BackCover
Front Cover
S
E
I
T
R
E
P
O
R
P
P
U
O
R
G
T
S
A
E
T
E
E
F
E
R
A
U
Q
S
CORPORATE HEADQUARTERS
400 West Parkway Place
Suite 100
Ridgeland, MS 39157
601.354.3555
Regional Offices
2966 Commerce Park Drive
Suite 450
Orlando, FL 32819
407.251.7075
7301 North State Highway 161
Suite 215
Irving, TX 75039
972.386.8700
10250 Constellation Boulevard
Suite 100
Los Angeles, CA 90067
323.457.0648
www.eastgroup.net
COVER-EGAR17-4p-to Broadridge R1.indd 1
3/9/18 12:48 PM
201740 million
Inside Front Cover
Inside Front Cover
Inside Back Cover
Inside Back Cover
First and foremost, thank you for your interest in EastGroup Properties. We’re focused on 2018
First and foremost, thank you for your interest in EastGroup Properties. We’re focused on 2018
and the opportunities-challenges that lie ahead, but before we turn the page, I’m pleased to share
and the opportunities-challenges that lie ahead, but before we turn the page, I’m pleased to share
an overview of 2017. This past year was a solid year for the Company from several vantage points
an overview of 2017. This past year was a solid year for the Company from several vantage points
– funds from operations, occupancy, same property operating results, the development pipeline
– funds from operations, occupancy, same property operating results, the development pipeline
and acquisitions. All of which were achieved while improving an already strong balance sheet.
and acquisitions. All of which were achieved while improving an already strong balance sheet.
This mix led to higher dividends and increased shareholder value. Total return to shareholders
This mix led to higher dividends and increased shareholder value. Total return to shareholders
(dividends plus the change in our common stock price) was over 23% for 2017.
(dividends plus the change in our common stock price) was over 23% for 2017.
Transition was a key theme during the year at a Company where we’ve historically had little
Transition was a key theme during the year at a Company where we’ve historically had little
transition. After 37 years with the Company, Keith McKey retired in July as our CFO. I’m simply not
transition. After 37 years with the Company, Keith McKey retired in July as our CFO. I’m simply not
articulate enough to adequately thank Keith for what he has meant to our Company. Upon Keith’s
articulate enough to adequately thank Keith for what he has meant to our Company. Upon Keith’s
retirement, Brent Wood, our Senior Vice President for Texas, relocated to our corporate office to
retirement, Brent Wood, our Senior Vice President for Texas, relocated to our corporate office to
become CFO. Brent joined EastGroup over 20 years ago as assistant controller, transitioned to
become CFO. Brent joined EastGroup over 20 years ago as assistant controller, transitioned to
the operating side of the business and now rotated back into our financial side. Following Brent’s
the operating side of the business and now rotated back into our financial side. Following Brent’s
transition we hired Reid Dunbar to be Senior Vice President for Texas. Ryan Collins joined us in
transition we hired Reid Dunbar to be Senior Vice President for Texas. Ryan Collins joined us in
June as Senior Vice President for the Western Region and opened our first California office. Our
June as Senior Vice President for the Western Region and opened our first California office. Our
California office is important to our strategy given our goal to patiently find an opportunistic way
California office is important to our strategy given our goal to patiently find an opportunistic way
to grow our western portfolio.
to grow our western portfolio.
We were also pleased to see internal career progression as well for John Coleman, Bruce Corkern
We were also pleased to see internal career progression as well for John Coleman, Bruce Corkern
and Staci Tyler. Finally, we were excited to welcome Don Colleran, Executive Vice President, Chief
and Staci Tyler. Finally, we were excited to welcome Don Colleran, Executive Vice President, Chief
Sales Officer for FedEx Corporation, to the Board. Whew – as you can tell, it’s a lengthy list of
Sales Officer for FedEx Corporation, to the Board. Whew – as you can tell, it’s a lengthy list of
moving pieces. Given all those parts and with benefit of hindsight, we are pleased to see how
moving pieces. Given all those parts and with benefit of hindsight, we are pleased to see how
seamlessly everyone stepped into new roles allowing the Company to accomplish all it did in 2017.
seamlessly everyone stepped into new roles allowing the Company to accomplish all it did in 2017.
“Total return to shareholders was over 23% for 2017.”
“Total return to shareholders was over 23% for 2017.”
S
S
R
R
E
E
D
D
L
L
O
O
H
H
E
E
R
R
A
A
H
H
S
S
O
O
T
T
R
R
E
E
T
T
T
T
E
E
L
L
Officers
Officers
(left to right) RYAN COLLINS, Senior Vice President; REID DUNBAR, Senior Vice President; CHRIS SEGREST, Vice President; STACI TYLER, CPA, Vice President
(left to right) RYAN COLLINS, Senior Vice President; REID DUNBAR, Senior Vice President; CHRIS SEGREST, Vice President; STACI TYLER, CPA, Vice President
and Controller; BRIAN LAIRD, Vice President; BRUCE CORKERN, CPA, Senior Vice President and Chief Accounting Officer; BILL GRAY, CPA, Vice President;
and Controller; BRIAN LAIRD, Vice President; BRUCE CORKERN, CPA, Senior Vice President and Chief Accounting Officer; BILL GRAY, CPA, Vice President;
BRENT WOOD, Chief Financial Officer; JOHN COLEMAN, Executive Vice President; MARSHALL LOEB, Chief Executive Officer; MICHAEL SACCO, Vice President;
BRENT WOOD, Chief Financial Officer; JOHN COLEMAN, Executive Vice President; MARSHALL LOEB, Chief Executive Officer; MICHAEL SACCO, Vice President;
KEVIN SAGER, Vice President; JOHN TRAVIS, Vice President; FARRAH KENNEDY, CPA, Vice President; NICK JONES, Vice President; DAVID HICKS, Vice President.
KEVIN SAGER, Vice President; JOHN TRAVIS, Vice President; FARRAH KENNEDY, CPA, Vice President; NICK JONES, Vice President; DAVID HICKS, Vice President.
Not pictured, MICHELLE RAYNER, CPA, Vice President
Not pictured, MICHELLE RAYNER, CPA, Vice President
COVER-EGAR17-4p-to Broadridge R1.indd 2
COVER-EGAR17-4p-to Broadridge R1.indd 2
3/9/18 12:48 PM
3/9/18 12:48 PM
Oak Creek Distribution Center, Tampa, FLOak Creek Distribution Center, Tampa, FL
Page 1
Total Return Performance
NAREIT
EGP
S&P
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Capitalization
As of 12/31/17
73%
Shareholders’
market equity
$3.1 billion
(common @
$88.38 per share)
24%
Fixed Rate debt
$995 million,
average rate
of 3.6%
3% Variable Rate debt $116 million
TEXT-EGAR17-8p to Broadridge R1.indd 1
3/9/18 1:00 PM
Eisenhauer Point, San Antonio, TX Page 2
Y
G
E
T
A
R
T
S
San Francisco
Santa Barbara
As we’ve stated before, our strategy is simple, straightforward and it works. We develop,
acquire and operate multi-tenant business distribution facilities for customers who are
location sensitive. Our properties are designed for users primarily in the 15,000 to 50,000
square foot range and are clustered around major transportation features in supply
constrained submarkets in the traditionally high growth major Sunbelt metropolitan areas.
TEXT-EGAR17-8p to Broadridge R1.indd 2
3/9/18 1:00 PM
Shiloh 400 Business Center, Atlanta, GA Page 3
San Francisco
Fresno
Las
Vegas
Denver
Santa Barbara
Los Angeles
San Diego
Phoenix
Property Locations
Charlotte
Atlanta
Tucson
El Paso
Dallas
Jackson
San Antonio
Austin
New Orleans
Houston
Jacksonville
Orlando
Tampa
Ft. Myers
Broward/
Palm Beach
Properties
Corporate Headquarters
Regional Offices
This continues to be a great time to be an investor in industrial real estate in the Sunbelt.
Property fundamentals are good in our markets, and we see no reason
this should change in the near term. In 2017, we grew all aspects
of our business – funds from operations, same property operating
results, new development, and acquisitions.
EastGroup’s customer base is large and diverse which we believe
increases the stability of our operations. At year-end, we had
approximately 1,500 customers with an average size of 25,000 square
feet and a weighted average lease term of 5.8 years.
It is also important to note that EastGroup’s customers, whether
national or local, primarily distribute to the metropolitan area in which
their space is located rather than to a much larger region or to the
entire country. This means that the economic vibrancy and growth of
these metro areas is a major determinant of our customers’ success
and our results. This is the reason we are investing in the fast growing
major Sunbelt markets.
E-commerce and the changing retail model are new demand
drivers we see continuing and accelerating. Omnichannel retailing
whereby retailers rely on fewer stores within major markets and
rely more heavily on nearby industrial buildings for inventory and
e-commerce shipments is driving demand. Some of the various
formats we’ve leased to include online only retailers who have no
brick and mortar presence, but merely industrial space and a website;
retailers using our buildings as back of house with numerous daily
pickups; and online pharmacy fulfillment to simply name a few. A
more recent trend we are watching closely is the maturation of the
e-commerce delivery model. As e-commerce delivery times shrink
and thus, become more critical to their business model, the big
box, edge of town fulfillment centers require accompanying in-fill
site business distribution centers. Simply put, the traffic congestion
within major markets is necessitating close in, smaller distribution
space to meet accelerated delivery times.
It is within this niche that EastGroup is uniquely well positioned
among our peers. The majority of our institutional industrial
ownership peers have developed large, big box (250,000 square
feet and above), less in-fill projects. Whereas, our typical building is
80,000 –130,000 square feet in in-fill locations near transportation
hubs, making them ideally suited for the prospective new and
growing demand source. At 97% leased at year-end, we also have the
luxury of patience as the supply chain evolution continues.
TEXT-EGAR17-8p to Broadridge R1.indd 3
3/9/18 1:00 PM
Madison Distribution Center, Tampa, FL
Page 4
S
T
L
U
S
E
R
Funds from Operations (FFO) for 2017
were $145.1 million or $4.26 per share
as compared to $131.2 million or $4.02
per share in 2016, an increase of 6.0%
per share. This represented the highest
FFO per share in EastGroup’s history,
and the seventh year in a row of growth
in FFO per share as compared to the
previous year’s results.
Portfolio leasing and occupancy
were 97.0% and 96.4% at year-end,
respectively. We experienced a 16.8%
increase in rents for leases (both new
and renewal) executed in 2017 with
straight lining (average rent over the
life of the lease) and a 6.6% increase
without (sometimes referred to as cash
rent). Both of these figures represent
increases over 2016 results continuing
a seven year positive trend.
2017 Accomplishments
n Paid 152nd Consecutive Quarterly Cash Dividend with a
3.2% Mid-Year Increase
n 25th Consecutive Year of Dividends with 22 Years of Increases
and No Reductions
n Strong and Flexible Balance Sheet at December 31, 2017 with
Debt to Total Market Capitalization of 27% and Interest and
Fixed Charge Coverage Ratios of 5.2x for 2017
n Began Development of 12 Properties with 1.3 Million Square Feet
and Projected Total Investment of $109 Million
n Acquired Properties Totaling 840,000 Square Feet and 90 Acres
of Land for $82 Million
n Funds from Operations of $145 Million or $4.26 per Share,
the Highest in EastGroup’s History
i
X
T
,
o
n
o
t
n
A
n
a
S
,
k
r
a
P
s
s
e
n
i
s
u
B
e
g
d
R
o
m
a
A
i
l
Financial Highlights
($ in thousands, except per share data)
Operations (for year ended December 31)
Revenues ......................................................................................................................................... $
Net income attributable to common stockholders ....................................................... $
Funds from operations (FFO) attributable to common stockholders .................... $
Property Portfolio (at year-end)
Real estate properties, at cost ................................................................................................ $
Total assets ...................................................................................................................................... $
Total debt ......................................................................................................................................... $
Stockholders’ equity ................................................................................................................... $
Square feet of real estate properties ....................................................................................
Common Share Data (for year ended December 31, except as indicated below)
Net income attributable to common stockholders per diluted share ................... $
FFO attributable to common stockholders per diluted share .................................. $
Dividends per share .................................................................................................................... $
Shares outstanding (in thousands at year-end) ............................................................................
Share price (at year-end) ................................................................................................................. $
Reconciliation of Net Income to FFO (for year ended December 31)
Net income attributable to common stockholders ....................................................... $
Depreciation and amortization ..............................................................................................
Company’s share of depreciation from unconsolidated investment ....................
Depreciation and amortization from noncontrolling interest ..................................
Net gain on sales of real estate investments ....................................................................
FFO attributable to common stockholders ...................................................................... $
2017
2016
2015
274,150
83,183
145,102
253,047
95,509
131,184
235,008
47,866
118,169
2,577,473 2,406,981 2,219,448
1,953,221 1,825,764 1,661,904
1,108,282 1,101,333 1,027,909
554,862
637,661
37,338,000 34,951,000 34,845,000
749,472
2.44
4.26
2.52
34,758
88.38
83,183
83,874
124
(224)
(21,855)
145,102
2.93
4.02
2.44
33,332
73.84
95,509
77,935
124
(214)
(42,170)
131,184
1.49
3.67
2.34
32,421
55.61
47,866
73,290
122
(206)
(2,903)
118,169
Diluted shares for earnings per share and FFO (in thousands) ..........................................
34,047
32,628
32,196
TEXT-EGAR17-8p to Broadridge R1.indd 4
3/9/18 1:00 PM
Page 5
H
T
G
N
E
R
T
S
L
A
I
C
N
A
N
I
F
At December 31, 2017, our debt-to-market capitalization
was 26.6%, and our floating rate bank debt was 2.8% of total
market capitalization. For the year, our interest and fixed
charge coverage ratios were both 5.2 times, our seventh year
in a row of improvement over the previous year.
In May, Moody’s Investors Service affirmed EastGroup’s
issuer rating of Baa2 with a stable outlook.
We primarily use our lines of credit to fund our
development program and property acquisitions. As market
conditions permit, we issue equity and/or longer term debt
to replace the short term bank borrowings.
Approximately six years ago, we began the switch from
traditional insurance company first mortgage secured
debt to unsecured term loans with banks and the private
placement of bonds. Both of these types of debt have interest
only payments until maturity, and the rates are fixed for the
life of the debt. We plan to primarily obtain unsecured fixed
rate debt in the future as market conditions permit. One of
the appealing factors of the unsecured fixed rate debt is the
greater asset level flexibility it allows after closing.
In addition to raising capital via the debt markets, we
were active within the continuous equity sales market. For
the year, we issued 1,370,500 shares at an average price per
share of $80.71 providing gross proceeds to the Company of
$111 million.
In summary, we remain committed to maintaining
a healthy balance sheet and to the value creation our
development program produces. The steps we made during
the year improved our balance sheet further enabling us to
meet both goals.
“. . . our seventh year in a row of improvement over the previous year.”
TEXT-EGAR17-8p to Broadridge R2.indd 5
3/19/18 9:12 AM
Operations (for year ended December 31)
Revenues ......................................................................................................................................... $
Net income attributable to common stockholders ....................................................... $
Funds from operations (FFO) attributable to common stockholders .................... $
274,150
83,183
145,102
253,047
95,509
131,184
235,008
47,866
118,169
Property Portfolio (at year-end)
Real estate properties, at cost ................................................................................................ $
Total assets ...................................................................................................................................... $
Total debt ......................................................................................................................................... $
Stockholders’ equity ................................................................................................................... $
Square feet of real estate properties ....................................................................................
2,577,473 2,406,981 2,219,448
1,953,221 1,825,764 1,661,904
1,108,282 1,101,333 1,027,909
749,472
637,661
554,862
37,338,000 34,951,000 34,845,000
2017
2016
2015
Common Share Data (for year ended December 31, except as indicated below)
Net income attributable to common stockholders per diluted share ................... $
FFO attributable to common stockholders per diluted share .................................. $
Dividends per share .................................................................................................................... $
Shares outstanding (in thousands at year-end) ............................................................................
Share price (at year-end) ................................................................................................................. $
Reconciliation of Net Income to FFO (for year ended December 31)
Net income attributable to common stockholders ....................................................... $
Depreciation and amortization ..............................................................................................
Company’s share of depreciation from unconsolidated investment ....................
Depreciation and amortization from noncontrolling interest ..................................
Net gain on sales of real estate investments ....................................................................
2.44
4.26
2.52
34,758
88.38
83,183
83,874
124
(224)
2.93
4.02
2.44
33,332
73.84
95,509
77,935
124
(214)
(21,855)
(42,170)
1.49
3.67
2.34
32,421
55.61
47,866
73,290
122
(206)
(2,903)
FFO attributable to common stockholders ...................................................................... $
145,102
131,184
118,169
Diluted shares for earnings per share and FFO (in thousands) ..........................................
34,047
32,628
32,196
Steele Creek Commerce Park, Charlotte, NCHorizon Commerce Park, Orlando, FL
Page 6
“An important element of a successful development program is well located
industrial land acquired at the right price.”
T
N
E
M
P
O
L
E
V
E
D
EastGroup’s development program has a long and successful
record of creating and accumulating value for our shareholders
over the past 20 years. We have added over 17 million square
feet of quality, state-of-the-art assets. As a result, we have built
roughly 45% of our current portfolio through our development
efforts.
Our early development efforts consisted of just one or
two building projects. As EastGroup grew and the program
successfully evolved, we began to develop parks with the
potential for multiple buildings where we create and control
a uniform high quality environment. This also allows us the
flexibility to better serve our customers by being able to meet
their changing space needs over time.
EastGroup is an “in-fill” site developer. We are comfortable
initiating speculative development in submarkets where we
have experience and an existing successful presence. These
development submarkets generally are supply constrained due
to limited land for new industrial development or have cost or
zoning barriers to entry. In addition, the vast majority of our
new developments are subsequent phases of existing multi-
building industrial parks; therefore, we view the risks materially
lower versus traditional greenfield developments.
Further reducing our risk is our approach to not bank land
on our balance sheet. In other words, we actively work to
minimize the time between closing and ground breaking.
Within our business park phase developments, we typically
start construction as leasing within the park dictates. For
example, if we have more prospects than space, we have
optimism about the next building as opposed to relying on a
consultant’s market study.
Due to the strong industrial property fundamentals and our
own leasing success, we began construction on 12 projects
containing 1.3 million square feet with projected total costs of
$109 million in 2017. Those 12 projects are in 7 different cities.
During the year, we transferred 12 properties with 2.2 million
square feet into the portfolio which were 94.8% leased as of
December 31.
An important element of a successful development program
is well located industrial land acquired at the right price.
In 2017, we purchased 88 acres for new development for a
combined investment of $12.2 million. These parcels are
located in Austin, Atlanta, Charlotte and San Antonio.
In addition to developable land, in fourth quarter we
acquired a newly developed property, Gwinnett Progress
Center, in Atlanta for $29.3 million. The property includes four
recently completed distribution buildings totaling 392,000
square feet and an additional 10.5 acres for future development
of an 85,000 square foot building.
What attracted us was the ability to acquire well located,
state of the art properties yet achieve above market returns by
assuming the remaining leasing risk. At closing the property
was 17% leased.
We believe our development program will continue as a
major creator of shareholder value. We have the right land,
permitted buildings, available capital and an experienced
and proven development team. We expect to continue our
development momentum in 2018 to be slightly ahead of
prior year’s pace. As always, however, it will be set by our own
leasing activity as opposed to set targets or simply high level
market research.
TEXT-EGAR17-8p to Broadridge R1.indd 6
3/9/18 1:01 PM
Creekview 121, Dallas, TXGateway Commerce Park, Miami, FL “An important element of a successful development program is well located
industrial land acquired at the right price.”
Page 7
leased upon acquisition
Recycling of capital through asset sales and the
redeployment of the proceeds in acquisitions
and development has historically been an
integral part of our strategy. The process allows
us to continually upgrade the quality, location
and growth potential of our assets. Our 2017
sales were primarily targeted at exiting older
assets, managing our portfolio allocation to
Houston and land parcels which were too small
for us to develop or where we did not have active
development plans.
During the year, EastGroup closed 4 sales
transactions, consisting of 514,000 square feet
of operating properties and 19 acres of land,
generating proceeds of $41.8 million. Of the
operating properties sold, just under 90% of the
proceeds were from Houston asset sales.
In February, we entered the Atlanta market with
the acquisition of Shiloh 400 Business Center,
a three-building 238,000 square foot business
distribution complex for $20.3 million. Shiloh was
100% leased at acquisition. Later in April, we
closed on Broadmoor Commerce Park in Atlanta
for $6.4 million. The Broadmoor acquisition
included the 100% leased, 84,000 square foot
building and 5.3 acres of land for the future
development of a 111,000 square foot building.
Finally in May, we acquired Southpark Corporate
Center 5-7 in Austin for $10.3 million. These three
buildings total 99,000 square feet, were 100%
leased at acquisition and are located adjacent to
EastGroup’s Southpark Corporate Center 3 and 4
buildings in Austin’s southeast/airport submarket.
G
N
I
L
C
Y
C
E
R
L
A
T
I
P
A
C
TEXT-EGAR17-8p to Broadridge R1.indd 7
3/9/18 1:01 PM
50% Jones Corporate Park, Las Vegas, NVvalue add Kyrene 202 Business Park, Phoenix, AZ
Page 8
DIVIDENDS
In September, EastGroup raised its quarterly dividend to $.64 per share
which represents an annualized dividend rate of $2.56 per share, an increase
of 3.2%. The December dividend was our 152nd consecutive quarterly cash
distribution to shareholders. We have now increased or maintained our
dividend for 25 consecutive years and raised it 22 years (including the last six)
over that period.
Reflecting EastGroup’s improving operating results, our 2017 FFO dividend
payout ratio stood at only 59% in spite of the increase.
THE FUTURE
In 2017, we achieved the highest FFO per share in EastGroup’s history. We
accomplished this with high occupancy levels, rent growth, and successfully
bringing new development online. I’m especially proud as this was
accomplished during a time of transition within our senior team and while
improving our balance sheet. Our commitment is to maintain the long term
results, broad strategy and culture you’ve come to expect but continue to
evolve as our markets dictate and allow.
We have a strong and experienced senior management team with a
cycle proven track record, and we believe that we will continue this positive
momentum through 2018 and future years.
leased upon acquisition
MARSHALL LOEB, CHIEF EXECUTIVE OFFICER
10K
TEXT-EGAR17-8p to Broadridge R1.indd 8
3/9/18 1:01 PM
Parc North, Dallas, TX37% value add Oak Creek Distribution Center, Tampa, FL UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 COMMISSION FILE NUMBER 1-07094
EASTGROUP PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(State or other jurisdiction
of incorporation or organization)
400 W PARKWAY PLACE
SUITE 100
RIDGELAND, MISSISSIPPI
(Address of principal executive offices)
Registrant’s telephone number: (601) 354-3555
13-2711135
(I.R.S. Employer
Identification No.)
39157
(Zip code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
SHARES OF COMMON STOCK, $.0001 PAR VALUE,
NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES (x) NO ( )
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YES ( ) NO
(x)
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 (x) NO ( )
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). YES (x) NO ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. (x)
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 (x)
Accelerated Filer ( )
Non-accelerated Filer ( )
(Do not check if a smaller reporting company)
Smaller Reporting Company ( )
Emerging Growth Company ( )
1
1
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 (x)
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2017, the last business day of the
Registrant's most recently completed second fiscal quarter: $2,789,236,000.
The number of shares of common stock, $.0001 par value, outstanding as of February 13, 2018 was 34,738,860.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated by reference into Part III.
2
2
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6.
Selected Financial Data
Item 7.
Item 7A.
Item 8.
Item 9.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
Page
4
5
11
11
11
11
12
14
15
36
37
37
37
37
38
38
39
39
39
40
3
PART I
ITEM 1. BUSINESS.
Organization
EastGroup Properties, Inc. (the Company or EastGroup) is an equity real estate investment trust (REIT) organized in 1969. The
Company has elected to be taxed and intends to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue
Code (the Code), as amended.
Available Information
The Company maintains a website at eastgroup.net. The Company posts its annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after it electronically files or furnishes such
materials to the Securities and Exchange Commission (SEC). In addition, the Company's website includes items related to corporate
governance matters, including, among other things, the Company's corporate governance guidelines, charters of various committees
of the Board of Directors, and the Company's code of business conduct and ethics applicable to all employees, officers and
directors. The Company intends to disclose on its website any amendment to, or waiver of, any provision of this code of business
conduct and ethics applicable to the Company's directors and executive officers that would otherwise be required to be disclosed
under the rules of the SEC or the New York Stock Exchange. Copies of these reports and corporate governance documents may
be obtained, free of charge, from the Company's website. Any shareholder also may obtain copies of these documents, free of
charge, by sending a request in writing to: Investor Relations, EastGroup Properties, Inc., 400 W. Parkway Place, Suite 100,
Ridgeland, MS 39157.
Administration
EastGroup maintains its principal executive office and headquarters in Ridgeland, Mississippi. The Company also has regional
offices in Orlando, Dallas and Los Angeles and asset management offices in Charlotte, Houston and Phoenix. EastGroup has
property management offices in Jacksonville, Tampa, Ft. Lauderdale and San Antonio. Offices at these locations allow the
Company to provide property management services to all of its Florida, Texas (except Austin and El Paso), Arizona, Mississippi
and North Carolina properties, which together account for 78% of the Company’s total portfolio on a square foot basis. In addition,
the Company currently provides property administration (accounting of operations) for its entire portfolio. The regional offices
in Florida, Texas and California provide oversight of the Company's development program. As of February 13, 2018, EastGroup
had 69 full-time employees and 2 part-time employees.
Operations
EastGroup's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality
business distribution space for location sensitive customers primarily in the 15,000 to 50,000 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. Over 99% of the Company’s revenue consists of rental income from real estate properties.
During 2017, EastGroup increased its holdings in real estate properties through its acquisition and development programs. The
Company purchased 840,000 square feet of properties and 90 acres of land for a total of $82 million. Also during 2017, the
Company began construction of 12 development projects containing 1.3 million square feet and transferred 12 projects, which
contain 2.2 million square feet and had costs of $160.1 million at the date of transfer, from its development program to real estate
properties.
Typically, the Company initially funds its development and acquisition programs through its $335 million unsecured bank credit
facilities. As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that
has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace short-term bank borrowings. In
May 2017, Moody's Investors Service affirmed 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 holds its properties as long-term investments but may determine to sell certain properties that no longer meet its
investment criteria. The Company may provide financing in connection with such sales of property if market conditions require. In
addition, the Company may provide financing to a partner or co-owner in connection with an acquisition of real estate in certain
situations.
4
Subject to the requirements necessary to maintain EastGroup’s qualifications as a REIT, the Company may acquire securities of
entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over those
entities.
The Company intends to continue to qualify as a REIT under the Code. To maintain its status as a REIT, the Company is required
to distribute at least 90% of its ordinary taxable income to its stockholders. If the Company has a capital gain, it has the option
of (i) deferring recognition of the capital gain through a tax-deferred exchange, (ii) declaring and paying a capital gain dividend
on any recognized net capital gain resulting in no corporate level tax, or (iii) retaining and paying corporate income tax on its net
long-term capital gain, with shareholders reporting their proportional share of the undistributed long-term capital gain and receiving
a credit or refund of their share of the tax paid by the Company.
EastGroup has no present intention of acting as an underwriter of offerings of securities of other issuers. The strategies and policies
set forth above were determined and are subject to review by EastGroup's Board of Directors, which may change such strategies
or policies based upon its evaluation of the state of the real estate market, the performance of EastGroup's assets, capital and credit
market conditions, and other relevant factors. EastGroup provides annual reports to its stockholders, which contain financial
statements audited by the Company’s independent registered public accounting firm.
Environmental Matters
Under various federal, state and local laws, ordinances and regulations, an owner of real estate may be liable for the costs of
removal or remediation of certain hazardous or toxic substances on or in such property. Many such laws impose liability without
regard to whether the owner knows of, or was responsible for, the presence of such hazardous or toxic substances. The presence
of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to sell or rent
such property or to use such property as collateral in its borrowings. EastGroup’s properties have been subjected to Phase I
Environmental Site Assessments (ESAs) by independent environmental consultants and, as necessary, have been subjected to
Phase II ESAs. These reports have not revealed any potential significant environmental liability. Management of EastGroup is
not aware of any environmental liability that would have a material adverse effect on EastGroup’s business, assets, financial
position or results of operations.
ITEM 1A. RISK FACTORS.
In addition to the other information contained or incorporated by reference in this document, readers should carefully consider
the following risk factors. Any of these risks or the occurrence of any one or more of the uncertainties described below could
have a material adverse effect on the Company's financial condition and the performance of its business. The Company refers to
itself as "we", "us" or "our" in the following risk factors.
Real Estate Industry Risks
We face risks associated with local real estate conditions in areas where we own properties. We may be adversely affected by
general economic conditions and local real estate conditions. For example, an oversupply of industrial properties in a local area
or a decline in the attractiveness of our properties to tenants would have a negative effect on us. Other factors that may affect
general economic conditions or local real estate conditions include:
•
•
•
•
•
•
•
population and demographic trends;
employment and personal income trends;
income and other tax laws;
changes in interest rates and availability and costs of financing;
increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other
factors which may not necessarily be offset by increased rents;
changes in the price of oil; and
construction costs.
We may be unable to compete for properties and tenants. The real estate business is highly competitive. We compete for interests
in properties with other real estate investors and purchasers, some of whom have greater financial resources, revenues and
geographical diversity than we have. Furthermore, we compete for tenants with other property owners. All of our industrial
properties are subject to significant local competition. We also compete with a wide variety of institutions and other investors for
capital funds necessary to support our investment activities and asset growth.
We are subject to significant regulation that constrains our activities. Local zoning and land use laws, environmental statutes and
other governmental requirements restrict our expansion, rehabilitation and reconstruction activities. These regulations may prevent
5
us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to
modify our properties, and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future
legislation may impose additional requirements. We cannot predict what requirements may be enacted or what changes may be
implemented to existing legislation.
Risks Associated with Our Properties
We may be unable to lease space. When a lease expires, a tenant may elect not to renew it. We may not be able to re-lease the
property on similar terms, if we are able to re-lease the property at all. The terms of renewal or re-lease (including the cost of
required renovations and/or concessions to tenants) may be less favorable to us than the prior lease. We also routinely develop
properties with no pre-leasing. If we are unable to lease all or a substantial portion of our properties, or if the rental rates upon
such leasing are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and
our ability to make expected distributions to stockholders may be adversely affected.
We have been and may continue to be affected negatively by tenant bankruptcies and leasing delays. At any time, a tenant may
experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may
result in a decline in the demand for space at our industrial properties. As a result, our tenants may delay lease commencement,
fail to make rental payments when due, or declare bankruptcy. Any such event could result in the termination of that tenant’s lease
and losses to us, and distributions to investors may decrease. We receive a substantial portion of our income as rents under mid-
term and long-term leases. If tenants are unable to comply with the terms of their leases because of rising costs or falling sales,
we may deem it advisable to modify lease terms to allow tenants to pay a lower rent or a smaller share of taxes, insurance and
other operating costs. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the
tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to the tenant. We also cannot be
sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes
bankrupt, the federal bankruptcy code will apply and, in some instances, may restrict the amount and recoverability of our claims
against the tenant. A tenant’s default on its obligations to us could adversely affect our financial condition and the cash we have
available for distribution.
We face risks associated with our property development. We intend to continue to develop properties where market conditions
warrant such investment. Once made, our investments may not produce results in accordance with our expectations. Risks
associated with our current and future development and construction activities include:
•
•
•
•
•
•
•
the availability of favorable financing alternatives;
the risk that we may not be able to obtain land on which to develop or that due to the increased cost of land, our activities
may not be as profitable;
construction costs exceeding original estimates due to rising interest rates and increases in the costs of materials and
labor;
construction and lease-up delays resulting in increased debt service, fixed expenses and construction costs;
expenditure of funds and devotion of management's time to projects that we do not complete;
fluctuations of occupancy and rental rates at newly completed properties, which depend on a number of factors,
including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower
return on our investment; and
complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy
and other governmental permits.
