |  | (947) |  |  | (661) |
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS | $ | 66,260 |  |  | 61,966 |  |  | 195,040 |  |  | 183,342 |

The following table presents reconciliations of Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO Attributable to Common Stockholders for the three and nine months ended September 30, 2021 and 2020.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (In thousands, except per share data)
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS | $ | 30,771 |  |  | 24,401 |  |  | 85,668 |  |  | 71,182 |
Depreciation and amortization | 32,263 |  |  | 29,211 |  |  | 93,925 |  |  | 85,673 |
Company’s share of depreciation from unconsolidated investment | 34 |  |  | 34 |  |  | 102 |  |  | 103 |
Depreciation and amortization from noncontrolling interest | — |  |  | (35) |  |  | — |  |  | (114) |
FUNDS FROM OPERATIONS (“FFO”) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 63,068 |  |  | 53,611 |  |  | 179,695 |  |  | 156,844 |
Net income attributable to common stockholders per diluted share | $ | 0.76 |  |  | 0.62 |  |  | $ | 2.13 |  |  | 1.82 |
Funds from operations (“FFO”) attributable to common stockholders per diluted share | $ | 1.55 |  |  | 1.36 |  |  | $ | 4.47 |  |  | 4.00 |
Diluted shares for earnings per share and funds from operations | 40,567 |  |  | 39,450 |  |  | 40,165 |  |  | 39,168 |

The Company analyzes the following performance trends in evaluating the revenues and expenses of the Company:
•The change in FFO per share represents the increase or decrease in FFO per share from the current period compared to the same period in the prior year. For the three months ended September 30, 2021, FFO was $1.55 per share compared with $1.36 per share for the same period of 2020, an increase of 14.0%. For the nine months ended September 30, 2021, FFO was $4.47 per share compared with $4.00 per share for the same period of 2020, an increase of 11.8%.
•For the three months ended September 30, 2021, PNOI increased by $9,296,000, or 14.1%, compared to the same period in 2020. PNOI increased $4,455,000 from same property operations, $3,817,000 from newly developed and value-add properties and $1,318,000 from 2020 and 2021 acquisitions; PNOI decreased $282,000 from operating properties sold in 2020.
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For the nine months ended September 30, 2021, PNOI increased by $24,043,000, or 12.4%, compared to the same period in 2020. PNOI increased $11,984,000 from same property operations, $10,291,000 from newly developed and value-add properties and $2,603,000 from 2020 and 2021 acquisitions; PNOI decreased $826,000 from operating properties sold in 2020.
•The change in Same PNOI represents the PNOI increase or decrease for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2020 through September 30, 2021). Same PNOI, excluding income from lease terminations, increased 6.9% and 6.4% for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020.
•Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2020 through September 30, 2021). Same property average occupancy was 97.7% for the three months ended September 30, 2021, compared to 97.0% for the same period of 2020. Same property average occupancy was 97.5% for the nine months ended September 30, 2021, compared to 96.9% for the same period of 2020.
•Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period. Occupancy at September 30, 2021 was 97.6%. Quarter-end occupancy ranged from 96.4% to 97.3% over the previous four quarters ended September 30, 2020 to June 30, 2021.
•Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases on the same space. Rental rate increases on new and renewal leases (4.9% of total square footage) averaged 37.4% for the three months ended September 30, 2021. For the nine months ended September 30, 2021, rental rate increases on new and renewal leases (15.7% of total square footage) averaged 31.1%.
•Lease termination fee income is included in Income from real estate operations. Lease termination fee income for the three and nine months ended September 30, 2021 was $353,000 and $947,000, respectively, compared to $192,000 and $661,000 for the same periods of 2020.
•The Company records reserves for uncollectible rent as reductions to Income from real estate operations; recoveries for uncollectible rent are recorded as additions to Income from real estate operations. The Company recorded net recoveries for uncollectible rent of $256,000 and $346,000 for the three and nine months ended September 30, 2021, respectively, compared to net reserves for uncollectible rent of $446,000 and $1,666,000 for the same periods of 2020. We evaluate the collectibility of rents and other receivables for individual leases at each reporting period based on factors including, among others, tenant's payment history, the financial condition of the tenant, business conditions and trends in the industry in which the tenant operates and economic conditions in the geographic area where the property is located. If evaluation of these factors or others indicates it is not probable we will collect substantially all rent we recognize an adjustment to rental revenue. If our judgment or estimation regarding probability of collection changes we may adjust or record additional rental revenue in the period such conclusion is reached. The Company followed its normal process for recording reserves for uncollectible rent during the three and nine months ended September 30, 2021 and also evaluated all deferred rent related to the COVID-19 pandemic for collectibility.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s management considers the following accounting policies and estimates to be critical to the reported operations of the Company.
Acquisition and Development of Real Estate Properties
The FASB Codification provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their respective fair values. Factors considered by management in allocating the cost of the properties acquired include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The allocation to tangible assets (land, building and improvements) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models. Land is valued using comparable land sales specific to the applicable market, provided by a third party. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.
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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. 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.
The significance of this accounting policy will fluctuate given the transaction activity during the period.
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 properties based on development activity.
FINANCIAL CONDITION
EastGroup’s Total Assets were $2,985,010,000 at September 30, 2021, an increase of $264,207,000 from December 31, 2020. Total Liabilities increased $114,985,000 to $1,565,270,000, and Total Equity increased $149,222,000 to $1,419,740,000 during the same period. The following paragraphs explain these changes in detail.
Assets
Real Estate Properties
Real estate properties increased $325,246,000 during the nine months ended September 30, 2021, primarily due to: (i) the transfer of 13 projects from Development and value-add properties to Real estate properties (as detailed under Development and Value-Add Properties below); (ii) operating property acquisitions; (iii) capital improvements at the Company’s properties; and (iv) right of use assets for the Company’s ground leases. These increases were partially offset by the transfer of land costs from Real estate properties to Development and value-add properties.
During the nine months ended September 30, 2021, the Company made capital improvements of $26,069,000 on existing and acquired properties (included in the Real Estate Improvements table under Results of Operations). Also, the Company incurred costs of $7,251,000 on development and value-add properties subsequent to transfer to Real estate properties; the Company records these expenditures as development and value-add costs on the Consolidated Statements of Cash Flows.
During 2021, EastGroup acquired the following operating properties:

OPERATING PROPERTIES ACQUIRED IN 2021 |  | Location |  | Size |  | Date Acquired |  | Cost
|  |  |  | (Square feet) |  |  |  | (In thousands)
Southpark Distribution Center 2 |  | Phoenix, AZ |  | 79,000 |  |  | 06/10/2021 |  | $ | 9,177 |
DFW Global Logistics Centre |  | Dallas, TX |  | 611,000 |  |  | 08/26/2021 |  | 89,829 |
Progress Center 3 |  | Atlanta, GA |  | 50,000 |  |  | 09/23/2021 |  | 5,000 |
Total operating property acquisitions |  |  |  | 740,000 |  |  |  |  | $ | 104,006 |

