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REAL ESTATE PROPERTIES | 12 Months Ended
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Dec. 31, 2024
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, 2024 and 2023 were as follows:
| December 31,
2024 |  | 2023
(In thousands)
Real estate properties: |  |  |
Land | $ | 888,140 |  |  | 814,364 |
Buildings and building improvements | 3,815,850 |  |  | 3,336,615 |
Tenant and other improvements | 761,061 |  |  | 684,573 |
Right of use assets — Ground leases (operating) (1) | 38,393 |  |  | 17,996 |
Development and value-add properties (2) | 674,472 |  |  | 639,647 |
| 6,177,916 |  |  | 5,493,195 |
Less accumulated depreciation | (1,415,576) |  |  | (1,273,723) |
| $ | 4,762,340 |  |  | 4,219,472 |
(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, 2024, 2023 and 2022 follows:
|  |  |  | (Unaudited) |  |  |  |
REAL ESTATE PROPERTIES ACQUIRED |  | Location |  | Size |  | Date Acquired |  | Cost (1)
|  |  |  | (Square feet) |  |  |  | (In thousands)
2024 |  |  |  |  |  |  |  |
OPERATING PROPERTIES ACQUIRED |  |  |  |  |  |  |  |
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 |
Riverpoint Industrial Park |  | Atlanta, GA |  | 779,000 |  |  | 11/12/2024 |  | 87,576 |
DFW Global Logistics Centre 5-8 (2) |  | Dallas, TX |  | 492,000 |  |  | 11/21/2024 |  | 75,852 |
Akimel Gateway (2) |  | Phoenix, AZ |  | 519,000 |  |  | 12/26/2024 |  | 82,998 |
Total operating property acquisitions (3) |  |  |  | 2,474,000 |  |  |  |  | 390,011 |
Total value-add property acquisitions (4) |  |  |  | — |  |  |  |  | — |
Total acquired assets in 2024 (5) |  |  |  | 2,474,000 |  |  |  |  | $ | 390,011 |
2023 |  |  |  |  |  |  |  |
OPERATING PROPERTIES ACQUIRED |  |  |  |  |  |  |  |
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 (3) |  |  |  | 987,000 |  |  |  |  | 165,116 |
Total value-add property acquisitions (4) |  |  |  | — |  |  |  |  | — |
Total acquired assets in 2023 (5) |  |  |  | 987,000 |  |  |  |  | $ | 165,116 |
2022 |  |  |  |  |  |  |  |
OPERATING PROPERTIES ACQUIRED |  |  |  |  |  |  |  |
Cebrian Distribution Center and Reed Distribution Center (6) |  | 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 (6) |  | San Francisco, CA |  | 1,377,000 |  |  | 06/01/2022 |  | 309,404 |
Total operating property acquisitions (3) |  |  |  | 1,706,000 |  |  |  |  | 359,130 |
VALUE-ADD PROPERTIES ACQUIRED |  |  |  |  |  |  |  |
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 (4) |  |  |  | 1,044,000 |  |  |  |  | 122,921 |
Total acquired assets in 2022 (5) |  |  |  | 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)This operating property is located on land subject to a ground lease. See Ground Leases discussion below for information regarding the Company’s right of use assets for ground leases. (3)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. (4)Value-add properties are defined in Note 1(e). (5)Excludes acquired development land as detailed below. (6)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. Also during 2024, EastGroup purchased 61.1 acres of development land in two markets for $13,762,000. 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. Sales of Real Estate A summary of operating properties sold during for the years ended December 31, 2024, 2023 and 2022 follows:
|  |  |  | (Unaudited) |  |  |  |  |  |  |  |
REAL ESTATE PROPERTIES SOLD |  | Location |  | Size |  | Date Sold |  | Net Sales Price |  | Basis |  | Recognized Gain
|  |  |  | (Square feet) |  |  |  | (In thousands)
2024 |  |  |  |  |  |  |  |  |  |  |  |
Interchange Business Park and Metro Airport Commerce Center |  | Jackson, MS |  | 159,000 |  |  | 03/05/2024 |  | $ | 13,614 |  |  | 4,863 |  |  | 8,751 |
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 |