We face risks associated with property acquisitions. We acquire individual properties and portfolios of properties and intend to
continue to do so. Our acquisition activities and their success are subject to the following risks:
• when we are able to locate a desired property, competition from other real estate investors may significantly increase
•
•
•
the purchase price;
acquired properties may fail to perform as expected;
the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;
acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or
understanding of the local market, a limited number of established business relationships in the area and a relative
unfamiliarity with local governmental and permitting procedures;
• we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of
properties, into our existing operations, and as a result, our results of operations and financial condition could be
adversely affected; and
6
• we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, to the transferor
with respect to unknown liabilities. As a result, if a claim were asserted against us based upon ownership of those
properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.
Coverage under our existing insurance policies may be inadequate to cover losses. We generally maintain insurance policies
related to our business, including casualty, general liability and other policies, covering our business operations, employees and
assets as appropriate for the markets where our properties and business operations are located. However, we would be required
to bear all losses that are not adequately covered by insurance. In addition, there may be certain losses that are not generally
insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so,
including losses due to floods, wind, earthquakes, acts of war, acts of terrorism or riots. If an uninsured loss or a loss in excess
of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties,
as well as the anticipated future revenue from the properties. In addition, if the damaged properties are subject to recourse
indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.
We face risks due to lack of geographic and real estate sector diversity. Substantially all of our properties are located in the Sunbelt
region of the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. As of
December 31, 2017, we owned operating properties totaling 5.5 million square feet in Houston and 4.2 million square feet in
Tampa, which represent 14.8% and 11.4%, respectively, of the Company's total Real estate properties on a square foot basis. A
downturn in general economic conditions and local real estate conditions in these geographic regions, as a result of oversupply
of or reduced demand for industrial properties, local business climate, business layoffs and changing demographics, would have
a particularly strong adverse effect on us. Our investments in real estate assets are concentrated in the industrial distribution
sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business
activities included other sectors of the real estate industry.
We face risks due to the illiquidity of real estate which may limit our ability to vary our portfolio. Real estate investments are
relatively illiquid. Our ability to vary our portfolio in response to changes in economic and other conditions will therefore be
limited. In addition, because of our status as a REIT, the Internal Revenue Code limits our ability to sell our properties. If we
must sell an investment, we cannot ensure that we will be able to dispose of the investment on terms favorable to the Company.
We are subject to environmental laws and regulations. Current and previous real estate owners and operators may be required
under various federal, state and local laws, ordinances and regulations to investigate and clean up hazardous substances released
at the properties they own or operate. They may also be liable to the government or to third parties for substantial property or
natural resource damage, investigation costs and cleanup costs. Such laws often impose liability without regard to whether the
owner or operator knew of, or was responsible for, the release or presence of such hazardous substances. In addition, some
environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs
in connection with the contamination. Contamination may adversely affect the owner’s ability to use, sell or lease real estate or
to borrow using the real estate as collateral. We have no way of determining at this time the magnitude of any potential liability
to which we may be subject arising out of environmental conditions or violations with respect to the properties we currently or
formerly owned. Environmental laws today can impose liability on a previous owner or operator of a property that owned or
operated the property at a time when hazardous or toxic substances were disposed of, released from, or present at the property. A
conveyance of the property, therefore, may not relieve the owner or operator from liability. Although ESAs have been conducted
at our properties to identify potential sources of contamination at the properties, such ESAs do not reveal all environmental
liabilities or compliance concerns that could arise from the properties. Moreover, material environmental liabilities or compliance
concerns may exist, of which we are currently unaware, that in the future may have a material adverse effect on our business,
assets or results of operations.
Compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may
require us to make improvements to our existing properties. Proposed legislation could also increase the costs of energy and
utilities. The cost of the proposed legislation may adversely affect our financial position, results of operations and cash flows. We
may be adversely affected by floods, hurricanes and other climate related events.
Financing Risks
We face risks associated with the use of debt to fund acquisitions and developments, including refinancing risk. We are subject
to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required
payments of principal and interest. In addition, certain of our debt will have significant outstanding principal balances on their
maturity dates, commonly known as “balloon payments.” Therefore, we will likely need to refinance at least a portion of our
outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing
will not be as favorable as the terms of the existing debt.
7
We face risks associated with our dependence on external sources of capital. In order to qualify as a REIT, we are required each
year to distribute to our stockholders at least 90% of our ordinary taxable income, and we are subject to tax on our income to the
extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs from cash
retained from operations. As a result, to fund capital needs, we rely on third-party sources of capital, which we may not be able
to obtain on favorable terms, if at all. Our access to third-party sources of capital depends upon a number of factors, including
(i) general market conditions; (ii) the market’s perception of our growth potential; (iii) our current and potential future earnings
and cash distributions; and (iv) the market price of our capital stock. Additional debt financing may substantially increase our
debt-to-total market capitalization ratio. Additional equity financing may dilute the holdings of our current stockholders.
Covenants in our credit agreements could limit our flexibility and adversely affect our financial condition. The terms of our
various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants,
such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit
our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the
applicable indebtedness even if we had satisfied our payment obligations. If we are unable to refinance our indebtedness at maturity
or meet our payment obligations, the amount of our distributable cash flow and our financial condition would be adversely affected.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms,
if at all. Our credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial position and
other factors employed by the credit rating agencies in their rating analysis of us. Our credit ratings can affect the amount and
type of capital we can access, as well as the terms of any financings we may obtain. There can be no assurance that we will be
able to maintain our current credit ratings. In the event our current credit ratings deteriorate, it may be more difficult or expensive
to obtain additional financing or refinance existing obligations and commitments. Also, a downgrade in our credit ratings would
trigger additional costs or other potentially negative consequences under our current and future credit facilities and debt instruments.
Increases in interest rates would increase our interest expense. At December 31, 2017, we had $116.3 million of variable-rate
debt outstanding not protected by interest rate hedge contracts. We may incur additional variable-rate debt in the future. If interest
rates increase, then so would the interest expense on our unhedged variable-rate debt, which would adversely affect our financial
condition and results of operations. From time to time, we manage our exposure to interest rate risk with interest rate hedge
contracts that effectively fix or cap a portion of our variable-rate debt. In addition, we refinance fixed-rate debt at times when we
believe rates and terms are appropriate. Our efforts to manage these exposures may not be successful. Our use of interest rate
hedge contracts to manage risk associated with interest rate volatility may expose us to additional risks, including a risk that a
counterparty to a hedge contract may fail to honor its obligations. Developing an effective interest rate risk strategy is complex
and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that
our hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of
interest rate hedge contracts typically involves costs, such as transaction fees or breakage costs.
A lack of any limitation on our debt could result in our becoming more highly leveraged. Our governing documents do not limit
the amount of indebtedness we may incur. Accordingly, we may incur additional debt and would do so, for example, if it were
necessary to maintain our status as a REIT. We might become more highly leveraged as a result, and our financial condition and
cash available for distribution to stockholders might be negatively affected and the risk of default on our indebtedness could
increase.
Other Risks
The market value of our common stock could decrease based on our performance and market perception and conditions. The
market value of our common stock may be affected by the market’s perception of our operating results, growth potential, and
current and future cash dividends and may also be affected by the real estate market value of our underlying assets. The market
price of our common stock may be influenced by the dividend on our common stock relative to market interest rates. Rising
interest rates may lead potential buyers of our common stock to expect a higher dividend rate, which would adversely affect the
market price of our common stock. In addition, rising interest rates would result in increased expense, thereby adversely affecting
cash flow and our ability to service our indebtedness and pay dividends.
The state of the economy or other adverse changes in general or local economic conditions may adversely affect our operating
results and financial condition. Turmoil in the global financial markets may have an adverse impact on the availability of credit
to businesses generally and could lead to a further weakening of the U.S. and global economies. Currently these conditions have
not impaired our ability to access credit markets and finance our operations. However, our ability to access the capital markets
may be restricted at a time when we would like, or need, to raise financing, which could have an impact on our flexibility to react
to changing economic and business conditions. Furthermore, deteriorating economic conditions including business layoffs,
downsizing, industry slowdowns and other similar factors that affect our customers could continue to negatively impact commercial
real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our real estate portfolio and in
8
the collateral securing any loan investments we may make. Additionally, an adverse economic situation could have an impact on
our lenders or customers, causing them to fail to meet their obligations to us. No assurances can be given that the effects of an
adverse economic situation will not have a material adverse effect on our business, financial condition and results of operations.
We may fail to qualify as a REIT. If we fail to qualify as a REIT, we will not be allowed to deduct distributions to stockholders
in computing our taxable income and will be subject to federal income tax at regular corporate rates. In addition, we may be
barred from qualification as a REIT for the four years following disqualification. The additional tax incurred at regular corporate
rates would significantly reduce the cash flow available for distribution to stockholders and for debt service. Furthermore, we
would no longer be required by the Internal Revenue Code to make any distributions to our stockholders as a condition of REIT
qualification. Any distributions to stockholders would be taxable as ordinary income to the extent of our current and accumulated
earnings and profits. Corporate distributees, however, may be eligible for the dividends received deduction on the distributions,
subject to limitations under the Internal Revenue Code. To qualify as a REIT, we must comply with certain highly technical and
complex requirements. We cannot be certain we have complied with these requirements because there are few judicial and
administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect
our ability to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court
decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the federal income
tax consequences of qualification. We cannot assure you that we will remain qualified as a REIT.
There is a risk of changes in the tax law applicable to real estate investment trusts. Since the Internal Revenue Service, the United
States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or
to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any such legislative action may
prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us and/or our investors.
We face possible adverse changes in tax laws. From time to time, changes in state and local tax laws or regulations are enacted
which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate
may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional
taxes on our assets or income. These increased tax costs could adversely affect our financial condition, results of operations and
the amount of cash available for the payment of dividends.
To maintain our status as a REIT, we limit the amount of shares any one stockholder can own. The Internal Revenue Code imposes
certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our outstanding shares
of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code) during the last half of
any taxable year. To protect our REIT status, our charter prohibits any holder from acquiring more than 9.8% (in value or in
number, whichever is more restrictive) of our outstanding equity stock (defined as all of our classes of capital stock, except our
excess stock (of which there is none outstanding)) unless our Board of Directors grants a waiver. The ownership limit may limit
the opportunity for stockholders to receive a premium for their shares of common stock that might otherwise exist if an investor
were attempting to assemble a block of shares in excess of 9.8% of the outstanding shares of equity stock or otherwise effect a
change in control.
Certain tax and anti-takeover provisions of our charter and bylaws may inhibit a change of our control. Certain provisions contained
in our charter and bylaws and the Maryland General Corporation Law may discourage a third party from making a tender offer
or acquisition proposal to us. If this were to happen, it could delay, deter or prevent a change in control or the removal of existing
management. These provisions also may delay or prevent the shareholders from receiving a premium for their common shares
over then-prevailing market prices. These provisions include:
•
•
•
•
the REIT ownership limit described above;
special meetings of our stockholders may be called only by the chairman of the board, the chief executive officer,
the president, a majority of the board or by stockholders possessing a majority of all the votes entitled to be cast at
the meeting;
our Board of Directors may authorize and issue securities without stockholder approval; and
advance-notice requirements for proposals to be presented at stockholder meetings.
In addition, Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other
things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require
them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize
the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (c) make a determination
under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (d) act or fail to act solely
because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation
or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Moreover, under Maryland
9
law the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not
subject to any higher duty or greater scrutiny than is applied to any other act of a director. Maryland law also contains a statutory
presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under
Maryland law.
The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in business
combinations, including mergers, dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other
specified transactions, with an "interested stockholder" or an affiliate of an interested stockholder for five years after the most
recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are
met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10 percent or more of the voting
power of the outstanding stock of the Maryland corporation. These provisions of Maryland law do not apply, however, to business
combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes an
interested stockholder. Pursuant to the statute, our Board of Directors has by resolution exempted business combinations between
us and any other person and such resolution may not be revoked, altered or amended without prior stockholder approval.
The Maryland Control Share Acquisition Act provides that "control shares" of a corporation acquired in a "control share acquisition"
shall have no voting rights except to the extent approved by a vote of two-thirds of the votes eligible to cast on the matter. "Control
Shares" means shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle
the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power: one-tenth or
more but less than one-third, one-third or more but less than a majority, or a majority or more of all voting power. A "control share
acquisition" means the acquisition of control shares, subject to certain exceptions.
If voting rights of control shares acquired in a control share acquisition are not approved at a stockholders' meeting, then subject
to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such
control shares are approved at a stockholders' meeting and the acquirer becomes entitled to vote a majority of the shares of stock
entitled to vote, all other stockholders may exercise appraisal rights. Our bylaws contain a provision exempting from the Maryland
Control Share Acquisition Act any and all acquisitions by any person of our stock. Our bylaws prohibit the repeal, amendment or
alteration of this provision without the approval by the Company’s stockholders; however, there can be no assurance that this
provision will not be amended or eliminated at some time in the future.
The Company faces risks in attracting and retaining key personnel. Many of our senior executives have strong industry reputations,
which aid us in identifying acquisition and development opportunities and negotiating with tenants and sellers of properties. The
loss of the services of these key personnel could affect our operations because of diminished relationships with existing and
prospective tenants, property sellers and industry personnel. In addition, attracting new or replacement personnel may be difficult
in a competitive market.
We have severance and change in control agreements with certain of our officers that may deter changes in control of the
Company. If, within a certain time period (as set in the officer’s agreement) following a change in control, we terminate the
officer's employment other than for cause, or if the officer elects to terminate his or her employment with us for reasons specified
in the agreement, we will make a severance payment equal to the officer's average annual compensation times an amount specified
in the officer's agreement, together with the officer's base salary and vacation pay that have accrued but are unpaid through the
date of termination. These agreements may deter a change in control because of the increased cost for a third party to acquire
control of us.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that
technology could harm our business. We rely on information technology networks and systems, including the internet, to process,
transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions
and records, and maintaining personal identifying information and customer and lease data. We purchase some of our information
technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring
to provide security for the processing, transmission and storage of confidential customer data, including individually identifiable
information relating to financial accounts. Although we have taken steps to protect the security of our information systems and
the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems' improper
functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-
attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches,
can create system disruptions, shutdowns or unauthorized disclosure of confidential information. In some cases, it may be difficult
to anticipate or immediately detect such incidents and the damage they cause. Any failure to maintain proper function, security
and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or
regulatory penalties and could have a materially adverse effect on our business, financial condition and results of operations.
10
We may be impacted by changes in U.S. social, political, regulatory and economic conditions or laws and policies. Any changes
to U.S. tax laws, foreign trade, manufacturing, and development and investment in the territories and countries where our customers
operate could adversely affect our operating results and our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
EastGroup owned 363 industrial properties and one office building at December 31, 2017. These properties are located primarily
in the Sunbelt states of Florida, Texas, Arizona, California and North Carolina, and the majority are clustered around major
transportation features in supply constrained submarkets. As of February 13, 2018, EastGroup’s portfolio was 96.7% leased and
96.2% occupied. The Company has developed approximately 45% of its total portfolio (on a square foot basis), including real
estate properties and development properties in lease-up and under construction. The Company’s focus is the ownership of business
distribution space (87% of the total portfolio) with the remainder in bulk distribution space (9%) and business service space
(4%). Business distribution space properties are typically multi-tenant buildings with a building depth of 200 feet or less, clear
height of 24-30 feet, office finish of 10-25% and truck courts with a depth of 100-120 feet. See Consolidated Financial Statement
Schedule III – Real Estate Properties and Accumulated Depreciation for a detailed listing of the Company’s properties.
At December 31, 2017, EastGroup did not own any single property with a book value that was 10% or more of total book value
or with gross revenues that were 10% or more of total gross revenues.
The Company's lease expirations, excluding month-to-month leases of 373,000 square feet, for the next ten years are detailed
below:
Years Ending December 31, Number of Leases Expiring
Total Area of Leases
Expiring
(in Square Feet)
Annualized Current
Base Rent of Leases
Expiring (1)
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027 and beyond
275
289
313
207
149
85
58
17
16
32
4,111,000
5,699,000
6,263,000
6,324,000
4,671,000
2,696,000
2,736,000
1,156,000
724,000
1,481,000
$
$
$
$
$
$
$
$
$
$
24,273,000
34,637,000
36,519,000
36,079,000
27,920,000
13,275,000
15,600,000
6,184,000
4,784,000
8,158,000
% of Total Base Rent of
Leases Expiring
11.6%
16.5%
17.4%
17.2%
13.3%
6.3%
7.4%
2.9%
2.3%
3.9%
(1) Represents the monthly cash rental rates, excluding tenant expense reimbursements, as of December 31, 2017, multiplied by 12 months.
ITEM 3. 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.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
11
PART II. OTHER INFORMATION
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
The Company’s shares of common stock are listed for trading on the New York Stock Exchange under the symbol “EGP.” The
following table shows the high and low share prices for each quarter reported by the New York Stock Exchange during the past
two years and the per share distributions paid for each quarter.
Shares of Common Stock Market Prices and Dividends
Quarter
First
Second
Third
Fourth
Calendar Year 2017
Calendar Year 2016
High
Low
$
76.13
87.40
91.51
95.03
67.69
73.13
80.10
86.41
Distributions
0.62
$
$
0.62
0.64
0.64
2.52
$
High
Low
60.46
69.35
76.00
74.71
49.31
58.28
68.40
63.99
Distributions
0.60
$
0.60
0.62
0.62
2.44
$
As of February 13, 2018, there were 467 holders of record of the Company’s 34,738,860 outstanding shares of common stock. The
Company distributed all of its 2017 and 2016 taxable income to its stockholders. Accordingly, no significant provisions for income
taxes were necessary. The following table summarizes the federal income tax treatment for all distributions by the Company for
the years 2017 and 2016.
Federal Income Tax Treatment of Share Distributions
Common Share Distributions:
Ordinary dividends
Nondividend distributions
Unrecaptured Section 1250 capital gain
Other capital gain
Total Common Distributions
Years Ended December 31,
2017
2016
$
$
2.49146
0.02686
—
0.00168
2.52000
2.10494
0.05202
0.12872
0.15432
2.44000
Securities Authorized For Issuance Under Equity Compensation Plans
See Item 12 of this Annual Report on Form 10-K, “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters,” for certain information regarding the Company’s equity compensation plans.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
No shares of common stock were purchased by the Company or withheld by the Company to satisfy any tax withholding obligations
during the three-month period ended December 31, 2017.
12
Performance Graph
The following graph compares, over the five years ended December 31, 2017, the cumulative total shareholder return on
EastGroup’s common stock with the cumulative total return of the Standard & Poor’s 500 Total Return Index (S&P 500 Total
Return) and the FTSE Equity REIT index prepared by the National Association of Real Estate Investment Trusts (FTSE NAREIT
Equity REITs).
The performance graph and related information shall not be deemed “soliciting material” or be deemed to be “filed” with the SEC,
nor shall such information be incorporated by reference into any future filing, except to the extent that the Company specifically
incorporates it by reference into such filing.
EastGroup
FTSE NAREIT Equity REITs
S&P 500 Total Return
Fiscal years ended December 31,
2012
$ 100.00
100.00
100.00
2013
111.69
102.47
132.39
2014
126.46
133.35
150.51
2015
115.72
137.62
152.59
2016
159.16
149.35
170.84
2017
196.32
157.16
208.13
The information above assumes that the value of the investment in shares of EastGroup’s common stock and each index was $100
on December 31, 2012, and that all dividends were reinvested.
13
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected consolidated financial data for the Company derived from the audited consolidated financial
statements and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this
report.
OPERATING DATA
REVENUES
2017
Years Ended December 31,
2016
2014
2015
(In thousands, except per share data)
2013
Income from real estate operations
Other revenue
$
274,031
119
274,150
252,961
86
253,047
74,347
77,935
13,232
161
165,675
87,372
(35,213)
42,170
1,765
96,094
—
—
—
—
96,094
(585)
95,509
5,451
100,960
2.93
—
2.93
32,563
2.93
—
2.93
32,628
95,509
—
95,509
19.13
2.44
2.44
234,918
90
235,008
67,402
73,290
15,091
164
155,947
79,061
(34,666)
2,903
1,101
48,399
—
—
—
—
48,399
(533)
47,866
(1,099)
46,767
1.49
—
1.49
32,091
1.49
—
1.49
32,196
47,866
—
47,866
17.11
2.34
2.34
219,706
123
219,829
62,797
70,314
12,726
210
146,047
73,782
(35,486)
9,188
989
48,473
—
—
—
—
48,473
(532)
47,941
(3,986)
43,955
1.53
—
1.53
31,341
1.52
—
1.52
31,452
47,941
—
47,941
17.72
2.22
2.22
201,849
322
202,171
57,885
65,789
11,725
191
135,590
66,581
(35,192)
—
949
32,338
89
—
798
887
33,225
(610)
32,615
2,021
34,636
1.05
0.03
1.08
30,162
1.05
0.03
1.08
30,269
31,728
887
32,615
16.61
2.14
2.14
Expenses
Expenses from real estate operations
Depreciation and amortization
General and administrative
Acquisition costs
Operating income
Other income (expense)
Interest expense
Gain, net of loss, on sales of real estate investments
Other
Income from continuing operations
Discontinued operations
Income from real estate operations
Gain on sales of nondepreciable real estate investments
Gain on sales of real estate investments
Income from discontinued operations
Net income
Net income attributable to noncontrolling interest in joint ventures
Net income attributable to EastGroup Properties, Inc. common
stockholders
Other comprehensive income (loss) - Cash flow hedges
TOTAL COMPREHENSIVE INCOME
BASIC PER COMMON SHARE DATA FOR NET INCOME
ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON
STOCKHOLDERS
Income from continuing operations
Income from discontinued operations
Net income attributable to common stockholders
Weighted average shares outstanding
DILUTED PER COMMON SHARE DATA FOR NET
INCOMEATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
Income from continuing operations
Income from discontinued operations
Net income attributable to common stockholders
Weighted average shares outstanding
AMOUNTS ATTRIBUTABLE TO EASTGROUP
PROPERTIES, INC. COMMON STOCKHOLDERS
Income from continuing operations
Income from discontinued operations
Net income attributable to common stockholders
OTHER PER SHARE DATA
Book value, at end of year
Common distributions declared
Common distributions paid
BALANCE SHEET DATA (AT END OF YEAR)
Real estate investments, at cost (1)
Real estate investments, net of accumulated depreciation (1)
Total assets
Unsecured bank credit facilities, unsecured debt and secured debt
Total liabilities
Noncontrolling interest in joint ventures
Total stockholders’ equity
80,108
83,874
14,972
—
178,954
95,196
(34,775)
21,855
1,313
83,589
—
—
—
—
83,589
(406)
83,183
3,353
86,536
2.45
—
2.45
33,996
2.44
—
2.44
34,047
83,183
—
83,183
21.56
2.52
2.52
$
$
$
$
$
$
$
$
$ 2,590,083
1,840,482
1,953,221
1,108,282
1,202,091
1,658
749,472
2,419,414
1,725,164
1,825,764
1,101,333
1,183,898
4,205
637,661
2,232,327
1,574,873
1,661,904
1,027,909
1,102,703
4,339
554,862
2,087,821
1,487,295
1,572,112
929,465
996,497
4,486
571,129
1,938,960
1,388,847
1,468,963
889,296
950,258
4,707
513,998
(1)
Includes mortgage loans receivable and unconsolidated investment. See Notes 3 and 4 in the Notes to Consolidated Financial Statements.
14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this report may be deemed “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as “will,” “anticipates,” “expects,” “believes,” “intends,” “plans,” “seeks,”
“estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements, which
generally are not historical in nature. All statements that address operating performance, events or developments that the Company
expects or anticipates will occur in the future, including statements relating to rent and occupancy growth, development activity,
the acquisition or sale of properties, general conditions in the geographic areas where the Company operates and the availability
of capital, are forward-looking statements. Forward-looking statements are inherently subject to known and unknown risks and
uncertainties, many of which the Company cannot predict, including, without limitation: changes in general economic conditions;
the extent of tenant defaults or of any early lease terminations; the Company's ability to lease or re-lease space at current or
anticipated rents; the availability of financing; the failure to maintain credit ratings with rating agencies; changes in the supply of
and demand for industrial/warehouse properties; increases in interest rate levels; increases in operating costs; natural disasters,
terrorism, riots and acts of war, and the Company's ability to obtain adequate insurance; changes in governmental regulation, tax
rates and similar matters; and other risks associated with the development and acquisition of properties, including risks that
development projects may not be completed on schedule, development or operating costs may be greater than anticipated or
acquisitions may not close as scheduled, and those additional factors discussed under “Item 1A. Risk Factors” in Part I of this
report. Although the Company believes the expectations reflected in the forward-looking statements are based upon reasonable
assumptions at the time made, the Company can give no assurance that such expectations will be achieved. The Company assumes
no obligation whatsoever to publicly update or revise any forward-looking statements. See also the information contained in the
Company’s reports filed or to be filed from time to time with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
OVERVIEW
EastGroup’s goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality
business distribution space for location sensitive customers primarily in the 15,000 to 50,000 square foot range. The Company
develops, acquires and operates distribution facilities, the majority of which are clustered around major transportation features in
supply constrained submarkets in major Sunbelt regions. The Company’s core markets are in the states of Florida, Texas, Arizona,
California and North Carolina.
The Company 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. During
2017, EastGroup obtained unsecured debt totaling $60 million and issued 1,370,457 shares of common stock through its continuous
common equity program, providing net proceeds to the Company of $109 million. EastGroup's financing and equity issuances
are further described in Liquidity and Capital Resources.
The Company’s primary revenue is rental income; as such, EastGroup’s greatest challenge is leasing space. During 2017, leases
expired on 6,475,000 square feet (17.3% of EastGroup’s total square footage of 37,338,000), and the Company was successful in
renewing or re-leasing 85% of the expiring square feet. In addition, EastGroup leased 2,120,000 square feet of other vacant space
during the year. During 2017, average rental rates on new and renewal leases increased by 16.8%. Property net operating income
(PNOI) from same properties, defined as operating properties owned during the entire current period and prior year reporting
period, increased 2.8% for 2017 compared to 2016.
EastGroup’s total leased percentage was 97.0% at December 31, 2017 compared to 97.3% at December 31, 2016. Leases scheduled
to expire in 2018 were 11.0% of the portfolio on a square foot basis at December 31, 2017. As of February 13, 2018, leases
scheduled to expire during the remainder of 2018 were 9.6% of the portfolio on a square foot basis.
The Company generates new sources of leasing revenue through its development and acquisition programs. The Company
mitigates risks associated with development through a Board-approved maximum level of land held for development and by
adjusting development start dates according to leasing activity.
During 2017, EastGroup acquired 840,000 square feet of properties and 90 acres of land for a total of $82 million. The Company
began construction of 12 development projects containing 1,339,000 square feet in Austin, Dallas, San Antonio, Phoenix, Tampa,
Orlando, and Charlotte. Also in 2017, the Company transferred 12 properties (2,197,000 square feet) in Dallas, San Antonio, Las
Vegas, Orlando, Tampa, Charlotte and Phoenix from its development program to real estate properties with costs of $160.1 million
15
at the date of transfer. As of December 31, 2017, EastGroup's development program consisted of 18 buildings (2,166,000 square
feet) located in 11 cities. The projected total cost for the development projects, which were collectively 50% leased as of
February 13, 2018, is $185 million, of which $54 million remained to be invested as of December 31, 2017.
During 2017, EastGroup sold 514,000 square feet of operating properties and 19 acres of land, generating gross sales proceeds of
$41.8 million. The Company recognized $21,855,000 in Gain, net of loss, on sales of real estate investments and $293,000 in
Gain, net of loss, on sales of non-operating real estate (included in Other on the Consolidated Statements of Income and
Comprehensive Income) during 2017.
Typically, the Company initially funds its development and acquisition programs through its $335 million unsecured bank credit
facilities (as discussed in Liquidity and Capital Resources). As market conditions permit, EastGroup issues equity and/or employs
fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate
swaps, to replace short-term bank borrowings. In May 2017, Moody's Investors Service affirmed 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. These properties are primarily located in major Sunbelt regions of
the United States, have similar economic characteristics and also meet the other criteria permitting the properties to be aggregated
into one reportable segment. The Company’s chief decision makers use two primary measures of operating results in making
decisions: (1) property net operating income (PNOI), 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, and (2) funds from operations attributable to common
stockholders (FFO), defined as net income (loss) attributable to common stockholders computed in accordance with U.S. generally
accepted accounting principles (GAAP), excluding gains or losses from sales of depreciable real estate property and impairment
losses, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint
ventures. The Company calculates FFO based on the National Association of Real Estate Investment Trusts’ (NAREIT) definition.
PNOI is a supplemental industry reporting measurement used to evaluate the performance of the Company’s real estate investments.
The Company believes the exclusion of depreciation and amortization in the industry’s calculation of PNOI provides a supplemental
indicator of the properties’ performance since real estate values have historically risen or fallen with market conditions. PNOI as
calculated by the Company may not be comparable to similarly titled but differently calculated measures for other real estate
investment trusts (REITs). The major factors influencing PNOI are occupancy levels, acquisitions and sales, development
properties that achieve stabilized operations, rental rate increases or decreases, and the recoverability of operating expenses. The
Company’s success depends largely upon its ability to lease space and to recover from tenants the operating costs associated with
those leases.
PNOI is comprised of Income from real estate operations, less Expenses from real estate operations plus the Company's share of
income and property operating expenses from its less-than-wholly-owned real estate investments. PNOI was calculated as follows
for the three fiscal years ended December 31, 2017, 2016 and 2015.
Income from real estate operations
Expenses from real estate operations
Noncontrolling interest in PNOI of consolidated 80% joint ventures
PNOI from 50% owned unconsolidated investment
PROPERTY NET OPERATING INCOME (PNOI)
274,031
(80,108)
(633)
897
194,187
$
$
2017
Years Ended December 31,
2016
(In thousands)
252,961
(74,347)
(823)
906
178,697
2015
234,918
(67,402)
(851)
842
167,507
Income from real estate operations is comprised of rental income, 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, other operating costs and bad debt expense. Generally, the Company’s
most significant operating expenses are property taxes and insurance. Tenant leases may be net leases in which the total operating
expenses are recoverable, modified gross leases in which some of the operating expenses are recoverable, or gross leases in which
no expenses are recoverable (gross leases represent only a small portion of the Company’s total leases). Increases in property
16
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 to PNOI for the three fiscal years ended December 31, 2017, 2016 and
2015.
Years Ended December 31,
2017
$
83,589
NET INCOME
(21,855)
(Gain) loss on sales of real estate investments
(293)
(Gain), net of loss, on sales of non-operating real estate
(247)
Interest income
(119)
Other income
—
Interest rate swap ineffectiveness
83,874
Depreciation and amortization
124
Company's share of depreciation from unconsolidated investment
34,775
Interest expense
General and administrative expense 14,972
—
Acquisition costs
(633)
Noncontrolling interest in PNOI of consolidated 80% joint ventures
194,187
PROPERTY NET OPERATING INCOME (PNOI)
$
2016
(In thousands)
96,094
(42,170)
(733)
(255)
(86)
5
77,935
124
35,213
13,232
161
(823)
178,697
2015
48,399
(2,903)
(123)
(258)
(90)
—
73,290
122
34,666
15,091
164
(851)
167,507
The Company believes FFO is a meaningful supplemental measure of operating performance for equity REITs. The Company
believes excluding depreciation and amortization in the calculation of FFO is appropriate since real estate values have historically
increased or decreased based on market conditions. 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. In addition, FFO, as
reported by the Company, may not be comparable to FFO reported by other REITs that do not define the term in accordance with
the current NAREIT definition. The Company’s key drivers affecting FFO are changes in PNOI (as discussed above), interest
rates, the amount of leverage the Company employs and general and administrative expenses. The following table presents
reconciliations of Net Income Attributable to EastGroup Properties, Inc. Common Stockholders to FFO Attributable to Common
Stockholders for the three fiscal years ended December 31, 2017, 2016 and 2015.
