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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
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, including area code: (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 ☐
-1-

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 ☐
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 April 25, 2023 was 44,410,824.
-2-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED MARCH 31, 2023

|  | Page
PART I. | FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Consolidated Balance Sheets, March 31, 2023 and December 31, 2022 (unaudited) | 4
| Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2023 and 2022 (unaudited) | 5
| Consolidated Statements of Changes in Equity for the three months ended March 31, 2023 and 2022 (unaudited) | 6
| Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited) | 7
| Notes to Consolidated Financial Statements (unaudited) | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 40
Item 4. | Controls and Procedures | 41
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings | 41
Item 1A. | Risk Factors | 41
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41
Item 3. | Defaults Upon Senior Securities | 41
Item 4. | Mine Safety Disclosures | 42
Item 5. | Other Information | 42
Item 6. | Exhibits | 42
SIGNATURES |  |
Authorized signatures |  | 43

-3-

PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

| March 31, 2023 |  | December 31, 2022
ASSETS |  |  |
Real estate properties | $ | 4,478,505 |  |  | 4,395,972 |
Development and value-add properties | 524,929 |  |  | 538,449 |
| 5,003,434 |  |  | 4,934,421 |
Less accumulated depreciation | (1,179,134) |  |  | (1,150,814) |
| 3,824,300 |  |  | 3,783,607 |
Unconsolidated investment | 7,507 |  |  | 7,230 |
Cash | 9,390 |  |  | 56 |
Other assets | 239,264 |  |  | 244,944 |
TOTAL ASSETS | $ | 4,080,461 |  |  | 4,035,837 |
LIABILITIES AND EQUITY |  |  |
LIABILITIES |  |  |
Unsecured bank credit facilities, net of debt issuance costs | $ | 69,787 |  |  | 168,454 |
Unsecured debt, net of debt issuance costs | 1,725,805 |  |  | 1,691,259 |
Secured debt, net of debt issuance costs | 2,003 |  |  | 2,031 |
Accounts payable and accrued expenses | 157,644 |  |  | 136,988 |
Other liabilities | 88,840 |  |  | 83,666 |
Total Liabilities | 2,044,079 |  |  | 2,082,398 |
EQUITY |  |  |
Stockholders’ Equity: |  |  |
Common shares; $0.0001 par value; 70,000,000 shares authorized; 44,242,699 shares issued and outstanding at March 31, 2023 and 43,575,539 at December 31, 2022 | 4 |  |  | 4 |
Excess shares; $0.0001 par value; 30,000,000 shares authorized; zero shares issued | — |  |  | — |
Additional paid-in capital | 2,355,476 |  |  | 2,251,521 |
Distributions in excess of earnings | (345,622) |  |  | (334,898) |
Accumulated other comprehensive income | 26,109 |  |  | 36,371 |
Total Stockholders’ Equity | 2,035,967 |  |  | 1,952,998 |
Noncontrolling interest in joint ventures | 415 |  |  | 441 |
Total Equity | 2,036,382 |  |  | 1,953,439 |
TOTAL LIABILITIES AND EQUITY | $ | 4,080,461 |  |  | 4,035,837 |

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
|  |  | March 31,
|  |  |  |  | 2023 |  | 2022
REVENUES |  |  |  |  |  |  |
Income from real estate operations |  |  |  |  | $ | 133,964 |  |  | 112,952 |
Other revenue |  |  |  |  | 1,061 |  |  | 22 |
|  |  |  |  | 135,025 |  |  | 112,974 |
EXPENSES |  |  |  |  |  |  |
Expenses from real estate operations |  |  |  |  | 36,186 |  |  | 31,064 |
Depreciation and amortization |  |  |  |  | 41,014 |  |  | 36,341 |
General and administrative |  |  |  |  | 5,204 |  |  | 4,310 |
Indirect leasing costs |  |  |  |  | 140 |  |  | 175 |
|  |  |  |  | 82,544 |  |  | 71,890 |
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |
Interest expense |  |  |  |  | (13,025) |  |  | (8,110) |
Gain on sales of real estate investments |  |  |  |  | 4,809 |  |  | 30,352 |
Other |  |  |  |  | 439 |  |  | 278 |
NET INCOME |  |  |  |  | 44,704 |  |  | 63,604 |
Net income attributable to noncontrolling interest in joint ventures |  |  |  |  | (14) |  |  | (24) |
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  | 44,690 |  |  | 63,580 |
Other comprehensive income (loss) - interest rate swaps |  |  |  |  | (10,262) |  |  | 15,828 |
TOTAL COMPREHENSIVE INCOME |  |  |  |  | $ | 34,428 |  |  | 79,408 |
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Net income attributable to common stockholders |  |  |  |  | $ | 1.02 |  |  | 1.54 |
Weighted average shares outstanding |  |  |  |  | 43,751 |  |  | 41,246 |
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Net income attributable to common stockholders |  |  |  |  | $ | 1.02 |  |  | 1.54 |
Weighted average shares outstanding |  |  |  |  | 43,823 |  |  | 41,359 |

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 three months ended March 31, 2023:

| Common Shares |  | Additional Paid-In Capital |  | Distributions in Excess of Earnings |  | Accumulated Other Comprehensive Income |  | Noncontrolling Interest in Joint Ventures |  | Total
BALANCE, DECEMBER 31, 2022 | $ | 4 |  |  | 2,251,521 |  |  | (334,898) |  |  | 36,371 |  |  | 441 |  |  | 1,953,439 |
Net income | — |  |  | — |  |  | 44,690 |  |  | — |  |  | 14 |  |  | 44,704 |
Net unrealized change in fair value of interest rate swaps | — |  |  | — |  |  | — |  |  | (10,262) |  |  | — |  |  | (10,262) |
Common dividends declared – $1.25 per share | — |  |  | — |  |  | (55,414) |  |  | — |  |  | — |  |  | (55,414) |
Stock-based compensation, net of forfeitures | — |  |  | 3,477 |  |  | — |  |  | — |  |  | — |  |  | 3,477 |
Issuance of 652,909 shares of common stock, common stock offering, net of expenses | — |  |  | 105,321 |  |  | — |  |  | — |  |  | — |  |  | 105,321 |
Withheld 31,254 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | — |  |  | (4,836) |  |  | — |  |  | — |  |  | — |  |  | (4,836) |
Withheld 46 shares of common stock to satisfy tax withholding obligations in connection with the issuance of common stock | — |  |  | (7) |  |  | — |  |  | — |  |  | — |  |  | (7) |
Net distributions to noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | (40) |  |  | (40) |
BALANCE, MARCH 31, 2023 | $ | 4 |  |  | 2,355,476 |  |  | (345,622) |  |  | 26,109 |  |  | 415 |  |  | 2,036,382 |

For the three months ended March 31, 2022:

| Common Shares |  | Additional Paid-In Capital |  | Distributions in Excess of Earnings |  | Accumulated Other Comprehensive Income |  | Noncontrolling Interest in Joint Ventures |  | Total
BALANCE, DECEMBER 31, 2021 | $ | 4 |  |  | 1,886,820 |  |  | (318,056) |  |  | 1,302 |  |  | 1,390 |  |  | 1,571,460 |
Net income | — |  |  | — |  |  | 63,580 |  |  | — |  |  | 24 |  |  | 63,604 |
Net unrealized change in fair value of interest rate swaps | — |  |  | — |  |  | — |  |  | 15,828 |  |  | — |  |  | 15,828 |
Common dividends declared – $1.10 per share | — |  |  | — |  |  | (45,953) |  |  | — |  |  | — |  |  | (45,953) |
Stock-based compensation, net of forfeitures | — |  |  | 2,594 |  |  | — |  |  | — |  |  | — |  |  | 2,594 |
Issuance of 385,538 shares of common stock, common stock offering, net of expenses | — |  |  | 74,179 |  |  | — |  |  | — |  |  | — |  |  | 74,179 |
Withheld 34,251 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock | — |  |  | (7,265) |  |  | — |  |  | — |  |  | — |  |  | (7,265) |
Net distributions to noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | (58) |  |  | (58) |
BALANCE, MARCH 31, 2022 | $ | 4 |  |  | 1,956,328 |  |  | (300,429) |  |  | 17,130 |  |  | 1,356 |  |  | 1,674,389 |

See accompanying Notes to Consolidated Financial Statements (unaudited).
-6-

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

| Three Months Ended March 31,
| 2023 |  | 2022
OPERATING ACTIVITIES |  |  |
Net income | $ | 44,704 |  |  | 63,604 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 41,014 |  |  | 36,341 |
Stock-based compensation expense | 2,784 |  |  | 1,903 |
Gain on sales of real estate investments | (4,809) |  |  | (30,352) |
Gain on sales of non-operating real estate | (81) |  |  | — |
Gain on casualties and involuntary conversion on real estate assets | (1,027) |  |  | — |
Changes in operating assets and liabilities: |  |  |
Accrued income and other assets | 1,005 |  |  | 1,372 |
Accounts payable, accrued expenses and prepaid rent | 9,674 |  |  | 9,380 |
Other | 197 |  |  | 16 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 93,461 |  |  | 82,264 |
INVESTING ACTIVITIES |  |  |
Development and value-add properties | (64,112) |  |  | (127,112) |
Real estate improvements | (15,777) |  |  | (9,840) |
Net proceeds from sales of real estate investments | 10,765 |  |  | 38,133 |
Leasing commissions | (7,921) |  |  | (9,344) |
Changes in accrued development costs | 12,271 |  |  | 4,494 |
Changes in other assets and other liabilities | (49) |  |  | (10,476) |
NET CASH USED IN INVESTING ACTIVITIES | (64,823) |  |  | (114,145) |
FINANCING ACTIVITIES |  |  |
Proceeds from unsecured bank credit facilities | 143,872 |  |  | 217,290 |
Repayments on unsecured bank credit facilities | (241,845) |  |  | (229,187) |
Proceeds from unsecured debt | 100,000 |  |  | 100,000 |
Repayments on unsecured debt | (65,000) |  |  | (75,000) |
Repayments on secured debt | (24) |  |  | (23) |
Debt issuance costs | (1,631) |  |  | (648) |
Distributions paid to stockholders (not including dividends accrued) | (55,173) |  |  | (46,033) |
Proceeds from common stock offerings | 105,716 |  |  | 74,249 |
Common stock offering related costs | (395) |  |  | (70) |
Other | (4,824) |  |  | (7,372) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (19,304) |  |  | 33,206 |
INCREASE IN CASH AND CASH EQUIVALENTS | 9,334 |  |  | 1,325 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 56 |  |  | 4,393 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 9,390 |  |  | 5,718 |
SUPPLEMENTAL CASH FLOW INFORMATION |  |  |
Cash paid for interest, net of amounts capitalized of $3,735 and $2,244 for 2023 and 2022, respectively | $ | 7,756 |  |  | 5,476 |
Cash paid for operating lease liabilities | 569 |  |  | 515 |