(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, 2024, the Company also sold 5.4 acres of land in two markets for $4,261,000 and recognized gains on the sales of $362,000. During the year ended December 31, 2023, the Company also sold 11.9 acres of land in two markets for $4,750,000 and recognized gains on the sales of $446,000. The Company did not sell any land during the year ended December 31, 2022. 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, 2024, 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 2024 were $19,823,000, compared to $16,235,000 for 2023 and $12,393,000 for 2022. In addition, EastGroup capitalized internal development costs of $8,181,000 during 2024, compared to $10,472,000 during 2023 and $9,985,000 in 2022. Total capital invested for development and value-add properties during 2024 was $245,033,000, which primarily consisted of improvement costs of $227,487,000 on development and value-add properties, $13,762,000 for new land investments, and costs of $3,784,000 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, 2024 follows:
| (Unaudited) |  |  |  | (Unaudited) |  |  |  |  |  |  |  |  |
| Actual or Estimated Building Size |  | Cumulative Costs Incurred as of 12/31/2024 |  | Projected Total Costs |  |  |  |  |  |  |  |  |
| (Square feet) |  | (In thousands) |  |  |  |  |  |  |  |  |
Lease-up | 1,721,000 |  |  | $ | 223,889 |  |  | $ | 239,400 |  |  |  |  |  |  |  |  |  |
Under construction | 2,422,000 |  |  | 200,179 |  |  | 369,300 |  |  |  |  |  |  |  |  |  |
Total lease-up and under construction | 4,143,000 |  |  | 424,068 |  |  | $ | 608,700 |  |  |  |  |  |  |  |  |  |
Prospective development (primarily land) | 9,919,000 |  |  | 250,404 |  |  |  |  |  |  |  |  |  |  |  |
Total Development and value-add properties as of December 31, 2024 | 14,062,000 |  |  | $ | 674,472 |  |  |  |  |  |  |  |  |  |  |  |
Total Development and value-add properties transferred to Real estate properties during the year ended December 31, 2024 | 1,519,000 |  |  | $ | 199,971 |  |  | (1) |  |  |  |  |  |  |  |  |
(1) Represents cumulative costs at the date of transfer. Ground Leases EastGroup applies ASC 842, Leases, for its ground leases, which are classified as operating leases. As of December 31, 2023, the Company had operating properties subject to ground leases in Florida, Texas and Arizona. In November and December 2024, EastGroup assumed ground leases in connection with the acquisitions of DFW Global Logistics Centre 5-8 in Dallas and Akimel Gateway in Phoenix; we recorded right of use assets and liabilities of $10,795,000 and $11,041,000, respectively. As of December 31, 2024 and 2023, the unamortized balances of the Company’s right of use assets for its ground leases were $38,393,000 and $17,996,000, respectively. The right of use assets for ground leases are included in Real estate properties on the Consolidated Balance Sheets. The ground leases have terms of 40 to 65 years and renewal options of 15 to 35 years, except for one lease in Arizona which is automatically and perpetually renewed annually. With the renewal options included, expiration dates range from August 2051 to December 2085. 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. Total ground lease expenditures for the years ended December 31, 2024, 2023 and 2022 were $1,936,000, $1,758,000 and $1,755,000, 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 terms for the Company's ground leases were 47 years and 35 years as of December 31, 2024 and 2023, respectively. The following schedule indicates approximate future minimum ground lease payments, including renewal periods, for these properties by year as of December 31, 2024:
Years Ending December 31, |  | (In thousands)
2025 |  | $ | 2,821 |
2026 |  | 2,951 |
2027 |  | 2,968 |
2028 |  | 3,040 |
2029 |  | 3,102 |
Thereafter |  | 152,366 |
Total minimum payments |  | 167,248 |
Imputed interest (1) |  | (127,861) |
Total ground lease liabilities |  | $ | 39,387 |
(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 and the Company’s estimated borrowing costs, to determine the imputed interest for its ground leases. The weighted-average discount rates for the Company's ground leases were 6.82% and 5.99% as of December 31, 2024 and 2023, respectively.

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