2017
Years Ended December 31,
2016
(In thousands, except per share data)
2015
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES,
83,183
INC. COMMON STOCKHOLDERS
83,874
Depreciation and amortization
124
Company's share of depreciation from unconsolidated investment
(224)
Depreciation and amortization from noncontrolling interest
(21,855)
(Gain) loss on sales of real estate investments
FUNDS FROM OPERATIONS (FFO) ATTRIBUTABLE TO
COMMON STOCKHOLDERS
Net income attributable to common stockholders per diluted share
Funds from operations attributable to common stockholders per diluted share
95,509
77,935
124
(214)
(42,170)
145,102
2.44
4.26
131,184
2.93
4.02
$
$
$
Diluted shares for earnings per share and funds from operations
34,047
32,628
17
47,866
73,290
122
(206)
(2,903)
118,169
1.49
3.67
32,196
The Company analyzes the following performance trends in evaluating the progress of the Company:
• The FFO change per share represents the increase or decrease in FFO per share from the current year compared to the
prior year. For 2017, FFO was $4.26 per share compared with $4.02 per share for 2016, an increase of 6.0% per share.
•
For the year ended December 31, 2017, PNOI increased by $15,490,000, or 8.7%, compared to 2016. PNOI increased
$10,327,000 from newly developed and redeveloped properties, $4,765,000 from same property operations and
$3,355,000 from 2016 and 2017 acquisitions; PNOI decreased $2,767,000 from operating properties sold in 2016 and
2017.
• The same property net operating income change represents the PNOI increase or decrease for the same operating properties
owned during the entire current period and prior year reporting period. PNOI from same properties increased 2.8% for
the year ended December 31, 2017, compared to 2016.
•
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 period. Same property average occupancy for the year ended
December 31, 2017, was 96.8% compared to 96.5% for 2016.
• 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 December 31, 2017 was 96.4%. Quarter-
end occupancy ranged from 94.9% to 96.8% over the previous four quarters ended December 31, 2016 to September 30,
2017.
• Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases
on the same space. For the year 2017, rental rate increases on new and renewal leases (20.5% of total square footage)
averaged 16.8%.
• Lease termination fee income is included in Income from real estate operations. For the year 2017, lease termination
fee income was $468,000 compared to $812,000 for 2016.
• Bad debt expense is included in Expenses from real estate operations. The Company recorded bad debt expense of
$499,000 in 2017 and $992,000 in 2016.
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.
Real Estate Properties
The Company applied the principles of Accounting Standards Codification (ASC) 805, Business Combinations, when accounting
for purchases of real estate until its adoption of ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of
a Business, which was effective October 1, 2016. ASU 2017-01 provides a new framework for determining whether transactions
should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, companies are required
to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired (or disposed
of) is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business. EastGroup
has determined that some of its real estate property acquisitions may be considered to be acquisitions of groups of similar identifiable
assets; therefore, the acquisitions are not considered to be acquisitions of a business.
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. Goodwill for business combinations is recorded when the purchase price exceeds the fair value of the assets and liabilities
acquired. 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. 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.
18
The purchase price is also allocated among the following categories of intangible assets: the above or below market component
of in-place leases, the value of in-place leases, and the value of customer relationships. The value allocable to the above or below
market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the
risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease
over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining
term of the lease. The amounts allocated to above and below market leases are included in Other assets and Other liabilities,
respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective
leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based
upon management’s assessment of their respective values. These intangible assets are included in Other assets on the Consolidated
Balance Sheets and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship,
as applicable.
For properties under development and 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.
The Company reviews its real estate investments for impairment of value whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If any real estate investment is considered permanently impaired, a
loss is recorded to reduce the carrying value of the property to its estimated fair value. Real estate assets classified as held for
sale are reported at the lower of the carrying amount or fair value less estimated costs of sale. The evaluation of real estate
investments involves many subjective assumptions dependent upon future economic events that affect the ultimate value of the
property. Currently, the Company’s management has not identified any impairment charges which should be recorded nor has it
recorded any impairment charges in recent years. In the event of impairment, the property’s basis would be reduced, and the
impairment would be recognized as a current period charge on the Consolidated Statements of Income and Comprehensive Income.
Valuation of Receivables
The Company is subject to tenant defaults and bankruptcies that could affect the collection of outstanding receivables. In order
to mitigate these risks, the Company performs credit reviews and analyses on prospective tenants before significant leases are
executed and on existing tenants before properties are acquired. On a quarterly basis, the Company evaluates outstanding
receivables and estimates the allowance for doubtful accounts. Management specifically analyzes aged receivables, customer
credit-worthiness, historical bad debts and current economic trends when evaluating the adequacy of the allowance for doubtful
accounts. The Company believes its allowance for doubtful accounts is adequate for its outstanding receivables for the periods
presented. In the event the allowance for doubtful accounts is insufficient for an account that is subsequently written off, additional
bad debt expense would be recognized as a current period charge on the Consolidated Statements of Income and Comprehensive
Income.
Tax Status
EastGroup, a Maryland corporation, has qualified as a real estate investment trust under Sections 856-860 of the Internal Revenue
Code and intends to continue to qualify as such. To maintain its status as a REIT, the Company is required to distribute at least
90% of its ordinary taxable income to its stockholders. If the Company has a capital gain, it has the option of (i) deferring
recognition of the capital gain through a tax-deferred exchange, (ii) declaring and paying a capital gain dividend on any recognized
net capital gain resulting in no corporate level tax, or (iii) retaining and paying corporate income tax on its net long-term capital
gain, with shareholders reporting their proportional share of the undistributed long-term capital gain and receiving a credit or
refund of their share of the tax paid by the Company. The Company distributed all of its 2017, 2016 and 2015 taxable income to
its stockholders. Accordingly, no significant provisions for income taxes were necessary.
FINANCIAL CONDITION
EastGroup’s Total Assets were $1,953,221,000 at December 31, 2017, an increase of $127,457,000 from December 31, 2016. Total
Liabilities increased $18,193,000 to $1,202,091,000, and Total Equity increased $109,264,000 to $751,130,000 during the same
period. The following paragraphs explain these changes in detail.
Assets
Real Estate Properties
Real estate properties increased $222,386,000 during the year ended December 31, 2017, primarily due to the transfer of 12
properties from Development, as detailed under Development below; the purchase of the operating properties detailed below; and
19
capital improvements at the Company's properties. These increases were partially offset by the operating property sales discussed
below.
During 2017, EastGroup acquired the following operating properties:
REAL ESTATE OPERATING PROPERTIES
ACQUIRED IN 2017
Shiloh 400
Broadmoor Commerce Park
Southpark Corporate Center 5-7
Hurricane Shoals 1 & 2
Total Acquisitions
Location
Size
(Square feet)
Date
Acquired
Atlanta, GA
Atlanta, GA
Austin, TX
Atlanta, GA
238,000
02/07/2017
84,000
99,000
260,000
681,000
04/26/2017
05/12/2017
12/12/2017
Cost (1)
(In thousands)
18,712
$
5,363
9,590
17,874
51,539
$
(1) Total cost of the operating properties acquired was $54,879,000, of which $51,539,000 was allocated to Real estate properties as
indicated above. The Company allocated $9,984,000 of the total purchase price to land using third party land valuations for the
Atlanta and Austin markets. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement
(see Note 18 in the Notes to Consolidated Financial Statements for additional information on ASC 820). Intangibles associated
with the purchases of real estate were allocated as follows: $3,610,000 to in-place lease intangibles and $115,000 to above market
leases (both included in Other assets on the Consolidated Balance Sheets), and $385,000 to below market leases (included in Other
liabilities on the Consolidated Balance Sheets).
During the year ended December 31, 2017, the Company made capital improvements of $27,471,000 on existing and acquired
properties (included in the Capital Expenditures table under Results of Operations). Also, the Company incurred costs of
$12,811,000 on development projects subsequent to transfer to Real estate properties; the Company records these expenditures
as development costs on the Consolidated Statements of Cash Flows.
EastGroup sold the following operating properties during 2017: Stemmons Circle in Dallas and Techway Southwest I-IV in
Houston. The properties (514,000 square feet combined) were sold for $38.0 million and the Company recognized gains on the
sales of $21.9 million.
Development
EastGroup’s investment in development at December 31, 2017 consisted of properties in lease-up and under construction of
$130,505,000 and prospective development (primarily land) of $111,509,000. The Company’s total investment in development
at December 31, 2017 was $242,014,000 compared to $293,908,000 at December 31, 2016. Total capital invested for development
during 2017 was $124,938,000, which primarily consisted of costs of $93,395,000 and $14,819,000 as detailed in the development
activity table below and costs of $12,811,000 on development projects subsequent to transfer to Real estate properties. The
capitalized costs incurred on development 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).
EastGroup capitalized internal development costs of $4,754,000 during the year ended December 31, 2017, compared to $3,789,000
during 2016.
During 2017, the Company acquired Progress Center 1 & 2, a development-stage operating property containing 132,000 square
feet, in Atlanta for $10,364,000, of which $10,312,000 was allocated to Development. The Company allocated $1,297,000 of the
total purchase price to land using third party land valuations for the Atlanta market. Intangibles associated with the purchase of
real estate were allocated as follows: $52,000 to in-place lease intangibles (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. Costs
associated with the development-stage operating property acquisitions, except for the amounts allocated to in-place lease
intangibles, are included in the development activity table below.
During 2017, EastGroup purchased 88 acres of development land in San Antonio, Austin, Atlanta and Charlotte for
$12,226,000. Costs associated with these acquisitions are included in the development activity table. These increases were offset
by the sale of 19 acres of land for $3,778,000 and the transfer of 12 development projects to Real estate properties during 2017
with a total investment of $160,108,000 as of the date of transfer.
20
DEVELOPMENT ACTIVITY
LEASE-UP
Alamo Ridge IV, San Antonio, TX
Weston, Ft. Lauderdale, FL (3)
Oak Creek VII, Tampa, FL
Progress Center 1 & 2, Atlanta, GA (4)
Eisenhauer Point 3, San Antonio, TX
SunCoast 4, Ft. Myers, FL
Steele Creek VII, Charlotte, NC
Horizon XII, Orlando, FL
Total Lease-Up
UNDER CONSTRUCTION
Country Club V, Tucson, AZ
Kyrene 202 III, IV & V, Phoenix, AZ
CreekView 121 3 & 4, Dallas, TX
Eisenhauer Point 5, San Antonio, TX
Eisenhauer Point 6, San Antonio, TX
Horizon X, Orlando, FL
Falcon Field, Phoenix, AZ
Airport Commerce Center 3, Charlotte, NC
Settlers Crossing 1, Austin, TX
Settlers Crossing 2, Austin, TX
Total Under Construction
PROSPECTIVE DEVELOPMENT
(PRIMARILY LAND)
Phoenix, AZ
Tucson, AZ (5)
Ft. Myers, FL
Miami, FL
Orlando, FL
Tampa, FL
Atlanta, GA
Jackson, MS
Charlotte, NC
Austin, TX
Dallas, TX
El Paso, TX (6)
Houston, TX (7)
San Antonio, TX
Total Prospective Development
COMPLETED DEVELOPMENT AND
TRANSFERRED TO REAL ESTATE
PROPERTIES DURING 2017
Eisenhauer Point 1 & 2, San Antonio, TX
South 35th Avenue, Phoenix, AZ (8)
Alamo Ridge III, San Antonio, TX
Parc North 1-4, Dallas, TX (9)
Madison IV & V, Tampa, FL
Jones Corporate Park, Las Vegas, NV (10)
Steele Creek VI, Charlotte, NC
Ten Sky Harbor, Phoenix, AZ
Horizon V, Orlando, FL
Horizon VII, Orlando, FL
Eisenhauer Point 4, San Antonio, TX
CreekView 121 1 & 2, Dallas, TX
$
$
$
Building Size
(Square feet)
97,000
134,000
116,000
132,000
71,000
93,000
120,000
140,000
903,000
300,000
166,000
158,000
98,000
85,000
104,000
96,000
96,000
77,000
83,000
1,263,000
Estimated
Building Size
(Square feet)
—
—
570,000
850,000
418,000
32,000
196,000
28,000
655,000
180,000
491,000
—
1,476,000
965,000
5,861,000
8,027,000
Building Size
(Square feet)
201,000
125,000
135,000
446,000
145,000
416,000
137,000
64,000
141,000
109,000
85,000
193,000
Total Transferred to Real Estate Properties
2,197,000
$
Footnotes for the Development Activity table are on the following page.
Costs Incurred
Costs
Transferred
in 2017 (1)
For the
Year Ended
12/31/17
Cumulative
as of
12/31/17
Estimated
Total Costs (2)
Anticipated
Building
Conversion
Date
(In thousands)
2,152
1,239
3,978
10,333
3,411
2,865
5,404
7,405
36,787
10,656
9,263
6,610
4,551
3,172
1,449
1,214
80
62
67
37,124
120
(417)
469
3,632
917
32
1,207
—
1,472
6,120
975
(2,444)
(184)
7,585
19,484
93,395
19
—
28
132
549
275
519
100
4,814
1,375
2,544
4,464
7,097
15,520
6,131
10,333
6,159
9,120
7,797
11,230
73,387
13,951
11,543
10,311
5,804
4,050
3,550
2,947
1,733
1,556
1,673
57,118
—
—
14,112
30,876
11,120
1,560
1,207
706
6,729
3,020
9,596
—
21,190
11,393
111,509
242,014
15,795
1,664
10,587
32,252
8,074
39,815
7,525
5,365
9,249
8,266
5,197
16,319
14,819
160,108
(11)
—
—
2,153
—
—
—
2,393
3,825
8,371
—
2,280
3,701
1,253
878
2,101
1,733
1,653
1,494
1,606
16,699
(4,013)
—
—
—
(5,926)
(2,153)
—
—
(4,046)
(3,100)
(3,701)
—
—
(2,131)
(25,070)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
21
8,300
16,000
7,500
11,100
6,800
10,000
8,600
12,100
80,400
24,200
13,800
14,200
7,500
5,200
8,000
9,000
7,300
7,400
8,000
104,600
03/18
03/18
04/18
04/18
06/18
06/18
09/18
12/18
04/18
02/19
03/19
03/19
03/19
04/19
05/19
07/19
10/19
10/19
Building
Conversion
Date
01/17
01/17
02/17
02/17
03/17
04/17
04/17
04/17
05/17
06/17
07/17
08/17
(1) Represents costs transferred from Prospective Development (primarily land) to Under Construction during the period. Negative amounts represent
land inventory costs transferred to Under Construction.
Included in these costs are development obligations of $29.0 million and tenant improvement obligations of $5.8 million on properties under development.
(2)
(3) This project was acquired by EastGroup on 11/1/16 and underwent redevelopment.
(4) This project was acquired by EastGroup on 12/12/17 during the lease-up phase.
(5) Negative amount represents land inventory costs transferred to Real Estate Properties for storage yard and parking lot expansion.
(6) Negative amount represents land sold on 11/3/17.
(7) Negative amount represents West Road retention ponds and infrastructure conveyed to West Harris County Municipal Utility District.
(8) This property was redeveloped from a manufacturing building to a multi-tenant distribution building.
(9) This project was acquired by EastGroup on 7/8/16 during the lease-up phase.
(10) This project was acquired by EastGroup on 11/15/16 during the lease-up phase.
(11) Represents cumulative costs at the date of transfer.
Accumulated Depreciation
Accumulated depreciation on real estate and development properties increased $55,351,000 during 2017 due primarily to
depreciation expense of $69,010,000, offset by the sale of 514,000 square feet of operating properties during the period.
Other Assets
Other assets increased $12,474,000 during 2017. A summary of Other assets follows:
December 31,
2017
2016
(In thousands)
$
72,722
(27,973)
44,749
65,521
(26,340)
39,181
31,609
(48)
31,561
6,004
(577)
5,427
20,690
(8,974)
11,716
1,550
(794)
756
4,581
6,034
990
11,490
28,369
(76)
28,293
6,824
(809)
6,015
21,231
(8,642)
12,589
1,594
(736)
858
4,752
4,546
990
7,606
$
117,304
104,830
Leasing costs (principally commissions)
Accumulated amortization of leasing costs
Leasing costs (principally commissions), net of accumulated amortization
Straight-line rents receivable
Allowance for doubtful accounts on straight-line rents receivable
Straight-line rents receivable, net of allowance for doubtful accounts
Accounts receivable
Allowance for doubtful accounts on accounts receivable
Accounts receivable, net of allowance for doubtful accounts
Acquired in-place lease intangibles
Accumulated amortization of acquired in-place lease intangibles
Acquired in-place lease intangibles, net of accumulated amortization
Acquired above market lease intangibles
Accumulated amortization of acquired above market lease intangibles
Acquired above market lease intangibles, net of accumulated amortization
Mortgage loans receivable
Interest rate swap assets
Goodwill
Prepaid expenses and other assets
Total Other assets
22
Liabilities
Unsecured bank credit facilities increased $4,719,000 during 2017, mainly due to proceeds of $391,617,000 exceeding repayments
of $387,298,000 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 increased $60,223,000 during 2017, primarily due to the closing of $60 million of senior unsecured private
placement notes in December 2017, and the amortization of debt issuance costs.
Secured debt decreased $57,993,000 during the year ended December 31, 2017. The decrease primarily resulted from the
repayment of one mortgage loan with a balance of $45,069,000, regularly scheduled principal payments of $13,139,000 and
amortization of premiums on Secured debt, offset by the amortization of debt issuance costs during the period.
Accounts payable and accrued expenses increased $12,266,000 during 2017. A summary of the Company’s Accounts payable
and accrued expenses follows:
December 31,
2017
2016
(In thousands)
Property taxes payable
$
12,081
Development costs payable
Real estate improvements and capitalized leasing costs payable
Interest payable
Dividends payable on unvested restricted stock
Book overdraft (1)
Other payables and accrued expenses
Total Accounts payable and accrued expenses
$
9,699
3,957
3,744
1,365
20,902
13,219
64,967
14,186
9,844
2,304
3,822
1,530
14,452
6,563
52,701
(1) Represents unfunded outstanding checks for which the bank has not advanced cash to the Company. See Note 1(p)
in the Notes to Consolidated Financial Statements.
Other liabilities decreased $1,022,000 during 2017. A summary of the Company’s Other liabilities follows:
Security deposits
Prepaid rent and other deferred income
Acquired below market lease intangibles
Accumulated amortization of acquired below market lease intangibles
Acquired below market lease intangibles, net of accumulated amortization
Interest rate swap liabilities
Prepaid tenant improvement reimbursements
Other liabilities
Total Other liabilities
December 31,
2017
2016
(In thousands)
$
$
16,668
9,352
4,135
(2,147)
1,988
695
124
15
28,842
14,782
9,795
4,012
(1,662)
2,350
2,578
343
16
29,864
Equity
Additional paid-in capital increased $111,835,000 during 2017 primarily due to the issuance of common stock under the Company's
continuous common equity program (as discussed in Liquidity and Capital Resources) and stock-based compensation (as discussed
in Note 11 in the Notes to Consolidated Financial Statements). EastGroup issued 1,370,457 shares of common stock under its
continuous common equity program with net proceeds to the Company of $109,207,000.
23
During 2017, Distributions in excess of earnings increased $3,377,000 as a result of dividends on common stock of $86,560,000
exceeding Net Income Attributable to EastGroup Properties, Inc. Common Stockholders of $83,183,000.
Accumulated other comprehensive income increased $3,353,000 during 2017. The increase resulted from the change in fair value
of the Company's interest rate swaps (cash flow hedges) which are further discussed in Notes 12 and 13 in the Notes to Consolidated
Financial Statements.
RESULTS OF OPERATIONS
2017 Compared to 2016
Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for 2017 was $83,183,000 ($2.45 per basic and
$2.44 per diluted share) compared to $95,509,000 ($2.93 per basic and diluted share) for 2016. PNOI increased by $15,490,000
($.45 per diluted share) for 2017 as compared to 2016. EastGroup recognized net gains on sales of real estate investments and
non-operating real estate of $22,148,000 ($.65 per diluted share) compared to $42,903,000 ($1.31 per diluted share) during 2016.
In addition, Depreciation and amortization expense increased by $5,939,000 ($.17 per diluted share), and General and
administrative expense increased by $1,740,000 ($.05 per share) during 2017 compared to 2016.
PNOI increased by $15,490,000, or 8.7%, for 2017 compared to 2016. PNOI increased $10,327,000 from newly developed and
redeveloped properties, $4,765,000 from same property operations and $3,355,000 from 2016 and 2017 acquisitions; PNOI
decreased $2,767,000 from operating properties sold in 2016 and 2017. For the year 2017, lease termination fee income was
$468,000 compared to $812,000 for 2016. The Company recorded net bad debt expense of $499,000 in 2017 and $992,000 in
2016. Straight-lining of rent increased Income from real estate operations by $3,723,000 and $2,839,000 in 2017 and 2016,
respectively.
The Company signed 138 leases with certain free rent concessions on 3,919,000 square feet during 2017 with total free rent
concessions of $5,672,000 over the lives of the leases, compared to 143 leases with free rent concessions on 4,176,000 square feet
with total free rent concessions of $5,286,000 over the lives of the leases in 2016.
The Company’s percentage of leased square footage was 97.0% at December 31, 2017, compared to 97.3% at December 31,
2016. Occupancy at the end of 2017 was 96.4% compared to 96.8% at the end of 2016.
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 period. Same property average occupancy for the year ended December 31, 2017, was 96.8%
compared to 96.5% for 2016.
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 period. The same property
average rental rate was $5.79 per square foot for the year ended December 31, 2017, compared to $5.57 per square foot for 2016.
24
Interest Expense decreased $438,000 for 2017 compared to 2016. The following table presents the components of Interest Expense
for 2017 and 2016:
Years Ended December 31,
2017
2016
(In thousands)
Increase
(Decrease)
VARIABLE RATE INTEREST EXPENSE
Unsecured bank credit facilities interest - variable rate
(excluding amortization of facility fees and debt issuance costs)
2,379
1,583
796
$
670
670
Amortization of facility fees - unsecured bank credit facilities
451
Amortization of debt issuance costs - unsecured bank credit facilities
450
Total variable rate interest expense 3,500
FIXED RATE INTEREST EXPENSE
Unsecured bank credit facilities interest - fixed rate (1)
2,703
—
1
797
(excluding amortization of facility fees and debt issuance costs)
1,616
1,002
614
Unsecured debt interest (1) (excluding amortization of debt issuance costs)
Secured debt interest (excluding amortization of debt issuance costs)
Amortization of debt issuance costs - unsecured debt
22,425
12,201
479
319
Amortization of debt issuance costs - secured debt
Total fixed rate interest expense 37,040
40,540
Total interest
(5,765)
34,775
Less capitalized interest
TOTAL INTEREST EXPENSE
$
19,245
16,907
700
384
37,850
40,553
(5,340)
35,213
3,180
(4,706)
(221)
(65)
(810)
(13)
(425)
(438)
(1) Includes interest on the Company's unsecured bank credit facilities and unsecured debt with fixed interest rates per the debt agreements
or effectively fixed interest rates due to interest rate swaps, as discussed in Note 13 in the Notes to Consolidated Financial Statements.
EastGroup's variable rate interest expense increased by $797,000 for 2017 as compared to 2016 primarily due to increases in the
Company's weighted average interest rate and average borrowings on its unsecured bank credit facilities as shown in the following
table:
Average borrowings on unsecured bank credit facilities - variable rate
Weighted average variable interest rates
(excluding amortization of facility fees and debt issuance costs)
Years Ended December 31,
2017
2016
Increase
(Decrease)
(In thousands, except rates of interest)
$ 114,751
106,352
8,399
2.07%
1.49%
The Company's fixed rate interest expense decreased by $810,000 for 2017 as compared to 2016 as a result of the secured debt,
fixed rate unsecured bank credit facilities and unsecured debt activity described below.
Secured debt interest decreased by $4,706,000 in 2017 as compared to 2016 as a result of regularly scheduled principal payments
and debt repayments. Regularly scheduled principal payments on secured debt were $13,139,000 during 2017 and $17,037,000
in 2016. The details of the secured debt repaid in 2016 and 2017 are shown in the following table:
25
SECURED DEBT REPAID IN 2016 AND 2017
Interest Rate
Date Repaid
Payoff Amount
Huntwood and Wiegman I
Alamo Downs, Arion 1-15 & 17, Rampart I-IV, Santan 10 I and
World Houston 16
Weighted Average/Total Amount for 2016
Arion 16, Broadway VI, Chino, East University I & II, Northpark I-IV,
Santan 10 II, 55th Avenue and World Houston 1 & 2, 21 & 23
Weighted Average/Total Amount for 2016 and 2017
EastGroup did not obtain any new secured debt during 2016 or 2017.
5.68%
08/05/2016
5.97%
5.88%
5.57%
5.76%
09/06/2016
08/07/2017
(In thousands)
$
$
$
$
24,543
51,194
75,737
45,069
120,806
The decrease in secured debt interest expense was partially offset by increases in interest expense from fixed rate unsecured bank
credit facilities and unsecured debt. The Company's interest expense from fixed rate unsecured bank credit facilities increased by
$1,002,000 during 2017 as compared to 2016. In August 2016, EastGroup repaid (with no penalty) an $80 million unsecured term
loan with an effectively fixed interest rate of 2.770% and an original maturity date of August 15, 2018. On the same day, the
Company borrowed $80 million through its $300 million unsecured bank credit facility; the maturity date for the credit facility is
July 30, 2019. The Company re-designated the interest rate swap that was previously applied to the $80 million unsecured term
loan to the $80 million unsecured bank credit facility borrowing. The $80 million unsecured bank credit facility draw has an
effectively fixed interest rate of 2.020% through the interest rate swap's maturity date of August 15, 2018.
The Company's interest expense from unsecured debt increased by $3,180,000 during 2017 as compared to 2016 as a result of the
Company's unsecured debt activity described below. The details of the unsecured debt obtained in 2016 and 2017 are shown in
the following table:
NEW UNSECURED DEBT IN 2016 and 2017
Effective Interest Rate
Date Obtained
Maturity Date
$65 Million Unsecured Term Loan (1)
$40 Million Unsecured Term Loan (2)
$60 Million Senior Unsecured Notes
$40 Million Senior Unsecured Notes
Weighted Average/Total Amount for 2016
$60 Million Senior Unsecured Notes
Weighted Average/Total Amount for 2016 and 2017
2.863%
2.335%
3.480%
3.750%
3.114%
3.460%
3.192%
04/01/2016
07/29/2016
12/15/2016
12/15/2016
04/01/2023
07/30/2021
12/15/2024
12/15/2026
12/13/2017
12/13/2024
Amount
(In thousands)
65,000
$
40,000
60,000
40,000
205,000
60,000
265,000
$
$
$
(1) The interest rate on this unsecured term loan is comprised of LIBOR plus 165 basis points subject to a pricing grid for changes in the
Company's coverage ratings. The Company entered into an interest rate swap to convert the loan's LIBOR rate to a fixed interest rate,
providing the Company a weighted average effective interest rate on the term loan of 2.863% as of December 31, 2017. See Note 13 in
the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
(2) The interest rate on this unsecured term loan is comprised of LIBOR plus 110 basis points subject to a pricing grid for changes in the
Company's coverage ratings. The Company entered into an interest rate swap to convert the loan's LIBOR rate to a fixed interest rate,
providing the Company a weighted average effective interest rate on the term loan of 2.335% as of December 31, 2017. See Note 13 in
the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
Additionally, in December 2017, the Company refinanced a $75 million unsecured term loan, resulting in a 30 basis point reduction
in the loan's interest rate. The loan, which has a maturity date of December 20, 2020, now has an effectively fixed interest rate of
3.452%.
Interest costs during the period of construction of real estate properties are capitalized and offset against interest expense. Capitalized
interest increased by $425,000 for 2017 as compared to 2016.
Depreciation and amortization expense increased $5,939,000 for 2017 compared to 2016 primarily due to the operating properties
acquired by the Company during 2016 and 2017 and the properties transferred from Development in 2016 and 2017, partially
offset by operating properties sold in 2016 and 2017.
26
Gain, net of loss, on sales of real estate investments, which includes gains and losses on the sales of operating properties, decreased
$20,315,000 for 2017 as compared to 2016. Gain, net of loss, on sales of non-operating real estate (included in Other on the
Consolidated Statements of Income and Comprehensive Income) decreased $440,000 for 2017 as compared to 2016. The
Company's 2016 and 2017 sales transactions are described below in Real Estate Sold and Held for Sale/Discontinued Operations.
Real Estate Improvements
Real estate improvements for EastGroup’s operating properties for the years ended December 31, 2017 and 2016 were as follows:
Upgrade on Acquisitions
Tenant Improvements:
New Tenants
Renewal Tenants
Other:
Building Improvements
Roofs
Parking Lots
Other
Total Real Estate Improvements (1)
Estimated
Useful Life
Years Ended December 31,
2017
2016
(In thousands)
40 yrs
$
161
Lease Life
Lease Life
5-40 yrs
5-15 yrs
3-5 yrs
5 yrs
$
11,413
3,357
3,362
6,197
1,880
1,101
27,471
394
9,976
2,748
5,113
2,785
1,377
764
23,157
(1) Reconciliation of Total Real Estate Improvements to Real Estate Improvements on the Consolidated Statements of Cash Flows:
Total Real Estate Improvements
Change in Real Estate Property Payables
$
Real Estate Improvements on the Consolidated Statements of Cash Flows $
Years Ended December 31,
2017
2016
(In thousands)
27,471
(1,313)
26,158
23,157
621
23,778
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 are included in Depreciation and amortization expense. Capitalized leasing costs for the
years ended December 31, 2017 and 2016 were as follows:
Development
New Tenants
Renewal Tenants
Total Capitalized Leasing Costs
Amortization of Leasing Costs
Estimated
Useful Life
Lease Life
Lease Life
Lease Life
Years Ended December 31,
2017
2016
(In thousands)
5,571
5,782
4,907
16,260
10,329
4,217
5,273
4,978
14,468
9,932
$
$
$
Real Estate Sold and Held for Sale/Discontinued Operations
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.
In accordance with FASB Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements (Topic 205) and
Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of
an Entity, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued
27
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 did not classify any properties as held for sale as of December 31, 2017 and 2016.
The Company does not consider its sales in 2016 and 2017 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.
In 2017, Eastgroup sold Stemmons Circle and Techway Southwest I-IV. The properties, which contain 514,000 square feet and
are located in Houston and Dallas, were sold for $38.0 million and the Company recognized net gains on the sales of $21.9 million.
The Company also sold 19 acres of land in El Paso and Dallas for $3,778,000 and recognized net gains of $293,000.
During 2016, EastGroup sold the following operating properties: Northwest Point Distribution and Service Centers, North
Stemmons II and III, America Plaza, Lockwood Distribution Center, West Loop Distribution Center 1 & 2, two of its four Interstate
Commons Distribution Center buildings, Castilian Research Center and Memphis I. The properties, which contain 1,256,000
square feet and are located in Houston, Dallas, Phoenix, Santa Barbara and Memphis, were sold for $75.7 million and the Company
recognized net gains on the sales of $42.2 million. The Company also sold 25 acres of land in Dallas, Orlando and Houston for
$5.4 million and recognized net gains on sales of $733,000.
The gains and losses on the sales of land are included in Other on the Consolidated Statements of Income and Comprehensive
Income, and the gains and losses on the sales of operating properties are included in Gain, net of loss, on sales of real estate
investments. See Notes 1(f) and 2 in the Notes to Consolidated Financial Statements for more information related to discontinued
operations and gains and losses on sales of real estate investments.