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

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, 2022 and the notes thereto. Certain reclassifications have been made in the 2022 consolidated financial statements to conform to the 2023 presentation.
(2)PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of EastGroup, its wholly owned subsidiaries and the investee of any joint ventures in which the Company has a controlling interest.
As of March 31, 2023 and December 31, 2022, EastGroup had a 95% controlling interest in one joint venture arrangement, which owns 6.5 acres of land in San Diego, known by the Company as the Miramar land. During the year ended December 31, 2022, EastGroup acquired the 1% noncontrolling interest in Speed Distribution Center, a 519,000 square foot building in San Diego, in which the Company held a 99% controlling interest. The Company continues to control and own 100% of the property.
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 months ended March 31, 2023 and 2022:

|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (In thousands)
Lease income — operating leases |  |  |  |  | $ | 100,696 |  |  | 84,945 |
Variable lease income (1) |  |  |  |  | 33,268 |  |  | 28,007 |
Income from real estate operations |  |  |  |  | $ | 133,964 |  |  | 112,952 |

(1)Primarily includes tenant reimbursements for real estate taxes, insurance and common area maintenance.
(5)REAL ESTATE PROPERTIES
EastGroup has one reportable segment – industrial properties, consistent with the Company’s manner of internal reporting, measurement of operating results and allocation of the Company’s resources.
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows (including estimated future expenditures necessary to substantially complete the asset) expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair
-8-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
value of the asset. During the three month periods ended March 31, 2023 and 2022, 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 $33,846,000 and $29,392,000 for the three months ended March 31, 2023 and 2022, respectively.
The Company’s Real estate properties and Development and value-add properties at March 31, 2023 and December 31, 2022 were as follows:

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Real estate properties: |  |  |
Land | $ | 738,856 |  |  | 730,445 |
Buildings and building improvements | 3,075,417 |  |  | 3,012,319 |
Tenant and other improvements | 645,194 |  |  | 633,817 |
Right of use assets — Ground leases (operating) (1) | 19,038 |  |  | 19,391 |
Development and value-add properties (2) | 524,929 |  |  | 538,449 |
| 5,003,434 |  |  | 4,934,421 |
Less accumulated depreciation | (1,179,134) |  |  | (1,150,814) |
| $ | 3,824,300 |  |  | 3,783,607 |

(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 the acquisition date based on near term lease termination), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.
(6)DEVELOPMENT AND VALUE-ADD PROPERTIES
For properties under development and value-add properties acquired in the development stage, costs associated with development (i.e., land, construction costs, interest expense, property taxes and other costs associated with development) are aggregated into the total capitalized costs of the property. Included in these costs are management’s estimates for the portions of internal costs (primarily personnel costs) deemed related to such development activities. The internal costs are allocated to specific development projects based on development activity. As the property becomes occupied, depreciation commences on the occupied portion of the building, and costs are capitalized only for the portion of the building that remains vacant. The Company transfers properties from the development and value-add program to Real estate properties as follows: (i) for development properties, at the earlier of 90% occupancy or one year after completion of the shell construction, and (ii) for value-add properties, at the earlier of 90% occupancy or one year after acquisition. Upon the earlier of 90% occupancy or one year after completion of the shell construction, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).
(7)REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES
Upon acquisition of real estate properties, EastGroup applies the principles of FASB ASC 805, Business Combinations. The FASB Codification provides a framework for determining whether transactions should be accounted for as acquisitions of assets or businesses. Under the guidance, companies are required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business. Criteria considered in grouping similar assets include geographic location, market and operational risks and the physical characteristics of the assets. EastGroup determined that its real estate property acquisitions in 2022 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 2022 acquisitions. There were no real estate property acquisitions during the three months ended March 31, 2023.
-9-

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 and the value of leases in-place at the time of acquisition. 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. In-place lease intangibles are valued based upon management’s assessment of factors such as an estimate of foregone rents and avoided leasing costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease.
Amortization expense for in-place lease intangibles was $1,962,000 and $2,465,000 for the three months ended March 31, 2023 and 2022, respectively. Amortization of above and below market lease intangibles increased rental income by $599,000 and $845,000 for the three months ended March 31, 2023 and 2022, respectively.
-10-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
There were no real estate property acquisitions during the three months ended March 31, 2023. During 2022, EastGroup acquired the following properties:

REAL ESTATE PROPERTIES ACQUIRED IN 2022 |  | Location |  | Size |  | Date Acquired |  | Cost (1)
|  |  |  | (Square feet) |  |  |  | (In thousands)
Operating properties acquired (2) |  |  |  |  |  |  |  |
Cebrian Distribution Center and Reed Distribution Center (3) |  | Sacramento, CA |  | 329,000 |  |  | 06/01/2022 |  | $ | 49,726 |
6 th Street Business Center, Benicia Distribution Center 1-5, Ettie Business Center, Laura Alice Business Center, Preston Distribution Center, Sinclair Distribution Center, Transit Distribution Center and Whipple Business Center (3) |  | San Francisco, CA |  | 1,377,000 |  |  | 06/01/2022 |  | 309,404 |
Total operating property acquisitions |  |  |  | 1,706,000 |  |  |  |  | 359,130 |
Value-add properties acquired (4) |  |  |  |  |  |  |  |
Cypress Preserve 1 & 2 |  | Houston, TX |  | 516,000 |  |  | 03/28/2022 |  | 54,462 |
Zephyr Distribution Center |  | San Francisco, CA |  | 82,000 |  |  | 04/08/2022 |  | 29,017 |
Mesa Gateway Commerce Center |  | Phoenix, AZ |  | 147,000 |  |  | 04/15/2022 |  | 18,315 |
Access Point 3 |  | Greenville, SC |  | 299,000 |  |  | 07/12/2022 |  | 21,127 |
Total value-add property acquisitions |  |  |  | 1,044,000 |  |  |  |  | 122,921 |
Total acquired assets |  |  |  | 2,750,000 |  |  |  |  | $ | 482,051 |

(1)Cost is calculated in accordance with FASB ASC 805, Business Combinations, and represents the sum of the purchase price, closing costs and capitalized acquisition costs.
(2)Operating properties are defined as stabilized real estate properties (land including buildings and improvements) in the Company’s operating portfolio; included in Real estate properties on the Consolidated Balance Sheets.
(3)The Company acquired these operating properties along with two land parcels, also in Sacramento, CA and San Francisco, CA, in connection with its acquisition of Tulloch Corporation in June 2022. Size and cost are presented on an aggregate basis for the properties located in Sacramento, CA and San Francisco, CA, respectively. In consideration for this acquisition, the Company assumed a $60,000,000 loan and issued 1,868,809 shares of the Company’s common stock. The acquisition date fair value of the loan assumed was $60,000,000, and the acquisition date fair value of the common shares, which was based on the closing share price on the acquisition date, was $303,756,000.
(4)Value-add properties are defined in Note 5.
-11-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the allocation of the total consideration for the acquired assets and assumed liabilities in connection with the acquisitions identified in the table above which were acquired during the year ended December 31, 2022.

ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2022 |  | Cost
|  | (In thousands)
Land |  | $ | 127,402 |
Buildings and building improvements |  | 335,335 |
Tenant and other improvements |  | 11,502 |
Total real estate properties acquired |  | 474,239 |
In-place lease intangibles (1) |  | 11,871 |
Below market lease intangibles (2) |  | (4,059) |
Total assets acquired, net of liabilities assumed |  | $ | 482,051 |

(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, 2022 had a weighted average remaining lease term at acquisition of approximately 3.9 years.
Also during 2022, EastGroup purchased 456.3 acres of development land in 10 cities for $123,717,000. The land acquisitions in San Francisco and Sacramento were acquired in connection with the Company’s acquisition of Tulloch Corporation in June 2022.
Also in the year ended December 31, 2022, the Company acquired the 1% noncontrolling partnership interest in Speed Distribution Center in San Diego for $18,599,000. EastGroup continues to control and own 100% of the property.
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 month periods ended March 31, 2023 and 2022.
(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 March 31, 2023 and December 31, 2022.
In accordance with ASC 360 and ASC 205, Presentation of Financial Statements, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.
The Company sold an operating property during the three months ended March 31, 2023, as shown in the table below. The results of operations and gains and losses on sales for the property sold are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains and losses on sales are included in Gain on sales of real estate investments. The Company did not consider its sale in 2023 to be a disposal of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results.
-12-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A summary of Gain on sales of real estate investments for the three months ended March 31, 2023 and the year ended December 31, 2022 follows:

REAL ESTATE PROPERTIES SOLD |  | Location |  | Size |  | Date Sold |  | Net Sales Price |  | Basis |  | Recognized Gain
|  |  |  | (In square feet) |  |  |  | (In thousands)
2023 |  |  |  |  |  |  |  |  |  |  |  |
World Houston 23 |  | Houston, TX |  | 125,000 |  | 03/31/2023 |  | $ | 9,327 |  |  | 4,518 |  |  | 4,809 |
2022 |  |  |  |  |  |  |  |  |  |  |  |
Metro Business Park |  | Phoenix, AZ |  | 189,000 |  | 01/06/2022 |  | $ | 32,851 |  |  | 5,880 |  |  | 26,971 |
Cypress Creek Business Park (1) |  | Fort Lauderdale, FL |  | 56,000 |  | 03/31/2022 |  | 5,282 |  |  | 1,901 |  |  | 3,381 |
World Houston 15 East |  | Houston, TX |  | 42,000 |  | 05/11/2022 |  | 12,873 |  |  | 2,226 |  |  | 10,647 |
Total for 2022 |  |  |  | 287,000 |  |  |  |  | $ | 51,006 |  |  | 10,007 |  |  | 40,999 |

