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REAL ESTATE PROPERTIES | 12 Months Ended
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Dec. 31, 2023
Real Estate [Abstract] |
REAL ESTATE PROPERTIES | REAL ESTATE PROPERTIES AND DEVELOPMENT AND VALUE-ADD PROPERTIES The Company’s Real estate properties and Development and value-add properties at December 31, 2023 and 2022 were as follows:
| December 31,
2023 |  | 2022
(In thousands)
Real estate properties: |  |  |
Land | $ | 814,364 |  |  | 730,445 |
Buildings and building improvements | 3,336,615 |  |  | 3,012,319 |
Tenant and other improvements | 684,573 |  |  | 633,817 |
Right of use assets — Ground leases (operating) (1) | 17,996 |  |  | 19,391 |
Development and value-add properties (2) | 639,647 |  |  | 538,449 |
| 5,493,195 |  |  | 4,934,421 |
Less accumulated depreciation | (1,273,723) |  |  | (1,150,814) |
| $ | 4,219,472 |  |  | 3,783,607 |
(1)See Ground Leases discussion below for information regarding the Company’s right of use assets for ground leases. (2)Value-add properties are defined in Note 1(e). A summary of real estate properties acquired for the years ended December 31, 2023, 2022 and 2021 follows:
|  |  |  | (Unaudited) |  |  |  |
REAL ESTATE PROPERTIES ACQUIRED |  | Location |  | Size |  | Date Acquired |  | Cost (1)
|  |  |  | (Square feet) |  |  |  | (In thousands)
2023 |  |  |  |  |  |  |  |
OPERATING PROPERTIES ACQUIRED (2) |  |  |  |  |  |  |  |
Craig Corporate Center |  | Las Vegas, NV |  | 156,000 |  |  | 04/18/2023 |  | $ | 34,365 |
Blue Diamond Business Park |  | Las Vegas, NV |  | 254,000 |  |  | 09/05/2023 |  | 52,973 |
McKinney Logistics Center |  | Dallas, TX |  | 193,000 |  |  | 10/02/2023 |  | 25,739 |
Park at Myatt |  | Nashville, TN |  | 171,000 |  |  | 11/03/2023 |  | 30,793 |
Pelzer Point Commerce Center 1 |  | Greenville, SC |  | 213,000 |  |  | 12/21/2023 |  | 21,246 |
Total operating property acquisitions |  |  |  | 987,000 |  |  |  |  | 165,116 |
Total value-add property acquisitions |  |  |  | — |  |  |  |  | — |
Total acquired assets in 2023 (5) |  |  |  | 987,000 |  |  |  |  | $ | 165,116 |
2022 |  |  |  |  |  |  |  |
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 in 2022 (5) |  |  |  | 2,750,000 |  |  |  |  | $ | 482,051 |
2021 |  |  |  |  |  |  |  |
OPERATING PROPERTIES ACQUIRED (2) |  |  |  |  |  |  |  |
Southpark Distribution Center 2 |  | Phoenix, AZ |  | 79,000 |  |  | 06/10/2021 |  | $ | 9,177 |
DFW Global Logistics Centre |  | Dallas, TX |  | 611,000 |  |  | 08/26/2021 |  | 89,829 |
Progress Center 3 |  | Atlanta, GA |  | 50,000 |  |  | 09/23/2021 |  | 5,000 |
Texas Avenue |  | Austin, TX |  | 20,000 |  |  | 10/15/2021 |  | 4,143 |
Total operating property acquisitions |  |  |  | 760,000 |  |  |  |  | 108,149 |
VALUE-ADD PROPERTIES ACQUIRED (4) |  |  |  |  |  |  |  |
Access Point 1 |  | Greenville, SC |  | 156,000 |  |  | 01/15/2021 |  | 10,501 |
Northpoint 200 |  | Atlanta, GA |  | 79,000 |  |  | 01/21/2021 |  | 6,516 |
Access Point 2 |  | Greenville, SC |  | 159,000 |  |  | 05/19/2021 |  | 10,743 |
Cherokee 75 Business Center 2 |  | Atlanta, GA |  | 105,000 |  |  | 06/17/2021 |  | 8,837 |
Siempre Viva Distribution Center 3-6 |  | San Diego, CA |  | 547,000 |  |  | 12/01/2021 |  | 134,479 |
Total value-add property acquisitions |  |  |  | 1,046,000 |  |  |  |  | 171,076 |
Total acquired assets in 2021 (5) |  |  |  | 1,806,000 |  |  |  |  | $ | 279,225 |
(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 1(e). (5)Excludes acquired development land as detailed below. Also during 2023, EastGroup purchased 328.3 acres of development land in seven markets for $70,664,000. During 2022, EastGroup purchased 456.3 acres of development land in 10 markets for $123,717,000. During 2021, EastGroup purchased 365.8 acres of development land in five markets for $41,065,000. Sales of Real Estate The Company sold operating properties during 2023, 2022 and 2021 as shown in the table below. The results of operations and gains and losses on sales for the properties sold during the periods presented are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains and losses on sales of operating properties are included in Gain on sales of real estate investments. The Company did not consider its sales in 2023, 2022 or 2021 to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results. A summary of Gain on sales of real estate investments for the years ended December 31, 2023, 2022 and 2021 follows:
|  |  |  | (Unaudited) |  |  |  |  |  |  |  |
REAL ESTATE PROPERTIES SOLD |  | Location |  | Size |  | Date Sold |  | Net Sales Price |  | Basis |  | Recognized Gain
|  |  |  | (Square feet) |  |  |  | (In thousands)
2023 |  |  |  |  |  |  |  |  |  |  |  |
World Houston 23 |  | Houston, TX |  | 125,000 |  |  | 03/31/2023 |  | $ | 9,327 |  |  | 4,518 |  |  | 4,809 |
Ettie Business Center |  | San Francisco, CA |  | 29,000 |  |  | 11/20/2023 |  | 11,638 |  |  | 8,845 |  |  | 2,793 |
Los Angeles Corporate Center |  | Los Angeles, CA |  | 77,000 |  |  | 12/29/2023 |  | 16,006 |  |  | 5,643 |  |  | 10,363 |
Total for 2023 |  |  |  | 231,000 |  |  |  |  | $ | 36,971 |  |  | 19,006 |  |  | 17,965 |
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 |
2021 |  |  |  |  |  |  |  |  |  |  |  |
Jetport Commerce Park |  | Tampa, FL |  | 284,000 |  |  | 11/09/2021 |  | $ | 44,260 |  |  | 5,401 |  |  | 38,859 |