2016 Compared to 2015
Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for 2016 was $95,509,000 ($2.93 per basic and
diluted share) compared to $47,866,000 ($1.49 per basic and diluted share) for 2015. EastGroup recognized Gain, net of loss, on
sales of real estate investments of $42,170,000 during 2016 and $2,903,000 during 2015.
PNOI increased by $11,190,000, or 6.7%, for 2016 compared to 2015. PNOI increased $7,345,000 from newly developed and
redeveloped properties, $4,943,000 from same property operations and $2,488,000 from 2015 and 2016 acquisitions; PNOI
decreased $3,447,000 from properties sold in 2015 and 2016. For the year 2016, lease termination fee income was $812,000
compared to $225,000 for 2015. The Company recorded net bad debt expense of $992,000 in 2016 and $747,000 in 2015. Straight-
lining of rent increased Income from real estate operations by $2,839,000 and $1,889,000 in 2016 and 2015, respectively.
The Company signed 143 leases with certain free rent concessions on 4,176,000 square feet during 2016 with total free rent
concessions of $5,286,000 over the lives of the leases, compared to 164 leases with free rent concessions on 3,678,000 square feet
with total free rent concessions of $4,024,000 over the lives of the leases in 2015.
The Company’s percentage of leased square footage was 97.3% at December 31, 2016, compared to 97.2% at December 31,
2015. Occupancy at the end of 2016 was 96.8% compared to 96.1% at the end of 2015.
Same property average occupancy for the year ended December 31, 2016, was 96.4% compared to 96.1% for 2015. The same
property average rental rate was $5.61 per square foot for the year ended December 31, 2016, compared to $5.26 per square foot
for 2015.
28
163
62
(43)
182
614
3,747
(4,154)
278
(37)
448
630
(83)
547
Interest expense increased $547,000 in 2016 compared to 2015. The following table presents the components of Interest expense
for 2016 and 2015:
Years Ended December 31,
2016
2015
(In thousands)
Increase
(Decrease)
VARIABLE RATE INTEREST EXPENSE
Unsecured bank credit facilities interest - variable rate
(excluding amortization of facility fees and debt issuance costs)
$
Amortization of facility fees - unsecured bank credit facilities
Amortization of debt issuance costs - unsecured bank credit facilities
493
450
Total variable rate interest expense 2,703
2,521
FIXED RATE INTEREST EXPENSE
Unsecured bank credit facilities interest - fixed rate (1)
1,583
670
1,420
608
(excluding amortization of facility fees and debt issuance costs)
Unsecured debt interest (1) (excluding amortization of debt issuance costs)
Secured debt interest (excluding amortization of debt issuance costs)
614
19,245
16,907
—
15,498
21,061
Amortization of debt issuance costs - unsecured debt
700
Amortization of debt issuance costs - secured debt
384
Total fixed rate interest expense 37,850
Total interest
Less capitalized interest
TOTAL INTEREST EXPENSE
$
40,553
(5,340)
35,213
422
421
37,402
39,923
(5,257)
34,666
(1) Includes interest on the Company's unsecured bank credit facilities and unsecured debt with fixed interest rates per the debt agreements
or effectively fixed interest rates due to interest rate swaps, as discussed in Note 13 in the Notes to Consolidated Financial Statements.
The Company's fixed rate interest expense increased by $448,000 for 2016 as compared to 2015 as a result of the fixed rate
unsecured bank credit facilities, unsecured debt and secured debt activity described below.
EastGroup's unsecured debt interest increased by $3,747,000 in 2016 as compared to 2015 as a result of the unsecured debt activity
described below. The details of the new unsecured debt in 2015 and 2016 are shown in the following table:
NEW UNSECURED DEBT IN 2015 and 2016
Effective Interest Rate Date Obtained
Maturity Date
$75 Million Unsecured Term Loan (1)
$25 Million Senior Unsecured Notes
$50 Million Senior Unsecured Notes
Weighted Average/Total Amount for 2015
$65 Million Unsecured Term Loan (2)
$40 Million Unsecured Term Loan (3)
$60 Million Senior Unsecured Notes
$40 Million Senior Unsecured Notes
Weighted Average/Total Amount for 2016
Weighted Average/Total Amount for 2015 and 2016
3.031%
3.970%
3.990%
3.507%
2.863%
2.335%
3.480%
3.750%
3.114%
3.280%
03/02/2015
10/01/2015
10/07/2015
04/01/2016
07/29/2016
12/15/2016
12/15/2016
02/28/2022
10/01/2025
10/07/2025
04/01/2023
07/30/2021
12/15/2024
12/15/2026
Amount
(In thousands)
75,000
$
25,000
50,000
150,000
65,000
40,000
60,000
40,000
205,000
355,000
$
$
$
$
(1) The interest rate on this unsecured term loan is comprised of LIBOR 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 LIBOR rate to a fixed interest rate, providing the Company a weighted average effective interest rate on
the term loan of 3.031% as of December 31, 2016. See Note 13 in the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
(2) The interest rate on this unsecured term loan is comprised of LIBOR plus 165 basis points subject to a pricing grid for changes in the Company's coverage ratings. The
Company entered into an interest rate swap to convert the loan's LIBOR rate to a fixed interest rate, providing the Company a weighted average effective interest rate on
the term loan of 2.863% as of December 31, 2016. See Note 13 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 LIBOR plus 110 basis points subject to a pricing grid for changes in the Company's coverage ratings. The
Company entered into an interest rate swap to convert the loan's LIBOR rate to a fixed interest rate, providing the Company a weighted average effective interest rate on
the term loan of 2.335% as of December 31, 2016. See Note 13 in the Notes to Consolidated Financial Statements for additional information on the interest rate swaps.
29
In August 2016, EastGroup repaid (with no penalty) an $80 million unsecured term loan with an effectively fixed interest rate of
2.770% and an original maturity date of August 15, 2018. On the same day, the Company borrowed $80 million through its $300
million unsecured bank credit facility; the maturity date for the credit facility is July 30, 2019. The Company re-designated the
interest rate swap that was previously applied to the $80 million unsecured term loan to the $80 million unsecured bank credit
facility borrowing. The $80 million unsecured bank credit facility draw has an effectively fixed interest rate of 2.020% through
the interest rate swap's maturity date of August 15, 2018.
Secured debt interest decreased by $4,154,000 in 2016 as compared to 2015 as a result of regularly scheduled principal payments
and debt repayments. Regularly scheduled principal payments on secured debt were $17,037,000 during 2016 and $20,484,000
in 2015. The details of the secured debt repaid in 2015 and 2016 are shown in the following table:
SECURED DEBT REPAID IN 2015 AND 2016
Interest Rate
Date Repaid
Payoff Amount
Beltway II-IV, Commerce Park I, Eastlake, Fairgrounds, Nations Ford,
Techway Southwest III, Wetmore 1-4 and World Houston 15 & 22
5.50%
03/06/2015
Country Club I, Lake Pointe, Techway Southwest II and
World Houston 19 & 20
Weighted Average/Total Amount for 2015
Huntwood and Wiegman I
Alamo Downs, Arion 1-15 & 17, Rampart I-IV, Santan 10 I and
World Houston 16
Weighted Average/Total Amount for 2016
Weighted Average/Total Amount for 2015 and 2016
EastGroup did not obtain any new secured debt during 2015 and 2016.
11/06/2015
08/05/2016
09/06/2016
4.98%
5.34%
5.68%
5.97%
5.88%
5.60%
(In thousands)
$
$
$
$
$
57,450
24,403
81,853
24,543
51,194
75,737
157,590
EastGroup's variable rate interest expense increased by $182,000 for 2016 as compared to 2015 primarily due to an increase in
the Company's weighted average interest rate on unsecured bank credit facilities borrowings, offset by a decrease in average
unsecured bank credit facilities borrowings as shown in the following table:
Average borrowings on unsecured bank credit facilities - variable rate
Weighted average variable interest rates
(excluding amortization of facility fees and debt issuance costs)
Years Ended December 31,
2016
2015
Increase
(Decrease)
(In thousands, except rates of interest)
$
106,352
109,777
(3,425)
1.49%
1.29%
Interest costs during the period of construction of real estate properties are capitalized and offset against interest expense. Capitalized
interest increased $83,000 for 2016 as compared to 2015.
Depreciation and amortization expense increased $4,645,000 for 2016 compared to 2015 primarily due to the operating properties
acquired by the Company in 2015 and 2016 and the properties transferred from Development in 2015 and 2016, partially offset
by operating properties sold in 2015 and 2016.
Gain, net of loss, on sales of real estate investments, which includes gains on the sales of operating properties, increased $39,267,000
for 2016 as compared to 2015. Gain, net of loss, on sales of non-operating real estate (included in Other on the Consolidated
Statements of Income and Comprehensive Income) increased $610,000 for 2016 as compared to 2015. The Company's 2015 and
2016 sales transactions are described below in Real Estate Sold and Held for Sale/Discontinued Operations.
30
Real Estate Improvements
Real Estate Improvements for EastGroup’s operating properties for the years ended December 31, 2016 and 2015 were as follows:
Upgrade on Acquisitions
Tenant Improvements:
New Tenants
Renewal Tenants
Other:
Building Improvements
Roofs
Parking Lots
Other
Total Real Estate Improvements (1)
Estimated
Useful Life
Years Ended December 31,
2016
2015
(In thousands)
40 yrs
$
394
5
Lease Life
Lease Life
5-40 yrs
5-15 yrs
3-5 yrs
5 yrs
$
9,976
2,748
5,113
2,785
1,377
764
23,157
10,100
1,936
4,599
7,562
808
768
25,778
(1) Reconciliation of Total Real Estate Improvements to Real Estate Improvements on the Consolidated Statements of Cash Flows:
Total Real Estate Improvements
Change in Real Estate Property Payables
Real Estate Improvements on the Consolidated Statements of Cash Flows
Years Ended December 31,
2016
2015
(In thousands)
$
$
23,157
621
23,778
25,778
(716)
25,062
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 are included in Depreciation and amortization expense. Capitalized leasing costs for
the years ended December 31, 2016 and 2015 were as follows:
Development
New Tenants
Renewal Tenants
Total Capitalized Leasing Costs
Amortization of Leasing Costs
Estimated
Useful Life
Lease Life
Lease Life
Lease Life
Years Ended December 31,
2016
2015
(In thousands)
$
$
$
4,217
5,273
4,978
14,468
9,932
3,824
3,893
3,773
11,490
9,038
Real Estate Held for Sale/Discontinued Operations
The Company did not classify any properties as held for sale as of December 31, 2016 and 2015.
The Company does not consider its sales in 2015 and 2016 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.
During 2016, EastGroup sold the following operating properties: Northwest Point Distribution and Service Centers, North
Stemmons II and III, America Plaza, Lockwood Distribution Center, West Loop Distribution Center 1 & 2, two of its four Interstate
Commons Distribution Center buildings, Castilian Research Center and Memphis I. The properties, which contain 1,256,000
square feet and are located in Houston, Dallas, Phoenix, Santa Barbara and Memphis, were sold for $75.7 million and the Company
recognized net gains on the sales of $42.2 million. The Company also sold 25 acres of land in Dallas, Orlando and Houston for
$5.4 million and recognized net gains on sales of $733,000.
31
During 2015, EastGroup sold one operating property, the last of its three Ambassador Row Warehouses in Dallas containing
185,000 square feet, for $5.3 million and recognized a gain on the sale of $2.9 million. The Company also sold a small parcel of
land in New Orleans for $170,000 and recognized a gain of $123,000.
The gains and losses on the sales of land are included in Other on the Consolidated Statements of Income and Comprehensive
Income, and the gains and losses on the sales of operating properties are included in Gain, net of loss, on sales of real estate
investments. See Notes 1(f) and 2 in the Notes to Consolidated Financial Statements for more information related to discontinued
operations and gains on sales of real estate investments.
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.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the
amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued
further guidance in ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical
Expedients, that provides clarifying guidance in certain narrow areas and adds some practical expedients. ASU 2014-09 will
replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The effective date of ASU 2014-09
was extended by one year by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.
The new standard was effective for the Company on January 1, 2018, and the Company is using the modified retrospective approach
upon adoption. The Company has made significant progress in evaluating the effect of ASU 2014-09 on its consolidated financial
statements and related disclosures beginning with the Form 10-Q for the period ending March 31, 2018. The Company has
completed its inventory of its sources of revenue and does not believe there will be a material financial statement impact or that
its pattern of revenue recognition will be materially impacted by the adoption of ASU 2014-09.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities,which requires public business entities to use the exit price notion when measuring
the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial
liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to
disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial
instruments measured at amortized costs on the balance sheet. EastGroup adopted ASU 2016-01 effective January 1, 2018. The
Company does not anticipate the adoption of ASU 2016-01 will have a material impact on the Company's financial condition or
results of operations.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all
leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee's obligation to
make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that
represents the lessee's right to use, or control the use of, a specified asset for the lease term. The Company is a lessee on a limited
number of leases, including office and ground leases, and while the adoption of ASU 2016-02 will impact the Company's accounting
for office and ground leases, the Company anticipates the impact will not be material to its overall financial condition and results
of operations. Lessor accounting is largely unchanged under ASU 2016-02. The Company's primary revenue is rental income;
as such, the Company is a lessor on a significant number of leases. The Company is continuing to evaluate the potential impacts
of the ASU and believes it will continue to account for its leases in substantially the same manner. The most significant changes
for the Company related to lessor accounting include bifurcating its revenue into lease and non-lease components and the new
standard's narrow definition of initial direct costs for leases. The new definition will result in certain costs (primarily legal costs
related to lease negotiations) being expensed rather than capitalized upon adoption of the new standard. Public business entities
are required to apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years. EastGroup plans to adopt ASU 2016-02 effective January 1, 2019. The Company is continuing
the process of evaluating and quantifying the effect that ASU 2016-02 will have on its consolidated financial statements and related
disclosures beginning with the Form 10-Q for the period ending March 31, 2019.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. The ASU is intended to improve the accounting for share-based payments and affects all
organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment
awards are simplified with the ASU, including income tax consequences, classification of awards as equity or liabilities and
classification on the Consolidated Statements of Cash Flows. ASU 2016-09 is effective for public business entities for annual
periods beginning after December 15, 2016, and interim periods within those fiscal years; early adoption is permitted. EastGroup
32
adopted ASU 2016-09 effective January 1, 2017. As a result, the Company elected to reverse compensation cost of any forfeited
awards when they occur and will continue to classify the cash flows resulting from remitting cash to the tax authorities for the
payment of taxes on the vesting of share-based payment awards as a financing activity on the Consolidated Statements of Cash
Flows. In addition, upon vesting of share-based payments, the Company will withhold up to the maximum individual statutory
tax rate and classify the entire award as equity. The adoption of ASU 2016-09 did not have a material impact on the Company's
financial condition or results of operations.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments, which addresses certain cash flow issues, including how debt prepayments or debt extinguishment costs and
distributions received from equity method investees are presented. ASU 2016-15 is effective for public business entities for annual
periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and the
Company has adopted ASU 2016-15 effective January 1, 2017. The adoption of ASU 2016-15 did not have a material impact on
the Company's financial condition or results of operations.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.
The ASU is intended to provide a new framework for determining whether transactions should be accounted for as acquisitions
(or disposals) of assets or businesses. Under the new guidance, companies are required to utilize an initial screening test to
determine whether substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single
identifiable asset or a group of similar identifiable assets; if so, the set is not a business. The Company has determined that some
of its real estate property acquisitions may be considered to be acquisitions of groups of similar identifiable assets; therefore, the
acquisitions are not considered to be acquisitions of a business. EastGroup adopted ASU 2017-01 for transactions beginning on
October 1, 2016. As a result, the Company has capitalized acquisition costs related to its 2017 and fourth quarter 2016 acquisitions
as they were determined not to be acquisitions of a business.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Others (Topic 350): Simplifying the Test for Goodwill
Impairment, which simplifies the measurement of goodwill impairment by eliminating the requirement of performing a hypothetical
purchase price allocation to measure goodwill impairment. The Company adopted ASU 2017-04 effective January 1, 2017, and
is applying the new guidance for goodwill impairment tests with measurement dates after January 1, 2017. The adoption of ASU
2017-04 did not have a material impact on the Company's financial condition or results of operations.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,
which clarifies what constitutes a modification of a share-based payment award. The ASU is intended to provide clarity and reduce
both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions
of a share-based payment award. ASU 2017-09 is effective for public entities for annual periods beginning after December 15,
2017, and interim periods within those fiscal years. The Company adopted ASU 2017-09 on January 1, 2018, and it does not
anticipate that the adoption of ASU 2017-09 will have a material impact on its financial condition or results of operations, as the
Company does not expect to have any modifications to share-based payment awards. However, if the Company does have a
modification to an award in the future, it will follow the guidance in ASU 2017-09.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities. The ASU is intended to better align a company's financial reporting for hedging activities with the economic
objectives of those activities. The transition method is a modified retrospective approach that will require the Company to recognize
the cumulative effect of initially applying the ASU as an adjustment to Accumulated other comprehensive income with a
corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year the entity adopts the
ASU. The primary provision in the ASU that will require an adjustment to beginning retained earnings is the change in timing
and income statement presentation for ineffectiveness related to cash flow and net investment hedges. As a result of the transition
guidance in the ASU, cumulative ineffectiveness that has previously been recognized on cash flow and net investment hedges that
are still outstanding and designated as of the date of adoption will be adjusted and removed from beginning retained earnings and
placed in Accumulated other comprehensive income. ASU 2017-12 is effective for public business entities for annual periods
beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted; however, the
Company plans to adopt ASU 2017-12 on January 1, 2019. While the Company continues to assess all potential impacts of ASU
2017-12, it does not expect the adoption to have a material impact on the Company's financial condition or results of operations.
33
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $155,014,000 for the year ended December 31, 2017. The primary other sources
of cash were from borrowings on unsecured bank credit facilities; proceeds from common stock offerings; proceeds from unsecured
debt; and net proceeds from sales of real estate investments and non-operating real estate. The Company distributed $86,725,000
in common stock dividends during 2017. Other primary uses of cash were for repayments on unsecured bank credit facilities and
secured debt; development of properties; purchases of real estate; and capital improvements at various properties.
Total debt at December 31, 2017 and 2016 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 December 31, 2017 and 2016.
Unsecured bank credit facilities - variable rate, carrying amount
Unsecured bank credit facilities - fixed rate, carrying amount (1)
$
Unamortized debt issuance costs
Unsecured bank credit facilities
Unsecured debt - fixed rate, carrying amount (1)
Unamortized debt issuance costs
Unsecured debt
Secured debt - fixed rate, carrying amount (1)
Unamortized debt issuance costs
Secured debt
December 31,
2017
2016
(In thousands)
116,339
80,000
(630)
195,709
715,000
(1,939)
713,061
200,354
(842)
199,512
112,020
80,000
(1,030)
190,990
655,000
(2,162)
652,838
258,594
(1,089)
257,505
Total debt
$
1,108,282
1,101,333
(1) These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
EastGroup has a $300 million unsecured revolving credit facility with a group of nine banks that matures in July 2019. The credit
facility contains options for a one-year extension (at the Company's election) and a $150 million expansion (with agreement by
all parties). The interest rate on each tranche is usually reset on a monthly basis and as of December 31, 2017, was LIBOR plus
100 basis points with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the Company's
credit ratings. The Company has designated an interest rate swap to an $80 million unsecured bank credit facility draw that
effectively fixes the interest rate on the $80 million draw to 2.020% through the interest rate swap's maturity date of August 15,
2018. As of December 31, 2017, EastGroup had an additional $110,000,000 of variable rate borrowings on this unsecured bank
credit facility with a weighted average interest rate of 2.528%. The Company has a standby letter of credit of $674,000 pledged
on this facility.
The Company also has a $35 million unsecured revolving credit facility that matures in July 2019. This credit facility automatically
extends for one year if the extension option in the $300 million revolving credit facility is exercised. The interest rate is reset on
a daily basis and as of December 31, 2017, was LIBOR plus 100 basis points with an annual facility fee of 20 basis points. The
margin and facility fee are subject to changes in the Company's credit ratings. At December 31, 2017, the interest rate was 2.564%
on a balance of $6,339,000.
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. 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.
34
In August 2017, EastGroup repaid (with no penalty) a mortgage loan with a balance of $45.1 million, an interest rate of 5.57%
and an original maturity date of September 5, 2017. The loan was collateralized by 1.4 million square feet of operating properties.
In December 2017, the Company closed $60 million of senior unsecured private placement notes with an insurance company. The
notes have a seven-year term and a fixed interest rate of 3.46% with semi-annual interest payments. The notes will not be and
have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements.
Also in December, the Company refinanced a $75 million unsecured term loan, resulting in a 30 basis point reduction in the loan's
interest rate. The loan, which has a maturity date of December 20, 2020, now has an effectively fixed interest rate of 3.452%.
The refinancing will provide a net annual savings to the Company of approximately $170,000.
In connection with EastGroup's continuous equity program, the Company has entered into sales agency financing agreements with
various sales agents under which the Company may issue and sell up to 10,000,000 shares of its common stock from time to time
in "at the market" offerings as defined in Rule 415 of the Securities Act of 1933. The Company previously sold an aggregate of
3,598,660 shares of common stock under the sales agency financing agreements and, as of February 14, 2018, EastGroup may
offer and sell an additional 6,401,340 shares of common stock through the sales agents.
During 2017, the Company issued and sold 1,370,457 shares of common stock under its continuous equity program at an average
price of $80.71 per share with gross proceeds to the Company of $110,606,000. The Company incurred offering-related costs of
$1,399,000 during the year, resulting in net proceeds to the Company of $109,207,000.
Contractual Obligations
EastGroup’s fixed, non-cancelable obligations as of December 31, 2017 were as follows:
Unsecured Bank Credit Facilities (1) (2)
Interest on Unsecured Bank Credit Facilities (3)
Unsecured Debt (1)
Interest on Unsecured Debt
Secured Debt (1)
Interest on Secured Debt
Operating Lease Obligations:
Office Leases
Ground Leases
Real Estate Property Obligations (4)
Development Obligations (5)
Tenant Improvements (6)
Purchase Obligations
Total
Payments Due by Period
Total
Less Than
1 Year
1-3 Years
3-5 Years
More Than
5 Years
$
196,339
8,905
715,000
120,729
200,354
26,467
1,864
13,534
2,402
29,024
13,231
3,368
$ 1,331,217
(In thousands)
196,339
3,523
180,000
40,986
64,665
13,264
706
1,522
—
—
—
162
501,167
—
5,382
50,000
24,139
11,314
10,116
349
761
2,402
29,024
13,231
3,206
149,924
—
—
115,000
29,517
122,332
2,809
809
1,522
—
—
—
—
271,989
—
—
370,000
26,087
2,043
278
—
9,729
—
—
—
—
408,137
(1) These amounts are included on the Consolidated Balance Sheets net of unamortized debt issuance costs.
(2) 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. At December 31, 2017, the weighted average interest rate was 2.530% on the $116,339,000
of variable-rate debt that matures in July 2019. Unsecured bank credit facilities also included $80,000,000 of debt with an effectively fixed interest
rate of 2.020% due to an interest rate swap that matures on August 15, 2018. The $300 million unsecured credit facility has options for a one-year
extension (at the Company's election) and a $150 million expansion (with agreement by all parties). The $35 million unsecured credit facility
automatically extends for one year if the extension option in the $300 million revolving facility is exercised. As of December 31, 2017, the interest
rate on the $300 million facility was LIBOR plus 100 basis points (weighted average interest rate of 2.528%) with an annual facility fee of 20 basis
points, and the interest rate on the $35 million facility, which resets on a daily basis, was LIBOR plus 100 basis points (2.564%) with an annual
facility fee of 20 basis points. The margin and facility fee are subject to changes in the Company's credit ratings.
(3) Represents an estimate of interest due on the Company's unsecured bank credit facilities based on the outstanding unsecured credit facilities as of
December 31, 2017 and interest rates and maturity dates on the facilities as of December 31, 2017 as discussed in note 2 above.
(4) Represents commitments on real estate properties, except for tenant improvement obligations.
(5) Represents commitments on properties under development, except for tenant improvement obligations.
(6) Represents tenant improvement allowance obligations.
35
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.
INFLATION AND OTHER ECONOMIC CONSIDERATIONS
Most of the Company's leases include scheduled rent increases. Additionally, most of the Company's leases require the tenants
to pay their pro rata share of operating expenses, including real estate taxes, insurance and common area maintenance, thereby
reducing the Company's exposure to increases in operating expenses resulting from inflation. 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 bad debt expense. 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.
ITEM 7A. 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 13 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 December 31, 2017.
2018
2019
2020
2021
2022
Thereafter
Total
Fair Value
Unsecured bank credit
facilities - variable
rate (in thousands)
Weighted average
interest rate
Unsecured bank credit
facilities - fixed rate
(in thousands)
Weighted average
interest rate
Unsecured debt - fixed
rate (in thousands)
Weighted average
interest rate
Secured debt - fixed
rate (in thousands)
Weighted average
interest rate
$ — 116,339
(1)
—
2.53% (3)
$ —
80,000
—
2.02%
—
—
—
—
—
—
—
—
—
—
—
—
— 116,339
116,277 (2)
—
—
—
2.53%
80,000
80,003 (4)
2.02%
$50,000
75,000
105,000
40,000
75,000
370,000
715,000
703,871 (4)
3.91%
2.85%
3.55%
2.34%
3.03%
3.56%
3.38%
$11,314
55,569
9,096
89,563
32,769
2,043
200,354
206,408 (4)
5.21%
7.01%
4.43%
4.55%
4.09%
3.85%
5.18%
(1) The variable-rate unsecured bank credit facilities mature in July 2019 and as of December 31, 2017, have balances of $110,000,000 (excluding the
$80,000,000 draw with an effectively fixed rate due to an interest rate swap, as shown in the table above) on the $300 million unsecured bank credit
facility and $6,339,000 on the $35 million unsecured bank credit facility.
(2) The fair value of the Company’s variable-rate debt is estimated by discounting expected cash flows at current market rates, excluding the effects of
debt issuance costs.
(3) Represents the weighted average interest rate for the Company's variable rate unsecured bank credit facilities as of December 31, 2017.
(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.
36
As the table above incorporates only those exposures that existed as of December 31, 2017, 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 25 basis points, interest expense and cash flows would increase or decrease
by approximately $294,000 annually. This does not include variable-rate debt that has been effectively fixed through the use of
interest rate swaps.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Registrant's Consolidated Balance Sheets as of December 31, 2017 and 2016, and its Consolidated Statements of Income and
Comprehensive Income, Changes in Equity and Cash Flows and Notes to Consolidated Financial Statements for the years ended
December 31, 2017, 2016 and 2015 and the Report of Independent Registered Public Accounting Firm thereon are included under
Item 15 of this report and are incorporated herein by reference. Unaudited quarterly results of operations included in the Notes
to Consolidated Financial Statements are also incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. 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 Rule 13a-15. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, 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) Internal Control Over Financial Reporting.
(a) Management's annual report on internal control over financial reporting.
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 13a-15(f). EastGroup’s Management Report on Internal Control Over Financial Reporting is set
forth in Part IV, Item 15 of this Form 10-K on page 43 and is incorporated herein by reference.
(b) Report of the independent registered public accounting firm.
The report of KPMG LLP, the Company's independent registered public accounting firm, on the Company's internal control over
financial reporting is set forth in Part IV, Item 15 of this Form 10-K on page 44 and is incorporated herein by reference.
(c) Changes in internal control over financial reporting.
There was no change in the Company's internal control over financial reporting during the Company's fourth fiscal quarter
ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION.
Not applicable.
37
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information regarding the Company’s executive officers and directors.
Name
D. Pike Aloian
H.C. Bailey, Jr.
H. Eric Bolton, Jr.
Donald F. Colleran
Hayden C. Eaves III
Fredric H. Gould
Mary E. McCormick
Leland R. Speed
David H. Hoster II
Marshall A. Loeb
Brent W. Wood
John F. Coleman
Ryan M. Collins
Bruce Corkern
R. Reid Dunbar
Position
Director since 1999; Partner in Almanac Realty Investors, LLC (real estate advisory and investment
management services)
Director since 1980; Chairman and President of H.C. Bailey Company (real estate development and
investment)
Director since 2013; Chairman and Chief Executive Officer of Mid-America Apartment
Communities, Inc.
Director since 2017; Executive Vice President, Chief Sales Officer of FedEx Corporation
Director since 2002; President of Hayden Holdings, Inc. (real estate investment)
Director since 1998; Chairman of the General Partner of Gould Investors L.P., Member of the Board
of Directors of BRT Realty Trust and Vice-Chairman of One Liberty Properties, Inc.
Director since 2005; Director of Xenia Hotels and Resorts (lodging real estate investment trust
(REIT)); Senior Lecturer at The Ohio State University, Fisher College of Business
Director since 1978; Chairman Emeritus of the Board of the Company since 2016; Chairman of the
Board of the Company from 1983 to 2015
Director since 1993; Chairman of the Board of the Company since 2016; President of the Company
from 1993 to 2015; Chief Executive Officer of the Company from 1997 to 2015
Director, President and Chief Executive Officer of the Company
Executive Vice President, Chief Financial Officer and Treasurer of the Company
Executive Vice President of the Company
Senior Vice President of the Company
Senior Vice President, Chief Accounting Officer and Secretary of the Company
Senior Vice President of the Company
All other information required by Item 10 of Part III regarding the Company’s executive officers and directors is incorporated
herein by reference from the sections entitled "Corporate Governance and Board Matters" and “Executive Officers” in the
Company's definitive Proxy Statement ("2018 Proxy Statement") to be filed pursuant to Regulation 14A of the Securities Exchange
Act of 1934, as amended, for EastGroup's Annual Meeting of Stockholders to be held on May 24, 2018. The 2018 Proxy Statement
will be filed within 120 days after the end of the Company's fiscal year ended December 31, 2017.
The information regarding compliance with Section 16(a) of the Exchange Act is incorporated herein by reference from the
subsection entitled "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's 2018 Proxy Statement.
Information regarding EastGroup's code of business conduct and ethics found in the subsection captioned "Available Information"
in Item 1 of Part I hereof is also incorporated herein by reference into this Item 10.
The information regarding the Company's audit committee, its members and the audit committee financial experts is incorporated
herein by reference from the subsection entitled "Committees and Meeting Data” in the Company's 2018 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION.
The information included under the following captions in the Company's 2018 Proxy Statement is incorporated herein by reference:
"Compensation Discussion and Analysis," "Summary Compensation Table," "Grants of Plan-Based Awards in 2017," "Outstanding
Equity Awards at 2017 Fiscal Year-End," "Option Exercises and Stock Vested in 2017," "Potential Payments upon Termination or
Change in Control," "Compensation of Directors" and "Compensation Committee Interlocks." The information included under
the heading "Report of the Compensation Committee" in the Company's 2018 Proxy Statement is incorporated herein by reference;
however, this information shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation
14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
38
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
Information regarding security ownership of certain beneficial owners and management is incorporated herein by reference from
the subsections entitled “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management and
Directors” in the Company’s 2018 Proxy Statement.
The following table summarizes the Company’s equity compensation plan information as of December 31, 2017.
Equity Compensation Plan Information
Plan category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
(a)
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(b)
Weighted-
average
exercise price
of outstanding
options,
warrants and
rights
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
—
—
—
—
—
—
1,671,981
—
1,671,981
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information regarding transactions with related parties and director independence is incorporated herein by reference from
the subsection entitled "Independent Directors" and the section entitled “Certain Transactions and Relationships” in the Company's
2018 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information regarding principal auditor fees and services is incorporated herein by reference from the section entitled "Auditor
Fees and Services" in the Company's 2018 Proxy Statement.