(1) Cypress Creek Business Park is located on a ground lease. In conjunction with the sale of the property, the Company fully amortized the associated right-of-use asset and liability of $1,745,000.
The table above includes sales of operating properties. During the three months ended March 31, 2023, the Company also sold a 2.0 acre parcel of land in Forth Worth, TX, for $1,550,000 and recognized a gain on the sale of $81,000. The gains on sales of non-operating real estate are included in Other on the Consolidated Statements of Income and Comprehensive Income.
(9)OTHER ASSETS
A summary of the Company’s Other assets follows:

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Leasing costs (principally commissions) | $ | 146,185 |  |  | 140,273 |
Accumulated amortization of leasing costs | (50,312) |  |  | (48,249) |
Leasing costs (principally commissions), net of accumulated amortization | 95,873 |  |  | 92,024 |
Acquired in-place lease intangibles | 36,113 |  |  | 37,181 |
Accumulated amortization of acquired in-place lease intangibles | (17,170) |  |  | (16,276) |
Acquired in-place lease intangibles, net of accumulated amortization | 18,943 |  |  | 20,905 |
Acquired above market lease intangibles | 496 |  |  | 496 |
Accumulated amortization of acquired above market lease intangibles | (272) |  |  | (251) |
Acquired above market lease intangibles, net of accumulated amortization | 224 |  |  | 245 |
Straight-line rents receivable | 64,644 |  |  | 61,452 |
Accounts receivable | 4,163 |  |  | 9,568 |
Interest rate swap assets | 30,229 |  |  | 38,352 |
Right of use assets — Office leases (operating) | 1,926 |  |  | 2,050 |
Escrow deposits and prepaid costs for pending transactions | 2,866 |  |  | 2,522 |
Goodwill | 990 |  |  | 990 |
Prepaid insurance | 1,693 |  |  | 2,681 |
Receivable for insurance proceeds | 6,098 |  |  | 2,828 |
Prepaid expenses and other assets | 11,615 |  |  | 11,327 |
Total Other assets | $ | 239,264 |  |  | 244,944 |

-13-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(10) DEBT
The Company’s debt is detailed below:

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Unsecured bank credit facilities - variable rate, carrying amount | $ | 72,027 |  |  | 170,000 |
Unamortized debt issuance costs | (2,240) |  |  | (1,546) |
Unsecured bank credit facilities, net of debt issuance costs | 69,787 |  |  | 168,454 |
Unsecured debt - fixed rate, carrying amount (1) | 1,730,000 |  |  | 1,695,000 |
Unamortized debt issuance costs | (4,195) |  |  | (3,741) |
Unsecured debt, net of debt issuance costs | 1,725,805 |  |  | 1,691,259 |
Secured debt - fixed rate, carrying amount (1) | 2,012 |  |  | 2,041 |
Unamortized debt issuance costs | (9) |  |  | (10) |
Secured debt, net of debt issuance costs | 2,003 |  |  | 2,031 |
Total debt, net of debt issuance costs | $ | 1,797,595 |  |  | 1,861,744 |

(1)These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
Until January 10, 2023, EastGroup had $425,000,000 and $50,000,000 unsecured bank credit facilities with margins over London Interbank Offered Rate (“LIBOR”) of 77.5 basis points, facility fees of 15 basis points and maturity dates of July 30, 2025. The Company amended and restated these credit facilities effective January 10, 2023, expanding the total capacity on its unsecured bank credit facilities from $475,000,000 to $675,000,000 and replacing LIBOR with SOFR as the benchmark interest rate.
The Company’s $625,000,000 unsecured bank credit facility, which was increased in January 2023 by $200,000,000 from $425,000,000, is with a group of 11 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 an additional $125,000,000 accordion (with agreement by all parties). The interest rate on each tranche is reset on a monthly basis and as of March 31, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points. As of March 31, 2023, the Company had $55,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 5.682%. The Company has a standby letter of credit of $67,000 pledged on this facility, which reduces borrowing capacity under the credit facility.
The Company's $50,000,000 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 $625,000,000 facility are exercised. The interest rate is reset on a daily basis and as of March 31, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points. As of March 31, 2023, the interest rate was 5.745% on a balance of $17,027,000.
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 the applicable interest margin is reduced by one basis point if the Company meets a certain sustainability performance target. This sustainability metric is evaluated annually and was achieved for the year ended December 31, 2022, which effectively reduced the margin on the unsecured bank credit facilities during 2023 by one basis point from 77.5 to 76.5 basis points.
In January 2023, the Company closed a $100,000,000 senior unsecured term loan with a seven-year term and interest only payments, which bears interest at the annual rate of SOFR plus an applicable margin (1.35% as of March 31, 2023) 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 SOFR rate component to a fixed interest rate for the entire term of the loan providing a total effectively fixed interest rate of 5.27%.
-14-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
On March 31, 2023, EastGroup repaid a $65,000,000 senior unsecured term loan with a total effectively fixed interest rate of 2.31%. The loan, which was scheduled to mature on April 1, 2023, was repaid with no penalty.
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 March 31, 2023, are as follows:

Years Ending December 31, |  | (In thousands)
2023 - Remainder of year |  | $ | 50,090 |
2024 |  | 170,122 |
2025 |  | 145,128 |
2026 |  | 141,672 |
2027 |  | 175,000 |
2028 and beyond |  | 1,050,000 |
Total |  | $ | 1,732,012 |

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

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Property taxes payable | $ | 21,725 |  |  | 6,823 |
Development costs payable | 31,781 |  |  | 21,305 |
Retainage payable | 12,805 |  |  | 11,011 |
Real estate improvements and capitalized leasing costs payable | 7,097 |  |  | 5,182 |
Interest payable | 14,387 |  |  | 9,597 |
Dividends payable | 56,193 |  |  | 55,952 |
Book overdraft (1) | 5,465 |  |  | 13,370 |
Other payables and accrued expenses | 8,191 |  |  | 13,748 |
Total Accounts payable and accrued expenses | $ | 157,644 |  |  | 136,988 |

(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.
-15-

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

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Security deposits | $ | 35,690 |  |  | 34,272 |
Prepaid rent and other deferred income | 20,404 |  |  | 17,004 |
Operating lease liabilities — Ground leases | 19,616 |  |  | 19,906 |
Operating lease liabilities — Office leases | 2,017 |  |  | 2,139 |
Acquired below market lease intangibles | 10,483 |  |  | 10,735 |
Accumulated amortization of below market lease intangibles | (4,324) |  |  | (3,957) |
Acquired below market lease intangibles, net of accumulated amortization | 6,159 |  |  | 6,778 |
Interest rate swap liabilities | 4,120 |  |  | 1,981 |
Other liabilities | 834 |  |  | 1,586 |
Total Other liabilities | $ | 88,840 |  |  | 83,666 |

(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 March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (In thousands)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): |  |  |
Balance at beginning of period |  |  |  |  | $ | 36,371 |  |  | 1,302 |
Other comprehensive income (loss) - interest rate swaps |  |  |  |  | (10,262) |  |  | 15,828 |
Balance at end of period |  |  |  |  | $ | 26,109 |  |  | 17,130 |

(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.
-16-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of March 31, 2023, the Company had seven 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’ SOFR 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 $14,448,000 will be reclassified from Other comprehensive income (loss) as a decrease 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 SOFR market data. Uncollateralized or partially-collateralized trades include appropriate economic adjustments for funding costs and credit risk. The Company calculates its derivative valuations using mid-market prices.
The Financial Conduct Authority announced it intended to stop compelling banks to submit rates for the calculation of LIBOR after June 30, 2023. In the U.S., the Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended SOFR plus a recommended spread adjustment as its preferred alternative to USD-LIBOR. As a result, all of the Company’s remaining borrowings which were LIBOR-based have been amended to modify the index from LIBOR to SOFR. Concurrently, the related swaps were amended to reference SOFR rather than LIBOR. The transition did not have a material impact on the Company’s consolidated financial statements.
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. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848, which was issued to defer the sunset date of Topic 848 to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 has no impact on the Company’s consolidated financial statements for the three months ended March 31, 2023. 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 March 31, 2023 and December 31, 2022, 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 March 31, 2023 |  | Notional Amount as of December 31, 2022
|  | (In thousands)
Interest Rate Swap |  | — |  | $65,000
Interest Rate Swap |  | $100,000 |  | $100,000
Interest Rate Swap |  | $100,000 |  | $100,000
Interest Rate Swap |  | $50,000 |  | $50,000
Interest Rate Swap |  | $100,000 |  | $100,000
Interest Rate Swap |  | $75,000 |  | $75,000
Interest Rate Swap |  | $50,000 |  | $50,000
Interest Rate Swap |  | $100,000 |  | $100,000

-17-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 March 31, 2023 and December 31, 2022. See Note 17 for additional information on the fair value of the Company’s interest rate swaps.

| Derivatives As of March 31, 2023 |  | Derivatives As of December 31, 2022
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
| (In thousands)
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Interest rate swap assets | Other assets |  | $ | 30,229 |  |  | Other assets |  | $ | 38,352 |
Interest rate swap liabilities | Other liabilities |  | 4,120 |  |  | Other liabilities |  | 1,981 |

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 months ended March 31, 2023 and 2022:

| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
| (In thousands)
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS |  |  |  |  |  |  |
Interest Rate Swaps: |  |  |  |  |  |  |
Amount of income (loss) recognized in Other comprehensive income (loss) on derivatives | $ | (6,197) |  |  | 14,952 |  |  |  |  |
Amount of (income) loss reclassified from Accumulated other comprehensive income (loss) into Interest expense | (4,065) |  |  | 876 |  |  |  |  |