The Company had no stabilized operating property sales during the nine months ended September 30, 2021.
Development and Value-Add Properties
EastGroup’s investment in Development and value-add properties at September 30, 2021 consisted of projects in lease-up and under construction of $249,825,000 and prospective development (primarily land) of $102,519,000. The Company’s total investment in Development and value-add properties at September 30, 2021 was $352,344,000 compared to $359,588,000 at December 31, 2020. During the nine months ended September 30, 2021, EastGroup transferred 13 development and value-add projects to Real estate properties with a total investment of $196,961,000 as of the date of transfer. Total capital invested for development during the first nine months of 2021 was $189,955,000, which primarily consisted of costs of $148,483,000 and
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$23,476,000 as detailed in the Development and Value-Add Properties Activity table below and costs of $7,251,000 on properties subsequent to transfer to Real estate properties. The capitalized costs incurred on development and value-add properties subsequent to transfer to Real estate properties include capital improvements at the properties and do not include other capitalized costs associated with development (i.e., interest expense, property taxes and internal personnel costs).
The Company capitalized internal development costs of $2,031,000 and $5,311,000 for the three and nine months ended September 30, 2021, respectively, compared to $1,447,000 and $5,052,000 for the same periods of 2020.
During 2021, EastGroup acquired the following value-add properties:

VALUE-ADD PROPERTIES ACQUIRED IN 2021 |  | Location |  | Size |  | Date Acquired |  | Cost
|  |  |  | (Square feet) |  |  |  | (In thousands)
Access Point 1 |  | Greenville, SC |  | 156,000 |  |  | 01/15/2021 |  | $ | 10,501 |
Northpoint 200 |  | Atlanta, GA |  | 79,000 |  |  | 01/21/2021 |  | 6,516 |
Access Point 2 |  | Greenville, SC |  | 159,000 |  |  | 05/19/2021 |  | 10,743 |
Cherokee 75 Business Center 2 |  | Atlanta, GA |  | 105,000 |  |  | 06/17/2021 |  | 8,837 |
Total value-add property acquisitions |  |  |  | 499,000 |  |  |  |  | $ | 36,597 |

During the nine months ended September 30, 2021, the Company acquired 101 acres of development land in Austin, Atlanta and Greenville for $11,910,000.
Costs associated with these acquisitions are included in the Development and Value-Add Properties Activity table.
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|  |  | Costs Incurred |  |  |  | Anticipated Building Conversion Date |  |  |  |  |  |  |  |  |
DEVELOPMENT AND VALUE-ADD PROPERTIES ACTIVITY |  |  | Costs Transferred in 2021 (1) |  | For the Nine Months Ended 9/30/2021 |  | Cumulative as of 9/30/2021 |  | Projected Total Costs |  |  |  |  |  |  |  |  |  |
|  |  | (In thousands) |  |  |  |  |  |  |  |  |  |  |
LEASE-UP | Building Size (Square feet) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ridgeview 1 & 2, San Antonio, TX | 226,000 |  |  | $ | — |  |  | 2,021 |  |  | 19,114 |  |  | 21,300 |  |  | 10/21 |  |  |  |  |  |  |  |  |
Gilbert Crossroads C & D, Phoenix, AZ | 178,000 |  |  | — |  |  | 13,678 |  |  | 20,295 |  |  | 24,200 |  |  | 12/21 |  |  |  |  |  |  |  |  |
LakePort 1-3, Dallas, TX | 194,000 |  |  | — |  |  | 3,351 |  |  | 23,132 |  |  | 25,300 |  |  | 12/21 |  |  |  |  |  |  |  |  |
Steele Creek 10, Charlotte, NC | 162,000 |  |  | — |  |  | 6,523 |  |  | 10,757 |  |  | 12,600 |  |  | 12/21 |  |  |  |  |  |  |  |  |
Access Point 1, Greenville, SC (2) | 156,000 |  |  | — |  |  | 12,388 |  |  | 12,388 |  |  | 12,600 |  |  | 01/22 |  |  |  |  |  |  |  |  |
Access Point 2, Greenville, SC (2) | 159,000 |  |  | — |  |  | 11,302 |  |  | 11,302 |  |  | 12,400 |  |  | 05/22 |  |  |  |  |  |  |  |  |
Grand Oaks 75 3, Tampa, FL | 136,000 |  |  | 2,198 |  |  | 7,843 |  |  | 10,041 |  |  | 12,000 |  |  | 09/22 |  |  |  |  |  |  |  |  |
Horizon West 2 & 3, Orlando, FL | 210,000 |  |  | 5,505 |  |  | 11,059 |  |  | 16,564 |  |  | 18,200 |  |  | 09/22 |  |  |  |  |  |  |  |  |
Total Lease-Up | 1,421,000 |  |  | 7,703 |  |  | 68,165 |  |  | 123,593 |  |  | 138,600 |  |  |  |  |  |  |  |  |  |  |  |
UNDER CONSTRUCTION |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speed Distribution Center, San Diego, CA | 519,000 |  |  | 17,758 |  | (3) | 36,208 |  |  | 53,966 |  |  | 88,600 |  |  | 02/22 |  |  |  |  |  |  |  |  |
Steele Creek 8, Charlotte, NC | 72,000 |  |  | 1,869 |  |  | 131 |  |  | 2,000 |  |  | 8,400 |  |  | 08/22 |  |  |  |  |  |  |  |  |
CreekView 9 & 10, Dallas, TX | 145,000 |  |  | 4,350 |  |  | 3,221 |  |  | 7,571 |  |  | 17,200 |  |  | 12/22 |  |  |  |  |  |  |  |  |
Tri-County Crossing 5, San Antonio, TX | 105,000 |  |  | 1,328 |  |  | 2,346 |  |  | 3,674 |  |  | 10,300 |  |  | 01/23 |  |  |  |  |  |  |  |  |
Basswood 1 & 2, Fort Worth, TX | 237,000 |  |  | — |  |  | 7,393 |  |  | 12,147 |  |  | 22,100 |  |  | 02/23 |  |  |  |  |  |  |  |  |
Grand Oaks 75 4, Tampa, FL | 185,000 |  |  | 3,313 |  |  | 373 |  |  | 3,686 |  |  | 17,900 |  |  | 02/23 |  |  |  |  |  |  |  |  |
SunCoast 12, Fort Myers, FL | 79,000 |  |  | 960 |  |  | 1,143 |  |  | 2,103 |  |  | 8,000 |  |  | 02/23 |  |  |  |  |  |  |  |  |
Gateway 3, Miami, FL | 133,000 |  |  | 6,791 |  |  | 2,170 |  |  | 8,961 |  |  | 19,100 |  |  | 04/23 |  |  |  |  |  |  |  |  |
Americas Ten 2, El Paso, TX | 168,000 |  |  | 2,885 |  |  | 770 |  |  | 3,655 |  |  | 14,100 |  |  | 05/23 |  |  |  |  |  |  |  |  |
Tri-County Crossing 6, San Antonio, TX | 124,000 |  |  | 1,576 |  |  | 943 |  |  | 2,519 |  |  | 9,900 |  |  | 05/23 |  |  |  |  |  |  |  |  |
45 Crossing, Austin, TX | 177,000 |  |  | — |  |  | 12,680 |  |  | 12,680 |  |  | 26,200 |  |  | 06/23 |  |  |  |  |  |  |  |  |
McKinney 3 & 4, Dallas, TX | 212,000 |  |  | 5,120 |  |  | 245 |  |  | 5,365 |  |  | 26,300 |  |  | 06/23 |  |  |  |  |  |  |  |  |
Ridgeview 3, San Antonio, TX | 88,000 |  |  | 1,443 |  |  | 535 |  |  | 1,978 |  |  | 10,700 |  |  | 06/23 |  |  |  |  |  |  |  |  |
Grand West Crossing 1, Houston, TX | 121,000 |  |  | 3,492 |  |  | 309 |  |  | 3,801 |  |  | 15,700 |  |  | 08/23 |  |  |  |  |  |  |  |  |
I-20 West Business Center, Atlanta, GA | 155,000 |  |  | 1,803 |  |  | 323 |  |  | 2,126 |  |  | 14,200 |  |  | 10/23 |  |  |  |  |  |  |  |  |
Total Under Construction | 2,520,000 |  |  | 52,688 |  |  | 68,790 |  |  | 126,232 |  |  | 308,700 |  |  |  |  |  |  |  |  |  |  |  |
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND) | Estimated Building Size (Square feet) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fort Myers, FL | 543,000 |  |  | (960) |  |  | 1,172 |  |  | 8,078 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Miami, FL | 243,000 |  |  | (6,791) |  |  | 697 |  |  | 14,202 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Orlando, FL | 1,278,000 |  |  | (5,505) |  |  | 3,262 |  |  | 25,435 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tampa, FL | 32,000 |  |  | (5,511) |  |  | 613 |  |  | 825 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Atlanta, GA | — |  |  | (1,803) |  |  | 411 |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |  |
Jackson, MS | 28,000 |  |  | — |  |  | — |  |  | 706 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Charlotte, NC | 250,000 |  |  | (1,869) |  |  | 205 |  |  | 2,661 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Greenville, SC | 400,000 |  |  | — |  |  | 1,685 |  |  | 1,685 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dallas, TX | 349,000 |  |  | (9,470) |  |  | 1,556 |  |  | 14,964 |  |  |  |  |  |  |  |  |  |  |  |  |  |
El Paso, TX | — |  |  | (2,885) |  |  | 298 |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fort Worth, TX | 652,000 |  |  | — |  |  | 582 |  |  | 15,132 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Houston, TX | 1,082,000 |  |  | (3,492) |  |  | 857 |  |  | 18,123 |  |  |  |  |  |  |  |  |  |  |  |  |  |
San Antonio, TX | 55,000 |  |  | (4,347) |  |  | 190 |  |  | 708 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Prospective Development | 4,912,000 |  |  | (42,633) |  |  | 11,528 |  |  | 102,519 |  |  |  |  |  |  |  |  |  |  |  |  |  |
| 8,853,000 |  |  | $ | 17,758 |  |  | 148,483 |  |  | 352,344 |  |  |  |  |  |  |  |  |  |  |  |  |  |
The Development and Value-Add Properties Activity table is continued on the following page. |  |  |  |  |  |  |  |  |