39
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1)
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm
Management Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets – December 31, 2017 and 2016
Consolidated Statements of Income and Comprehensive Income – Years ended December 31, 2017,
2016 and 2015
Consolidated Statements of Changes in Equity – Years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Cash Flows – Years ended December 31, 2017, 2016 and 2015
Notes to Consolidated Financial Statements
(2)
Consolidated Financial Statement Schedules:
Schedule III – Real Estate Properties and Accumulated Depreciation
Schedule IV – Mortgage Loans on Real Estate
Page
42
43
44
45
46
47
48
49
73
87
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable, and therefore have been omitted, or
the required information is included in the Notes to Consolidated Financial Statements.
(3)
Exhibits:
The following exhibits are filed with this Form 10-K or incorporated by reference to the listed document
previously filed with the SEC:
Number
Description
(3)
Articles of Incorporation and Bylaws
(10)
(a)
(b)
(a)
(b)
(c)
(d)
Articles of Incorporation (incorporated by reference to Appendix B to the Company's Proxy Statement for its
Annual Meeting of Stockholders held on June 5, 1997).
Amended and Restated Bylaws of EastGroup Properties, Inc. (incorporated by reference to Exhibit 3.1 to the
Company's Form 8-K filed March 3, 2017).
Material Contracts (*Indicates management or compensatory agreement):
Form of Severance and Change in Control Agreement that the Company has entered into with Marshall A.
Loeb, Brent W. Wood and John F. Coleman (incorporated by reference to Exhibit 10(a) to the Company's Form
8-K filed May 18, 2016).*
Form of Severance and Change in Control Agreement that the Company has entered into with Ryan M. Collins,
C. Bruce Corkern and R. Reid Dunbar (incorporated by reference to Exhibit 10(b) to the Company's Form 8-
K filed May 18, 2016).*
Third Amended and Restated Credit Agreement Dated January 2, 2013 among EastGroup Properties, L.P.;
EastGroup Properties, Inc.; PNC Bank, National Association, as Administrative Agent; Regions Bank and
SunTrust Bank as Co-Syndication Agents; U.S. Bank National Association and Wells Fargo Bank, National
Association as Co-Documentation Agents; PNC Capital Markets LLC, as Sole Lead Arranger and Sole
Bookrunner; and the Lenders thereunder (incorporated by reference to Exhibit 10.1 to the Company's Form 8-
K filed January 8, 2013).
First Amendment to Third Amended and Restated Credit Agreement, dated as of August 9, 2013, among
EastGroup Properties, L.P., EastGroup Properties, Inc. and PNC Bank, National Association, as administrative
agent, and each of the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.2
to the Company's Form 8-K filed August 30, 2013).
40
Second Amendment to Third Amended and Restated Credit Agreement dated as of July 30, 2015 by and among
EastGroup Properties, L.P.; EastGroup Properties, Inc.; PNC Bank, National Association, as Administrative
Agent; and each of the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1
to the Company's Form 8-K filed August 4, 2015).
EastGroup Properties, Inc. 2013 Equity Incentive Plan, as amended and restated as of March 3, 2017
(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed March 3, 2017).*
EastGroup Properties, Inc. Director Compensation Program (filed herewith).*
Note Purchase Agreement, dated as of August 28, 2013, among EastGroup Properties, L.P., EastGroup
Properties, Inc. and the purchasers of the notes party thereto (including the form of the 3.80% Senior Notes
due August 28, 2025) (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 30,
2013).
Amended and Restated Sales Agency Financing Agreement dated March 6, 2017 between EastGroup Properties,
Inc. and BNY Mellon Capital Markets, LLC (incorporated by reference to Exhibit 1.1 to the Company's Form
8-K filed March 10, 2017).
Amended and Restated Sales Agency Financing Agreement dated March 6, 2017 between EastGroup Properties,
Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 1.2 to the
Company's Form 8-K filed March 10, 2017).
Amended and Restated Sales Agency Financing Agreement dated March 6, 2017 between EastGroup Properties,
Inc. and Raymond James & Associates, Inc. (incorporated by reference to Exhibit 1.3 to the Company's Form
8-K filed March 10, 2017).
Sales Agency Financing Agreement dated March 6, 2017 between EastGroup Properties, Inc. and Jefferies
LLC (incorporated by reference to Exhibit 1.4 to the Company's Form 8-K filed March 10, 2017).
Statement of computation of ratio of earnings to combined fixed charges and preferred stock distributions (filed
herewith).
Subsidiaries of EastGroup Properties, Inc. (filed herewith).
Consent of KPMG LLP (filed herewith).
Powers of attorney (filed herewith).
Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
Marshall A. Loeb, Chief Executive Officer
Brent W. Wood, Chief Financial Officer
Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
Marshall A. Loeb, Chief Executive Officer
Brent W. Wood, Chief Financial Officer
Material United States Federal Income Tax Considerations (incorporated by reference to Exhibit 99.1 to the
Company's Form 8-K filed February 14, 2018).
The following materials from EastGroup Properties, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) consolidated balance
sheets, (ii) consolidated statements of income and comprehensive income, (iii) consolidated statements of
changes in equity, (iv) consolidated statements of cash flows, and (v) the notes to the consolidated financial
statements.
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(a)
(b)
(a)
(b)
(12)
(21)
(23)
(24)
(31)
(32)
(99)
(101)
(b) Exhibits
The exhibits required to be filed with this Report pursuant to Item 601 of Regulation S-K are listed under “Exhibits” in Part IV,
Item 15(a)(3) of this Report and are incorporated herein by reference.
(c) Financial Statement Schedules
The Financial Statement Schedules required to be filed with this Report are listed under “Consolidated Financial Statement
Schedules” in Part IV, Item 15(a)(2) of this Report, and are incorporated herein by reference.
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS
EASTGROUP PROPERTIES, INC.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of EastGroup Properties, Inc. and subsidiaries (the "Company")
as of December 31, 2017 and 2016, the related consolidated statements of income and comprehensive income, changes in equity,
and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement
schedules III and IV (collectively, the "consolidated financial statements"). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results
of their operations and their cash flows for each of the years in the three-year period ended December 31, 2017, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
("PCAOB"), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 14, 2018 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our
audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
(Signed) KPMG LLP
We have served as the Company's auditor since 1970.
Jackson, Mississippi
February 14, 2018
42
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
EastGroup’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including
the Chief Executive Officer and Chief Financial Officer, EastGroup conducted an evaluation of the effectiveness of internal control
over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. The design of any system of internal control over financial reporting is
based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Based on EastGroup’s evaluation under the framework
in Internal Control – Integrated Framework (2013), management concluded that our internal control over financial reporting was
effective as of December 31, 2017.
/s/ EASTGROUP PROPERTIES, INC.
Ridgeland, Mississippi
February 14, 2018
43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS
EASTGROUP PROPERTIES, INC.:
Opinion on Internal Control Over Financial Reporting
We have audited EastGroup Properties, Inc. and subsidiaries’ (the "Company") internal control over financial reporting as of
December 31, 2017, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2017, based on the criteria established in Internal Control
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
("PCAOB"), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, and the related consolidated
statements of income and comprehensive income, changes in equity, and cash flows for each of the years in the three-year period
ended December 31, 2017, and the related notes and financial statement schedules III and IV (collectively, the "consolidated
financial statements"), and our report dated February 14, 2018 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Jackson, Mississippi
February 14, 2018
(Signed) KPMG LLP
44
December 31,
2017
2016
(In thousands, except share and
per share data)
$
2,335,459
242,014
2,577,473
(749,601)
1,827,872
8,029
16
117,304
1,953,221
195,709
713,061
199,512
64,967
28,842
2,113,073
293,908
2,406,981
(694,250)
1,712,731
7,681
522
104,830
1,825,764
190,990
652,838
257,505
52,701
29,864
1,202,091
1,183,898
3
—
1,061,153
(317,032)
5,348
749,472
1,658
751,130
1,953,221
3
—
949,318
(313,655)
1,995
637,661
4,205
641,866
1,825,764
$
$
$
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
Real estate properties
Development
Less accumulated depreciation
Unconsolidated investment
Cash
Other assets
TOTAL ASSETS
LIABILITIES AND EQUITY
LIABILITIES
Unsecured bank credit facilities
Unsecured debt
Secured debt
Accounts payable and accrued expenses
Other liabilities
Total Liabilities
EQUITY
Stockholders’ Equity:
Common shares; $.0001 par value; 70,000,000 shares authorized;
34,758,167 shares issued and outstanding at December 31, 2017 and
33,332,213 at December 31, 2016
Excess shares; $.0001 par value; 30,000,000 shares authorized;
no shares issued
Additional paid-in capital
Distributions in excess of earnings
Accumulated other comprehensive income
Total Stockholders’ Equity
Noncontrolling interest in joint ventures
Total Equity
TOTAL LIABILITIES AND EQUITY
See accompanying Notes to Consolidated Financial Statements.
45
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Years Ended December 31,
2017
2016
2015
(In thousands, except per share data)
REVENUES
Income from real estate operations
Other revenue
$
274,031
119
EXPENSES
Expenses from real estate operations 80,108
83,874
Depreciation and amortization
14,972
General and administrative
274,150
Acquisition costs
OPERATING INCOME
OTHER INCOME (EXPENSE)
Interest expense
Gain, net of loss, on sales of real estate investments
Other
NET INCOME
Net income attributable to noncontrolling interest in joint ventures
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS
Other comprehensive income (loss) - cash flow hedges
TOTAL COMPREHENSIVE INCOME
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
2.45
Net income attributable to common stockholders
Weighted average shares outstanding 33,996
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE
TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
2.44
Net income attributable to common stockholders
Weighted average shares outstanding 34,047
$
$
$
2.93
32,563
2.93
32,628
252,961
86
253,047
74,347
77,935
13,232
161
165,675
87,372
—
178,954
95,196
(34,775)
21,855
(35,213)
42,170
1,313
83,589
(406)
83,183
1,765
96,094
(585)
95,509
3,353
86,536
5,451
100,960
234,918
90
235,008
67,402
73,290
15,091
164
155,947
79,061
(34,666)
2,903
1,101
48,399
(533)
47,866
(1,099)
46,767
1.49
32,091
1.49
32,196
See accompanying Notes to Consolidated Financial Statements.
46
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Common
Stock
Additional
Paid-In
Capital
Distributions
In Excess
Of Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest in
Joint Ventures
Total
Balance, December 31, 2014
$
Net income
Net unrealized change in fair value of cash flow
hedges
Common dividends declared – $2.34 per share
Stock-based compensation, net of forfeitures
Issuance of 106,751 shares of common stock,
common stock offering, net of expenses
Issuance of 4,536 shares of common stock,
dividend reinvestment plan
Withheld 32,409 shares of common stock to satisfy
tax withholding obligations in connection with
the vesting of restricted stock
Distributions to noncontrolling interest
Balance, December 31, 2015
Net income
Net unrealized change in fair value of cash flow
hedges
Common dividends declared – $2.44 per share
Stock-based compensation, net of forfeitures
Issuance of 875,052 shares of common stock,
common stock offering, net of expenses
Issuance of 3,326 shares of common stock,
dividend reinvestment plan
Withheld 57,316 shares of common stock to satisfy
tax withholding obligations in connection with
the vesting of restricted stock
Distributions to noncontrolling interest
Balance, December 31, 2016
Net income
Net unrealized change in fair value of cash flow
hedges
Common dividends declared – $2.52 per share
Stock-based compensation, net of forfeitures
Issuance of 1,370,457 shares of common stock,
common stock offering, net of expenses
Issuance of 2,744 shares of common stock,
dividend reinvestment plan
Withheld 33,695 shares of common stock to satisfy
tax withholding obligations in connection with
the vesting of restricted stock
Purchase of noncontrolling interest in joint venture
Distributions to noncontrolling interest
Contributions from noncontrolling interest
Balance, December 31, 2017
$
3
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
—
—
3
See accompanying Notes to Consolidated Financial Statements.
(In thousands, except share and per share data)
874,335
(300,852)
(2,357)
—
—
—
8,423
6,233
257
(2,041)
—
47,866
—
—
(1,099)
(75,906)
—
—
—
—
—
—
—
—
—
—
—
887,207
(328,892)
(3,456)
95,509
—
—
5,451
—
—
—
5,831
59,283
228
(3,231)
—
(80,272)
—
—
—
—
—
949,318
(313,655)
—
—
—
7,012
109,207
228
(2,505)
(2,107)
—
—
83,183
—
(86,560)
—
—
—
—
—
—
—
—
—
—
—
—
—
1,995
—
3,353
—
—
—
—
—
—
—
—
4,486
533
575,615
48,399
—
—
—
—
—
—
(680)
4,339
585
—
—
—
—
—
—
(719)
4,205
406
—
—
—
—
—
—
(2,597)
(478)
122
(1,099)
(75,906)
8,423
6,233
257
(2,041)
(680)
559,201
96,094
5,451
(80,272)
5,831
59,283
228
(3,231)
(719)
641,866
83,589
3,353
(86,560)
7,012
109,207
228
(2,505)
(4,704)
(478)
122
1,061,153
(317,032)
5,348
1,658
751,130
47
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
OPERATING ACTIVITIES
Net income $
Adjustments to reconcile net income to net cash provided by operating
activities:
Years Ended December 31,
2017
2016
(In thousands)
2015
83,589
96,094
48,399
Depreciation and amortization
Stock-based compensation expense
83,874
5,521
77,935
4,590
73,290
6,733
Gain, net of loss, on sales of real estate investments and non-operating
real estate
Changes in operating assets and liabilities:
(22,148)
(42,903)
(3,026)
Accrued income and other assets
Accounts payable, accrued expenses and prepaid rent
Other
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
(5,034)
8,333
879
155,014
(124,938)
(55,195)
(26,158)
42,710
(2,883)
5,736
295
138,864
(203,765)
(27,668)
(23,778)
78,780
Real estate development
Purchases of real estate
Real estate improvements
Net proceeds from sales of real estate investments and non-operating
real estate
Repayments on mortgage loans receivable
123
3,629
Changes in accrued development costs
(13,793)
Changes in other assets and other liabilities
(186,472)
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
171
(144)
(15,872)
(179,426)
Proceeds from unsecured bank credit facilities
608,349
(567,165)
205,000
(80,000)
(92,773)
(1,487)
Repayments on unsecured bank credit facilities
Proceeds from unsecured debt
Repayments on unsecured debt —
Repayments on secured debt
Debt issuance costs
Distributions paid to stockholders (not including dividends accrued on
391,617
(387,298)
60,000
(58,209)
(380)
unvested restricted stock)
Proceeds from common stock offerings
Proceeds from dividend reinvestment plan
Other
NET CASH PROVIDED BY FINANCING ACTIVITIES
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
SUPPLEMENTAL CASH FLOW INFORMATION
$
Cash paid for interest, net of amount capitalized of $5,765, $5,340, and
$5,257 for 2017, 2016 and 2015, respectively
33,595
33,634
$
See accompanying Notes to Consolidated Financial Statements.
48
(86,725)
109,207
228
(4,534)
23,906
(506)
522
16
(80,899)
59,283
236
(2,462)
48,082
474
48
522
(2,118)
6,928
(157)
130,049
(95,032)
(31,574)
(25,062)
5,156
116
(1,705)
(8,317)
(156,418)
420,104
(368,669)
150,000
—
(102,337)
(1,952)
(75,845)
6,233
256
(1,384)
26,406
37
11
48
33,164
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017, 2016 and 2015
(1) SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the accounts of EastGroup Properties, Inc. ("EastGroup" or "the Company"), its
wholly owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest.
At December 31, 2015, EastGroup had a controlling interest in two joint ventures, the 80% owned University Business Center
and the 80% owned Castilian Research Center. During the second quarter of 2016, Castilian Research Center was sold, and the
joint venture was subsequently terminated. At December 31, 2016, the Company had a controlling interest in one joint venture,
the 80% owned University Business Center. During the fourth quarter of 2017, EastGroup closed the acquisition of the 20%
noncontrolling interest in two of the four University Business Center buildings; the Company now owns 100% of University
Business Center 125 and 175. As of December 31, 2017, EastGroup had an 80% controlling interest in University Business Center
120 and 130.
The Company records 100% of the assets, liabilities, revenues and expenses of the buildings 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.
(b) Income Taxes
EastGroup, a Maryland corporation, has qualified as a real estate investment trust (REIT) under Sections 856-860 of the Internal
Revenue Code and intends to continue to qualify as such. To maintain its status as a REIT, the Company is required to distribute
at least 90% of its ordinary taxable income to its stockholders. If the Company has a capital gain, it has the option of (i) deferring
recognition of the capital gain through a tax-deferred exchange, (ii) declaring and paying a capital gain dividend on any recognized
net capital gain resulting in no corporate level tax, or (iii) retaining and paying corporate income tax on its net long-term capital
gain, with the shareholders reporting their proportional share of the undistributed long-term capital gain and receiving a credit or
refund of their share of the tax paid by the Company. The Company distributed all of its 2017, 2016 and 2015 taxable income to
its stockholders. Accordingly, no significant provisions for income taxes were necessary. The following table summarizes the
federal income tax treatment for all distributions by the Company for the years ended 2017, 2016 and 2015.
Federal Income Tax Treatment of Share Distributions
Common Share Distributions:
Ordinary dividends
Nondividend distributions
Unrecaptured Section 1250 capital gain
Other capital gain
Total Common Share Distributions
Years Ended December 31,
2017
2016
2015
$
$
2.49146
0.02686
—
0.00168
2.52000
2.10494
0.05202
0.12872
0.15432
2.44000
2.24258
0.02774
0.06968
—
2.34000
EastGroup applies the principles of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
740, Income Taxes, when evaluating and accounting for uncertainty in income taxes. With few exceptions, the Company’s 2013
and earlier tax years are closed for examination by U.S. federal, state and local tax authorities. In accordance with the provisions
of ASC 740, the Company had no significant uncertain tax positions as of December 31, 2017 and 2016.
The Company’s income may differ for tax and financial reporting purposes principally because of (1) the timing of the deduction
for the provision for possible losses and losses on investments, (2) the timing of the recognition of gains or losses from the sale
of investments, (3) different depreciation methods and lives, (4) real estate properties having a different basis for tax and financial
reporting purposes, (5) mortgage loans having a different basis for tax and financial reporting purposes, thereby producing different
gains upon collection of these loans, and (6) differences in book and tax allowances and timing for stock-based compensation
expense.
49
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(c) Income Recognition
Minimum rental income from real estate operations is recognized on a straight-line basis. The straight-line rent calculation on
leases includes the effects of rent concessions and scheduled rent increases, and the calculated straight-line rent income is recognized
over the lives of the individual leases. The Company maintains allowances for doubtful accounts receivable, including straight-
line rents receivable, based upon estimates determined by management. Management specifically analyzes aged receivables,
customer credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts.
Revenue is recognized on payments received from tenants for early terminations after all criteria have been met in accordance
with ASC 840, Leases.
The Company recognizes gains on sales of real estate in accordance with the principles set forth in ASC 360, Property, Plant and
Equipment. Upon closing of real estate transactions, the provisions of ASC 360 require consideration for the transfer of rights of
ownership to the purchaser, receipt of an adequate cash down payment from the purchaser, adequate continuing investment by
the purchaser and no substantial continuing involvement by the Company. If the requirements for recognizing gains have not
been met, the sale and related costs are recorded, but the gain is deferred and recognized by a method other than the full accrual
method.
The Company recognizes interest income on mortgage loans on the accrual method unless a significant uncertainty of collection
exists. If a significant uncertainty exists, interest income is recognized as collected. If applicable, discounts on mortgage loans
receivable are amortized over the lives of the loans using a method that does not differ materially from the interest method. The
Company evaluates the collectibility of both interest and principal on each of its loans to determine whether the loans are impaired. A
loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable
to collect all amounts due according to the existing contractual terms. When a loan is considered to be impaired, the amount of
loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at
the loan’s effective interest rate or to the fair value of the underlying collateral (if the loan is collateralized) less costs to sell. As
of December 31, 2017 and 2016, there was no significant uncertainty of collection; therefore, interest income was recognized. As
of December 31, 2017 and 2016, the Company determined that no allowance for collectibility of the mortgage loans receivable
was necessary.
(d) Real Estate Properties
EastGroup has one reportable segment–industrial properties. These properties are concentrated in major Sunbelt markets of the
United States, primarily in the states of Florida, Texas, Arizona, California and North Carolina, have similar economic characteristics
and also meet the other criteria that permit the properties to be aggregated into one reportable segment.
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to future undiscounted net cash flows (including estimated future expenditures necessary to substantially
complete the asset) expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the
asset. As of December 31, 2017 and 2016, 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 $69,010,000, $63,793,000 and $59,882,000 for 2017, 2016 and
2015, respectively.
(e) Development
For properties under development and properties acquired in the development stage, costs associated with development (i.e., land,
construction costs, interest expense, property taxes and other direct and indirect 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. 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. When the property becomes
80% occupied or one year after completion of the shell construction (whichever comes first), capitalization of development costs,
including interest expense, property taxes and internal personnel costs, ceases. The properties are then transferred to Real estate
properties, and depreciation commences on the entire property (excluding the land).
50
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective January 1, 2018, the Company is implementing an accounting policy change and will begin transferring properties from
Development to Real estate properties at the earlier of 90% occupancy or one year after completion of the shell construction.
(f) Real Estate 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.
In accordance with FASB Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements (Topic 205) and
Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of
an Entity, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued
operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial
results when the component or group of components meets the criteria to be classified as held for sale or when the component or
group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures
about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for
discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine
whether the sales qualify for discontinued operations presentation.
(g) Derivative Instruments and Hedging Activities
EastGroup applies ASC 815, Derivatives and Hedging, which requires all entities with derivative instruments to disclose
information regarding how and why the entity uses derivative instruments and how derivative instruments and related hedged
items affect the entity’s financial position, financial performance and cash flows. See Note 13 for a discussion of the Company's
derivative instruments and hedging activities.
(h) Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
(i) Amortization
Debt origination costs are deferred and amortized over the term of each loan using the effective interest method. Amortization of
debt issuance costs was $1,250,000, $1,534,000 and $1,336,000 for 2017, 2016 and 2015, respectively. Amortization of facility
fees was $670,000, $670,000 and $608,000 for 2017, 2016 and 2015, respectively.
Leasing costs are deferred and amortized using the straight-line method over the term of the lease. Leasing costs paid during the
period are included in Changes in other assets and other liabilities in the Investing Activities section on the Consolidated Statements
of Cash Flows. Leasing costs amortization expense was $10,329,000, $9,932,000 and $9,038,000 for 2017, 2016 and 2015,
respectively.
Amortization expense for in-place lease intangibles is disclosed below in Real Estate Property Acquisitions and Acquired
Intangibles.
(j) Real Estate Property Acquisitions and Acquired Intangibles
Upon acquisition of real estate properties, EastGroup applies the principles of ASC 805, Business Combinations. Prior to the
Company's adoption of ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, effective
October 1, 2016, acquisition-related costs were recognized as expenses in the periods in which the costs were incurred and the
services were received.
As discussed in Note 1(o), beginning with acquisitions after October 1, 2016, the Company follows the guidance in ASU 2017-01,
which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of
assets or businesses. Under the new guidance, companies are required to utilize an initial screening test to determine whether
substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a
group of similar identifiable assets; if so, the set is not a business. EastGroup has determined that its real estate property acquisitions
in 2017 and the fourth quarter of 2016 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 has capitalized acquisition costs related
to its 2017 and fourth quarter 2016 acquisitions.
The FASB Codification provides guidance on how to properly determine the allocation of the purchase price among the individual
components of both the tangible and intangible assets based on their respective fair values. Goodwill for business combinations
is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired. Factors considered by management
51
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
The Company determines whether any financing assumed is above or below market based upon comparison to similar financing
terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller
that is determined to be above or below market rates.
The purchase price is also allocated among the following categories of intangible assets: the above or below market component
of in-place leases, the value of in-place leases, and the value of customer relationships. The value allocable to the above or below
market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the
risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease
over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining
term of the lease. The amounts allocated to above and below market leases are included in Other assets and Other liabilities,
respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective
leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based
upon management’s assessment of their respective values. These intangible assets are included in Other assets on the Consolidated
Balance Sheets and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship,
as applicable.
Amortization of above and below market leases increased rental income by $529,000, $488,000 and $448,000 in 2017, 2016 and
2015, respectively. Amortization expense for in-place lease intangibles was $4,535,000, $4,210,000 and $4,370,000 for 2017,
2016 and 2015, respectively.
Projected amortization of in-place lease intangibles for the next five years as of December 31, 2017 is as follows:
Years Ending December 31,
2018
2019
2020
2021
2022
$
(In thousands)
3,576
2,555
1,911
1,482
893
During 2017, the Company acquired the following operating properties: Shiloh 400, Broadmoor Commerce Park and Hurricane
Shoals 1 & 2 in Atlanta and Southpark Corporate Center 5-7 in Austin. The Company also acquired one development stage
property, Progress Center 1 & 2 in Atlanta. At the time of acquisition, Progress Center 1 & 2 was classified in the lease-up phase
of development. The total cost for the properties acquired by the Company was $65,243,000, of which $51,539,000 was allocated
to Real estate properties and $10,312,000 was allocated to Development. EastGroup allocated $11,281,000 of the total purchase
price to land using third party land valuations for the Atlanta and Austin markets. The market values are considered to be Level
3 inputs as defined by ASC 820, Fair Value Measurement (see Note 18 for additional information on ASC 820). Intangibles
associated with the purchase of real estate were allocated as follows: $3,662,000 to in-place lease intangibles and $115,000 to
above market leases (included in Other assets on the Consolidated Balance Sheets), and $385,000 to below market leases (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.
During 2016, the Company acquired the following development-stage properties: Parc North in Ft. Worth (Dallas), Weston
Commerce Park in Weston (South Florida), and Jones Corporate Park in Las Vegas. At the time of acquisition, the properties were
classified as under construction or in the lease-up phase of development.
Also in 2016, the Company acquired Flagler Center, a three-building business distribution complex in Jacksonville, Florida.
The properties purchased in 2016 were acquired for a total cost of $112,158,000, of which $22,228,000 was allocated to Real
estate properties and $84,490,000 was allocated to Development. EastGroup allocated $29,164,000 of the total purchase price to
land using third party land valuations for the Dallas, South Florida, Las Vegas and Jacksonville markets. The market values are
considered to be Level 3 inputs as defined by ASC 820. Intangibles associated with the purchase of real estate were allocated as
follows: $5,941,000 to in-place lease intangibles, $393,000 to above market leases and $894,000 to below market leases.
52
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 2015, the Company acquired Southpark Corporate Center and Springdale Business Center, both in Austin, Texas, for a
total cost of $31,574,000, of which $28,648,000 was allocated to Real estate properties. The Company allocated $5,494,000 of
the total purchase price to land using third party land valuations for the Austin market. The market values are considered to be
Level 3 inputs as defined by ASC 820. Intangibles associated with the purchase of real estate were allocated as follows: $3,453,000
to in-place lease intangibles and $527,000 to below market leases.
The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles
(on a quarterly basis) for possible impairment. In management’s opinion, no impairment of goodwill and other intangibles existed
at December 31, 2017 and 2016.
(k) Stock-Based Compensation
In May 2004, the stockholders of the Company approved the EastGroup Properties, Inc. 2004 Equity Incentive Plan ("the 2004
Plan"), which was further amended by the Board of Directors in September 2005 and December 2006. This plan authorized the
issuance of common stock to employees in the form of options, stock appreciation rights, restricted stock, deferred stock units,
performance shares, bonus stock or stock in lieu of cash compensation.
In April 2013, the Board of Directors adopted the EastGroup Properties, Inc. 2013 Equity Incentive Plan (the “2013 Equity Plan”)
upon the recommendation of the Compensation Committee; the 2013 Equity Plan was approved by the Company's stockholders
and became effective May 29, 2013. The 2013 Equity Plan was further amended by the Board of Directors in March 2017. The
2013 Equity Plan replaced the 2004 Plan and the 2005 Directors Equity Incentive Plan. Typically, the Company issues new shares
to fulfill stock grants or upon the exercise of stock options.
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.
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 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.
(l) 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.
(m) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses
53
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
(n) 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.
(o) 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.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the
amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued
further guidance in ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical
Expedients, that provides clarifying guidance in certain narrow areas and adds some practical expedients. ASU 2014-09 will
replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The effective date of ASU 2014-09
was extended by one year by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.
The new standard was effective for the Company on January 1, 2018, and the Company is using the modified retrospective approach
upon adoption. The Company has made significant progress in evaluating the effect of ASU 2014-09 on its consolidated financial
statements and related disclosures beginning with the Form 10-Q for the period ending March 31, 2018. The Company has
completed its inventory of its sources of revenue and does not believe there will be a material financial statement impact or that
its pattern of revenue recognition will be materially impacted by the adoption of ASU 2014-09.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities,which requires public business entities to use the exit price notion when measuring
the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial
liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to
disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial
instruments measured at amortized costs on the balance sheet. EastGroup adopted ASU 2016-01 effective January 1, 2018. The
Company does not anticipate the adoption of ASU 2016-01 will have a material impact on the Company's financial condition or
results of operations.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all
leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee's obligation to
make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that
represents the lessee's right to use, or control the use of, a specified asset for the lease term. The Company is a lessee on a limited
number of leases, including office and ground leases, and while the adoption of ASU 2016-02 will impact the Company's accounting
for office and ground leases, the Company anticipates the impact will not be material to its overall financial condition and results
of operations. Lessor accounting is largely unchanged under ASU 2016-02. The Company's primary revenue is rental income;
as such, the Company is a lessor on a significant number of leases. The Company is continuing to evaluate the potential impacts
of the ASU and believes it will continue to account for its leases in substantially the same manner. The most significant changes
for the Company related to lessor accounting include bifurcating its revenue into lease and non-lease components and the new
standard's narrow definition of initial direct costs for leases. The new definition will result in certain costs (primarily legal costs
related to lease negotiations) being expensed rather than capitalized upon adoption of the new standard. Public business entities
are required to apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years. EastGroup plans to adopt ASU 2016-02 effective January 1, 2019. The Company is continuing
the process of evaluating and quantifying the effect that ASU 2016-02 will have on its consolidated financial statements and related
disclosures beginning with the Form 10-Q for the period ending March 31, 2019.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. The ASU is intended to improve the accounting for share-based payments and affects all
organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment
awards are simplified with the ASU, including income tax consequences, classification of awards as equity or liabilities and
classification on the Consolidated Statements of Cash Flows. ASU 2016-09 is effective for public business entities for annual
periods beginning after December 15, 2016, and interim periods within those fiscal years; early adoption is permitted. EastGroup
adopted ASU 2016-09 effective January 1, 2017. As a result, the Company elected to reverse compensation cost of any forfeited
awards when they occur and will continue to classify the cash flows resulting from remitting cash to the tax authorities for the
payment of taxes on the vesting of share-based payment awards as a financing activity on the Consolidated Statements of Cash
54
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Flows. In addition, upon vesting of share-based payments, the Company will withhold up to the maximum individual statutory
tax rate and classify the entire award as equity. The adoption of ASU 2016-09 did not have a material impact on the Company's
financial condition or results of operations.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments, which addresses certain cash flow issues, including how debt prepayments or debt extinguishment costs and
distributions received from equity method investees are presented. ASU 2016-15 is effective for public business entities for annual
periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and the
Company has adopted ASU 2016-15 effective January 1, 2017. The adoption of ASU 2016-15 did not have a material impact on
the Company's financial condition or results of operations.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.