See Note 13 for additional information on the Company’s Accumulated other comprehensive income (loss) resulting from its interest rate swaps.
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 $26,425,000 as of March 31, 2023.
(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.
-18-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:

| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
| (In thousands)
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Numerator – net income attributable to common stockholders | $ | 44,690 |  |  | 63,580 |  |  |  |  |
Denominator – weighted average shares outstanding | 43,751 |  |  | 41,246 |  |  |  |  |
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  |  |  |
Numerator – net income attributable to common stockholders | $ | 44,690 |  |  | 63,580 |  |  |  |  |
Denominator: |  |  |  |  |  |  |
Weighted average shares outstanding | 43,751 |  |  | 41,246 |  |  |  |  |
Unvested restricted stock | 72 |  |  | 113 |  |  |  |  |
Weighted average diluted shares outstanding | 43,823 |  |  | 41,359 |  |  |  |  |

(16) STOCK-BASED COMPENSATION
EastGroup applies the provisions of ASC 718, Compensation - Stock Compensation, to account for its stock-based compensation plans. 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 cost for market-based awards and awards that only require service are expensed on a straight-line basis over the requisite service periods. The cost for performance-based awards is determined 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. This method accelerates the expensing of the award compared to the straight-line method. For awards with a performance condition, compensation expense is recognized when the performance condition is considered probable of achievement.
The total compensation expense for service and performance based awards is based upon the fair market value of the shares on the grant date. The grant date fair value for awards that have been granted and are subject to a future market condition (total shareholder return) are determined using a Monte Carlo simulation pricing model developed to specifically accommodate the unique features of the awards.
During the restricted period for awards no longer subject to contingencies, the Company accrues dividends and holds the certificates for the shares; however, the employee can vote the shares. Share certificates and dividends are delivered to the employee as they vest. Forfeitures of awards are recognized as they occur.
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 vesting periods of the Company’s restricted stock plans vary, as determined by the Committee. Restricted stock is granted to executive officers subject to both continued service and the satisfaction of certain annual performance goals and multi-year market conditions as determined by the Committee.
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 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 (25% vests in each of the following four years).
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 2023 are: (i) funds from operations (“FFO”) per share, (ii) cash same property net operating income change, (iii) debt-to-EBITDAre ratio,
-19-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 (34% vests at the end of the one-year performance period and 33% vests in each of the following two years). 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 (34% vests at the end of the one-year performance period and 33% vests in each of the following two years).
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 total compensation expense is based upon the fair market value of the shares on the grant date.
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 $3,252,000 for the three months ended March 31, 2023, of which $693,000 was capitalized as part of the Company’s development costs. For the three months ended March 31, 2022, stock-based compensation cost for employees was $2,561,000, of which $691,000 was capitalized as part of the Company’s development costs.
Stock-based compensation expense for directors was $225,000 for the three months ended March 31, 2023, and $33,000 for the same period in 2022.
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 three months ended March 31, 2023, the Company withheld 31,254 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 three months ended March 31, 2023 was $6,606,000. As of the vesting dates, the aggregate fair value of shares that vested during the three months ended March 31, 2023 was $11,309,000.

Award Activity: | Three Months Ended March 31, 2023 |  |
| Shares |  | Weighted Average Grant Date Fair Value |  |  |  |
Unvested at beginning of period | 102,508 |  |  | $ | 133.29 |  |  |  |  |
Granted (1) (2) | 46,416 |  |  | 142.32 |  |  |  |  |
Forfeited | (1,015) |  |  | 144.79 |  |  |  |  |
Vested | (73,184) |  |  | 120.87 |  |  |  |  |
Unvested at end of period | 74,725 |  |  | $ | 150.91 |  |  |  |  |

(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 2021 and 2022 for long-term performance and in 2023 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 135,133.
(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 FASB Codification requires disclosure of the level within the fair value 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
-20-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 March 31, 2023 and December 31, 2022.

| March 31, 2023 |  | December 31, 2022
| Carrying Amount (1) |  | Fair Value |  | Carrying Amount (1) |  | Fair Value
| (In thousands)
Financial Assets: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 9,390 |  |  | 9,390 |  |  | 56 |  |  | 56 |
Interest rate swap assets | 30,229 |  |  | 30,229 |  |  | 38,352 |  |  | 38,352 |
Financial Liabilities: |  |  |  |  |  |  |
Unsecured bank credit facilities - variable rate (2) | 72,027 |  |  | 72,058 |  |  | 170,000 |  |  | 169,684 |
Unsecured debt (2) | 1,730,000 |  |  | 1,609,354 |  |  | 1,695,000 |  |  | 1,548,221 |
Secured debt (2) | 2,012 |  |  | 1,924 |  |  | 2,041 |  |  | 1,918 |
Interest rate swap liabilities | 4,120 |  |  | 4,120 |  |  | 1,981 |  |  | 1,981 |

(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 or SOFR swap 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 or SOFR swap 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, it may affect the Company’s ability to make distributions to its shareholders, service debt or meet other financial obligations.
(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.
(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 ASUs apply to the Company.
-21-

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, applies to the Company. Also, in December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of Topic 848 to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 had no impact on the Company’s consolidated financial statements for the three months ended March 31, 2023. See Note 14 in the Consolidated Financial Statements for further evaluation of these ASUs.
(21) SUBSEQUENT EVENTS
On March 30 and 31, 2023, the Company sold 168,125 shares of common stock under its continuous common equity program at a weighted average price of $163.35. These shares were deemed to be issued and outstanding upon settlement in April 2023.
Subsequent to March 31, 2023, the Company closed on the acquisition of 58.8 acres of development land in the East submarket of Tampa, known by the Company as Lakeside Station Land, for approximately $6,600,000.
In April, the Company closed on the acquisition of 48.7 acres of development land in San Antonio’s Northeast Submarket for approximately $6,100,000.
Also in April, EastGroup acquired Craig Corporate Center, a 155,000 square foot building in Las Vegas, for approximately $34,200,000.
-22-

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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect EastGroup’s expectations and projections about the Company’s future results, performance, prospects, plans 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,” “goals,” “plans” or variations of such words and similar expressions or the negative of such words, although not all forward-looking statements contain such words. These forward-looking statements are based on information currently available to the Company and are subject to a number of known and unknown assumptions, risks, uncertainties and other factors that may cause the Company’s actual results, performance, plans 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 to publicly 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 by 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;
•disruption in supply and delivery chains;
•construction costs could increase as a result of inflation impacting the costs to develop properties;
•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 impacts of inflation;
•potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws, real estate investment trust (“REIT”) or corporate income tax laws, potential changes in zoning laws, or increases in real property tax rates, and any related increased cost of compliance;
•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 coronavirus (“COVID-19”) pandemic;
•availability of financing and capital, increase in 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;
•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;
•risks related to the failure, inadequacy or interruption of our data security systems and processes;
•potentially catastrophic events such as acts of war, civil unrest and terrorism; 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.
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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, 2022.
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 20,000 to 100,000 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.
During the three months ended March 31, 2023, economic uncertainty and stock market volatility have increased due to a number of factors, including rising inflation, increasing interest rates, and lingering supply chain disruptions. While these factors have not had a significant adverse impact on EastGroup to date, they may adversely impact the Company in the future. 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. Additionally, most of the Company's leases include scheduled rent increases. In the event inflation causes increases in the Company’s general and administrative expenses, or higher interest rates increase the Company’s cost of doing business, such increased costs would not be passed through to tenants and could adversely affect the Company’s results of operations. The Company continues to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.
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 March 31, 2023, EastGroup issued and sold, and subsequently settled the issuance of, 652,909 shares of common stock through its continuous common equity offering program at a weighted average price of $163.55 per share, providing aggregate net proceeds to the Company of $105,321,000. In addition, on March 30 and 31, 2023, the Company sold 168,125 shares of common stock at a weighted average price of $163.35, providing aggregate net proceeds to the Company of $27,188,000. These shares were deemed to be issued and outstanding upon settlement in April 2023. Also during the three months ended March 31, 2023, the Company closed a $100,000,000 senior unsecured term loan with an effectively fixed interest rate of 5.27%. Additionally, the Company amended its unsecured bank credit facilities, effective January 2023, to expand the total capacity on its unsecured bank credit facilities from $475,000,000 to $675,000,000 and to replace LIBOR with Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate. The maturity date remains 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 three months ended March 31, 2023, EastGroup executed new and renewal leases on 1,659,000 square feet (3.2% of the operating portfolio’s total square footage of 52,647,000). For new and renewal leases signed during the first three months of 2023, average rental rates increased by 48.5% as compared to the former leases on the same spaces.
On a diluted per share basis, Net Income Attributable to EastGroup Properties, Inc. Common Stockholders was $1.02 for the three months ended March 31, 2023, compared to $1.54 for the same period of 2022, a 33.8% decrease. See the Company’s analysis of performance trends below for further details.
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, 2022 through March 31, 2023), increased 7.6% for the three months ended March 31, 2023 as compared to the same period in 2022.
EastGroup’s operating portfolio was 98.7% leased and 97.9% occupied as of March 31, 2023, compared to 98.8% and 97.9%, respectively, at March 31, 2022. As of April 25, 2023, the operating portfolio was 98.4% leased and 98.2% occupied. Leases scheduled to expire for the remainder of 2023 were 6.7% of the operating portfolio on a square foot basis at March 31, 2023, and this percentage was reduced to 6.0% as of April 25, 2023.
The Company generates new sources of leasing revenue through its acquisitions and also its development and value-add program. 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.
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During the three months ended March 31, 2023, EastGroup began construction of four development projects containing 1,033,000 square feet in four cities. EastGroup also transferred three development and value-add projects (716,000 square feet) in two cities from its development and value-add program to real estate properties, with costs of $76,713,000 at the date of transfer. As of March 31, 2023, EastGroup’s development and value-add program consisted of 21 projects (4,298,000 square feet) located in 13 cities. The projected total investment for the development and value-add projects, which were collectively 38% leased as of April 25, 2023, is $553,100,000, of which $231,924,000 remained to be invested as of March 31, 2023.
During the three months ended March 31, 2023, there were no value-add or operating property acquisitions.
During the three months ended March 31, 2023, EastGroup sold a 125,000 square foot operating property and two acres of land, generating gross sales proceeds of $11,150,000. The Company recognized $4,809,000 in Gain on sales of real estate investments and $81,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the three months ended March 31, 2023.
The Company typically initially funds its development and acquisition programs through its unsecured bank credit facilities, the total capacity of which was increased in January 2023 by $200,000,000, from $475,000,000 to $675,000,000 (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. Moody’s Investors Service has assigned the Company’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, consistent with the Company’s manner of internal reporting, measurement of operating results and allocation of the Company’s resources. The Company’s chief decision makers use two primary measures of operating results in making decisions: (1) funds from operations (“FFO”) attributable to common stockholders, 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 has 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 months ended March 31, 2023, Same Properties includes properties which were included in the operating portfolio for the entire period from January 1, 2022 through March 31, 2023. 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.
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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 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.
The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three months ended March 31, 2023 and 2022.