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|  |  | Costs Incurred |  |  |  |  |  |  |  |  |  |  |  |  |
DEVELOPMENT AND VALUE-ADD PROPERTIES TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2021 |  |  | Costs Transferred in 2021 (1) |  | For the Nine Months Ended 9/30/2021 |  | Cumulative as of 9/30/2021 |  |  |  | Building Conversion Date |  |  |  |  |  |  |  |  |
|  |  | (In thousands) |  |  |  |  |  |  |  |  |  |  |  |  |
| Building Size (Square feet) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gilbert Crossroads A & B, Phoenix, AZ | 140,000 |  |  | $ | — |  |  | — |  |  | 16,768 |  |  |  |  | 01/21 |  |  |  |  |  |  |  |  |
CreekView 7 & 8, Dallas, TX | 137,000 |  |  | — |  |  | 1,099 |  |  | 17,658 |  |  |  |  | 03/21 |  |  |  |  |  |  |  |  |
Hurricane Shoals 3, Atlanta, GA | 101,000 |  |  | — |  |  | 124 |  |  | 8,935 |  |  |  |  | 03/21 |  |  |  |  |  |  |  |  |
Northpoint 200, Atlanta, GA (2) | 79,000 |  |  | — |  |  | 6,861 |  |  | 6,861 |  |  |  |  | 03/21 |  |  |  |  |  |  |  |  |
Rancho Distribution Center, Los Angeles, CA (2) | 162,000 |  |  | — |  |  | — |  |  | 27,325 |  |  |  |  | 03/21 |  |  |  |  |  |  |  |  |
World Houston 44, Houston, TX | 134,000 |  |  | — |  |  | 399 |  |  | 8,525 |  |  |  |  | 05/21 |  |  |  |  |  |  |  |  |
Gateway 4, Miami, FL | 197,000 |  |  | — |  |  | 641 |  |  | 22,688 |  |  |  |  | 06/21 |  |  |  |  |  |  |  |  |
Interstate Commons 2, Phoenix, AZ (2) | 142,000 |  |  | — |  |  | 50 |  |  | 12,291 |  |  |  |  | 06/21 |  |  |  |  |  |  |  |  |
Settlers Crossing 3 & 4, Austin, TX | 173,000 |  |  | — |  |  | 2,477 |  |  | 19,981 |  |  |  |  | 06/21 |  |  |  |  |  |  |  |  |
SunCoast 7, Fort Myers, FL | 77,000 |  |  | — |  |  | 276 |  |  | 7,649 |  |  |  |  | 06/21 |  |  |  |  |  |  |  |  |
Tri-County Crossing 3 & 4, San Antonio, TX | 203,000 |  |  | — |  |  | 1,000 |  |  | 15,409 |  |  |  |  | 06/21 |  |  |  |  |  |  |  |  |
Cherokee 75 Business Center 2, Atlanta, GA (2) | 105,000 |  |  | — |  |  | 9,052 |  |  | 9,052 |  |  |  |  | 07/21 |  |  |  |  |  |  |  |  |
Northwest Crossing 1-3, Houston, TX | 278,000 |  |  | — |  |  | 1,497 |  |  | 23,819 |  |  |  |  | 09/21 |  |  |  |  |  |  |  |  |
Total Transferred to Real Estate Properties | 1,928,000 |  |  | $ | — |  |  | 23,476 |  |  | 196,961 |  |  | (4) |  |  |  |  |  |  |  |  |  |  |

