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REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES | 9 Months Ended
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Sep. 30, 2024
Asset Acquisition [Abstract] |
Real Estate Property Acquisitions and Acquired Intangibles | 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 2023 and the first nine months of 2024 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 2023 and 2024 acquisitions. 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 terms of the existing leases. Amortization of above and below market lease intangibles, which is included in Income from real estate operations, increased rental income by $612,000 and $1,765,000 for the three and nine months ended September 30, 2024, respectively, and $560,000 and $1,855,000 for the same periods in 2023. Amortization expense for in-place lease intangibles, which is included in Depreciation and amortization, was $2,009,000 and $5,828,000 for the three and nine months ended September 30, 2024, respectively, and $1,895,000 and $6,031,000 for the same periods in 2023. During the nine months ended September 30, 2024, EastGroup acquired the following properties:
REAL ESTATE PROPERTIES ACQUIRED IN 2024 |  | Location |  | Size |  | Date Acquired |  | Cost (1)
|  |  |  | (Square feet) |  |  |  | (In thousands)
Operating properties acquired (2)(3) |  |  |  |  |  |  |  |
Spanish Ridge Industrial Park |  | Las Vegas, NV |  | 231,000 |  |  | 01/23/2024 |  | $ | 54,859 |
147 Exchange |  | Raleigh, NC |  | 274,000 |  |  | 05/03/2024 |  | 52,945 |
Hays Commerce Center 3 & 4 |  | Austin, TX |  | 179,000 |  |  | 08/19/2024 |  | 35,781 |
Total operating property acquisitions |  |  |  | 684,000 |  |  |  |  | $ | 143,585 |
(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)Excludes acquired development land as discussed below. There were no value-add acquisitions during the nine months ended September 30, 2024. 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 nine months ended September 30, 2024.
ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2024 |  | Cost
|  | (In thousands)
Land |  | $ | 34,778 |
Buildings and building improvements |  | 96,218 |
Tenant and other improvements |  | 6,371 |
Total real estate properties acquired |  | 137,367 |
In-place lease intangibles (1) |  | 8,659 |
Above market lease intangibles (1) |  | 121 |
Below market lease intangibles (2) |  | (2,562) |
Total assets acquired, net of liabilities assumed |  | $ | 143,585 |
(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 terms 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 terms of the associated leases in place at the time of acquisition. The leases in the properties acquired during the nine months ended September 30, 2024 had a weighted average remaining lease term at acquisition of approximately 5.7 years. Also during the nine months ended September 30, 2024, EastGroup purchased 34.3 acres of development land in Atlanta for $3,302,000. During 2023, EastGroup acquired the following properties:
REAL ESTATE PROPERTIES ACQUIRED IN 2023 |  | Location |  | Size |  | Date Acquired |  | Cost (1)
|  |  |  | (Square feet) |  |  |  | (In thousands)
Operating properties acquired (2)(3) |  |  |  |  |  |  |  |
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 |
(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)Excludes acquired development land as discussed below. There were no value-add acquisitions during the year ended December 31, 2023. 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, 2023.
ACQUIRED ASSETS AND ASSUMED LIABILITIES IN 2023 |  | Cost
|  | (In thousands)
Land |  | $ | 44,676 |
Buildings and building improvements |  | 111,082 |
Tenant and other improvements |  | 4,346 |
Total real estate properties acquired |  | 160,104 |
In-place lease intangibles (1) |  | 7,242 |
Below market lease intangibles (2) |  | (2,230) |
Total assets acquired, net of liabilities assumed |  | $ | 165,116 |
(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 terms 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 terms of the associated leases in place at the time of acquisition. The leases in the properties acquired during the year ended December 31, 2023 had a weighted average remaining lease term at acquisition of approximately 8.0 years. Also during 2023, EastGroup purchased 328.3 acres of development land in seven markets for $70,664,000. The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment. No impairment of goodwill or other intangibles existed during the three and nine month periods ended September 30, 2024 and 2023.

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