|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (In thousands)
NET INCOME |  |  |  |  | $ | 44,704 |  |  | 63,604 |
Gain on sales of real estate investments |  |  |  |  | (4,809) |  |  | (30,352) |
Gain on sales of non-operating real estate |  |  |  |  | (81) |  |  | — |
Interest income |  |  |  |  | (81) |  |  | — |
Other revenue |  |  |  |  | (1,061) |  |  | (22) |
Indirect leasing costs |  |  |  |  | 140 |  |  | 175 |
Depreciation and amortization |  |  |  |  | 41,014 |  |  | 36,341 |
Company’s share of depreciation from unconsolidated investment |  |  |  |  | 31 |  |  | 31 |
Interest expense |  |  |  |  | 13,025 |  |  | 8,110 |
General and administrative expense |  |  |  |  | 5,204 |  |  | 4,310 |
Noncontrolling interest in PNOI of consolidated joint ventures |  |  |  |  | (16) |  |  | (21) |
PROPERTY NET OPERATING INCOME (“PNOI”) |  |  |  |  | 98,070 |  |  | 82,176 |
PNOI from 2022 acquisitions |  |  |  |  | (4,039) |  |  | — |
PNOI from 2022 and 2023 development and value-add properties |  |  |  |  | (9,591) |  |  | (1,896) |
PNOI from 2022 and 2023 operating property dispositions |  |  |  |  | 94 |  |  | (273) |
Other PNOI |  |  |  |  | 112 |  |  | 11 |
SAME PNOI |  |  |  |  | 84,646 |  |  | 80,018 |
Lease termination fee income from same properties |  |  |  |  | (38) |  |  | (1,394) |
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS |  |  |  |  | $ | 84,608 |  |  | 78,624 |

PNOI was calculated as follows for the three months ended March 31, 2023 and 2022.

|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (In thousands)
Income from real estate operations |  |  |  |  | $ | 133,964 |  |  | 112,952 |
Expenses from real estate operations |  |  |  |  | (36,186) |  |  | (31,064) |
Noncontrolling interest in PNOI of consolidated joint ventures |  |  |  |  | (16) |  |  | (21) |
PNOI from 50% owned unconsolidated investment |  |  |  |  | 308 |  |  | 309 |
PROPERTY NET OPERATING INCOME (“PNOI”) |  |  |  |  | $ | 98,070 |  |  | 82,176 |

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
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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.
The following table presents reconciliations of Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO Attributable to Common Stockholders for the three months ended March 31, 2023 and 2022.

|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (In thousands, except per share data)
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS |  |  |  |  | $ | 44,690 |  |  | 63,580 |
Depreciation and amortization |  |  |  |  | 41,014 |  |  | 36,341 |
Company’s share of depreciation from unconsolidated investment |  |  |  |  | 31 |  |  | 31 |
Depreciation and amortization from noncontrolling interest |  |  |  |  | (1) |  |  | (3) |
Gain on sales of real estate investments |  |  |  |  | (4,809) |  |  | (30,352) |
Gain on sales of non-operating real estate |  |  |  |  | (81) |  |  | — |
FUNDS FROM OPERATIONS (“FFO”) ATTRIBUTABLE TO COMMON STOCKHOLDERS |  |  |  |  | $ | 80,844 |  |  | 69,597 |
Net income attributable to common stockholders per diluted share |  |  |  |  | $ | 1.02 |  |  | 1.54 |
Funds from operations (“FFO”) attributable to common stockholders per diluted share |  |  |  |  | $ | 1.84 |  |  | 1.68 |
Diluted shares for earnings per share and funds from operations |  |  |  |  | 43,823 |  |  | 41,359 |

The Company analyzes the following performance trends in evaluating the revenues and expenses of the Company:
•On a diluted per share basis, Net Income Attributable to EastGroup Properties, Inc. Common Stockholders was $1.02 for the three months ended March 31, 2023, compared to $1.54 for the same period of 2022, a 33.8% decrease. The change is primarily due to the following:
–EastGroup recognized Gains on sales of real estate investments of $4,809,000 ($0.11 per share) during the three months ended March 31, 2023, compared to $30,352,000 ($0.73 per share) for the three months ended March 31, 2022.
–Interest expense increased by $4,915,000 ($0.11 per share) during the three months ended March 31, 2023, as compared to the same period of 2022.
–Depreciation and amortization expense increased by $4,673,000 ($0.11 per share) during the three months ended March 31, 2023, as compared to the same period of 2022.
–PNOI increased by $15,894,000 ($0.36 per share) during the three months ended March 31, 2023, compared to the same period of 2022.
•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 March 31, 2023, FFO was $1.84 per share compared with $1.68 per share for the same period of 2022, an increase of 9.5%. FFO increased due to the increase in PNOI partially offset by the increase in interest expense.
•For the three months ended March 31, 2023, PNOI increased by $15,894,000, or 19.3%, as compared to the same period in 2022. PNOI increased $7,695,000 from newly developed and value-add properties, $4,628,000 from same property operations and $4,039,000 from 2022 acquisitions; PNOI decreased $367,000 from operating properties sold in 2022 and 2023.
•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, 2022 through March 31, 2023). Same PNOI, excluding income from lease terminations, increased 7.6% for the three months ended March 31, 2023, as compared to the same period in 2022.
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•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 period and prior year reporting periods (January 1, 2022 through March 31, 2023). Same property average occupancy was 98.7% for the three months ended March 31, 2023, compared to 97.4% for the same period of 2022.
•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 March 31, 2023 was 97.9%. Quarter-end occupancy ranged from 97.9% to 98.5% over the previous four quarters ended March 31, 2022 to December 31, 2022.
•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 (3.2% of the operating portfolio’s total square footage) averaged 48.5% for the three months ended March 31, 2023.
•Lease termination fee income is included in Income from real estate operations. Lease termination fee income for the three months ended March 31, 2023 was $55,000, compared to $1,394,000 for the same period of 2022.
•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 reserves for uncollectible rent of $369,000 for the three months ended March 31, 2023, compared to net recoveries of uncollectible rent of $106,000 for the same period of 2022. We evaluate the collectability of rents and other receivables for individual leases at each reporting period based on factors including, among others, tenant 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 months ended March 31, 2023.
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 Financial Accounting Standards Board (“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.
The purchase price is also allocated among the following categories of intangible assets: the above or below market component of in-place leases and the value of leases in-place at the time of acquisition. 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. In-place lease intangibles are valued based upon management’s assessment of factors such as an estimate of foregone rents and avoided leasing costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease.
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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 $4,080,461,000 at March 31, 2023, an increase of $44,624,000 from December 31, 2022. Total Liabilities decreased $38,319,000 to $2,044,079,000, and Total Equity increased $82,943,000 to $2,036,382,000 during the same period. The following paragraphs explain these changes in additional detail.
Assets
Real Estate Properties
Real estate properties increased $82,533,000 during the three months ended March 31, 2023, primarily due to: (i) the transfer of three projects from Development and value-add properties to Real estate properties (as detailed under Development and Value-Add Properties below); (ii) capital improvements at the Company’s properties; (iii) costs incurred on development and value-add projects subsequent to transfer to Real estate properties discussed below. The increases were partially offset by the sale of one operating property and the transfer of one property from Real estate properties to Development and value-add propertie s.
During the three months ended March 31, 2023, the Company made capital improvements of $16,887,000 on existing properties (included in the Real Estate Improvements table under Results of Operations). Also, the Company incurred costs of $4,116,000 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 the three months ended March 31, 2023, EastGroup sold a 125,000 square foot operating property, generating gross sales proceeds of $9,600,000. The Company recognized $4,809,000 in Gain on sales of real estate investments during the three months ended March 31, 2023.
Development and Value-Add Properties
EastGroup’s investment in Development and value-add properties at March 31, 2023 consisted of projects in lease-up and under construction of $321,176,000 and prospective development (primarily land) of $203,753,000. The Company’s total investment in Development and value-add properties at March 31, 2023 was $524,929,000 compared to $538,449,000 at December 31, 2022. Total capital invested for development during the first three months of 2023 was $64,112,000, which primarily consisted of improvement costs of $59,996,000 on development and value-add properties and costs of $4,116,000 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 $2,455,000 and $2,469,000 for the three months ended March 31, 2023 and 2022, respectively.
There were no value-add acquisitions during the three months ended March 31, 2023.
During the three months ended March 31, 2023, EastGroup sold 2.0 acres of land, generating gross sales proceeds of $1,550,000. The Company recognized $81,000 in gains on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and Comprehensive Income) during the three months ended March 31, 2023.
Also during the three months ended March 31, 2023, the Company transferred three development and value-add projects to Real estate properties with a total investment of $76,713,000 as of the date of transfer. The Company also transferred one operating property to Development and value-add properties with a total investment of $4,553,000 as of the date of transfer.
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DEVELOPMENT AND VALUE-ADD PROPERTIES ACTIVITY | Actual or Estimated Building Size (Square feet) |  | Cumulative Costs Incurred as of 3/31/2023 |  | Projected Total Costs |  |  |  |  |  |  |  |  |
|  |  | (In thousands) |  |  |  |  |  |  |  |  |
Lease-up | 1,262,000 |  |  | $ | 156,038 |  |  | 173,600 |  |  |  |  |  |  |  |  |  |
Under construction | 3,036,000 |  |  | 165,138 |  |  | 379,500 |  |  |  |  |  |  |  |  |  |
Total lease-up and under construction | 4,298,000 |  |  | 321,176 |  |  | 553,100 |  |  |  |  |  |  |  |  |  |
Prospective development (primarily land) | 8,822,000 |  |  | 203,753 |  |  |  |  |  |  |  |  |  |  |  |
Total Development and value-add properties as of March 31, 2023 | 13,120,000 |  |  | $ | 524,929 |  |  |  |  |  |  |  |  |  |  |  |
Total Development and value-add properties transferred to Real estate properties during the three months ended March 31, 2023 | 716,000 |  |  | $ | 76,713 |  |  | (1) |  |  |  |  |  |  |  |  |