The ASU is intended to provide a new framework for determining whether transactions should be accounted for as acquisitions
(or disposals) of assets or businesses. Under the new guidance, companies are required to utilize an initial screening test to
determine whether substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single
identifiable asset or a group of similar identifiable assets; if so, the set is not a business. The Company has determined that some
of its real estate property acquisitions may be considered to be acquisitions of groups of similar identifiable assets; therefore, the
acquisitions are not considered to be acquisitions of a business. EastGroup adopted ASU 2017-01 for transactions beginning on
October 1, 2016. As a result, the Company has capitalized acquisition costs related to its 2017 and fourth quarter 2016 acquisitions
as they were determined not to be acquisitions of a business.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Others (Topic 350): Simplifying the Test for Goodwill
Impairment, which simplifies the measurement of goodwill impairment by eliminating the requirement of performing a hypothetical
purchase price allocation to measure goodwill impairment. The Company adopted ASU 2017-04 effective January 1, 2017, and
is applying the new guidance for goodwill impairment tests with measurement dates after January 1, 2017. The adoption of ASU
2017-04 did not have a material impact on the Company's financial condition or results of operations.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,
which clarifies what constitutes a modification of a share-based payment award. The ASU is intended to provide clarity and reduce
both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions
of a share-based payment award. ASU 2017-09 is effective for public entities for annual periods beginning after December 15,
2017, and interim periods within those fiscal years. The Company adopted ASU 2017-09 on January 1, 2018, and it does not
anticipate that the adoption of ASU 2017-09 will have a material impact on its financial condition or results of operations, as the
Company does not expect to have any modifications to share-based payment awards. However, if the Company does have a
modification to an award in the future, it will follow the guidance in ASU 2017-09.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities. The ASU is intended to better align a company's financial reporting for hedging activities with the economic
objectives of those activities. The transition method is a modified retrospective approach that will require the Company to recognize
the cumulative effect of initially applying the ASU as an adjustment to Accumulated other comprehensive income with a
corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year the entity adopts the
ASU. The primary provision in the ASU that will require an adjustment to beginning retained earnings is the change in timing
and income statement presentation for ineffectiveness related to cash flow and net investment hedges. As a result of the transition
guidance in the ASU, cumulative ineffectiveness that has previously been recognized on cash flow and net investment hedges that
are still outstanding and designated as of the date of adoption will be adjusted and removed from beginning retained earnings and
placed in Accumulated other comprehensive income. ASU 2017-12 is effective for public business entities for annual periods
beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted; however, the
Company plans to adopt ASU 2017-12 on January 1, 2019. While the Company continues to assess all potential impacts of ASU
2017-12, it does not expect the adoption to have a material impact on the Company's financial condition or results of operations.
(p) Classification of Book Overdraft on Consolidated Statements of Cash Flows
The Company classifies changes in book overdraft in which the bank has not advanced cash to the Company to cover outstanding
checks as an operating activity. Such amounts are included in Accounts payable, accrued expenses and prepaid rent in the Operating
Activities section on the Consolidated Statements of Cash Flows.
(q) Reclassifications
Certain reclassifications have been made in the 2016 and 2015 consolidated financial statements to conform to the 2017 presentation.
55
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(2) REAL ESTATE PROPERTIES
The Company’s Real estate properties and Development at December 31, 2017 and 2016 were as follows:
Real estate properties:
Land
Buildings and building improvements
Tenant and other improvements
Development
Less accumulated depreciation
December 31,
2017
2016
(In thousands)
$
$
345,424
1,587,130
402,905
242,014
2,577,473
(749,601)
1,827,872
308,931
1,435,309
368,833
293,908
2,406,981
(694,250)
1,712,731
EastGroup acquired operating properties during 2017, 2016 and 2015 as discussed in Note 1(j).
In 2017, Eastgroup sold Stemmons Circle and Techway Southwest I-IV.
In 2016, the Company sold the following operating properties: Northwest Point Distribution and Service Centers, North Stemmons
II and III, America Plaza, Lockwood Distribution Center, West Loop Distribution Center 1 & 2, two of its four Interstate Commons
Distribution Center buildings, Castilian Research Center and Memphis I.
In 2015, the Company sold one operating property, the last of its three Ambassador Row Warehouses.
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 are included in
Gain, net of loss, on sales of real estate investments.
The Company did not classify any properties as held for sale as of December 31, 2017 and 2016.
56
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sales of Real Estate
A summary of Gain, net of loss, on sales of real estate investments for the years ended December 31, 2017, 2016 and 2015 follows:
Real Estate Properties
Location
Size
(in Square
Feet)
Date Sold
Net Sales
Price
Recognized
Gain
Basis
(In thousands)
2017
Stemmons Circle
Techway Southwest I-IV
Total for 2017
2016
Northwest Point Distribution
and Service Centers
North Stemmons III
North Stemmons II
Lockwood Distribution Center
Dallas, TX
Houston, TX
99,000
05/12/2017
415,000
06/19/2017
Houston, TX
Dallas, TX
Dallas, TX
Houston, TX
232,000
60,000
26,000
392,000
02/12/2016
03/04/2016
04/12/2016
04/18/2016
West Loop Distribution Center 1 & 2 Houston, TX
161,000
04/19/2016
America Plaza
Houston, TX
121,000
04/28/2016
Interstate Commons Distribution
Center 1 & 2
Castilian Research Center (1)
Memphis I
Total for 2016
2015
Ambassador Row Warehouse
Phoenix, AZ
Santa Barbara, CA
142,000
30,000
05/31/2016
06/28/2016
Memphis, TN
92,000
12/16/2016
Dallas, TX
185,000
04/13/2015
$
$
$
$
$
5,051
32,506
37,557
15,189
3,131
1,203
14,024
13,154
7,938
9,906
7,698
1,482
1,329
14,373
15,702
5,080
1,908
765
4,154
3,564
3,378
3,568
7,513
1,625
73,725
31,555
3,722
18,133
21,855
10,109
1,223
438
9,870
9,590
4,560
6,338
185
(143)
42,170
4,998
2,095
2,903
(1) EastGroup owned 80% of Castilian Research Center through a joint venture. The information shown for this transaction also includes
the 20% attributable to the Company's noncontrolling interest partner.
The table above includes sales of operating properties; the Company also sold parcels of land during the years presented. During
the year ended December 31, 2017, the Company sold parcels of land in El Paso and Dallas for total gross proceeds of $3,778,000
and recognized a net gain of $293,000. During the year ended December 31, 2016, EastGroup sold parcels of land in Houston,
Dallas and Orlando for $5,400,000 and recognized a gain of $733,000. During the year ended December 31, 2015, the Company
sold a small parcel of land in New Orleans for $170,000 and recognized a gain of $123,000. The net gains on sales of land are
included in Other on the Consolidated Statements of Income and Comprehensive Income.
Development
The Company’s development program as of December 31, 2017, was comprised of the properties detailed in the table below. Costs
incurred include capitalization of interest costs during the period of construction. The interest costs capitalized on development
properties for 2017 were $5,765,000 compared to $5,340,000 for 2016 and $5,257,000 for 2015. In addition, EastGroup capitalized
internal development costs of $4,754,000 during the year ended December 31, 2017, compared to $3,789,000 during 2016 and
$4,467,000 in 2015.
Total capital invested for development during 2017 was $124,938,000, which primarily consisted of costs of $93,395,000 and
$14,819,000 as detailed in the Development Activity table below and costs of $12,811,000 on development properties subsequent
to transfer to Real estate properties. The capitalized costs incurred on development 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).
57
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DEVELOPMENT ACTIVITY
LEASE-UP
Alamo Ridge IV, San Antonio, TX
Weston, Ft. Lauderdale, FL (3)
Oak Creek VII, Tampa, FL
Progress Center 1 & 2, Atlanta, GA (4)
Eisenhauer Point 3, San Antonio, TX
SunCoast 4, Ft. Myers, FL
Steele Creek VII, Charlotte, NC
Horizon XII, Orlando, FL
Total Lease-Up
UNDER CONSTRUCTION
Country Club V, Tucson, AZ
Kyrene 202 III, IV & V, Phoenix, AZ
CreekView 121 3 & 4, Dallas, TX
Eisenhauer Point 5, San Antonio, TX
Eisenhauer Point 6, San Antonio, TX
Horizon X, Orlando, FL
Falcon Field, Phoenix, AZ
Airport Commerce Center 3, Charlotte, NC
Settlers Crossing 1, Austin, TX
Settlers Crossing 2, Austin, TX
Total Under Construction
PROSPECTIVE DEVELOPMENT
(PRIMARILY LAND)
Phoenix, AZ
Tucson, AZ (5)
Ft. Myers, FL
Miami, FL
Orlando, FL
Tampa, FL
Atlanta, GA
Jackson, MS
Charlotte, NC
Austin, TX
Dallas, TX
El Paso, TX (6)
Houston, TX (7)
San Antonio, TX
Total Prospective Development
COMPLETED DEVELOPMENT AND
TRANSFERRED TO REAL ESTATE
PROPERTIES DURING 2017
Eisenhauer Point 1 & 2, San Antonio, TX
South 35th Avenue, Phoenix, AZ (8)
Alamo Ridge III, San Antonio, TX
Parc North 1-4, Dallas, TX (9)
Madison IV & V, Tampa, FL
Jones Corporate Park, Las Vegas, NV (10)
Steele Creek VI, Charlotte, NC
Ten Sky Harbor, Phoenix, AZ
Horizon V, Orlando, FL
Horizon VII, Orlando, FL
Eisenhauer Point 4, San Antonio, TX
CreekView 121 1 & 2, Dallas, TX
Total Transferred to Real Estate Properties
(Unaudited)
Building Size
(Square feet)
97,000
134,000
116,000
132,000
71,000
93,000
120,000
140,000
903,000
300,000
166,000
158,000
98,000
85,000
104,000
96,000
96,000
77,000
83,000
1,263,000
Estimated
Building Size
(Square feet)
—
—
570,000
850,000
418,000
32,000
196,000
28,000
655,000
180,000
491,000
—
1,476,000
965,000
5,861,000
8,027,000
Building Size
(Square feet)
201,000
125,000
135,000
446,000
145,000
416,000
137,000
64,000
141,000
109,000
85,000
193,000
2,197,000
Footnotes for the Development Activity table are on the following page.
Costs Incurred
Costs
Transferred
in 2017 (1)
For the
Year Ended
12/31/17
Cumulative
as of
12/31/17
Estimated
Total Costs (2)
(In thousands)
Anticipated
Building
Conversion
Date
(Unaudited)
(Unaudited)
2,152
1,239
3,978
10,333
3,411
2,865
5,404
7,405
36,787
10,656
9,263
6,610
4,551
3,172
1,449
1,214
80
62
67
37,124
120
(417)
469
3,632
917
32
1,207
—
1,472
6,120
975
(2,444)
(184)
7,585
19,484
93,395
19
—
28
132
549
275
519
100
4,814
1,375
2,544
4,464
14,819
7,097
15,520
6,131
10,333
6,159
9,120
7,797
11,230
73,387
13,951
11,543
10,311
5,804
4,050
3,550
2,947
1,733
1,556
1,673
57,118
—
—
14,112
30,876
11,120
1,560
1,207
706
6,729
3,020
9,596
—
21,190
11,393
111,509
242,014
15,795
1,664
10,587
32,252
8,074
39,815
7,525
5,365
9,249
8,266
5,197
16,319
160,108
(11)
$
$
$
$
—
—
2,153
—
—
—
2,393
3,825
8,371
—
2,280
3,701
1,253
878
2,101
1,733
1,653
1,494
1,606
16,699
(4,013)
—
—
—
(5,926)
(2,153)
—
—
(4,046)
(3,100)
(3,701)
—
—
(2,131)
(25,070)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
58
8,300
16,000
7,500
11,100
6,800
10,000
8,600
12,100
80,400
24,200
13,800
14,200
7,500
5,200
8,000
9,000
7,300
7,400
8,000
104,600
03/18
03/18
04/18
04/18
06/18
06/18
09/18
12/18
04/18
02/19
03/19
03/19
03/19
04/19
05/19
07/19
10/19
10/19
Building
Conversion
Date
01/17
01/17
02/17
02/17
03/17
04/17
04/17
04/17
05/17
06/17
07/17
08/17
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Represents costs transferred from Prospective Development (primarily land) to Under Construction during the period. Negative amounts represent
land inventory costs transferred to Under Construction.
Included in these costs are development obligations of $29.0 million and tenant improvement obligations of $5.8 million on properties under development.
(2)
(3) This project was acquired by EastGroup on 11/1/16 and underwent redevelopment.
(4) This project was acquired by EastGroup on 12/12/17 during the lease-up phase.
(5) Negative amount represents land inventory costs transferred to Real Estate Properties for storage yard and parking lot expansion.
(6) Negative amount represents land sold on 11/3/17.
(7) Negative amount represents West Road retention ponds and infrastructure conveyed to West Harris County Municipal Utility District.
(8) This property was redeveloped from a manufacturing building to a multi-tenant distribution building.
(9) This project was acquired by EastGroup on 7/8/16 during the lease-up phase.
(10) This project was acquired by EastGroup on 11/15/16 during the lease-up phase.
(11) Represents cumulative costs at the date of transfer.
Future Minimum Rental Receipts Under Non-Cancelable Leases
The following schedule indicates approximate future minimum rental receipts under non-cancelable leases for real estate properties
by year as of December 31, 2017:
Years Ending December 31,
2018
2019
2020
2021
2022
Thereafter
Total minimum receipts
(In thousands)
$
$
204,614
177,110
139,791
100,559
74,092
147,960
844,126
Ground Leases
As of December 31, 2017, the Company owned two properties in Florida, two properties in Texas and one property in Arizona
that are subject to ground leases. These leases have terms of 40 to 50 years, expiration dates of August 2031 to November 2037,
and renewal options of 15 to 35 years, except for the one lease in Arizona which is automatically and perpetually renewed
annually. Total ground lease expenditures for the years ended December 31, 2017, 2016 and 2015 were $760,000, $756,000 and
$756,000, 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. The
following schedule indicates approximate future minimum ground lease payments for these properties by year as of December 31,
2017:
Future Minimum Ground Lease Payments
Years Ending December 31,
2018
2019
2020
2021
2022
Thereafter
Total minimum payments
(3) UNCONSOLIDATED INVESTMENT
(In thousands)
$
$
761
761
761
761
761
9,729
13,534
The Company owns a 50% undivided tenant-in-common interest in Industry Distribution Center II, a 309,000 square foot warehouse
distribution building in the City of Industry (Los Angeles), California. The building was constructed in 1998 and is 100% leased
through December 2018 to a single tenant who owns the other 50% interest in the property. This investment is accounted for
under the equity method of accounting and had a carrying value of $8,029,000 at December 31, 2017, and $7,681,000 at December
31, 2016.
59
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) MORTGAGE LOANS RECEIVABLE
As of December 31, 2016, the Company had two mortgage loans receivable, both of which were classified as first mortgage loans,
with effective interest rates of 5.25% and maturity dates in October 2017. During 2017, the loan agreements were amended and
restated. As of December 31, 2017, EastGroup had two mortgage loans receivable, both of which were classified as first mortgage
loans, with effective interest rates of 5.15% and maturity dates in December 2022. Mortgage loans receivable are included in
Other assets on the Consolidated Balance Sheets. See Note 5 for a summary of Other assets.
(5) OTHER ASSETS
A summary of the Company’s Other assets follows:
Leasing costs (principally commissions)
$
Accumulated amortization of leasing costs
Leasing costs (principally commissions), net of accumulated amortization
December 31,
2017
2016
(In thousands)
72,722
(27,973)
44,749
65,521
(26,340)
39,181
Straight-line rents receivable
Allowance for doubtful accounts on straight-line rents receivable
Straight-line rents receivable, net of allowance for doubtful accounts
Accounts receivable
Allowance for doubtful accounts on accounts receivable
Accounts receivable, net of allowance for doubtful accounts
Acquired in-place lease intangibles
Accumulated amortization of acquired in-place lease intangibles
Acquired in-place lease intangibles, net of accumulated amortization
Acquired above market lease intangibles
Accumulated amortization of acquired above market lease intangibles
Acquired above market lease intangibles, net of accumulated amortization
31,609
(48)
31,561
6,004
(577)
5,427
20,690
(8,974)
11,716
1,550
(794)
756
Mortgage loans receivable
Interest rate swap assets
Goodwill
Prepaid expenses and other assets
Total Other assets
4,581
6,034
990
11,490
117,304
$
28,369
(76)
28,293
6,824
(809)
6,015
21,231
(8,642)
12,589
1,594
(736)
858
4,752
4,546
990
7,606
104,830
60
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) UNSECURED BANK CREDIT FACILITIES
EastGroup has a $300 million unsecured revolving credit facility with a group of nine banks that matures in July 2019. The credit
facility contains options for a one-year extension (at the Company's election) and a $150 million expansion (with agreement by
all parties). The interest rate on each tranche is usually reset on a monthly basis and as of December 31, 2017, was LIBOR plus
100 basis points with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the Company's
credit ratings. The Company has designated an interest rate swap to an $80 million unsecured bank credit facility draw that
effectively fixes the interest rate on the $80 million draw to 2.020% through the interest rate swap's maturity date of August 15,
2018. As of December 31, 2017, EastGroup had an additional $110,000,000 of variable rate borrowings on this unsecured bank
credit facility with a weighted average interest rate of 2.528%. The Company has a standby letter of credit of $674,000 pledged
on this facility.
The Company also has a $35 million unsecured revolving credit facility that matures in July 2019. This credit facility automatically
extends for one year if the extension option in the $300 million revolving credit facility is exercised. The interest rate is reset on
a daily basis and as of December 31, 2017, was LIBOR plus 100 basis points with an annual facility fee of 20 basis points. The
margin and facility fee are subject to changes in the Company's credit ratings. At December 31, 2017, the interest rate was 2.564%
on a balance of $6,339,000.
Average unsecured bank credit facilities borrowings were $114,751,000 in 2017, $106,352,000 in 2016 and $109,777,000 in 2015,
with weighted average interest rates (excluding amortization of facility fees and debt issuance costs) of 2.07% in 2017, 1.49% in
2016 and 1.29% in 2015. Amortization of facility fees was $670,000, $670,000 and $608,000 for 2017, 2016 and 2015, respectively.
Amortization of debt issuance costs for the Company's unsecured bank credit facilities was $451,000, $450,000 and $493,000 for
2017, 2016 and 2015, respectively.
The Company’s unsecured bank credit facilities 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 financial debt covenants
at December 31, 2017.
See Note 7 for a detail of the outstanding balances of the Company's Unsecured bank credit facilities as of December 31, 2017
and 2016.
(7) UNSECURED AND SECURED DEBT
The Company's debt is detailed below. EastGroup presents debt issuance costs as reductions of Unsecured bank credit facilities,
Unsecured debt and Secured debt on the Consolidated Balance Sheets as detailed below.
Unsecured bank credit facilities - variable rate, carrying amount
Unsecured bank credit facilities - fixed rate, carrying amount (1)
$
December 31,
2017
December 31,
2016
(In thousands)
116,339
80,000
(630)
195,709
715,000
(1,939)
713,061
200,354
(842)
199,512
112,020
80,000
(1,030)
190,990
655,000
(2,162)
652,838
258,594
(1,089)
257,505
$
1,108,282
1,101,333
Unamortized debt issuance costs
Unsecured bank credit facilities
Unsecured debt - fixed rate, carrying amount (1)
Unamortized debt issuance costs
Unsecured debt
Secured debt - fixed rate, carrying amount (1)
Unamortized debt issuance costs
Secured debt
Total debt
(1) These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.
61
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the carrying amount of Unsecured debt follows:
Margin Above LIBOR
Interest Rate
Maturity Date
2017
2016
(In thousands)
Balance at December 31,
$50 Million Unsecured Term Loan
$75 Million Unsecured Term Loan (1)
$75 Million Unsecured Term Loan (1)
$40 Million Unsecured Term Loan (1)
$75 Million Unsecured Term Loan (1)
$65 Million Unsecured Term Loan (1)
$100 Million Senior Unsecured Notes:
$30 Million Notes
$50 Million Notes
$20 Million Notes
$60 Million Senior Unsecured Notes
$100 Million Senior Unsecured Notes:
$60 Million Notes
$40 Million Notes
$25 Million Senior Unsecured Notes
$50 Million Senior Unsecured Notes
Not applicable
1.150%
1.100%
1.100%
1.400%
1.650%
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
3.910%
2.846%
3.452%
2.335%
3.031%
2.863%
3.800%
3.800%
3.800%
3.460%
3.480%
3.750%
3.970%
3.990%
12/21/2018
$
07/31/2019
12/20/2020
07/30/2021
02/28/2022
04/01/2023
08/28/2020
08/28/2023
08/28/2025
12/13/2024
12/15/2024
12/15/2026
10/01/2025
10/07/2025
50,000
75,000
75,000
40,000
75,000
65,000
30,000
50,000
20,000
60,000
60,000
40,000
25,000
50,000
50,000
75,000
75,000
40,000
75,000
65,000
30,000
50,000
20,000
—
60,000
40,000
25,000
50,000
$
715,000
655,000
(1) The interest rates on these unsecured term loans are comprised of LIBOR plus a margin which is subject to a pricing grid for changes
in the Company's coverage ratings. The Company entered into interest rate swap agreements (further described in Note 13) to convert
the loans' LIBOR rates to effectively fixed interest rates. The interest rates in the table above are the effectively fixed interest rates for
the loans, including the effects of the interest rate swaps, as of December 31, 2017.
The Company’s 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 financial debt covenants
at December 31, 2017.
A summary of the carrying amount of Secured debt follows:
Property
Arion 16, Broadway VI, Chino, East
University I & II, Northpark, Santan 10 II, 55th
Avenue and World Houston 1 & 2, 21 & 23
Dominguez, Industry I & III, Kingsview, Shaw,
Walnut and Washington
Blue Heron II
40th Avenue, Beltway Crossing V, Centennial Park,
Executive Airport, Interchange Park I, Ocean
View, Wetmore 5-8 and World Houston 26, 28,
29 & 30
Colorado Crossing, Interstate I-III, Rojas, Steele
Creek 1 & 2, Venture and World Houston 3-9
Arion 18, Beltway Crossing VI & VII, Commerce
Park II & III, Concord, Interstate V-VII,
Lakeview, Ridge Creek II, Southridge IV & V
and World Houston 32
Ramona
Interest
Rate
Monthly
P&I
Payment
Maturity
Date
Carrying Amount
of Securing
Real Estate at
December 31, 2017
Balance at December 31,
2017
2016
(In thousands)
5.57%
518,885
Repaid
$
—
—
47,496
7.50%
5.39%
539,747
16,176
05/05/2019
02/29/2020
45,886
4,425
49,580
409
52,231
576
4.39%
463,778
01/05/2021
67,796
55,317
58,380
4.75%
420,045
06/05/2021
56,000
50,161
52,752
4.09%
3.85%
329,796
01/05/2022
16,287
11/30/2026
56,440
9,027
42,315
2,572
44,493
2,666
$
239,574
200,354
258,594
62
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company currently intends to repay its debt obligations, both in the short-term and long-term, through its operating cash
flows, borrowings under its unsecured bank credit facilities, proceeds from new debt (primarily unsecured), and/or proceeds from
the issuance of equity instruments.
Principal payments on long-term debt, including Unsecured debt and Secured debt (not including Unsecured bank credit facilities),
due during the next five years as of December 31, 2017 are as follows:
Years Ending December 31,
2018
2019
2020
2021
2022
(8) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
A summary of the Company’s Accounts payable and accrued expenses follows:
(In thousands)
61,314
$
130,569
114,096
129,563
107,769
December 31,
2017
2016
(In thousands)
Property taxes payable
$
12,081
Development costs payable
Real estate improvements and capitalized leasing costs payable
Interest payable
Dividends payable on unvested restricted stock
Book overdraft (1)
Other payables and accrued expenses
Total Accounts payable and accrued expenses
9,699
3,957
3,744
1,365
20,902
13,219
64,967
$
14,186
9,844
2,304
3,822
1,530
14,452
6,563
52,701
(1) Represents unfunded outstanding checks for which the bank has not advanced cash to the Company. See Note 1(p).
(9) OTHER LIABILITIES
A summary of the Company’s Other liabilities follows:
Security deposits
Prepaid rent and other deferred income
Acquired below-market lease intangibles
Accumulated amortization of below-market lease intangibles
Acquired below-market lease intangibles, net of accumulated amortization
Interest rate swap liabilities
Prepaid tenant improvement reimbursements
Other liabilities
Total Other liabilities
63
December 31,
2017
2016
(In thousands)
$
16,668
9,352
4,135
(2,147)
1,988
695
124
15
$
28,842
14,782
9,795
4,012
(1,662)
2,350
2,578
343
16
29,864
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) COMMON STOCK ACTIVITY
The following table presents the common stock activity for the three years ended December 31, 2017:
Shares outstanding at beginning of year
Common stock offerings
Dividend reinvestment plan
Incentive restricted stock granted
Incentive restricted stock forfeited
Director common stock awarded
Director restricted stock granted
Restricted stock withheld for tax obligations
Shares outstanding at end of year
Years Ended December 31,
2017
2016
2015
33,332,213
1,370,457
2,744
93,285
(16,000)
8,881
282
(33,695)
34,758,167
Common Shares
32,421,460
875,052
3,326
80,529
(910)
10,072
—
(57,316)
33,332,213
32,232,587
106,751
4,536
100,622
—
9,373
—
(32,409)
32,421,460
Common Stock Issuances
The following table presents the common stock issuance activity for the three years ended December 31, 2017:
Years Ended December 31,
2017
2016
2015
Number of
Common Shares Issued
Net Proceeds
(In thousands)
1,370,457
$
875,052
106,751
109,207
59,283
6,233
Dividend Reinvestment Plan
The Company has a dividend reinvestment plan that allows stockholders to reinvest cash distributions in new shares of the Company.
(11) STOCK-BASED COMPENSATION
The Company 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.
Equity Incentive Plan
In May 2004, the stockholders of the Company approved the EastGroup Properties, Inc. 2004 Equity Incentive Plan (the “2004
Plan”) that authorized the issuance of up to 1,900,000 shares of common stock to employees in the form of options, stock appreciation
rights, restricted stock, deferred stock units, performance shares, bonus stock or stock in lieu of cash compensation. The 2004
Plan was further amended by the Board of Directors in September 2005 and December 2006.
In April 2013, the Board of Directors adopted the EastGroup Properties, Inc. 2013 Equity Incentive Plan (the “2013 Equity Plan”)
upon the recommendation of the Compensation Committee; the 2013 Equity Plan was approved by the Company's stockholders
and became effective May 29, 2013. The 2013 Equity Plan was further amended by the Board of Directors in March 2017. The
2013 Equity Plan replaced the 2004 Plan and the 2005 Directors Equity Incentive Plan. The 2013 Equity Plan permits the grant
of awards to employees and directors with respect to 2,000,000 shares of common stock.
There were 1,671,981, 1,752,345 and 1,802,000 total shares available for grant under the 2013 Equity Plan as of December 31,
2017, 2016 and 2015, respectively. Typically, the Company issues new shares to fulfill stock grants.
Stock-based compensation cost for employees was $6,309,000, $5,184,000 and $7,891,000 for 2017, 2016 and 2015, respectively,
of which $1,458,000, $1,183,000 and $1,672,000 were capitalized as part of the Company’s development costs for the respective
years.
64
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Employee Equity Awards
The Company's restricted stock program is designed to provide incentives for management to achieve goals established by the
Compensation Committee of the Company's Board of Directors (the Committee). The awards act as a retention device, as they
vest over time, allowing participants to benefit from dividends on shares as well as potential stock appreciation. Equity awards
align management's interests with the long-term interests of shareholders. The vesting periods of the Company’s restricted stock
plans vary, as determined by the Compensation 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
Compensation Committee. Restricted stock is granted to non-executive officers subject only to continued service. The cost for
market-based awards and awards that only require service is amortized on a straight-line basis over the requisite service periods.
The total compensation expense for service and performance based awards is based upon the fair market value of the shares on
the grant date.
In March 2017, the Committee evaluated the Company's performance compared to certain annual performance measures (primarily
funds from operations (FFO) per share and total shareholder return) for the year ended December 31, 2016. Based on the evaluation,
36,571 shares were awarded to the Company’s executive officers at the grant date (March 2, 2017) fair value of $74.80 per
share. These shares vested 20% on the date shares were determined and awarded and will vest 20% per year on January 1 in years
2018, 2019, 2020 and 2021. The shares are being expensed on a straight-line basis over the remaining service period.
Also in March 2017, the Committee evaluated the Company’s total shareholder return, both on an absolute basis for 2016 as well
as on a relative basis compared to the NAREIT Equity Index, NAREIT Industrial Index and Russell 2000 Index for the five-year
period ended December 31, 2016. Based on the evaluation, 33,289 shares were awarded to the Company’s executive officers at
the grant date (March 2, 2017) fair value of $74.80 per share. These shares vested 25% on the date shares were determined and
awarded and will vest 25% per year on January 1 in years 2018, 2019 and 2020. The shares are being expensed on a straight-line
basis over the remaining service period.
Notwithstanding the foregoing, the shares issued to the Company’s former Chief Financial Officer under these plans became fully
vested on the grant date of the awards in the first quarter of 2017.
In the second quarter of 2017, the Committee approved an equity compensation plan for certain of its executive officers based
upon certain annual performance measures for 2017, including FFO per share, same property net operating income change, general
and administrative costs, and fixed charge coverage. During the first quarter of 2018, the Committee will measure the Company's
performance for 2017 against bright-line tests established by the Committee on the grant date of May 10, 2017. The number of
shares that may be earned for the achievement of the annual performance measures could range from zero to 21,096. These shares,
which have a grant date fair value of $78.18, would vest 20% on the date shares are determined and 20% per year on each January
1 for the subsequent four years. On the grant date of May 10, 2017, the Company began recognizing expense for its estimate of
the shares that may be earned pursuant to these awards; the shares are being 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.
Also in the second quarter of 2017, the Committee approved an equity compensation plan for certain of its executive officers based
upon the achievement of individual goals for each of the officers included in the plan. Any shares issued pursuant to the individual
goals in this compensation plan will be determined by the Committee in its discretion and issued in the first quarter of 2018. The
number of shares to be issued on the grant date for the achievement of individual goals could range from zero to 5,274. These
shares would vest 20% on the date shares are determined and awarded and 20% per year on each January 1 for the subsequent
four years. The Company will begin recognizing the expense for any shares awarded on the grant date in the first quarter of 2018,
and the shares will be expensed on a straight-line basis over the remaining service period.
Also in the second quarter of 2017, the Committee approved a long-term equity compensation plan for certain of the Company’s
executive officers that includes three components based on total shareholder return and one component based only on continued
service as of the vesting dates.
The three long-term equity compensation plan components based on total shareholder return are subject to bright-line tests that
will compare the Company's total shareholder return to the NAREIT Equity Index and to the Company's industrial REIT peer
group. The first plan will measure the bright-line tests over the one-year period ending December 31, 2017. During the first
quarter of 2018, the Committee will measure the Company's performance for the one-year period against bright-line tests established
by the Committee on the grant date of May 10, 2017. The number of shares to be earned on the measurement date could range
from zero to 4,730. These shares would vest 100% on the date the earned shares are determined. On the grant date of May 10,
2017, the Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined
using a simulation pricing model developed to specifically accommodate the unique features of the award.
65
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The second plan will measure the bright-line tests over the two-year period ending December 31, 2018. During the first quarter
of 2019, the Committee will measure the Company's performance for the two-year period against bright-line tests established by
the Committee on the grant date of May 10, 2017. The number of shares to be earned on the measurement date could range from
zero to 9,460. These shares would vest 100% on the date the earned shares are determined. On the grant date of May 10, 2017,
the Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined using
a simulation pricing model developed to specifically accommodate the unique features of the award.
The third plan will measure the bright-line tests over the three-year period ending December 31, 2019. During the first quarter
of 2020, the Committee will measure the Company's performance for the three-year period against bright-line tests established
by the Committee on the grant date of May 10, 2017. The number of shares to be earned on the measurement date could range
from zero to 18,917. These shares would vest 75% on the date the earned shares are determined in the first quarter of 2020 and
25% on January 1, 2021. On the grant date of May 10, 2017, the Company began recognizing expense for this plan based on the
grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate
the unique features of the award.