(1) Represents costs transferred from Prospective Development (primarily land) to Under Construction during the period. Negative amounts represent land inventory costs transferred to Under Construction.
(2) Represents value-add properties acquired by EastGroup.
(3) Represents costs transferred from Real estate properties during the year.
(4) Represents cumulative costs at the date of transfer.
Accumulated Depreciation
Accumulated depreciation on real estate, development and value-add properties increased $75,699,000 during the nine months ended September 30, 2021, primarily due to depreciation expense.
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Other Assets
Other assets increased $22,013,000 during the nine months ended September 30, 2021. A summary of Other assets follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Leasing costs (principally commissions) | $ | 110,986 |  |  | 95,914 |
Accumulated amortization of leasing costs | (40,713) |  |  | (38,371) |
Leasing costs (principally commissions), net of accumulated amortization | 70,273 |  |  | 57,543 |
Acquired in-place lease intangibles | 29,606 |  |  | 28,107 |
Accumulated amortization of acquired in-place lease intangibles | (13,674) |  |  | (13,554) |
Acquired in-place lease intangibles, net of accumulated amortization | 15,932 |  |  | 14,553 |
Acquired above market lease intangibles | 1,815 |  |  | 1,825 |
Accumulated amortization of acquired above market lease intangibles | (1,399) |  |  | (1,231) |
Acquired above market lease intangibles, net of accumulated amortization | 416 |  |  | 594 |
Straight-line rents receivable | 49,919 |  |  | 43,079 |
Accounts receivable | 5,535 |  |  | 6,064 |
Interest rate swap assets | 511 |  |  | — |
Right of use assets — Office leases (operating) | 2,108 |  |  | 2,131 |
Receivable for common stock offerings | — |  |  | 1,942 |
Goodwill | 990 |  |  | 990 |
Receivable for tenant improvement cost reimbursements | 14,762 |  |  | 192 |
Prepaid expenses and other assets | 11,146 |  |  | 22,491 |
Total Other assets | $ | 171,592 |  |  | 149,579 |

Liabilities
Unsecured bank credit facilities, net of debt issuance costs decreased $65,475,000 during the nine months ended September 30, 2021, mainly due to repayments of $380,877,000 and new debt issuance costs incurred during the period, partially offset by borrowings of $316,893,000 and the amortization of debt issuance costs during the period. The Company’s credit facilities are described in greater detail under Liquidity and Capital Resources.
Unsecured debt, net of debt issuance costs increased $134,722,000 during the nine months ended September 30, 2021, primarily due to the closing of a $50 million senior unsecured term loan in March, closing the private placement of $125 million of senior unsecured notes in June and the amortization of debt issuance costs, partially offset by the repayment of a $40 million term loan in July and new debt issuance costs incurred during the period. The borrowings and repayments on Unsecured debt, net of debt issuance costs are described in greater detail under Liquidity and Capital Resources.
Secured debt, net of debt issuance costs decreased $43,527,000 during the nine months ended September 30, 2021. The decrease resulted from the repayment of a mortgage loan with a principal balance of $40,841,000 in March, regularly scheduled principal payments of $2,750,000 and amortization of premiums on Secured debt, net of debt issuance costs, partially offset by the amortization of debt issuance costs during the period.
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Accounts payable and accrued expenses increased $80,406,000 during the nine months ended September 30, 2021. A summary of the Company’s Accounts payable and accrued expenses follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Property taxes payable | $ | 46,949 |  |  | 3,524 |
Development costs payable | 28,557 |  |  | 6,427 |
Real estate improvements and capitalized leasing costs payable | 7,018 |  |  | 5,692 |
Interest payable | 8,863 |  |  | 6,537 |
Dividends payable | 37,816 |  |  | 32,677 |
Book overdraft (1) | 13,230 |  |  | 5,176 |
Other payables and accrued expenses | 7,546 |  |  | 9,540 |
Total Accounts payable and accrued expenses | $ | 149,979 |  |  | 69,573 |

(1)Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the Company’s working cash line of credit, which is included in the Company’s Unsecured bank credit facilities.
Other liabilities increased $8,859,000 during the nine months ended September 30, 2021. A summary of the Company’s Other liabilities follows:

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Security deposits | $ | 27,277 |  |  | 22,140 |
Prepaid rent and other deferred income | 15,529 |  |  | 14,694 |
Operating lease liabilities — Ground leases | 23,250 |  |  | 11,199 |
Operating lease liabilities — Office leases | 2,157 |  |  | 2,167 |
Acquired below market lease intangibles | 10,368 |  |  | 9,019 |
Accumulated amortization of below market lease intangibles | (6,964) |  |  | (6,168) |
Acquired below market lease intangibles, net of accumulated amortization | 3,404 |  |  | 2,851 |
Interest rate swap liabilities | 2,987 |  |  | 10,752 |
Prepaid tenant improvement cost reimbursements | 556 |  |  | 364 |
Other liabilities | 3,516 |  |  | 5,650 |
Total Other liabilities | $ | 78,676 |  |  | 69,817 |