(1) Represents cumulative costs at the date of transfer.
Accumulated Depreciation
Accumulated depreciation on real estate, development and value-add properties increased $28,320,000 during the three months ended March 31, 2023, primarily due to depreciation expense, partially offset by the sale of one operating property.
Other Assets
Other assets decreased $5,680,000 during the three months ended March 31, 2023. A summary of Other assets follows:

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Leasing costs (principally commissions) | $ | 146,185 |  |  | 140,273 |
Accumulated amortization of leasing costs | (50,312) |  |  | (48,249) |
Leasing costs (principally commissions), net of accumulated amortization | 95,873 |  |  | 92,024 |
Acquired in-place lease intangibles | 36,113 |  |  | 37,181 |
Accumulated amortization of acquired in-place lease intangibles | (17,170) |  |  | (16,276) |
Acquired in-place lease intangibles, net of accumulated amortization | 18,943 |  |  | 20,905 |
Acquired above market lease intangibles | 496 |  |  | 496 |
Accumulated amortization of acquired above market lease intangibles | (272) |  |  | (251) |
Acquired above market lease intangibles, net of accumulated amortization | 224 |  |  | 245 |
Straight-line rents receivable | 64,644 |  |  | 61,452 |
Accounts receivable | 4,163 |  |  | 9,568 |
Interest rate swap assets | 30,229 |  |  | 38,352 |
Right of use assets — Office leases (operating) | 1,926 |  |  | 2,050 |
Escrow deposits and prepaid costs for pending transactions | 2,866 |  |  | 2,522 |
Goodwill | 990 |  |  | 990 |
Prepaid insurance | 1,693 |  |  | 2,681 |
Receivable for insurance proceeds | 6,098 |  |  | 2,828 |
Prepaid expenses and other assets | 11,615 |  |  | 11,327 |
Total Other assets | $ | 239,264 |  |  | 244,944 |

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Liabilities
Unsecured bank credit facilities, net of debt issuance costs decreased $98,667,000 during the three months ended March 31, 2023, mainly due to repayments of $241,845,000 and new debt issuance costs incurred during the period, partially offset by borrowings of $143,872,000 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 $34,546,000 during the three months ended March 31, 2023, primarily due to the closing of a $100,000,000 senior unsecured term loan in January and the amortization of debt issuance costs, partially offset by the repayment of a $65,000,000 term loan in March 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.
Accounts payable and accrued expenses increased $20,656,000 during the three months ended March 31, 2023. A summary of the Company’s Accounts payable and accrued expenses follows:

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Property taxes payable | $ | 21,725 |  |  | 6,823 |
Development costs payable | 31,781 |  |  | 21,305 |
Retainage payable | 12,805 |  |  | 11,011 |
Real estate improvements and capitalized leasing costs payable | 7,097 |  |  | 5,182 |
Interest payable | 14,387 |  |  | 9,597 |
Dividends payable | 56,193 |  |  | 55,952 |
Book overdraft (1) | 5,465 |  |  | 13,370 |
Other payables and accrued expenses | 8,191 |  |  | 13,748 |
Total Accounts payable and accrued expenses | $ | 157,644 |  |  | 136,988 |

(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 $5,174,000 during the three months ended March 31, 2023. A summary of the Company’s Other liabilities follows:

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Security deposits | $ | 35,690 |  |  | 34,272 |
Prepaid rent and other deferred income | 20,404 |  |  | 17,004 |
Operating lease liabilities — Ground leases | 19,616 |  |  | 19,906 |
Operating lease liabilities — Office leases | 2,017 |  |  | 2,139 |
Acquired below market lease intangibles | 10,483 |  |  | 10,735 |
Accumulated amortization of below market lease intangibles | (4,324) |  |  | (3,957) |
Acquired below market lease intangibles, net of accumulated amortization | 6,159 |  |  | 6,778 |
Interest rate swap liabilities | 4,120 |  |  | 1,981 |
Other liabilities | 834 |  |  | 1,586 |
Total Other liabilities | $ | 88,840 |  |  | 83,666 |

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Equity
Additional paid-in capital increased $103,955,000 during the three months ended March 31, 2023, 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 three months ended March 31, 2023, EastGroup issued and sold, and subsequently settled the issuance of, 652,909 shares of common stock through its continuous common equity offering program at a weighted average price of $163.55 per share, providing aggregate net proceeds to the Company of $105,321,000.
For the three months ended March 31, 2023, Distributions in excess of earnings increased $10,724,000 as a result of dividends on common stock of $55,414,000 exceeding Net Income Attributable to EastGroup Properties, Inc. Common Stockholders of $44,690,000.
Accumulated other comprehensive income decreased $10,262,000 during the three months ended March 31, 2023. The decrease resulted from the change in fair value of the Company’s interest rate swaps (cash flow hedges) which are further discussed in Notes 13 and 14 in the Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the three months ended March 31, 2023 was $44,690,000 ($1.02 per basic and diluted share), compared to $63,580,000 ($1.54 per basic and diluted share) for the same period in 2022. The following paragraphs provide further details with respect to these changes:
•EastGroup recognized Gains on sales of real estate investments of $4,809,000 ($0.11 per diluted share) and $30,352,000 ($0.73 per diluted share) during the three months ended March 31, 2023 and 2022, respectively.
•Interest expense increased by $4,915,000 ($0.11 per share) during the three months ended March 31, 2023, as compared to the same period of 2022.
•Depreciation and amortization expense increased by $4,673,000 ($0.11 per diluted share) during the three months ended March 31, 2023, as compared to the same period in 2022.
•PNOI increased by $15,894,000 ($0.36 per diluted share), or 19.3%, for the three months ended March 31, 2023, as compared to the same period in 2022. PNOI increased $7,695,000 from newly developed and value-add properties, $4,628,000 from same property operations and $4,039,000 from 2022 acquisitions; PNOI decreased $367,000 from operating properties sold in 2022 and 2023. Lease termination fee income was $55,000 and $1,394,000 for the three month periods ended March 31, 2023 and 2022, respectively. The Company recorded net reserves for uncollectible rent of $369,000 and net recoveries of uncollectible rent of $106,000 for the three months ended March 31, 2023 and 2022, respectively. Straight-lining of rent increased PNOI by $3,481,000 and $2,440,000 for the three months ended March 31, 2023 and 2022, respectively.
•During the three months ended March 31, 2023, EastGroup recognized a gain on casualties and involuntary conversion of $1,027,000 ($0.02 per diluted share). There were no gains on casualties and involuntary conversions during the three months ended March 31, 2022.
EastGroup entered into 18 leases with certain rent concessions on 1,196,000 square feet during the three months ended March 31, 2023, with total rent concessions of $3,168,000 over the lives of the leases. During the same period of 2022, the Company entered into 30 leases with certain rent concessions on 1,340,000 square feet with total rent concessions of $2,079,000 over the lives of the leases.
The Company’s percentage of leased square footage for the operating portfolio was 98.7% at March 31, 2023, compared to 98.8% at March 31, 2022. Occupancy for the Company’s operating portfolio was 97.9% at both March 31, 2023 and 2022.
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 period and prior year reporting periods (January 1, 2022 through March 31, 2023). Same property average occupancy for the three months ended March 31, 2023, was 98.7% compared to 97.4% for the same period of 2022.
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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 period and prior year reporting periods (January 1, 2022 through March 31, 2023). The same property average rental rate was $7.45 per square foot for the three months ended March 31, 2023, compared to $6.90 per square foot for the same period of 2022.
Interest expense increased $4,915,000 for the three months ended March 31, 2023, compared to the same period in 2022. The following table presents the components of Interest expense for the three months ended March 31, 2023 and 2022:

| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  | Increase (Decrease) |  |  |  |  |  |
| (In thousands)
VARIABLE RATE INTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |
Unsecured bank credit facilities interest - variable rate (excluding amortization of facility fees and debt issuance costs) | $ | 1,139 |  |  | 566 |  |  | 573 |  |  |  |  |  |  |
Amortization of facility fees - unsecured bank credit facilities | 242 |  |  | 176 |  |  | 66 |  |  |  |  |  |  |
Amortization of debt issuance costs - unsecured bank credit facilities | 244 |  |  | 163 |  |  | 81 |  |  |  |  |  |  |
Total variable rate interest expense | 1,625 |  |  | 905 |  |  | 720 |  |  |  |  |  |  |
FIXED RATE INTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |
Unsecured debt interest (1) (excluding amortization of debt issuance costs) | 14,876 |  |  | 9,281 |  |  | 5,595 |  |  |  |  |  |  |
Secured debt interest (excluding amortization of debt issuance costs) | 19 |  |  | 21 |  |  | (2) |  |  |  |  |  |  |
Amortization of debt issuance costs - unsecured debt | 239 |  |  | 146 |  |  | 93 |  |  |  |  |  |  |
Amortization of debt issuance costs - secured debt | 1 |  |  | 1 |  |  | — |  |  |  |  |  |  |
Total fixed rate interest expense | 15,135 |  |  | 9,449 |  |  | 5,686 |  |  |  |  |  |  |
Total interest | 16,760 |  |  | 10,354 |  |  | 6,406 |  |  |  |  |  |  |
Less capitalized interest | (3,735) |  |  | (2,244) |  |  | (1,491) |  |  |  |  |  |  |
TOTAL INTEREST EXPENSE | $ | 13,025 |  |  | 8,110 |  |  | 4,915 |  |  |  |  |  |  |