The component of the long-term equity compensation plan based only on continued service as of the vesting dates was awarded
on May 10, 2017. On that date, 5,406 shares were granted to certain executive officers subject only to continued service as of the
vesting dates. These shares, which have a grant date fair value of $78.18 per share, will vest 25% in the first quarter of 2018 and
25% on January 1 in years 2019, 2020 and 2021. The shares are being expensed on a straight-line basis over the remaining service
period.
Also during the second quarter of 2017, 5,169 shares were granted to certain executive officers subject only to continued service
as of the vesting dates. These shares, which have a weighted average grant date fair value of $81.27 per share, vested 20% on
January 1, 2018, and will vest 20% per year on January 1 in years 2019, 2020, 2021 and 2022. The shares are being expensed on
a straight-line basis over the remaining service period.
Also during the second quarter of 2017, 12,850 shares were granted to certain non-executive officers subject only to continued
service as of the vesting dates. These shares, which have a grant date fair value of $84.57 per share, vested 20% on January 1,
2018, and will vest 20% per year on January 1 in years 2019, 2020, 2021 and 2022. The shares are being expensed on a straight-
line basis over the remaining service period.
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. For shares subject to contingencies, dividends are accrued based upon
the number of shares expected to be awarded. Share certificates and dividends are delivered to the employee as they vest. As of
December 31, 2017, there was $5,988,000 of unrecognized compensation cost related to unvested restricted stock compensation
for employees and directors that is expected to be recognized over a weighted average period of 2.7 years.
Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to employees with the related
weighted average grant date fair value share prices for 2017, 2016 and 2015. Of the shares that vested in 2017, 2016 and 2015,
33,695 shares, 57,316 shares and 32,409 shares, respectively, were withheld by the Company to satisfy the tax obligations for
those employees who elected this option as permitted under the applicable equity plan. As of the grant date, the fair value of shares
that were granted during 2017, 2016 and 2015 was $7,155,000, $4,736,000 and $6,145,000, respectively. As of the vesting date,
the fair value of shares that vested during 2017, 2016 and 2015 was $6,441,000, $10,013,000 and $6,664,000, respectively.
Restricted Stock Activity:
Unvested at beginning of year
Granted (1)
Forfeited
Vested
Unvested at end of year
Years Ended December 31,
2017
2016
2015
Weighted
Average
Grant Date
Fair Value
51.97
$
76.70
36.98
61.62
63.18
Shares
162,087
93,285
(16,000)
(86,728)
152,644
Weighted
Average
Grant Date
Fair Value
$
52.68
58.81
52.89
56.09
51.97
Shares
260,698
80,529
(910)
(178,230)
162,087
Weighted
Average
Grant Date
Fair Value
$
49.79
61.07
—
53.40
52.68
Shares
265,911
100,622
—
(105,835)
260,698
(1) Does not include the restricted shares that may be earned if the performance goals established in 2017 for annual and long-term performance
periods 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 59,477.
66
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Following is a vesting schedule of the total unvested shares as of December 31, 2017:
Unvested Shares Vesting Schedule
2018
2019
2020
2021
2022
Total Unvested Shares
Number of Shares
50,158
44,235
41,064
13,584
3,603
152,644
Directors Equity Awards
The Company has a directors equity plan that was approved by stockholders and adopted in 2013 (the "2013 Equity Plan"). The
Board of Directors has adopted a policy under the 2013 Equity Plan pursuant to which awards will be made to non-employee
Directors. The current policy provides that the Company shall automatically award an annual retainer share award to each non-
employee Director who has been elected or reelected as a member of the Board of Directors at the Annual Meeting. The number
of shares shall be equal to $80,000 divided by the fair market value of a share on the date of such election. If a non-employee
Director is elected or appointed to the Board of Directors other than at an Annual Meeting of the Company, the annual retainer
share award shall be pro rated. The policy also provides that each new non-employee Director appointed or elected will receive
an automatic award of restricted shares of Common Stock on the effective date of election or appointment equal to $25,000 divided
by the fair market value of the Company's Common Stock on such date. These restricted shares will vest over a four-year period
upon the performance of future service as a Director, subject to certain exceptions.
Directors were issued 8,881 shares, 10,072 shares and 9,373 shares of common stock as annual retainer awards for 2017, 2016
and 2015, respectively.
During the third quarter of 2017, 282 shares were granted to a newly elected non-employee Director subject only to continued
service as of the vesting date. The shares, which have a grant date fair value of $88.86 per share, will vest 25% per year on
September 8 in years 2018, 2019, 2020 and 2021. The shares are being expensed on a straight-line basis over the remaining service
period.
During 2013, 417 shares were granted to a newly elected non-employee Director subject only to continued service as of the vesting
date. The shares, which have a grant date fair value of $59.97 per share, vested 25% on each of December 6, 2014, 2015, 2016
and 2017.
As of the vesting date, the fair value of shares that vested during 2017, 2016 and 2015 was $9,000, $8,000 and $6,000,
respectively. Stock-based compensation expense for directors was $670,000, $589,000 and $514,000 for 2017, 2016 and 2015,
respectively.
(12) 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) for 2017, 2016 and 2015 are presented in the Company’s Consolidated Statements of Changes in Equity and are
summarized below. See Note 13 for information regarding the Company’s interest rate swaps.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance at beginning of year
Change in fair value of interest rate swaps - cash flow hedges
Balance at end of year
Years Ended December 31,
2017
2016
2015
(In thousands)
(3,456)
5,451
1,995
1,995
3,353
5,348
$
$
(2,357)
(1,099)
(3,456)
67
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(13) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company
principally manages its exposures to a wide variety of business and operational risks through management of its core business
activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the
amount, sources, and duration of its debt funding and, to a limited extent, the use of derivative instruments.
Specifically, the Company has entered into derivative instruments to manage exposures that arise from business activities that
result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The
Company's derivative instruments, described below, are used to manage differences in the amount, timing and duration of the
Company's known or expected cash payments principally related to certain of the Company's borrowings.
The Company's objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest
rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty
in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying
notional amount.
As of December 31, 2017, EastGroup 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' LIBOR rate components
to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective.
The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Other
comprehensive income (loss) and is subsequently reclassified into earnings through interest expense as interest payments are made
in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the
derivatives, which is immaterial for the periods reported, is recognized directly in earnings (included in Other on the Consolidated
Statements of Income and Comprehensive Income).
Amounts reported in Other comprehensive income (loss) related to derivatives will be reclassified to Interest expense as interest
payments are made or received on the Company's variable-rate debt. The Company estimates the swap interest receipts will be
$617,000 over the next twelve months. These receipts approximate the expected cash interest receipts due from counterparties
for the swaps. Since the interest payments and receipts on the swaps in combination with the associated debt have been effectively
fixed, this estimate is not in addition to the Company's total expected combined interest payments or expense for the next twelve
months.
The Company's valuation methodology for over-the-counter (“OTC”) derivatives is to discount cash flows based on Overnight
Index Swap (“OIS”) rates. Uncollateralized or partially-collateralized trades are discounted at OIS, but include appropriate
economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and
credit risk. The Company calculates its derivative values using mid-market prices.
As of December 31, 2017 and 2016, 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 December 31, 2017
Notional Amount as of December 31, 2016
(In thousands)
Interest Rate Swap
Interest Rate Swap
Interest Rate Swap
Interest Rate Swap
Interest Rate Swap
Interest Rate Swap
Interest Rate Swap
$80,000
$75,000
$75,000
$65,000
$60,000
$40,000
$15,000
$80,000
$75,000
$75,000
$65,000
$60,000
$40,000
$15,000
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the
Consolidated Balance Sheets as of December 31, 2017 and 2016. See Note 18 for additional information on the fair value of the
Company's interest rate swaps.
68
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivatives
As of December 31, 2017
Derivatives
As of December 31, 2016
Balance Sheet Location
Fair Value
Balance Sheet Location
Fair Value
(In thousands)
Derivatives designated as cash flow hedges:
Interest rate swap assets
Interest rate swap liabilities
Other assets
Other liabilities
$
6,034
695
Other assets
Other liabilities
$
4,546
2,578
The table below presents the effect of the Company's derivative financial instruments on the Consolidated Statements of Income
and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015:
Years Ended December 31,
2017
2016
2015
(In thousands)
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest Rate Swaps:
Amount of income (loss) recognized in Other comprehensive income (loss)
on derivatives $
1,437
Amount of loss reclassified from Accumulated other comprehensive income
(loss) into Interest expense 1,916
1,410
4,041
(5,374)
4,275
See Note 12 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.
As of December 31, 2017, the fair value of derivatives in an asset position related to these agreements was $6,034,000, and the
fair value of derivatives in a liability position related to these agreements was $695,000. As of December 31, 2017, the Company
has not posted any collateral related to these arrangements. If the Company had breached any of the contractual provisions of the
derivative contract, it could have been required to settle its obligations under the agreements at their termination value. The swap
termination value of derivatives in an asset position was an asset in the amount of $6,084,000, and the swap termination value of
derivatives in a liability position was a liability in the amount of $717,000.
69
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(14) EARNINGS PER SHARE
The Company applies ASC 260, Earnings Per Share, which requires companies to present basic and diluted EPS. Reconciliation
of the numerators and denominators in the basic and diluted EPS computations is as follows:
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
Numerator – net income attributable to common stockholders
Denominator – weighted average shares outstanding
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE
TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
2017
2016
2015
(In thousands)
$
83,183
33,996
95,509
32,563
47,866
32,091
Numerator – net income attributable to common stockholders
$
83,183
95,509
47,866
Denominator:
Weighted average shares outstanding
Unvested restricted stock
Total Shares
(15) QUARTERLY RESULTS OF OPERATIONS – UNAUDITED
33,996
51
34,047
32,563
65
32,628
32,091
105
32,196
2017 Quarter Ended
2016 Quarter Ended
Mar 31
Jun 30
Sep 30
Dec 31
Mar 31
Jun 30
Sep 30
Dec 31
(In thousands, except per share data)
$ 66,409
90,004
(53,436)
(53,027)
12,973
36,977
69,001
(53,029)
15,972
71,944
(54,277)
17,667
73,189
(51,359)
21,830
93,279
(49,186)
44,093
64,043
(49,243)
14,800
66,614
(51,243)
15,371
(154)
(87)
(88)
(77)
(119)
(180)
(139)
(147)
$ 12,819
36,890
15,884
17,590
21,711
43,913
14,661
15,224
Revenues
Expenses
Net Income
Net income attributable to
noncontrolling interest in joint
ventures
Net income attributable to EastGroup
Properties, Inc. common
stockholders
BASIC PER SHARE DATA FOR NET
INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS (1)
Net income attributable to common
stockholders
Weighted average shares outstanding
33,361
33,987
34,215
34,406
$
0.38
1.09
0.46
0.51
0.67
32,254
1.36
32,376
0.45
32,741
0.46
32,874
DILUTED PER SHARE DATA FOR
NET INCOME ATTRIBUTABLE TO
EASTGROUP PROPERTIES, INC.
COMMON STOCKHOLDERS (1)
Net income attributable to common
stockholders
Weighted average shares outstanding
$
0.38
33,409
1.08
34,040
0.46
34,290
0.51
34,505
0.67
32,307
1.35
32,440
0.45
32,823
0.46
32,964
(1) The above quarterly earnings per share calculations are based on the weighted average number of common shares outstanding during
each quarter for basic earnings per share and the weighted average number of outstanding common shares and common share equivalents
during each quarter for diluted earnings per share. The annual earnings per share calculations in the Consolidated Statements of Income
and Comprehensive Income are based on the weighted average number of common shares outstanding during each year for basic earnings
per share and the weighted average number of outstanding common shares and common share equivalents during each year for diluted
earnings per share. The sum of quarterly financial data may vary from the annual data due to rounding.
70
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(16) DEFINED CONTRIBUTION PLAN
EastGroup maintains a 401(k) plan for its employees. The Company makes matching contributions of 50% of the employee’s
contribution (limited to 10% of compensation as defined by the plan) and may also make annual discretionary contributions. The
Company’s total expense for this plan was $672,000, $675,000 and $585,000 for 2017, 2016 and 2015, respectively.
(17) 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 and for which the Company
is adequately insured.
(18) FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides
guidance for using fair value to measure financial assets and liabilities. The Codification requires disclosure of the level within
the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets
for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or
similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable
in the market (Level 3).
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance
with ASC 820 at December 31, 2017 and 2016.
Financial Assets:
Cash and cash equivalents
Mortgage loans receivable
Interest rate swap assets
Financial Liabilities:
Unsecured bank credit facilities - variable rate (2)
Unsecured bank credit facilities - fixed rate (2)
Unsecured debt (2)
Secured debt (2)
Interest rate swap liabilities
December 31,
2017
2016
Carrying
Amount (1)
Fair
Value
Carrying
Amount (1)
Fair
Value
(In thousands)
$
16
4,581
6,034
116,339
80,000
715,000
200,354
695
16
4,569
6,034
116,277
80,003
703,871
206,408
695
522
4,752
4,546
112,020
80,000
655,000
258,594
2,578
522
4,747
4,546
111,923
79,998
623,147
266,585
2,578
(1) Carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions, except as indicated
in the notes below.
(2) Carrying amounts and fair values shown in the table exclude debt issuance costs (see Notes 6 and 7 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.
Mortgage loans receivable (included in Other assets on the Consolidated Balance Sheets): The fair value is estimated by
discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit
ratings and for the same remaining maturities (Level 2 input).
Interest rate swap assets (included in Other assets on the Consolidated Balances Sheets): The instruments are recorded at fair
value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for
substantially the full term of the contract (Level 2 input). See Note 13 for additional information on the Company's interest rate
swaps.
71
EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unsecured bank credit facilities: The fair value of the Company’s unsecured bank credit facilities is estimated by discounting
expected cash flows at current market rates (Level 2 input), excluding the effects of debt issuance costs.
Unsecured debt: The fair value of the Company’s unsecured debt is estimated by discounting expected cash flows at the rates
currently offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers (Level 2 input),
excluding the effects of debt issuance costs.
Secured debt: The fair value of the Company’s secured debt is estimated by discounting expected cash flows at the rates currently
offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers (Level 2 input), excluding
the effects of debt issuance costs.
Interest rate swap liabilities (included in Other liabilities on the Consolidated Balance Sheets): The instruments are recorded
at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for
substantially the full term of the contract (Level 2 input). See Note 13 for additional information on the Company's interest rate
swaps.
(19) SUBSEQUENT EVENTS
On January 26, 2018, EastGroup closed the sale of World Houston 18, a 33,000 square foot, non-EastGroup developed, single-
tenant building in Houston, for $2.5 million. The transaction generated a gain on sale which will be recognized in the first quarter
of 2018.
Subsequent to December 31, 2017, the Company executed a commitment letter for $60 million of senior unsecured private
placement notes with an insurance company. The notes, which are expected to close in April 2018, have a 10-year term and a
fixed interest rate of 3.93% with semi-annual interest payments. The notes will not be and have not been registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements.
72
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
:
)
c
(
s
e
i
t
r
e
p
o
r
P
e
t
a
t
s
E
l
a
e
R
n
o
i
t
p
i
r
c
s
e
D
:
l
a
i
r
t
s
u
d
n
I
A
D
I
R
O
L
F
a
p
m
a
T
7
9
/
6
8
/
1
8
9
1
3
9
9
1
6
9
9
1
8
8
9
1
5
8
-
4
7
9
1
7
8
/
3
8
9
1
8
9
/
7
9
/
0
9
9
1
0
0
0
2
9
9
9
1
5
0
0
2
6
0
0
2
1
0
0
2
8
9
9
1
8
9
9
1
1
0
0
2
7
0
0
2
1
0
0
2
7
0
0
2
8
0
0
2
5
1
0
2
9
0
0
2
8
0
0
2
8
0
0
2
8
9
9
1
9
9
/
8
9
9
1
4
0
0
2
1
0
0
2
0
9
/
7
8
9
1
9
9
-
3
9
9
1
4
9
9
1
7
9
9
1
9
9
9
1
8
9
/
7
9
9
1
8
9
9
1
8
9
/
7
9
9
1
0
0
0
2
0
0
0
2
8
9
/
7
9
9
1
8
9
9
1
8
9
9
1
3
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
8
9
9
1
8
9
9
1
2
0
0
2
3
0
0
2
1
1
0
2
9
2
1
,
6
5
4
5
,
8
8
2
6
,
4
8
8
7
,
3
9
5
5
,
1
3
6
7
,
4
4
3
2
,
4
9
9
3
,
3
3
2
8
,
1
0
4
1
,
2
1
1
1
,
2
8
8
7
,
2
0
2
0
,
4
4
1
5
,
2
1
7
1
,
1
0
5
7
,
2
0
6
2
,
2
5
5
6
,
1
5
2
4
1
4
3
,
1
7
7
4
8
9
4
5
2
7
,
2
9
0
4
,
5
4
3
3
,
3
4
3
9
,
1
1
7
0
,
6
7
3
9
,
8
5
6
0
,
4
1
4
9
0
,
8
0
9
4
,
2
1
5
4
5
,
7
8
7
3
,
6
0
6
5
,
2
0
0
4
,
8
7
9
0
,
8
1
5
4
,
5
7
9
4
,
4
2
7
0
,
5
0
8
2
,
4
2
8
6
,
5
9
0
6
,
8
0
2
9
,
5
5
3
6
,
3
7
2
9
,
7
7
7
5
,
6
3
8
8
,
5
3
7
0
,
7
1
8
5
,
5
8
7
6
,
1
6
7
7
,
1
6
0
2
,
6
8
9
6
,
0
1
3
3
6
,
7
2
2
7
,
4
5
6
5
,
6
5
9
4
,
5
3
5
1
,
2
0
1
2
,
7
2
9
0
,
7
7
1
8
,
4
2
4
8
,
3
7
1
4
,
4
3
4
9
,
3
7
1
2
,
5
0
0
5
,
7
3
7
2
,
5
9
7
0
,
3
5
4
2
,
7
1
6
6
,
5
1
7
0
,
5
2
2
0
,
6
0
0
8
,
4
3
9
4
,
1
9
4
5
,
1
9
4
9
,
4
5
6
3
,
9
8
1
7
,
6
9
0
7
,
3
3
6
2
,
3
3
1
3
1
,
9
2
3
4
8
5
7
5
,
1
0
8
9
3
8
8
7
0
4
0
9
1
,
1
5
0
0
,
1
4
3
6
5
5
6
5
5
6
7
3
3
5
6
4
7
4
6
6
5
5
2
8
6
6
1
9
2
1
8
9
0
1
,
1
1
8
7
5
8
1
7
2
2
1
5
0
,
1
7
5
2
,
1
3
3
3
,
1
5
1
9
3
1
0
,
1
2
3
1
,
4
7
2
5
,
4
9
9
8
,
5
5
6
7
,
2
2
7
5
,
1
0
5
6
5
8
5
,
2
4
0
4
,
2
9
9
3
5
5
6
5
2
6
7
1
4
,
4
9
7
4
,
1
4
7
3
,
1
0
7
6
,
1
6
9
1
,
3
3
7
7
3
5
8
,
5
1
4
2
,
5
0
3
2
,
6
3
6
9
,
4
3
9
4
,
1
9
4
5
,
1
7
3
9
7
6
3
,
2
2
7
3
,
1
2
6
4
5
3
6
,
1
3
7
7
6
5
,
3
1
9
5
,
6
0
0
8
,
3
3
6
9
,
3
3
0
5
,
1
5
2
6
,
4
8
8
6
,
4
8
1
4
,
4
7
8
1
,
3
—
8
1
3
,
3
8
3
7
,
3
6
2
1
,
6
3
0
6
,
3
—
2
7
4
,
6
—
—
—
—
—
—
2
1
0
,
4
8
9
9
,
6
6
4
3
,
5
7
4
2
,
3
7
9
4
,
7
2
3
4
8
5
7
5
,
1
0
8
9
3
4
8
7
0
4
0
9
1
,
1
5
0
0
,
1
4
3
6
5
5
6
5
5
6
7
3
3
5
6
4
9
0
1
,
1
7
4
6
9
3
4
2
8
6
4
2
7
2
4
6
3
4
8
8
1
6
5
8
1
7
2
2
7
5
2
,
1
3
3
3
,
1
5
1
9
3
1
0
,
1
1
3
1
,
4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
k
r
a
P
e
c
r
e
m
m
o
C
t
e
e
r
t
S
h
t
6
5
I
I
&
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
i
m
a
j
n
e
B
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
i
m
a
j
n
e
B
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
r
o
p
t
s
e
W
k
r
a
P
e
c
r
e
m
m
o
C
t
r
o
p
t
e
J
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
V
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
V
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
I
V
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
e
d
l
a
W
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
e
d
l
a
W
I
I
I
V
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
X
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
A
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
B
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
y
a
w
s
s
e
r
p
x
E
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
y
a
w
s
s
e
r
p
x
E
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
n
e
B
o
l
i
S
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
k
a
l
t
s
e
W
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
r
o
p
r
i
A
I
I
I
&
I
h
t
r
o
N
r
e
v
i
R
m
l
a
P
r
e
t
n
e
C
r
e
v
i
R
m
l
a
P
I
I
h
t
r
o
N
r
e
v
i
R
m
l
a
P
I
h
t
u
o
S
r
e
v
i
R
m
l
a
P
I
I
h
t
u
o
S
r
e
v
i
R
m
l
a
P
7
0
0
2
5
1
0
2
6
1
0
2
4
8
9
1
4
9
/
3
9
/
5
7
9
1
1
1
0
2
1
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
5
7
9
1
6
7
9
1
0
8
9
1
4
9
9
1
2
0
0
2
2
0
0
2
7
9
/
6
9
9
1
7
9
/
6
9
9
1
8
9
/
7
9
/
7
8
/
4
7
9
1
8
9
/
7
9
/
9
8
9
1
9
9
9
1
8
9
/
7
9
9
1
2
8
/
0
8
9
1
5
7
9
1
9
9
9
1
1
0
0
2
2
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
6
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
8
0
0
2
2
1
0
2
2
1
0
2
8
9
9
1
9
9
9
1
3
0
0
2
9
9
9
1
9
9
9
1
9
9
9
1
9
9
9
1
9
9
9
1
9
9
9
1
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
3
0
0
2
8
9
/
7
9
9
1
1
7
2
,
1
0
5
2
,
2
4
7
7
2
3
6
1
7
2
2
7
2
,
1
4
1
3
,
3
0
1
8
3
0
9
2
2
6
,
8
2
8
0
,
2
2
3
6
,
2
6
5
8
,
3
2
1
2
,
2
6
1
5
,
1
9
7
3
,
3
4
9
1
,
2
4
2
3
,
2
4
9
6
,
2
8
5
3
,
1
5
0
8
,
2
5
9
1
,
2
8
1
1
,
2
2
4
8
,
1
6
5
0
,
2
9
7
8
,
1
4
5
3
,
2
2
0
9
,
1
5
1
4
,
1
4
9
7
2
6
0
,
6
6
8
7
,
1
1
2
0
7
,
3
8
2
6
,
7
7
6
7
,
8
8
7
4
,
2
2
9
2
,
5
9
9
6
,
1
0
2
7
,
1
1
7
2
,
5
6
4
6
,
9
7
0
2
,
3
4
0
0
,
7
2
0
2
,
8
7
8
1
,
2
9
8
6
,
4
9
9
3
,
1
0
0
4
,
1
8
1
1
,
3
1
6
4
6
,
1
1
2
3
2
,
4
4
5
6
,
4
4
3
8
,
6
5
1
6
,
4
3
4
5
,
3
0
4
7
,
5
5
9
7
,
4
3
6
3
,
5
4
4
6
,
5
8
5
1
,
4
2
0
2
,
5
6
6
7
,
4
0
9
0
,
6
8
3
1
,
5
4
8
8
,
4
5
5
8
,
5
5
3
2
,
7
6
7
8
,
6
1
2
9
,
6
1
8
2
,
5
5
3
7
,
3
2
4
1
,
4
6
3
3
,
5
0
7
8
,
3
8
8
9
,
2
3
4
1
,
5
3
5
1
,
4
1
2
7
,
4
4
9
8
,
4
6
8
4
,
3
9
2
8
,
4
4
2
4
,
4
3
4
5
,
5
2
3
6
,
4
2
0
5
,
4
4
8
2
,
5
5
1
7
,
6
5
4
3
,
6
3
5
4
,
6
7
6
8
,
4
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
1
9
7
0
4
1
,
2
d
n
a
L
5
9
4
4
2
6
5
6
5
1
9
2
3
0
6
0
0
3
0
2
3
7
9
4
2
1
5
2
7
4
,
1
8
9
4
,
1
5
4
7
5
5
5
7
9
5
2
4
6
2
4
6
0
5
7
2
7
6
3
7
3
2
4
3
7
4
5
6
0
5
2
8
3
1
7
5
0
2
5
1
3
5
8
6
4
4
1
4
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
3
1
5
5
4
1
,
1
8
2
4
4
0
0
,
7
2
0
2
,
8
6
7
4
5
7
2
,
2
4
5
4
3
0
4
1
0
9
,
5
1
9
2
,
1
9
2
5
5
7
6
,
2
2
5
2
,
1
1
1
0
,
1
2
7
8
,
1
2
3
0
,
1
4
0
8
,
1
5
8
3
,
2
6
8
4
,
3
9
2
8
,
4
4
2
4
,
4
3
4
5
,
5
2
3
6
,
4
2
0
5
,
4
4
8
2
,
5
5
1
7
,
6
5
4
3
,
6
3
5
4
,
6
7
6
8
,
4
4
7
8
5
7
,
4
2
0
5
,
8
9
7
7
,
2
—
—
1
1
7
,
1
4
1
4
,
2
5
4
9
7
9
9
5
4
7
,
5
4
4
4
,
2
3
1
6
,
3
1
6
6
,
2
8
1
6
,
2
7
7
9
,
1
1
7
2
,
3
1
2
1
,
3
7
1
9
,
2
9
0
5
,
2
—
—
—
—
—
—
—
—
—
—
—
1
9
7
9
3
1
,
2
5
9
4
4
2
6
5
6
5
1
9
2
3
0
6
0
0
3
0
2
3
7
9
4
2
1
5
2
7
4
,
1
8
9
4
,
1
5
4
7
5
5
5
7
9
5
2
4
6
2
4
6
0
5
7
2
7
6
3
7
3
2
4
3
7
4
5
6
0
5
2
8
3
1
7
5
0
2
5
1
3
5
8
6
4
4
1
4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8
9
7
2
,
0
6
6
2
,
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
I
I
I
&
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
s
i
d
a
M
V
&
V
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
s
i
d
a
M
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
s
a
E
a
p
m
a
T
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
s
e
W
a
p
m
a
T
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
s
i
d
a
M
n
o
i
t
p
i
r
c
s
e
D
r
e
t
n
e
C
r
o
l
l
e
c
n
a
h
C
o
d
n
a
l
r
O
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
g
n
a
h
c
x
E
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
g
n
a
h
c
x
E
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
g
n
a
h
c
x
E
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
l
e
b
n
u
S
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
g
n
u
o
Y
n
h
o
J
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
g
n
u
o
Y
n
h
o
J
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
e
t
n
o
m
a
t
l
A
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
e
t
n
o
m
a
t
l
A
I
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
I
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
I
I
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
)
h
(
V
I
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
)
h
(
V
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
V
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
I
V
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
I
I
V
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
X
I
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
X
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
r
e
t
n
e
C
t
r
o
p
n
u
S
I
I
r
e
t
n
e
C
t
r
o
p
n
u
S
I
I
I
r
e
t
n
e
C
t
r
o
p
n
u
S
V
I
r
e
t
n
e
C
t
r
o
p
n
u
S
V
r
e
t
n
e
C
t
r
o
p
n
u
S
I
V
r
e
t
n
e
C
t
r
o
p
n
u
S
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
2
1
0
2
8
0
0
2
4
1
0
2
4
1
0
2
6
1
0
2
5
1
0
2
7
1
0
2
7
1
0
2
8
7
9
1
5
9
/
4
8
9
1
7
8
/
6
8
9
1
7
7
9
1
5
8
/
4
8
9
1
0
0
0
2
0
9
9
1
5
0
0
2
/
7
9
9
1
6
8
9
1
6
8
9
1
6
8
9
1
8
8
9
1
6
8
9
1
8
8
9
1
9
0
0
2
6
0
/
4
0
0
2
9
9
/
0
9
9
1
3
0
0
2
5
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
9
8
9
1
4
9
9
1
3
9
9
1
7
9
9
1
3
2
1
,
1
5
1
7
,
4
8
9
8
6
9
7
0
9
4
3
6
6
9
0
2
3
3
2
1
8
1
,
3
3
7
3
,
5
1
9
0
,
1
1
0
7
7
,
4
8
0
0
2
/
7
9
9
1
9
0
1
,
2
1
0
0
0
2
5
0
0
2
6
1
0
2
6
9
9
1
7
9
9
1
7
9
9
1
8
9
9
1
1
0
0
2
9
9
9
1
4
0
0
2
4
0
0
2
8
9
/
6
9
9
1
5
8
3
,
1
2
1
0
,
4
5
7
6
2
8
3
,
3
1
0
0
,
3
1
9
2
,
4
8
0
3
,
2
9
7
8
,
4
7
1
9
,
7
2
7
5
,
3
5
1
5
,
2
4
0
9
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
0
4
4
,
6
1
2
9
,
8
1
l
a
t
o
T
0
1
5
,
7
8
0
3
,
8
2
6
4
,
7
6
4
6
,
9
8
9
6
,
9
0
3
4
,
8
5
3
3
,
6
0
5
7
,
8
4
6
1
,
8
1
5
0
8
,
9
6
9
5
,
5
2
3
5
0
,
3
7
8
3
,
9
7
2
9
,
5
6
9
8
,
6
1
9
1
5
,
6
7
9
1
,
7
1
7
4
,
6
9
4
5
,
8
0
9
5
,
8
9
6
4
,
7
8
8
1
,
5
5
7
3
,
7
2
2
7
,
4
1
5
6
2
,
9
5
8
5
,
3
2
7
7
5
,
2
8
0
5
,
7
7
5
2
,
2
2
0
4
9
,
4
1
5
0
9
,
5
7
5
3
,
4
4
2
4
,
6
3
7
9
,
3
3
1
1
,
2
1
1
1
5
,
4
1
2
6
5
,
6
0
4
9
,
6
3
3
1
,
3
9
8
2
,
5
7
5
3
,
4
4
2
4
,
6
8
8
4
,
3
2
2
1
,
0
1
9
0
3
,
2
1
7
8
5
,
5
5
5
5
,
5
3
8
6
,
2
3
1
5
1
9
9
5
2
0
,
2
1
1
1
,
1
1
9
9
7
9
0
,
1
8
0
1
,
1
1
6
9
7
4
1
,
1
5
7
3
,
1
2
4
4
,
3
0
4
5
6
7
4
1
1
0
,
2
9
7
8
,
1
7
1
3
,
7
6
1
6
—
—
5
8
4
1
9
9
,
1
2
0
2
,
2
5
7
9
0
5
4
5
8
3
,
1
9
1
5
,
6
7
9
1
,
7
1
7
4
,
6
9
4
5
,
8
0
9
5
,
8
8
6
4
,
7
9
8
3
,
3
4
1
4
,
4
2
7
2
,
8
2
5
7
,
1
1
1
2
,
8
8
7
6
8
0
8
,
1
8
2
9
4
0
,
3
2
9
8
,
1
5
3
9
,
2
6
3
8
5
6
2
,
5
4
2
5
,
3
1
6
9
,
1
3
3
3
,
1
3
8
6
,
2
5
7
7
2
9
,
5
6
9
8
,
6
1
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
—
—
—
—
—
—
—
—
9
9
7
,
1
1
6
9
,
2
0
5
4
,
6
3
1
5
,
7
4
7
3
,
5
1
9
9
8
,
1
0
0
7
,
5
2
1
9
,
4
1
3
4
2
,
2
5
6
4
,
2
9
8
4
,
3
2
5
6
,
2
7
5
8
,
4
5
8
7
,
8
6
2
6
,
3
2
2
2
,
4
—
3
1
5
5
2
0
,
2
1
9
9
1
1
1
,
1
1
9
9
7
9
0
,
1
8
0
1
,
1
2
6
9
7
4
1
,
1
5
7
3
,
1
2
4
4
,
3
0
4
5
6
7
4
1
1
0
,
2
9
7
8
,
1
7
1
3
,
7
3
1
6
—
—
5
8
4
1
9
9
,
1
2
0
2
,
2
5
7
9
0
5
4
5
8
3
,
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9
0
4
—
5
1
9
6
,
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
X
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
I
X
k
r
a
P
e
c
r
e
m
m
o
C
e
g
d
i
r
h
t
u
o
S
I
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
I
I
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
I
I
I
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
V
I
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
V
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
I
I
V
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
o
o
w
r
e
e
D
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
p
i
l
l
i
h
P
k
r
a
P
s
s
e
n
i
s
u
B
e
t
n
i
o
P
e
k
a
L
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
i
l
l
E
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
d
i
s
t
s
e
W
r
e
t
n
e
C
e
c
r
e
m
m
o
C
h
c
a
e
B
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
t
a
t
s
r
e
t
n
I
r
e
t
n
e
C
r
e
l
g
a
l
F
k
r
a
P
s
s
e
n
i
s
u
B
k
e
e
r
C
s
s
e
r
p
y
C
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
a
h
k
c
o
L
r
e
t
n
e
C
e
c
r
e
m
m
o
C
e
t
a
t
s
r
e
t
n
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
o
r
p
n
i
L
a
e
r
a
h
c
a
e
B
m
l
a
P
/
e
l
a
d
r
e
d
u
a
L
.