Equity
Additional paid-in capital increased $155,695,000 during the nine months ended September 30, 2021, primarily due to the issuance of common stock under the Company’s continuous common equity offering program (as discussed in Liquidity and Capital Resources) and activity related to stock-based compensation (as discussed in Note 16 in the Notes to Consolidated Financial Statements). During the nine months ended September 30, 2021, EastGroup issued 966,608 shares of common stock under its continuous common equity offering program with net proceeds to the Company of $152,429,000.
For the nine months ended September 30, 2021, Distributions in excess of earnings increased $14,711,000 as a result of dividends on common stock of $100,379,000 exceeding Net Income Attributable to EastGroup Properties, Inc. Common Stockholders of $85,668,000.
Accumulated other comprehensive loss decreased $8,276,000 during the nine months ended September 30, 2021. The decrease resulted from the change in fair value of the Company’s interest rate swaps (cash flow hedges) which are further discussed in Note 14 in the Notes to Consolidated Financial Statements.
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RESULTS OF OPERATIONS
Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the three and nine months ended September 30, 2021 was $30,771,000 ($0.76 per basic and diluted share) and $85,668,000 ($2.14 per basic share and $2.13 per diluted share), respectively, compared to $24,401,000 ($0.62 per basic and diluted share) and $71,182,000 ($1.82 per basic and diluted share) for the same periods in 2020. The following paragraphs explain the change:
•PNOI increased by $9,296,000 ($0.23 per diluted share), or 14.1%, for the three months ended September 30, 2021, as compared to the same period of 2020. PNOI increased $4,455,000 from same property operations, $3,817,000 from newly developed and value-add properties and $1,318,000 from 2020 and 2021 acquisitions; PNOI decreased $282,000 from operating properties sold in 2020. Lease termination fee income was $353,000 and $192,000 for the three month periods ended September 30, 2021 and 2020, respectively. The Company recorded net recoveries for uncollectible rent of $256,000 and net reserves for uncollectible rent of $446,000 for the three months ended September 30, 2021 and 2020, respectively. Straight-lining of rent increased Income from real estate operations by $2,550,000 and $904,000 for the three months ended September 30, 2021 and 2020, respectively.
PNOI increased by $24,043,000 ($0.60 per diluted share), or 12.4%, for the nine months ended September 30, 2021, as compared to the same period of 2020. PNOI increased $11,984,000 from same property operations, $10,291,000 from newly developed and value-add properties and $2,603,000 from 2020 and 2021 acquisitions; PNOI decreased $826,000 from operating properties sold in 2020. Lease termination fee income was $947,000 and $661,000 for the nine month periods ended September 30, 2021 and 2020, respectively. The Company recorded net recoveries for uncollectible rent of $346,000 and net reserves for uncollectible rent of $1,666,000 for the nine months ended September 30, 2021 and 2020, respectively. Straight-lining of rent increased Income from real estate operations by $6,536,000 and $3,734,000 for the nine months ended September 30, 2021 and 2020, respectively.
•There were no sales during the three and nine months ended September 30, 2021, or during the same periods of 2020.
•Depreciation and amortization expense increased by $3,052,000 ($0.08 per diluted share) and $8,252,000 ($0.21 per diluted share) during the three and nine months ended September 30, 2021, respectively, as compared to the same periods of 2020.
EastGroup signed 41 leases with free rent concessions on 1,163,000 square feet during the three months ended September 30, 2021, with total free rent concessions of $1,710,000 over the lives of the leases. During the same period of 2020, the Company signed 56 leases with free rent concessions on 1,511,000 square feet with total free rent concessions of $2,710,000 over the lives of the leases.
During the nine months ended September 30, 2021, EastGroup signed 139 leases with free rent concessions on 4,452,000 square feet with total free rent concessions of $8,422,000 over the lives of the leases. During the same period of 2020, the Company signed 139 leases with free rent concessions on 3,792,000 square feet with total free rent concessions of $5,787,000 over the lives of the leases.
The Company’s percentage of leased square footage was 98.8% at September 30, 2021, compared to 97.8% at September 30, 2020. Occupancy at September 30, 2021 was 97.6% compared to 96.4% at September 30, 2020.
Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2020 through September 30, 2021). Same property average occupancy for the three and nine months ended September 30, 2021, was 97.7% and 97.5%, respectively, compared to 97.0% and 96.9%, for the same periods of 2020.
The same property average rental rate calculated in accordance with GAAP represents the average annual rental rates of leases in place for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2020 through September 30, 2021). The same property average rental rate was $6.62 and $6.49 per square foot for the three and nine months ended September 30, 2021, respectively, compared to $6.19 and $6.13 per square foot for the same periods of 2020.
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Interest expense increased $69,000 for the three months ended September 30, 2021 and decreased $277,000 for the nine months ended September 30, 2021, compared to the same periods in 2020. The following table presents the components of Interest expense for the three and nine months ended September 30, 2021 and 2020:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | Increase (Decrease) |  | 2021 |  | 2020 |  | Increase (Decrease)
| (In thousands)
VARIABLE RATE INTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |
Unsecured bank credit facilities interest - variable rate (excluding amortization of facility fees and debt issuance costs) | $ | 67 |  |  | 212 |  |  | (145) |  |  | 659 |  |  | 1,528 |  |  | (869) |
Amortization of facility fees - unsecured bank credit facilities | 180 |  |  | 198 |  |  | (18) |  |  | 571 |  |  | 591 |  |  | (20) |
Amortization of debt issuance costs - unsecured bank credit facilities | 163 |  |  | 141 |  |  | 22 |  |  | 443 |  |  | 421 |  |  | 22 |
Total variable rate interest expense | 410 |  |  | 551 |  |  | (141) |  |  | 1,673 |  |  | 2,540 |  |  | (867) |
FIXED RATE INTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |
Unsecured debt interest (1) (excluding amortization of debt issuance costs) | 9,776 |  |  | 8,553 |  |  | 1,223 |  |  | 27,889 |  |  | 25,249 |  |  | 2,640 |
Secured debt interest (excluding amortization of debt issuance costs) | 365 |  |  | 1,408 |  |  | (1,043) |  |  | 1,478 |  |  | 4,299 |  |  | (2,821) |
Amortization of debt issuance costs - unsecured debt | 147 |  |  | 158 |  |  | (11) |  |  | 435 |  |  | 454 |  |  | (19) |
Amortization of debt issuance costs - secured debt | 10 |  |  | 55 |  |  | (45) |  |  | 84 |  |  | 170 |  |  | (86) |
Total fixed rate interest expense | 10,298 |  |  | 10,174 |  |  | 124 |  |  | 29,886 |  |  | 30,172 |  |  | (286) |
Total interest | 10,708 |  |  | 10,725 |  |  | (17) |  |  | 31,559 |  |  | 32,712 |  |  | (1,153) |
Less capitalized interest | (2,292) |  |  | (2,378) |  |  | 86 |  |  | (6,686) |  |  | (7,562) |  |  | 876 |
TOTAL INTEREST EXPENSE | $ | 8,416 |  |  | 8,347 |  |  | 69 |  |  | 24,873 |  |  | 25,150 |  |  | (277) |

(1)Includes interest on the Company’s unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 14 in the Notes to Consolidated Financial Statements.
The Company’s variable rate interest expense decreased by $141,000 and $867,000 for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020 primarily due to decreases in the Company’s weighted average variable interest rates and average borrowings on its unsecured bank credit facilities as shown in the following table:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | Increase (Decrease) |  | 2021 |  | 2020 |  | Increase (Decrease)
| (In thousands, except rates of interest)
Average borrowings on unsecured bank credit facilities - variable rate | $ | 31,380 |  | 72,083 |  | (40,703) |  | 81,136 |  | 105,811 |  | (24,675)
Weighted average variable interest rates (excluding amortization of facility fees and debt issuance costs) | 0.86 | % |  | 1.17 | % |  |  |  | 1.08 | % |  | 1.93 | % |  |

The Company’s fixed rate interest expense increased by $124,000 for the three months ended September 30, 2021 and decreased by $286,000 for the nine months ended September 30, 2021, as compared to the same periods in 2020 as a result of the unsecured debt and secured debt activity described below.
Interest expense from fixed rate unsecured debt increased by $1,223,000 and $2,640,000 during the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The increases resulted from the Company’s unsecured debt activity described below.
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The details of the unsecured debt obtained in 2020 and 2021 are shown in the following table:

NEW UNSECURED DEBT IN 2020 AND 2021 |  | Effective Interest Rate |  | Date Obtained |  | Maturity Date |  | Amount
|  |  |  |  |  |  |  | (In thousands)
$100 Million Senior Unsecured Term Loan (1) |  | 2.39% |  | 03/25/2020 |  | 03/25/2027 |  | $ | 100,000 |
$100 Million Senior Unsecured Notes |  | 2.61% |  | 10/14/2020 |  | 10/14/2030 |  | 100,000 |
$75 Million Senior Unsecured Notes |  | 2.71% |  | 10/14/2020 |  | 10/14/2032 |  | 75,000 |
$50 Million Senior Unsecured Term Loan (2) |  | 1.55% |  | 03/18/2021 |  | 03/18/2025 |  | 50,000 |
$125 Million Senior Unsecured Notes |  | 2.74% |  | 06/10/2021 |  | 06/10/2031 |  | 125,000 |
Weighted Average/Total Amount for 2020 and 2021 |  | 2.50% |  |  |  |  |  | $ | 450,000 |