(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 increased by $720,000 for the three months ended March 31, 2023, as compared to the same period in 2022 primarily due to an increase in the Company’s weighted average variable interest rates on its unsecured bank credit facilities, partially offset by a decrease in average borrowings, as shown in the following table:

|  |  | Three Months Ended March 31,
|  |  |  |  |  |  | 2023 |  | 2022 |  | Increase (Decrease)
|  |  |  |  |  |  | (In thousands, except rates of interest)
Average borrowings on unsecured bank credit facilities - variable rate |  |  |  |  |  |  | $ | 86,795 |  | 244,405 |  | (157,610)
Weighted average variable interest rates (excluding amortization of facility fees and debt issuance costs) |  |  |  |  |  |  | 5.32 | % |  | 0.94 | % |  |

The Company’s fixed rate interest expense increased by $5,686,000 for the three months ended March 31, 2023, as compared to the same period in 2022 as a result of the unsecured debt and secured debt activity described below.
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Interest expense from fixed rate unsecured debt increased by $5,595,000 during the three months ended March 31, 2023, as compared to the same period in 2022. The increase resulted from the Company’s unsecured debt activity described below. The details of the unsecured debt obtained in 2022 and 2023 as of March 31, 2023 are shown in the following table:

NEW UNSECURED DEBT IN 2022 AND 2023 |  | Effectively Fixed Interest Rate |  | Date Obtained |  | Maturity Date |  | Amount
|  |  |  |  |  |  |  | (In thousands)
$100 Million Senior Unsecured Term Loan (1) |  | 3.06% |  | 03/31/2022 |  | 09/29/2028 |  | $ | 100,000 |
$150 Million Senior Unsecured Notes |  | 3.03% |  | 04/20/2022 |  | 04/20/2032 |  | 150,000 |
$50 Million Senior Unsecured Term Loan (2) |  | 4.09% |  | 08/31/2022 |  | 08/30/2024 |  | 50,000 |
$75 Million Senior Unsecured Term Loan (3) |  | 4.00% |  | 08/31/2022 |  | 08/31/2027 |  | 75,000 |
$75 Million Senior Unsecured Notes |  | 4.90% |  | 10/12/2022 |  | 10/12/2033 |  | 75,000 |
$75 Million Senior Unsecured Notes |  | 4.95% |  | 10/12/2022 |  | 10/12/2034 |  | 75,000 |
$100 Million Senior Unsecured Term Loan (4) |  | 5.27% |  | 01/13/2023 |  | 01/13/2030 |  | 100,000 |
Weighted Average/Total Amount for 2022 and 2023 |  | 4.05% |  |  |  |  |  | $ | 625,000 |

(1) The interest rate on this unsecured term loan is comprised of Term SOFR plus 140 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 Term SOFR rate to a fixed interest rate, providing the Company an effectively fixed interest rate on the term loan of 3.06% as of March 31, 2023. 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 Term SOFR plus 95 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 Term SOFR rate to a fixed interest rate, providing the Company an effectively fixed interest rate on the term loan of 4.09% as of March 31, 2023. See Note 14 in the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
(3) The interest rate on this unsecured term loan is comprised of Term SOFR plus 95 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 Term SOFR rate to a fixed interest rate, providing the Company an effectively fixed interest rate on the term loan of 4.00% as of March 31, 2023. See Note 14 in the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
(4) The interest rate on this unsecured term loan is comprised of Term SOFR plus 135 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 Term SOFR rate to a fixed interest rate, providing the Company an effectively fixed interest rate on the term loan of 5.27% as of March 31, 2023. 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 2022 and 2023:

UNSECURED DEBT REPAID IN 2022 AND 2023 |  | Interest Rate |  | Date Repaid |  | Payoff Amount
|  |  |  |  |  | (In thousands)
$75 Million Senior Unsecured Term Loan |  | 3.03% |  | 02/28/2022 |  | $ | 75,000 |
$65 Million Senior Unsecured Term Loan |  | 2.31% |  | 03/31/2023 |  | 65,000 |
Weighted Average/Total Amount for 2022 and 2023 |  | 2.70% |  |  |  | $ | 140,000 |

Also during 2022, the Company assumed a $60,000,000 loan in the acquisition of operating properties and development land, which was repaid with no penalty during the same period. EastGroup did not obtain or repay any other secured debt during 2022 and 2023.
Interest costs during the period of construction of real estate properties are capitalized and offset against interest expense. Capitalized interest increased $1,491,000 for the three months ended March 31, 2023, as compared to the same period of 2022, due to increased borrowing rates and changes in development spending.
Depreciation and amortization expense increased $4,673,000 for the three months ended March 31, 2023, as compared to the same period in 2022, primarily due to the operating properties acquired by the Company in 2022 and the properties transferred from Development and value-add properties in 2022 and 2023, partially offset by operating properties sold in 2022 and 2023.
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Gain on sales of real estate investments, which includes gains on the sales of operating properties, decreased $25,543,000 for the three months ended March 31, 2023, as compared to the same period in 2022. The Company’s 2022 and 2023 sales transactions are described below in Real Estate Sold and Held for Sale.
Real Estate Improvements
Real estate improvements for EastGroup’s operating properties for the three months ended March 31, 2023 and 2022 were as follows:

|  |  |  |  | Three Months Ended March 31,
| Estimated Useful Life |  |  |  |  |  | 2023 |  | 2022
|  |  |  |  |  | (In thousands)
Upgrade on acquisitions | 40 yrs |  |  |  |  |  | $ | 270 |  |  | 278 |
Tenant improvements: |  |  |  |  |  |  |  |  |
New tenants | Lease life |  |  |  |  |  | 5,441 |  |  | 3,456 |
Renewal tenants | Lease life |  |  |  |  |  | 911 |  |  | 710 |
Other: |  |  |  |  |  |  |  |  |
Building improvements | 5-40 yrs |  |  |  |  |  | 2,203 |  |  | 2,569 |
Roofs | 5-15 yrs |  |  |  |  |  | 7,070 |  |  | 1,151 |
Parking lots | 3-5 yrs |  |  |  |  |  | 842 |  |  | 236 |
Other | 5 yrs |  |  |  |  |  | 150 |  |  | 326 |
Total real estate improvements (1) |  |  |  |  |  |  | $ | 16,887 |  |  | 8,726 |

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

|  | Three Months Ended March 31,
| 2023 |  | 2022
| (In thousands)
Total real estate improvements |  | $ | 16,887 |  |  | 8,726 |
Change in real estate property payables |  | (887) |  |  | (192) |
Change in construction in progress |  | (223) |  |  | 1,306 |
Real estate improvements on the Consolidated Statements of Cash Flows |  | $ | 15,777 |  |  | 9,840 |

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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 months ended March 31, 2023 and 2022 were as follows:

|  |  |  |  | Three Months Ended March 31,
| Estimated Useful Life |  |  |  |  |  | 2023 |  | 2022
|  |  |  |  |  |  | (In thousands)
Development and value-add | Lease life |  |  |  |  |  | $ | 4,550 |  |  | 4,286 |
New tenants | Lease life |  |  |  |  |  | 2,137 |  |  | 3,586 |
Renewal tenants | Lease life |  |  |  |  |  | 2,363 |  |  | 3,401 |
Total capitalized leasing costs (1) |  |  |  |  |  |  | $ | 9,050 |  |  | 11,273 |
Amortization of leasing costs |  |  |  |  |  |  | $ | 5,206 |  |  | 4,484 |

(1)Reconciliation of Total capitalized leasing costs to Leasing commissions on the Consolidated Statements of Cash Flows:

|  | Three Months Ended March 31,
| 2023 |  | 2022
| (In thousands)
Total capitalized leasing costs |  | $ | 9,050 |  |  | 11,273 |
Change in leasing commissions payables |  | (1,129) |  |  | (1,929) |
Leasing commissions on the Consolidated Statements of Cash Flows |  | $ | 7,921 |  |  | 9,344 |

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 March 31, 2023 and December 31, 2022.
In accordance with ASC 360 and ASC 205, Presentation of Financial Statements, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.
The Company sold an operating property during the three months ended March 31, 2023, as shown in the table below. The results of operations and gains and losses on sales for the property sold are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains and losses on sales are included in Gain on sales of real estate investments. The Company did not consider its sale in 2023 to be a disposal of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results.
A summary of Gain on sales of real estate investments for the three months ended March 31, 2023 and the year ended December 31, 2022 follows:
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REAL ESTATE PROPERTIES SOLD |  | Location |  | Size |  | Date Sold |  | Net Sales Price |  | Basis |  | Recognized Gain
|  |  |  | (In square feet) |  |  |  | (In thousands)
2023 |  |  |  |  |  |  |  |  |  |  |  |
World Houston 23 |  | Houston, TX |  | 125,000 |  | 03/31/2023 |  | $ | 9,327 |  |  | 4,518 |  |  | 4,809 |
2022 |  |  |  |  |  |  |  |  |  |  |  |
Metro Business Park |  | Phoenix, AZ |  | 189,000 |  | 01/06/2022 |  | $ | 32,851 |  |  | 5,880 |  |  | 26,971 |
Cypress Creek Business Park (1) |  | Fort Lauderdale, FL |  | 56,000 |  | 03/31/2022 |  | 5,282 |  |  | 1,901 |  |  | 3,381 |
World Houston 15 East |  | Houston, TX |  | 42,000 |  | 05/11/2022 |  | 12,873 |  |  | 2,226 |  |  | 10,647 |
Total for 2022 |  |  |  | 287,000 |  |  |  |  | $ | 51,006 |  |  | 10,007 |  |  | 40,999 |