(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 year ended December 31, 2023, the Company also sold 11.9 acres of land in Houston and Fort Worth for $4,750,000 and recognized gains on the sales of $446,000. The Company did not sell any land during the years ended December 31, 2022 or 2021. The gains on sales of non-operating real estate are included in Other on the Consolidated Statements of Income and Comprehensive Income. Development and Value-Add Properties As of December 31, 2023, the Company’s development and value-add program consisted of projects in lease-up, under construction and prospective development (primarily land), as detailed in the table below. Costs incurred include capitalization of interest costs during the period of construction. The interest costs capitalized on development projects for 2023 were $16,235,000 compared to $12,393,000 for 2022 and $9,028,000 for 2021. In addition, EastGroup capitalized internal development costs of $10,472,000 during the year ended December 31, 2023, compared to $9,985,000 during 2022 and $7,713,000 in 2021. Total capital invested for development and value-add properties during 2023 was $388,213,000, which primarily consisted of improvement costs of $301,596,000 on development and value-add properties, $70,664,000 for new land investments, and costs of $15,953,000 on properties subsequent to transfer to Real estate propertie s. The capitalized costs incurred on development and value-add projects 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). A summary of the Company’s Development and Value-Add Properties for the year ended December 31, 2023 follows:
| (Unaudited) |  |  |  | (Unaudited) |  |  |  |  |  |  |  |  |
| Actual or Estimated Building Size |  | Cumulative Costs Incurred as of 12/31/2023 |  | Projected Total Costs |  |  |  |  |  |  |  |  |
| (Square feet) |  | (In thousands) |  |  |  |  |  |  |  |  |
Lease-up | 1,352,000 |  |  | $ | 162,356 |  |  | $ | 180,600 |  |  |  |  |  |  |  |  |  |
Under construction | 2,725,000 |  |  | 212,568 |  |  | 395,100 |  |  |  |  |  |  |  |  |  |
Total lease-up and under construction | 4,077,000 |  |  | 374,924 |  |  | $ | 575,700 |  |  |  |  |  |  |  |  |  |
Prospective development (primarily land) | 10,792,000 |  |  | 264,723 |  |  |  |  |  |  |  |  |  |  |  |
Total Development and value-add properties as of December 31, 2023 | 14,869,000 |  |  | $ | 639,647 |  |  |  |  |  |  |  |  |  |  |  |
Total Development and value-add properties transferred to Real estate properties during the year ended December 31, 2023 | 2,341,000 |  |  | $ | 271,568 |  |  | (1) |  |  |  |  |  |  |  |  |
(1) Represents cumulative costs at the date of transfer. Ground Leases As of December 31, 2023 and 2022, the Company operated one property in Florida, four properties in Texas and one property in Arizona that are subject to ground leases. The ground leases have terms of 40 to 50 years, expiration dates of August 2031 to October 2058, and renewal options of 15 to 35 years, except for the one lease in Arizona which is automatically and perpetually renewed annually. The Company has included renewal options in the lease terms for calculating the ground lease assets and liabilities as the Company is reasonably certain it will exercise these options. With the renewal options included, expiration dates range from August 2051 to January 2070. Total ground lease expenditures for the years ended December 31, 2023, 2022 and 2021 were $1,758,000, $1,755,000 and $1,354,000, respectively. Payments are subject to increases at 3 to 10 year intervals based upon the agreed or appraised fair market value of the leased premises on the adjustment date or the Consumer Price Index percentage increase since the base rent date. These future changes in payments will be considered variable payments and will not impact the assessment of the asset or liability unless there is a significant event that triggers reassessment, such as amendment with a change in the terms of the lease. The weighted-average remaining lease term as of December 31, 2023, for the ground leases is 35 years. EastGroup applies ASC 842, Leases, for its ground leases, which are classified as operating leases. There were no new ground leases in 2023 or 2022. As of December 31, 2023 and 2022, the unamortized balances of the Company’s right of use assets for its ground leases were $17,996,000 and $19,391,000, respectively. The right of use assets for ground leases are included in Real estate properties on the Consolidated Balance Sheets. The following schedule indicates approximate future minimum ground lease payments for these properties by year as of December 31, 2023: Future Minimum Ground Lease Payments as of December 31, 2023
Years Ending December 31, |  | (In thousands)
2024 |  | $ | 1,496 |
2025 |  | 1,531 |
2026 |  | 1,567 |
2027 |  | 1,567 |
2028 |  | 1,573 |
Thereafter |  | 50,298 |
Total minimum payments |  | 58,032 |
Imputed interest (1) |  | (39,274) |
Total ground lease liabilities |  | $ | 18,758 |
(1)As the Company’s leases do not provide an implicit rate, in order to calculate the present value of the remaining ground lease payments, the Company used its incremental borrowing rate, adjusted for a number of factors, including the long-term nature of the ground leases, the Company’s estimated borrowing costs, and the estimated fair value of the underlying land, to determine the imputed interest for its ground leases.

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