(1) The interest rate on this unsecured term loan is comprised of LIBOR plus 145 basis points subject to a pricing grid for changes in the Company’s coverage ratings. The Company entered into an interest rate swap to convert the loan’s LIBOR rate to a fixed interest rate, providing the Company a weighted average effective interest rate on the term loan of 2.39% as of September 30, 2021. See Note 14 in the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
(2) The interest rate on this unsecured term loan is comprised of LIBOR plus 100 basis points subject to a pricing grid for changes in the Company’s coverage ratings. The Company entered into an interest rate swap to convert the loan’s LIBOR rate to a fixed interest rate, providing the Company a weighted average effective interest rate on the term loan of 1.55% as of September 30, 2021. See Note 14 in the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
The increase in interest expense from the new unsecured debt was partially offset by the repayment of the following unsecured debt during 2020 and 2021:

UNSECURED DEBT REPAID IN 2020 AND 2021 |  | Interest Rate |  | Date Repaid |  | Payoff Amount
|  |  |  |  |  | (In thousands)
$30 Million Senior Unsecured Notes |  | 3.80% |  | 08/28/2020 |  | $ | 30,000 |
$75 Million Senior Unsecured Term Loan |  | 3.45% |  | 12/21/2020 |  | 75,000 |
$40 Million Senior Unsecured Term Loan |  | 2.34% |  | 07/30/2021 |  | 40,000 |
Weighted Average/Total Amount for 2020 and 2021 |  | 3.22% |  |  |  | $ | 145,000 |

The increase in interest expense from unsecured debt was offset by a decrease in secured debt interest expense. Interest expense from secured debt decreased by $1,043,000 and $2,821,000 during the three and nine month periods ended September 30, 2021, as compared to the same periods in 2020 as a result of regularly scheduled principal payments and the payoffs described in the table below. Regularly scheduled principal payments on secured debt were $2,750,000 during the nine months ended September 30, 2021. During the year ended December 31, 2020, regularly scheduled principal payments on secured debt were $8,436,000. The details of the secured debt repaid in 2020 and 2021 are shown in the following table:

SECURED DEBT REPAID IN 2020 AND 2021 |  | Interest Rate |  | Date Repaid |  | Payoff Amount
|  |  |  |  |  | (In thousands)
40th Avenue, Beltway Crossing 5, Centennial Park, Executive Airport, Interchange Park 1, Ocean View, Wetmore 5-8 and World Houston 26, 28, 29 & 30 |  | 4.39% |  | 10/07/2020 |  | $ | 45,871 |
Colorado Crossing, Interstate Distribution Center 1-3, Rojas Commerce Park, Steele Creek 1 & 2, Venture Distribution Center 1 and World Houston 3, 4, 6, 7, 8 & 9 |  | 4.75% |  | 03/08/2021 |  | 40,841 |
Weighted Average/Total Amount for 2020 and 2021 |  | 4.56% |  |  |  | $ | 86,712 |

EastGroup did not obtain any new secured debt during 2020 or the first nine months of 2021.
Interest costs during the period of construction of real estate properties are capitalized and offset against interest expense. Capitalized interest decreased $86,000 and $876,000 for the three and nine months ended September 30, 2021, respectively, as compared to the same periods of 2020, due to changes in development spending and borrowing rates.
Depreciation and amortization expense increased $3,052,000 and $8,252,000 for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020, primarily due to the operating properties acquired by the Company in 2020 and 2021 and the properties transferred from Development and value-add properties in 2020 and 2021, partially offset by operating properties sold in 2020.
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The Company did not sell any properties during the nine months ended September 30, 2021 or 2020.
Real Estate Improvements
Real estate improvements for EastGroup’s operating properties for the three and nine months ended September 30, 2021 and 2020 were as follows:

|  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
| Estimated Useful Life |  | 2021 |  | 2020 |  | 2021 |  | 2020
|  |  | (In thousands)
Upgrade on Acquisitions | 40 yrs |  | $ | 214 |  |  | 117 |  |  | 368 |  |  | 282 |
Tenant Improvements: |  |  |  |  |  |  |  |  |
New Tenants | Lease Life |  | 3,349 |  |  | 3,114 |  |  | 8,516 |  |  | 8,870 |
Renewal Tenants | Lease Life |  | 609 |  |  | 398 |  |  | 2,793 |  |  | 2,403 |
Other: |  |  |  |  |  |  |  |  |
Building Improvements | 5-40 yrs |  | 1,521 |  |  | 1,195 |  |  | 4,925 |  |  | 3,185 |
Roofs | 5-15 yrs |  | 1,682 |  |  | 1,443 |  |  | 7,744 |  |  | 5,025 |
Parking Lots | 3-5 yrs |  | 439 |  |  | 90 |  |  | 870 |  |  | 439 |
Other | 5 yrs |  | 160 |  |  | 207 |  |  | 853 |  |  | 560 |
Total Real Estate Improvements (1) |  |  | $ | 7,974 |  |  | 6,564 |  |  | 26,069 |  |  | 20,764 |

(1)Reconciliation of Total Real Estate Improvements to Real estate improvements on the Consolidated Statements of Cash Flows:

|  | Nine Months Ended September 30,
| 2021 |  | 2020
| (In thousands)
Total Real Estate Improvements |  | $ | 26,069 |  |  | 20,764 |
Change in Real Estate Property Payables |  | 535 |  |  | 585 |
Change in Construction in Progress |  | 145 |  |  | 4,187 |
Real Estate Improvements on the Consolidated Statements of Cash Flows |  | $ | 26,749 |  |  | 25,536 |

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Capitalized Leasing Costs
The Company’s leasing costs (principally commissions) are capitalized and included in Other assets. The costs are amortized over the terms of the associated leases, and the amortization is included in Depreciation and amortization expense. Capitalized leasing costs for the three and nine months ended September 30, 2021 and 2020 were as follows:

|  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
| Estimated Useful Life |  | 2021 |  | 2020 |  | 2021 |  | 2020
|  |  | (In thousands)
Development and Value-Add | Lease Life |  | $ | 1,369 |  |  | 1,356 |  |  | 8,928 |  |  | 3,873 |
New Tenants | Lease Life |  | 2,073 |  |  | 2,164 |  |  | 9,228 |  |  | 4,385 |
Renewal Tenants | Lease Life |  | 2,956 |  |  | 2,690 |  |  | 6,496 |  |  | 6,432 |
Total Capitalized Leasing Costs (1) |  |  | $ | 6,398 |  |  | 6,210 |  |  | 24,652 |  |  | 14,690 |
Amortization of Leasing Costs |  |  | $ | 4,017 |  |  | 3,782 |  |  | 11,936 |  |  | 10,636 |

(1)Reconciliation of Total Capitalized Leasing Costs to Leasing commissions on the Consolidated Statements of Cash Flows:

|  | Nine Months Ended September 30,
| 2021 |  | 2020
| (In thousands)
Total Capitalized Leasing Costs |  | $ | 24,652 |  |  | 14,690 |
Change in Leasing Commissions Payables |  | (1,861) |  |  | (1,949) |
Leasing Commissions on the Consolidated Statements of Cash Flows |  | $ | 22,791 |  |  | 12,741 |