(1) Cypress Creek Business Park is located on a ground lease. In conjunction with the sale of the property, the Company fully amortized the associated right-of-use asset and liability of $1,745,000.
The table above includes sales of operating properties. During the three months ended March 31, 2023, the Company also sold a 2.0 acre parcel of land in Forth Worth, TX, for $1,550,000 and recognized a gain on the sale of $81,000. The gains on sales of non-operating real estate are included in Other on the Consolidated Statements of Income and Comprehensive Income.
RECENT ACCOUNTING PRONOUNCEMENTS
EastGroup has evaluated all FASB ASUs recently released by the FASB through the date the financial statements were issued and determined that the following ASUs apply to the Company.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, applies to the Company. Also, in December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of Topic 848 to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 had no impact on the Company’s consolidated financial statements for the three months ended March 31, 2023. See Note 14 in the Consolidated Financial Statements for further evaluation of these ASUs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $93,461,000 for the three months ended March 31, 2023. The primary other sources of cash were borrowings on unsecured bank credit facilities and unsecured debt; proceeds from common stock offerings; and net proceeds from sales of real estate investments. The Company distributed $55,173,000 in common stock dividends during the three months ended March 31, 2023. Other primary uses of cash were for repayments on unsecured bank credit facilities and unsecured debt; the construction and development of properties; capital improvements at various properties; and leasing commissions.
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. The Company expects liquidity sources and needs in the coming year to be consistent in nature with those for the three months ended March 31, 2023.
As of March 31, 2023, the Company was contractually obligated to pay the dividend declared in March 2023, which was paid in April 2023. An amount for dividends payable of $56,193,000 was included in Accounts payable and accrued expenses at March 31, 2023, which includes dividends payable on unvested restricted stock of $983,000, which are subject to continued service and will be paid upon vesting in future periods.
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Total debt at March 31, 2023 and December 31, 2022 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 March 31, 2023 and December 31, 2022.

| March 31, 2023 |  | December 31, 2022
| (In thousands)
Unsecured bank credit facilities - variable rate, carrying amount (1) | $ | 72,027 |  |  | 170,000 |
Unamortized debt issuance costs | (2,240) |  |  | (1,546) |
Unsecured bank credit facilities, net of debt issuance costs | 69,787 |  |  | 168,454 |
Unsecured debt - fixed rate, carrying amount (2) | 1,730,000 |  |  | 1,695,000 |
Unamortized debt issuance costs | (4,195) |  |  | (3,741) |
Unsecured debt, net of debt issuance costs | 1,725,805 |  |  | 1,691,259 |
Secured debt - fixed rate, carrying amount (2) | 2,012 |  |  | 2,041 |
Unamortized debt issuance costs | (9) |  |  | (10) |
Secured debt, net of debt issuance costs | 2,003 |  |  | 2,031 |
Total debt, net of debt issuance costs | $ | 1,797,595 |  |  | 1,861,744 |

(1)The Company’s balances under its unsecured bank credit facilities change depending on the Company’s cash needs and, as such, both the principal amounts and the interest rates are subject to variability.
(2)These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
Until January 10, 2023, EastGroup had $425,000,000 and $50,000,000 unsecured bank credit facilities with margins over LIBOR of 77.5 basis points, facility fees of 15 basis points and maturity dates of July 30, 2025. The Company amended and restated these credit facilities effective January 10, 2023, expanding the total capacity on its unsecured bank credit facilities from $475,000,000 to $675,000,000 and replacing LIBOR with SOFR as the benchmark interest rate.
The Company’s $625,000,000 unsecured bank credit facility, which was increased in January 2023 by $200,000,000 from $425,000,000, is with a group of 11 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 an additional $125,000,000 accordion (with agreement by all parties). The interest rate on each tranche is reset on a monthly basis and as of March 31, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points. As of March 31, 2023, the Company had $55,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of 5.682%. The Company has a standby letter of credit of $67,000 pledged on this facility, which reduces borrowing capacity under the credit facility.
The Company's $50,000,000 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 $625,000,000 facility are exercised. The interest rate is reset on a daily basis and as of March 31, 2023, was SOFR plus 76.5 basis points with an annual facility fee of 15 basis points. As of March 31, 2023, the interest rate was 5.745% on a balance of $17,027,000.
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 the applicable interest margin is reduced by one basis point if the Company meets a certain sustainability performance target. This sustainability metric is evaluated annually and was achieved for the year ended December 31, 2022, which effectively reduced the margin on the unsecured bank credit facilities during 2023 by one basis point from 77.5 to 76.5 basis points.
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 operations of the Company. The Company also believes it can obtain debt financing and issue common and/or preferred equity.
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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 January 2023, the Company closed a $100,000,000 senior unsecured term loan with a seven-year term and interest only payments, which bears interest at the annual rate of SOFR plus an applicable margin (1.35% as of March 31, 2023) 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 SOFR rate component to a fixed interest rate for the entire term of the loan providing a total effectively fixed interest rate of 5.27%.
On March 31, 2023, EastGroup repaid a $65,000,000 senior unsecured term loan with a total effectively fixed interest rate of 2.31%. The loan, which was scheduled to mature on April 1, 2023, was repaid with no penalty.
On December 16, 2022, EastGroup entered into sales agreements with each of Robert W. Baird & Co. Incorporated; BNY Mellon Capital Markets, LLC; BofA Securities, Inc.; BTIG, LLC; Jefferies LLC; Raymond James & Associates, Inc.; Regions Securities LLC; Samuel A. Ramirez & Company, Inc.; TD Securities (USA) LLC; and Wells Fargo Securities, LLC in connection with the establishment of a 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 April 26, 2023, the Company has sold an aggregate of 821,034 shares of common stock with gross proceeds of $134,245,000 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 $615,755,000 through the sales agents.
During the three months ended March 31, 2023, EastGroup issued and sold, and subsequently settled the issuance of, 652,909 shares of common stock under its continuous common equity offering program at a weighted average price of $163.55 per share with gross proceeds to the Company of $106,782,000. The Company incurred offering-related costs of $1,461,000 during the three months, resulting in net proceeds to the Company of $105,321,000. On March 30 and 31, 2023, the Company sold 168,125 shares of common stock under its continuous common equity program at a weighted average price of $163.35 per share with gross proceeds to the Company of $27,463,000. These shares were deemed to be issued and outstanding upon settlement in April 2023.
EastGroup’s other material cash requirements from known contractual and other obligations, including real estate property obligations, development and value-add obligations and tenant improvements as of December 31, 2022, did not materially change during the three months ended March 31, 2023.
The Company has no material off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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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 March 31, 2023.

| April – December 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter |  | Total |  | Fair Value
Unsecured bank credit facilities - variable rate (in thousands) | $ | — |  |  | — |  |  | 72,027 |  | (1) | — |  |  | — |  |  | — |  |  | 72,027 |  |  | 72,058 |  | (2)
Weighted average interest rate | — |  |  | — |  |  | 5.70 | % | (3) | — |  |  | — |  |  | — |  |  | 5.70 | % |  |  |
Unsecured debt - fixed rate (in thousands) | $ | 50,000 |  |  | 170,000 |  | 145,000 |  | 140,000 |  | 175,000 |  | 1,050,000 |  | 1,730,000 |  | 1,609,354 |  | (4)
Weighted average interest rate | 3.80 | % |  | 3.65 | % |  | 3.12 | % |  | 2.57 | % |  | 2.74 | % |  | 3.61 | % |  | 3.41 | % |  |  |
Secured debt - fixed rate (in thousands) | $ | 90 |  | 122 |  | 128 |  | 1,672 |  | — |  | — |  |  | 2,012 |  | 1,924 |  | (4)
Weighted average interest rate | 3.85 | % |  | 3.85 | % |  | 3.85 | % |  | 3.85 | % |  | — |  | — |  |  | 3.85 | % |  |  |

(1)The variable-rate unsecured bank credit facilities mature in July 2025 and as of March 31, 2023, have balances of $55,000,000 on the $625,000,000 unsecured bank credit facility and $17,027,000 on the $50,000,000 unsecured bank credit facility. These balances fluctuate based on Company operations and capital activity, as discussed in Liquidity and Capital Resources.
(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 March 31, 2023.
(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 March 31, 2023, it does not consider those exposures or positions that could arise after that date. If the weighted average interest rate on the variable rate unsecured bank credit facilities, as shown above, changes by 10% or approximately 57 basis points, interest expense and cash flows would increase or decrease by approximately $411,000 annually. This does not include variable-rate debt that has been effectively fixed through the use of interest rate swaps.
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 causes 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 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 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 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 March 31, 2023, 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 first fiscal quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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, 2022, 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, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Period |  | Total Number of Shares Purchased |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
January 1, 2023 through January 31, 2023 (1) |  | 21,289 |  |  | $ | 148.08 |  |  | — |  |  | — |
February 1, 2023 through February 28, 2023 (1) |  | 9,994 |  |  | 168.90 |  |  | — |  |  | — |
March 1, 2023 through March 31, 2023 (1) |  | 17 |  |  | 162.49 |  |  | — |  |  | — |
Total |  | 31,300 |  |  | $ | 154.74 |  |  | — |  |  |

(1) As permitted under the Company’s equity compensation plan, these shares were withheld by the Company to satisfy the tax withholding obligations in connection with the issuance of shares of common stock or the vesting of shares of restricted stock.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES.
None.
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ITEM 4.MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.OTHER INFORMATION.
None.
ITEM 6.EXHIBITS.

The following exhibits are included in or incorporated by reference into, this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023:

Exhibit Number | Description
10.1 | First Amendment to Fifth Amended and Restated Credit Agreement, dated as of January 10, 2023 among EastGroup Properties, L.P.; the Company; PNC Bank, National Association, as Administrative Agent; Regions Bank, as Syndication Agent, Wells Fargo Bank, National Association, Bank of America, N.A., U.S. Bank National Association and TD Bank, N.A. as Co-Documentation Agents; PNC Capital Markets LLC as Sustainability Agent; PNC Capital Markets LLC and Regions Capital Markets, as Joint Lead Arrangers and Joint Bookrunners and the Lenders party thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed January 13, 2023).
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: April 26, 2023

| 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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