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 Accounting Standards Codification (“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 September 30, 2021 and December 31, 2020.
In accordance with FASB Accounting Standards Update (“ASU”) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, 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.
There were no sales during the nine months ended September 30, 2021 or 2020.
RECENT ACCOUNTING PRONOUNCEMENTS
EastGroup has evaluated all ASUs recently released by the FASB through the date the financial statements were issued and determined that the following ASU applies to the Company.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
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LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $241,166,000 for the nine months ended September 30, 2021. The primary other sources of cash were borrowings on unsecured bank credit facilities and unsecured debt and proceeds from common stock offerings. The Company distributed $95,240,000 in common stock dividends during the nine months ended September 30, 2021. Other primary uses of cash were for repayments on unsecured bank credit facilities, unsecured debt and secured debt, the construction and development of properties, purchases of real estate, capital improvements at various properties and leasing commissions.
Total debt at September 30, 2021 and December 31, 2020 is detailed below. The Company’s unsecured bank credit facilities and unsecured debt instruments have certain restrictive covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage, and the Company was in compliance with all of its debt covenants at September 30, 2021 and December 31, 2020.

| September 30, 2021 |  | December 31, 2020
| (In thousands)
Unsecured bank credit facilities - variable rate, carrying amount | $ | 61,016 |  |  | 125,000 |
Unamortized debt issuance costs | (2,297) |  |  | (806) |
Unsecured bank credit facilities, net of debt issuance costs | 58,719 |  |  | 124,194 |
Unsecured debt - fixed rate, carrying amount (1) | 1,245,000 |  |  | 1,110,000 |
Unamortized debt issuance costs | (2,570) |  |  | (2,292) |
Unsecured debt, net of debt issuance costs | 1,242,430 |  |  | 1,107,708 |
Secured debt - fixed rate, carrying amount (1) | 35,490 |  |  | 79,096 |
Unamortized debt issuance costs | (24) |  |  | (103) |
Secured debt, net of debt issuance costs | 35,466 |  |  | 78,993 |
Total debt, net of debt issuance costs | $ | 1,336,615 |  |  | 1,310,895 |

(1)These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
Until June 29, 2021, EastGroup had $350 million and $45 million unsecured bank credit facilities with margins over LIBOR of 100 basis points, facility fees of 20 basis points and maturity dates of July 30, 2022. The Company amended and restated these credit facilities on June 29, 2021, expanding the capacity to $425 million and $50 million, as detailed below.
The $425 million unsecured bank credit facility is with a group of nine banks and has a maturity date of July 30, 2025. The credit facility contains options for two six-month extensions (at the Company's election) and a $325 million accordion (with agreement by all parties). The interest rate on each tranche is usually reset on a monthly basis and as of September 30, 2021, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points. As of September 30, 2021, the Company had $45,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 0.861%. The Company has a standby letter of credit of $674,000 pledged on this facility.
The Company's $50 million unsecured bank credit facility has a maturity date of July 30, 2025, or such later date as designated by the bank; the Company also has two six-month extensions available if the extension options in the $425 million facility are exercised. The interest rate is reset on a daily basis and as of September 30, 2021, was LIBOR plus 77.5 basis points with an annual facility fee of 15 basis points. As of September 30, 2021, the interest rate was 0.855% on a balance of $16,016,000.
For both facilities, the margin and facility fee are subject to changes in the Company's credit ratings. Although the Company’s current credit rating is Baa2, given the strength of the Company’s key credit metrics, initial pricing for the credit facilities is based on the BBB+/Baa1 credit ratings level. This favorable pricing level will be retained provided that the Company’s consolidated leverage ratio, as defined in the applicable agreements, remains less than 32.5%. The facilities also include a sustainability-linked pricing component pursuant to which, if the Company meets certain sustainability performance targets, the applicable interest margin will be reduced by one basis point.
As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace the short-term bank borrowings. The Company believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the
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operations of the Company. The Company also believes it can obtain debt financing and issue common and/or preferred equity. For future debt issuances, the Company intends to issue primarily unsecured fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps. The Company may also access the public debt market in the future as a means to raise capital.
In March 2021, the Company closed a $50 million senior unsecured term loan with a four-year term and interest only payments, which bears interest at the annual rate of LIBOR plus an applicable margin (1.00% as of September 30, 2021 and October 26, 2021) based on the Company’s senior unsecured long-term debt rating. The Company also entered into an interest rate swap agreement to convert the loan’s LIBOR rate component to a fixed interest rate for the entire term of the loan providing a total effective fixed interest rate of 1.55%.
In March 2021, EastGroup repaid (with no penalty) a mortgage loan with a balance of $40.8 million, an interest rate of 4.75% and an original maturity date of June 5, 2021.
In June 2021, the Company closed on the private placement of $125 million of senior unsecured notes with a fixed interest rate of 2.74% and a 10-year term. The notes dated April 8, 2021, were issued and sold on June 10, 2021 and require interest-only payments. The notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
In July 2021, the Company repaid a maturing $40 million senior unsecured term loan with an effective interest rate of 2.34%.
In September 2021, the Company closed on the refinance of a $100 million senior unsecured term loan with five years remaining. The amended term loan provides for interest only payments currently at an interest rate of LIBOR plus 85 basis points, based on the Company’s current credit ratings and consolidated leverage ratio, which is a 65 basis point reduction in the credit spread compared to the original term loan. The Company has an interest rate swap agreement which converts the loan’s LIBOR rate component to a fixed interest rate for the entire term of the loan, providing a total effective fixed interest rate of 2.10%. The term loan also includes a sustainability-linked pricing component pursuant to which, if the Company meets certain sustainability performance targets, the applicable interest margin will be reduced by one basis point.
In October 2021, the Company repaid (with no penalty) a mortgage loan with a balance of $33.1 million, an interest rate of 4.09% and an original maturity date of January 5, 2022.
On March 5, 2021, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced that USD-LIBOR will no longer be published after June 30, 2023. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR.
The Company anticipates that LIBOR will continue to be available substantially in its current form at least until June 30, 2023. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. The Company has material contracts that are indexed to USD-LIBOR and is monitoring this activity and evaluating the related risks.
The Company’s unsecured bank credit facilities, senior unsecured term loans and interest rate swap contracts are indexed to LIBOR. The Company is continuously monitoring and evaluating the related risks, which include interest on loans and amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued as interest rates may be adversely affected. While we expect LIBOR to be available in substantially its current form until June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.
Each of the Company’s contracts, which are indexed to LIBOR, include provisions for a replacement rate which will be substantially equivalent to the all-in LIBOR-based interest rate in effect prior to its replacement. Therefore, the Company believes the transition will not have a material impact on our consolidated financial statements.
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On December 20, 2019, EastGroup entered into sales agreements with each of BNY Mellon Capital Markets, LLC; BofA Securities, Inc.; BTIG, LLC; Jefferies LLC; Raymond James & Associates, Inc.; Regions Securities LLC; and Wells Fargo Securities, LLC in connection with the establishment of a new continuous common equity offering program pursuant to which the Company may sell shares of its common stock with an aggregate gross sales price of up to $750,000,000 from time to time. As of October 27, 2021, the Company has sold an aggregate of 1,676,532 shares of common stock with gross proceeds of $248,148,000 under the sales agency financing agreements, and EastGroup may offer and sell additional shares of its common stock with an aggregate gross sales price of up to $501,852,000 through the sales agents.
During the nine months ended September 30, 2021, EastGroup issued and sold 966,608 shares of common stock under its continuous common equity offering program at an average price of $159.54 per share with gross proceeds to the Company of $154,210,000. The Company incurred offering-related costs of $1,781,000 during the nine months, resulting in net proceeds to the Company of $152,429,000.
The Company anticipates that its current cash balance, operating cash flows, borrowings under its unsecured bank credit facilities, proceeds from new debt and/or proceeds from the issuance of equity instruments will be adequate for (i) operating and administrative expenses, (ii) normal repair and maintenance expenses at its properties, (iii) debt service obligations, (iv) maintaining compliance with its debt covenants, (v) distributions to stockholders, (vi) capital improvements, (vii) purchases of properties, (viii) development, and (ix) any other normal business activities of the Company, both in the short-term and long-term, including after taking into account the effects of the COVID-19 pandemic.
Contractual Obligations
EastGroup’s fixed, non-cancelable obligations as of December 31, 2020, did not materially change during the nine months ended September 30, 2021, except for the changes in Unsecured bank credit facilities, net of debt issuance costs, Unsecured debt, net of debt issuance costs and Secured debt, net of debt issuance costs discussed above.
INFLATION AND OTHER ECONOMIC CONSIDERATIONS
Most of the Company’s leases include scheduled rent increases. Additionally, most of the Company’s leases require the tenants to pay their pro rata share of operating expenses, including real estate taxes, insurance and common area maintenance, thereby reducing the Company’s exposure to increases in operating expenses resulting from inflation or other factors. In the event inflation or other factors cause increases in the Company’s general and administrative expenses or the level of interest rates, such increased costs would not be passed through to tenants and could adversely affect the Company’s results of operations.
EastGroup’s financial results are affected by general economic conditions in the markets in which the Company’s properties are located. The state of the economy, or other adverse changes in general or local economic conditions resulting from the ongoing COVID-19 pandemic or general economic conditions, could result in the inability of some of the Company’s existing tenants to make lease payments and may therefore increase the reserves for uncollectible rent. It may also impact the Company’s ability to (i) renew leases or re-lease space as leases expire, or (ii) lease development space. In addition, an economic downturn or recession, including but not limited to the ongoing COVID-19 pandemic, could also lead to an increase in overall vacancy rates or a decline in rents the Company can charge to re-lease properties upon expiration of current leases. In all of these cases, EastGroup’s cash flows would be adversely affected.
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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to interest rate changes primarily as a result of its unsecured bank credit facilities 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 objective for interest rate risk management is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. The Company has two variable rate unsecured bank credit facilities as discussed under Liquidity and Capital Resources. As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace the short-term bank borrowings. The Company’s interest rate swaps are discussed in Note 14 in the Notes to Consolidated Financial Statements. The table below presents the principal payments due and weighted average interest rates, which include the impact of interest rate swaps, for both the fixed-rate and variable-rate debt as of September 30, 2021.

| October – December 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | Thereafter |  | Total |  | Fair Value
Unsecured bank credit facilities - variable rate (in thousands) | $ | — |  |  | — |  |  | — |  |  | — |  |  | 61,016 |  | (1) | — |  |  | 61,016 |  |  | 61,026 |  | (2)
Weighted average interest rate | — |  |  | — |  |  | — |  |  | — |  |  | 0.86 | % | (3) | — |  |  | 0.86 | % |  |  |
Unsecured debt - fixed rate (in thousands) | $ | — |  |  | 75,000 |  | 115,000 |  | 120,000 |  | 145,000 |  | 790,000 |  | 1,245,000 |  | 1,293,658 |  | (4)
Weighted average interest rate | — |  |  | 3.03 | % |  | 2.96 | % |  | 3.47 | % |  | 3.12 | % |  | 3.08 | % |  | 3.11 | % |  |  |
Secured debt - fixed rate (in thousands) | $ | 678 |  | 32,770 |  | 119 |  | 122 |  | 128 |  | 1,673 |  | 35,490 |  | 35,874 |  | (4)
Weighted average interest rate | 4.08 | % |  | 4.09 | % |  | 3.85 | % |  | 3.85 | % |  | 3.85 | % |  | 3.85 | % |  | 4.08 | % |  |  |

(1)The variable-rate unsecured bank credit facilities mature in July 2025 and as of September 30, 2021, have balances of $45,000,000 on the $425 million unsecured bank credit facility and $16,016,000 on the $50 million unsecured bank credit facility.
(2)The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates, excluding the effects of debt issuance costs.
(3)Represents the weighted average interest rate for the Company’s variable rate unsecured bank credit facilities as of September 30, 2021.
(4)The fair value of the Company’s fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, is estimated 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, excluding the effects of debt issuance costs.
As the table above incorporates only those exposures that existed as of September 30, 2021, it does not consider those exposures or positions that could arise after that date. Based on the weighted average balance for the nine months ended September 30, 2021, if the weighted average interest rate on the variable rate unsecured bank credit facilities changes by 10% or approximately 9 basis points, interest expense and cash flows would increase or decrease by approximately $55,000 annually. This does not include variable-rate debt that has been effectively fixed through the use of interest rate swaps.
ITEM 4.CONTROLS AND PROCEDURES.
(i) Disclosure Controls and Procedures.
The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, the Company’s disclosure controls and procedures were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.
(ii) Changes in Internal Control Over Financial Reporting.
There was no change in the Company’s internal control over financial reporting during the Company’s third fiscal quarter ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION.
ITEM 1. 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. The Company cannot predict the outcome of any litigation with certainty, and some lawsuits, claims or proceedings may be disposed of unfavorably to the Company, which could materially affect its financial condition or results of operations.
ITEM 1A. RISK FACTORS.
There have been no material changes to the risk factors disclosed in EastGroup’s Form 10-K for the year ended December 31, 2020, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors. For a full description of these risk factors, please refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 6.EXHIBITS.

Exhibits |
The following exhibits are included in or incorporated by reference into, this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021:

Exhibit Number | Description
31.1 | Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) of Marshall A. Loeb, Chief Executive Officer (filed herewith).
31.2 | Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) of Brent W. Wood, Chief Financial Officer (filed herewith).
32.1 | Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Marshall A. Loeb, Chief Executive Officer (furnished herewith).
32.2 | Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Brent W. Wood, Chief Financial Officer (furnished herewith).
101.1.SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.2.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.3.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.4.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.5.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) (filed herewith).

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SIGNATURES
Pursuant to the requirements 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.
Date: October 27, 2021

| EASTGROUP PROPERTIES, INC.
| /s/ STACI H. TYLER
| Staci H. Tyler
| Senior Vice President, Chief Accounting Officer and Secretary
| /s/ BRENT W. WOOD
| Brent W. Wood
| Executive Vice President, Chief Financial Officer and Treasurer

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