t
F
e
l
l
i
v
n
o
s
k
c
a
J
n
o
i
t
p
i
r
c
s
e
D
)
f
(
r
t
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
o
p
r
i
A
e
v
i
t
u
c
e
x
E
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
r
e
H
e
u
l
B
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
r
e
H
e
u
l
B
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
r
e
H
e
u
l
B
k
r
a
P
s
s
e
n
i
s
u
B
5
9
e
l
p
m
a
S
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
8
0
0
2
7
0
0
2
8
0
0
2
8
9
9
1
8
8
9
1
8
7
9
1
7
8
/
6
8
9
1
7
8
/
4
7
9
1
0
8
9
1
7
7
9
1
9
9
9
1
0
9
/
6
6
9
1
7
9
/
6
9
9
1
0
8
9
1
4
8
9
1
9
5
9
1
2
9
9
1
9
9
9
1
6
8
9
1
5
0
0
2
5
0
0
2
6
0
0
2
6
9
9
1
2
1
0
2
6
9
9
1
7
9
9
1
9
9
9
1
6
9
9
1
6
9
9
1
9
9
9
1
6
9
9
1
7
9
9
1
8
9
9
1
4
1
0
2
8
9
9
1
7
0
0
2
8
9
9
1
6
9
9
1
4
5
7
,
1
5
0
0
,
2
6
1
2
,
2
5
9
6
1
1
2
,
6
9
1
8
,
0
1
6
4
8
,
1
0
7
6
,
4
9
4
9
,
1
5
2
5
,
5
7
5
7
,
2
3
1
1
,
4
3
3
1
,
3
9
2
9
,
7
8
8
4
6
9
7
,
8
5
5
8
,
2
2
0
9
,
1
7
0
8
,
5
0
2
7
,
5
4
0
9
,
5
5
8
3
,
8
0
9
0
,
3
1
7
4
0
,
7
9
1
3
,
2
2
9
2
8
,
3
1
6
6
,
8
8
0
1
,
4
1
0
2
,
1
1
0
4
5
,
6
0
3
6
,
0
1
1
3
2
,
7
2
4
3
,
4
1
5
1
5
,
9
1
2
0
,
7
2
5
5
8
,
2
3
2
4
,
5
0
3
0
,
0
1
2
9
7
,
4
6
7
9
,
4
2
2
6
,
6
2
8
7
,
0
1
8
6
4
,
4
7
7
4
,
8
1
6
3
9
,
2
2
0
4
,
8
5
6
4
,
3
5
9
1
,
9
4
3
9
,
4
5
4
7
,
7
5
9
5
,
5
8
9
7
,
1
1
4
5
7
,
5
1
9
7
,
6
1
5
5
8
,
2
9
4
7
,
3
7
6
6
,
8
8
2
9
8
2
9
3
6
7
,
1
8
0
3
,
2
9
7
5
,
2
2
4
8
,
3
3
9
8
9
5
2
3
4
6
6
0
0
,
2
6
0
6
,
1
5
8
8
,
2
6
3
6
,
1
4
4
5
,
2
1
6
7
,
3
9
0
8
,
4
3
9
9
,
4
5
6
6
,
6
2
5
1
5
0
1
,
2
9
0
1
,
3
2
3
9
4
4
3
,
1
2
9
8
0
7
1
,
1
1
3
8
1
7
4
,
2
5
9
6
3
2
6
,
1
3
0
3
2
,
0
1
8
1
4
,
4
—
4
7
6
,
1
3
6
3
,
1
)
7
5
1
(
4
8
2
4
1
2
,
3
—
—
—
8
8
7
,
8
6
1
3
,
4
8
6
3
,
5
1
4
0
0
,
2
8
5
0
,
7
3
7
5
,
2
5
2
0
,
8
3
0
1
,
4
4
7
2
,
5
0
0
9
,
4
5
7
1
,
0
1
1
5
7
,
5
3
7
3
,
2
1
2
1
0
,
3
5
6
4
,
3
3
5
4
,
5
1
1
9
1
1
9
0
2
7
,
1
7
9
1
,
2
9
7
5
,
2
2
4
8
,
3
3
9
8
9
5
2
3
4
6
6
0
0
,
2
6
0
6
,
1
5
8
8
,
2
6
3
6
,
1
4
4
5
,
2
1
6
7
,
3
0
3
2
,
0
1
—
4
7
6
,
1
3
6
3
,
1
8
8
/
7
8
9
1
6
9
9
1
9
1
1
,
7
1
9
0
8
,
5
3
9
8
2
,
0
3
0
2
5
,
5
5
2
2
,
8
7
6
0
,
2
2
7
1
5
,
5
—
—
—
—
—
—
—
—
5
5
4
,
2
3
9
6
6
,
—
—
2
5
3
6
,
1
2
3
4
,
2
7
5
2
,
8
4
1
,
6
1
6
0
7
,
1
—
—
—
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
s
a
o
C
n
u
S
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
s
a
o
C
n
u
S
I
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
s
a
o
C
n
u
S
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
a
m
g
e
i
W
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
a
m
g
e
i
W
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
o
o
w
t
n
u
H
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
t
n
e
m
e
l
C
n
a
S
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
t
i
m
e
s
o
Y
a
e
r
a
s
e
l
e
g
n
A
s
o
L
a
e
r
a
o
c
s
i
c
n
a
r
F
n
a
S
A
I
N
R
O
F
I
L
A
C
n
o
i
t
p
i
r
c
s
e
D
s
r
e
y
M
.
t
F
)
e
(
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
z
e
u
g
n
i
m
o
D
)
e
(
r
e
t
n
e
C
l
a
i
r
t
s
u
d
n
I
w
e
i
v
s
g
n
i
K
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
e
e
r
t
S
n
i
a
M
)
e
(
r
e
t
n
e
C
s
s
e
n
i
s
u
B
t
u
n
l
a
W
)
e
(
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
o
t
g
n
i
h
s
a
W
)
e
(
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
y
r
t
s
u
d
n
I
)
e
(
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
y
r
t
s
u
d
n
I
r
e
t
n
e
C
e
t
a
r
o
p
r
o
C
s
e
l
e
g
n
A
s
o
L
r
e
t
n
e
C
s
s
e
n
i
s
u
B
t
u
n
t
s
e
h
C
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
a
n
o
m
a
R
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
o
n
i
h
C
r
e
t
n
e
C
s
s
e
n
i
s
u
B
y
t
i
s
r
e
v
i
n
U
a
r
a
b
r
a
B
a
t
n
a
S
o
n
s
e
r
F
7
8
/
1
8
/
8
7
9
1
8
9
9
1
1
1
7
,
0
1
2
2
9
,
9
1
7
5
4
,
7
1
5
6
4
,
2
0
3
8
,
5
7
2
6
,
1
1
5
6
4
,
2
5
0
9
,
1
1
)
e
(
r
e
t
n
e
C
e
c
r
e
m
m
o
C
w
a
h
S
6
7
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
n
o
i
t
p
i
r
c
s
e
D
o
g
e
i
D
n
a
S
9
8
9
1
5
0
0
2
8
7
9
1
9
7
9
1
2
0
0
2
9
7
9
1
5
1
0
2
8
9
9
1
1
8
/
0
8
/
9
7
9
1
8
9
/
7
9
/
7
8
/
6
8
9
1
8
0
/
6
1
0
2
4
0
/
3
0
/
1
0
0
2
-
9
9
9
1
7
1
0
2
6
9
9
1
8
9
9
1
8
9
9
1
8
9
9
1
8
9
9
1
9
9
9
1
9
9
9
1
2
0
0
2
2
0
0
2
3
0
0
2
7
0
0
2
5
0
0
2
4
0
0
2
7
9
9
1
0
1
0
2
8
8
9
1
0
0
0
2
4
0
0
2
9
0
0
2
8
8
9
1
4
1
0
2
3
0
0
2
2
1
0
2
3
1
0
2
6
1
0
2
6
1
/
5
1
0
2
8
9
9
1
8
9
9
1
8
9
9
1
8
9
9
1
8
9
9
1
1
0
0
2
9
9
9
1
0
0
0
2
0
0
0
2
0
0
0
2
0
0
0
2
0
0
0
2
0
0
0
2
9
7
2
,
5
8
3
6
,
2
3
2
2
,
6
2
8
0
,
2
1
4
5
,
1
4
7
9
,
2
6
2
1
,
5
8
9
9
7
9
3
,
2
6
0
8
,
7
8
9
9
0
1
3
9
1
1
,
1
1
4
1
7
,
4
0
0
7
,
4
3
3
8
,
1
0
8
5
,
5
6
8
9
,
2
1
0
6
,
2
1
7
7
,
2
8
0
6
,
1
3
2
9
,
1
2
8
7
,
1
7
3
2
,
3
5
7
1
,
3
2
8
3
,
1
0
2
7
,
1
1
9
3
6
,
4
1
4
7
6
,
8
2
6
0
,
8
6
4
0
,
3
7
7
5
,
6
7
5
9
6
8
7
,
1
8
8
8
,
6
5
0
1
,
7
6
4
0
,
3
7
7
5
,
6
—
8
5
3
8
,
)
f
(
r
e
t
n
e
C
e
t
a
r
o
p
r
o
C
w
e
i
V
n
a
e
c
O
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
k
a
l
t
s
a
E
5
1
3
,
0
1
7
9
0
,
4
2
3
4
,
3
0
2
1
,
8
8
6
8
,
7
5
1
1
,
1
2
1
1
5
,
5
3
9
7
,
1
4
6
5
1
,
6
6
5
5
4
,
5
3
3
4
8
,
7
1
9
1
6
,
8
6
5
9
,
8
3
0
5
,
3
1
1
2
,
0
1
0
0
1
,
7
1
1
3
,
6
8
1
7
,
5
2
4
1
,
3
8
6
2
,
3
8
7
3
,
4
7
9
9
,
6
0
6
2
,
6
7
1
1
,
3
9
6
5
,
8
8
7
5
,
3
6
1
0
,
3
6
9
2
,
6
6
1
4
,
6
2
5
4
,
8
1
6
7
8
,
4
2
3
4
,
7
3
6
8
6
,
3
5
0
4
8
,
0
3
8
6
5
,
4
1
9
5
9
,
7
1
3
9
,
7
8
7
0
,
3
1
3
5
,
9
0
0
3
,
6
8
7
3
,
5
0
8
0
,
5
2
0
8
,
2
6
8
9
,
2
6
5
6
,
3
6
6
2
,
6
1
4
7
,
5
4
4
7
,
2
9
1
5
6
1
4
6
4
7
,
1
4
2
8
,
1
2
5
4
,
1
3
6
6
,
2
5
3
6
1
6
3
,
4
0
7
4
,
2
1
5
1
6
,
4
5
7
2
,
3
0
6
6
5
2
0
,
1
5
2
4
0
8
6
0
0
8
3
3
9
8
3
6
0
4
3
2
8
2
2
2
7
1
3
7
9
1
5
3
7
3
8
2
6
,
3
0
7
5
,
1
5
3
5
0
9
1
,
2
4
5
6
,
2
2
5
4
,
8
1
5
5
2
,
1
7
2
0
,
3
3
7
9
,
2
2
8
4
,
4
8
6
5
,
4
1
6
6
0
,
2
5
5
6
8
1
5
,
1
7
4
9
,
4
5
4
9
,
1
9
9
5
6
1
3
,
1
3
8
3
7
1
4
7
2
0
,
1
6
6
2
,
6
3
9
4
,
1
9
9
7
7
7
1
4
9
,
4
8
0
0
,
2
1
8
4
,
2
6
0
1
,
4
2
6
7
,
3
—
1
2
6
,
3
5
0
4
,
4
3
3
1
7
,
0
5
8
5
3
,
6
2
—
3
9
8
,
5
3
1
4
,
6
3
2
4
,
2
4
8
5
,
4
5
5
3
,
4
9
7
7
,
4
4
6
7
,
3
9
1
4
,
2
9
6
5
,
2
9
2
6
,
2
—
8
4
2
,
4
5
4
9
,
1
9
1
5
6
1
4
6
4
7
,
1
4
2
8
,
1
2
5
4
,
1
3
6
6
,
2
5
3
6
1
6
3
,
4
0
7
4
,
2
1
5
1
6
,
4
5
7
2
,
3
0
6
6
5
2
0
,
1
5
2
4
0
8
6
0
0
8
3
3
9
8
3
6
0
4
3
2
8
2
2
2
7
1
3
7
9
1
5
3
7
3
—
7
4
4
,
5
3
6
1
2
,
4
2
4
4
,
5
5
1
4
,
—
—
—
—
—
—
—
0
3
7
4
,
0
5
8
1
,
2
9
3
5
,
0
5
7
3
,
—
—
—
—
—
—
—
—
)
h
(
I
I
V
&
,
I
,
V
V
e
s
u
o
h
e
r
a
W
e
t
a
t
s
r
e
t
n
I
5
&
4
,
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
2
&
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
g
(
)
g
(
6
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
8
&
7
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
g
(
)
g
(
9
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
0
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
1
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
2
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
3
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
4
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
5
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
6
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
7
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
3
-
1
r
e
t
n
e
C
e
c
r
e
m
m
o
C
w
e
i
V
k
r
a
P
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
l
i
a
r
T
y
d
a
h
S
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
o
o
w
l
a
V
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
l
e
i
f
h
t
r
o
N
)
g
(
s
e
s
u
o
h
e
r
a
W
e
r
u
t
n
e
V
2
&
1
1
2
1
w
e
i
V
k
e
e
r
C
4
-
1
h
t
r
o
N
c
r
a
P
n
o
t
s
u
o
H
)
g
(
I
I
&
I
e
s
u
o
h
e
r
a
W
e
t
a
t
s
r
e
t
n
I
)
g
(
I
I
I
e
s
u
o
h
e
r
a
W
e
t
a
t
s
r
e
t
n
I
V
I
e
s
u
o
h
e
r
a
W
e
t
a
t
s
r
e
t
n
I
S
A
X
E
T
s
a
l
l
a
D
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
5
9
9
1
4
0
0
2
4
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
9
0
0
2
9
0
0
2
9
0
0
2
1
1
0
2
2
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
2
1
0
2
3
1
0
2
3
1
0
2
3
1
0
2
4
1
0
2
4
1
0
2
4
1
0
2
5
1
0
2
8
9
9
1
1
0
0
2
7
0
0
2
8
0
0
2
0
0
0
2
/
9
9
9
1
5
0
0
2
0
0
0
2
0
0
0
2
3
0
/
0
0
0
2
0
0
0
2
0
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
7
0
0
2
7
0
0
2
8
0
0
2
8
0
0
2
7
0
0
2
1
1
0
2
5
0
0
2
5
0
0
2
1
1
0
2
1
1
0
2
1
1
0
2
1
1
0
2
1
1
0
2
1
1
0
2
1
1
0
2
9
9
9
1
8
9
9
1
2
0
0
2
5
0
0
2
5
0
0
2
3
8
8
6
4
9
,
1
6
7
9
,
1
2
9
4
,
1
1
1
1
,
2
9
8
9
,
2
4
5
3
,
2
4
5
4
,
1
4
2
1
,
1
2
8
7
,
1
9
5
5
,
1
7
4
2
,
1
9
7
0
,
2
7
6
5
,
1
9
6
0
,
1
4
4
2
,
1
1
0
4
,
1
3
8
6
9
1
4
3
1
9
4
4
1
,
1
6
4
3
,
1
1
1
6
8
2
0
,
1
2
7
5
9
0
4
6
5
3
,
2
6
1
4
,
5
6
3
4
,
4
8
6
2
,
1
1
7
3
,
1
4
9
0
,
2
5
5
7
,
3
6
1
0
,
5
8
7
3
,
4
8
7
9
,
4
7
5
2
,
8
0
2
7
,
6
0
9
3
,
4
9
3
6
,
3
1
4
8
,
5
5
1
2
,
5
3
2
9
,
4
9
7
7
,
6
1
7
7
,
4
5
8
0
,
4
0
8
8
,
6
3
3
0
,
9
2
1
8
,
3
5
1
8
,
2
6
6
5
,
5
9
5
1
,
7
3
7
3
,
8
2
2
8
,
5
9
1
4
,
0
1
9
9
5
,
6
5
8
3
,
5
1
9
3
,
5
5
5
0
,
0
1
7
0
9
,
8
2
1
4
,
3
4
8
5
,
3
1
7
7
,
1
2
8
3
,
3
8
0
0
,
4
2
4
9
,
3
2
4
5
,
4
7
4
3
,
7
3
8
8
,
5
2
8
8
,
3
4
9
1
,
3
4
0
0
,
5
5
6
6
,
4
9
4
9
,
3
7
5
5
,
5
7
8
0
,
4
9
3
5
,
3
4
5
3
,
5
7
6
8
,
7
3
7
3
,
3
5
7
4
,
2
2
8
8
,
4
0
0
4
,
6
0
2
3
,
7
2
0
2
,
5
7
4
3
,
9
0
5
9
,
5
4
1
8
,
4
5
2
8
,
4
9
1
1
,
9
9
4
4
,
8
7
9
9
,
2
4
2
1
,
3
3
2
3
3
7
3
8
0
0
,
1
6
3
4
6
3
4
0
1
9
7
3
8
8
0
5
5
4
4
7
3
8
0
5
5
4
7
9
2
2
2
,
1
4
8
6
6
4
5
6
2
5
,
1
6
6
1
,
1
9
3
4
0
4
3
4
8
6
9
5
7
3
5
0
,
1
0
2
6
2
7
0
,
1
9
4
6
1
7
5
6
6
5
6
3
9
8
5
4
5
1
4
0
6
4
9
5
2
6
2
1
,
1
0
6
0
,
2
2
4
9
,
3
2
4
5
,
4
7
4
3
,
7
3
8
8
,
5
2
8
8
,
3
4
9
1
,
3
4
0
0
,
5
5
6
6
,
4
1
4
1
,
4
8
9
7
,
5
7
8
0
,
4
9
3
5
,
3
5
5
6
,
5
7
6
8
,
7
3
7
3
,
3
5
7
4
,
2
2
8
8
,
4
0
0
4
,
6
0
2
3
,
7
2
0
2
,
5
7
4
3
,
9
0
5
9
,
5
4
1
8
,
4
4
9
7
8
5
9
,
2
7
3
7
,
2
7
9
9
,
2
4
2
1
,
3
8
7
2
1
5
,
1
6
5
2
,
2
8
4
9
,
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
3
0
,
4
1
6
1
,
6
2
1
7
,
5
—
—
3
2
3
3
7
3
8
0
0
,
1
6
3
4
6
3
4
0
1
9
7
3
8
8
0
5
5
4
4
7
3
8
0
5
5
2
8
7
1
8
9
4
8
6
6
4
5
5
2
2
,
1
6
6
1
,
1
9
3
4
0
4
3
4
8
6
9
5
7
3
5
0
,
1
0
2
6
2
7
0
,
1
9
4
6
1
7
5
6
6
5
6
3
9
8
5
4
5
1
4
0
6
4
—
—
—
—
—
—
—
—
7
7
0
2
,
—
7
7
9
2
,
0
1
8
2
,
0
7
8
3
,
—
—
7
4
7
3
,
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
9
1
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
0
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
1
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
2
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
3
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
4
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
5
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
f
(
6
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
f
(
8
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
f
(
9
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
f
(
0
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
7
2
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
A
1
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
B
1
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
)
h
(
2
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
3
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
4
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
5
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
6
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
7
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
8
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
9
3
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
0
4
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
1
4
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
2
4
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
e
e
r
G
l
a
r
t
n
e
C
I
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
I
I
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
I
I
I
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
k
r
a
P
s
s
e
n
i
s
u
B
t
n
o
m
n
e
l
G
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
n
o
i
t
p
i
r
c
s
e
D
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
8
0
0
2
8
0
0
2
8
0
0
2
9
0
0
2
1
1
0
2
2
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
4
1
0
2
5
1
0
2
5
1
0
2
3
1
0
2
3
1
0
2
3
1
0
2
4
1
0
2
4
1
0
2
4
1
0
2
5
1
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
7
0
0
2
7
0
0
2
7
0
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
2
1
0
2
7
2
3
,
1
6
2
0
,
2
1
1
9
,
1
1
8
3
,
2
7
0
4
,
1
0
6
4
3
7
7
1
8
6
3
9
5
1
1
6
2
2
2
4
1
4
8
4
5
8
7
9
3
1
9
6
7
8
3
2
8
5
2
5
5
3
3
6
1
5
,
3
2
8
8
,
5
6
8
8
,
6
6
2
7
,
6
0
4
9
,
5
2
3
5
,
2
4
0
6
,
4
1
9
7
,
4
2
5
6
,
4
0
0
8
,
5
9
1
8
,
4
3
4
2
,
5
3
6
5
,
3
4
1
2
,
5
1
7
9
,
4
6
0
2
,
5
5
0
8
,
6
2
4
0
,
5
4
0
9
,
5
6
5
0
,
3
1
8
1
,
5
8
6
2
,
6
1
6
9
,
5
9
1
2
,
5
4
1
1
,
2
1
7
8
,
3
1
0
1
,
4
1
1
1
,
4
6
4
9
,
4
9
9
2
,
4
2
0
7
,
4
7
9
9
,
2
1
8
3
,
4
8
5
3
,
4
7
0
5
,
4
5
6
8
,
5
8
9
3
,
4
6
1
3
,
5
5
9
/
7
8
9
1
0
0
0
2
/
7
9
9
1
6
2
6
,
8
1
1
8
4
,
9
2
1
8
4
,
9
2
6
8
9
1
3
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
8
0
0
2
9
9
/
8
9
9
1
2
0
0
2
/
6
8
9
1
6
0
/
0
0
0
2
-
8
8
9
1
9
9
9
1
1
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
5
0
0
2
0
9
0
,
5
3
0
3
,
2
8
2
3
,
4
1
0
8
,
7
1
1
1
4
,
1
1
4
3
,
1
8
4
2
,
2
9
5
0
,
1
4
1
2
,
7
5
7
7
,
7
5
4
5
,
4
4
3
2
,
9
5
1
2
,
2
4
3
8
8
,
3
6
2
1
,
4
9
5
7
,
4
1
9
7
,
2
5
7
8
,
6
9
1
0
,
4
2
9
8
,
7
2
7
0
,
8
3
0
6
4
,
3
9
9
6
,
3
3
4
1
,
4
3
7
3
,
2
1
4
8
,
5
1
7
4
3
,
4
1
4
9
4
,
1
0
6
4
1
0
7
8
1
6
5
6
7
1
2
7
8
1
4
3
3
7
0
9
6
1
4
5
4
5
8
0
2
5
1
4
5
6
6
5
3
3
8
3
1
6
9
9
6
0
4
9
4
4
6
8
8
5
—
0
0
9
6
2
5
2
4
3
,
1
3
4
1
,
4
3
2
4
7
2
4
6
1
6
8
1
4
6
5
0
,
3
1
8
1
,
5
8
6
2
,
6
1
6
9
,
5
9
1
2
,
5
4
1
1
,
2
1
7
8
,
3
1
0
1
,
4
1
3
0
,
4
9
1
8
,
4
2
2
2
,
4
2
2
6
,
4
7
9
9
,
2
5
8
3
,
4
2
6
3
,
4
2
1
5
,
4
2
7
8
,
5
2
0
4
,
4
0
2
3
,
5
6
5
7
,
8
6
1
2
,
3
1
4
2
,
1
4
5
5
,
1
0
4
6
,
6
0
6
4
,
3
9
9
6
,
3
3
4
1
,
4
3
7
3
,
2
3
4
5
,
3
9
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5
2
7
,
0
2
9
5
6
,
3
8
7
7
,
2
8
3
3
,
6
2
3
4
,
1
3
—
—
—
—
0
6
4
1
0
7
8
1
6
5
6
7
1
2
7
8
1
4
3
3
7
0
9
6
1
2
6
1
8
9
7
9
5
1
2
6
6
6
5
9
2
8
9
0
6
4
9
6
3
3
9
0
4
6
4
8
5
—
0
0
9
6
2
5
2
4
3
,
1
3
4
1
,
4
3
2
4
7
2
4
6
1
6
8
1
4
4
0
8
,
0
1
4
9
4
,
1
—
8
5
3
3
,
1
5
7
3
,
3
6
6
3
,
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
)
f
(
V
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
V
I
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
)
h
(
I
V
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
)
h
(
I
I
V
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
I
I
I
V
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
X
I
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
X
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
I
X
k
r
a
P
s
s
e
n
i
s
u
B
g
n
i
s
s
o
r
C
y
a
w
t
l
e
B
I
k
r
a
P
s
s
e
n
i
s
u
B
d
a
o
R
t
s
e
W
I
I
k
r
a
P
s
s
e
n
i
s
u
B
d
a
o
R
t
s
e
W
I
I
I
k
r
a
P
s
s
e
n
i
s
u
B
d
a
o
R
t
s
e
W
V
I
k
r
a
P
s
s
e
n
i
s
u
B
d
a
o
R
t
s
e
W
n
o
i
t
p
i
r
c
s
e
D
1
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
2
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
3
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
4
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
5
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
6
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
7
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
l
i
a
r
T
d
l
e
i
f
r
e
t
t
u
B
o
s
a
P
l
E
6
0
1
4
,
)
g
(
k
r
a
P
e
c
r
e
m
m
o
C
s
a
j
o
R
—
—
—
—
—
—
—
0
2
5
1
,
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
n
w
o
D
o
m
a
l
A
5
1
,
3
1
-
1
k
r
a
P
s
s
e
n
i
s
u
B
n
o
i
r
A
I
r
e
t
n
e
C
s
s
e
n
i
s
u
B
n
e
T
s
a
c
i
r
e
m
A
o
i
n
o
t
n
A
n
a
S
4
-
1
r
e
t
n
e
C
s
s
e
n
i
s
u
B
e
r
o
m
t
e
W
)
h
(
8
1
k
r
a
P
s
s
e
n
i
s
u
B
n
o
i
r
A
4
1
k
r
a
P
s
s
e
n
i
s
u
B
n
o
i
r
A
6
1
k
r
a
P
s
s
e
n
i
s
u
B
n
o
i
r
A
7
1
k
r
a
P
s
s
e
n
i
s
u
B
n
o
i
r
A
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
8
0
0
2
8
0
0
2
8
0
0
2
8
0
0
2
6
8
/
5
8
9
1
0
0
0
2
2
1
0
2
2
1
0
2
3
1
0
2
5
1
0
2
5
1
0
2
5
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
9
0
0
2
5
9
9
1
5
9
9
1
0
0
0
2
1
7
9
1
1
7
9
1
3
8
9
1
6
8
9
1
0
8
9
1
9
7
9
1
9
9
9
1
0
0
0
2
1
0
0
2
/
1
8
9
1
6
0
0
2
6
0
0
2
6
0
0
2
6
0
0
2
7
0
0
2
1
1
0
2
8
0
0
2
8
0
0
2
8
0
0
2
3
1
0
2
7
0
0
2
7
0
0
2
7
0
0
2
5
1
0
2
5
1
0
2
4
1
0
2
5
1
0
2
7
1
0
2
5
1
0
2
6
9
9
1
9
9
9
1
0
0
0
2
0
0
0
2
2
0
0
2
2
0
0
2
1
1
0
2
9
9
9
1
1
0
0
2
6
3
6
,
1
7
1
4
,
1
3
1
2
,
1
5
2
6
,
2
0
1
1
,
5
9
7
3
,
1
0
3
2
,
1
5
2
1
,
1
8
3
9
3
6
3
1
8
8
1
9
3
9
2
3
2
1
7
3
9
1
2
8
,
3
6
2
3
,
2
0
7
2
6
8
9
1
4
4
4
9
7
,
2
8
9
3
,
1
1
9
5
,
1
1
9
6
4
2
2
5
8
5
,
1
7
5
8
,
3
0
2
8
,
1
6
9
9
,
3
4
1
3
,
4
5
4
4
,
4
6
3
7
,
8
4
8
5
,
3
9
0
8
,
3
9
9
8
,
3
0
8
6
,
7
2
8
0
,
2
1
8
3
4
,
0
1
9
6
0
,
8
9
9
8
,
4
3
1
5
,
5
9
2
2
,
5
1
4
4
,
5
7
0
6
,
8
9
4
7
,
5
0
3
0
,
1
1
3
2
5
,
6
1
1
7
3
,
5
3
5
4
,
4
2
8
3
3
,
8
1
6
7
6
,
9
6
4
5
,
1
1
9
4
2
,
5
3
4
2
,
1
0
4
0
,
3
5
1
8
,
2
9
8
5
,
1
2
9
1
,
3
3
4
3
,
1
6
0
8
,
7
0
9
5
,
5
6
8
9
,
6
2
9
2
,
4
9
1
7
,
4
7
5
4
,
4
8
8
6
,
4
4
8
9
,
7
7
4
3
,
5
3
2
1
,
0
1
2
4
6
,
4
1
6
1
8
,
4
1
5
8
,
9
1
8
6
6
,
5
1
5
7
3
,
8
2
2
7
,
8
8
8
7
2
1
4
,
4
5
6
2
,
2
5
3
4
,
2
6
3
2
,
1
3
9
5
,
2
3
9
8
6
1
3
,
6
2
7
6
,
4
2
1
4
5
0
5
6
4
5
6
5
0
,
1
4
4
6
,
1
3
8
0
,
1
7
0
6
4
9
7
2
7
7
3
5
7
3
2
6
2
0
4
7
0
9
5
5
5
1
8
8
,
1
2
0
6
,
4
0
7
6
,
2
1
0
3
,
1
4
2
8
,
2
7
3
8
5
5
4
5
7
7
0
8
3
3
5
3
9
9
5
0
5
4
8
1
9
0
9
4
,
1
4
8
5
,
3
9
0
8
,
3
9
9
8
,
3
0
8
6
,
7
9
2
2
,
2
7
3
3
2
9
2
,
4
9
1
7
,
4
7
5
4
,
4
8
8
6
,
4
4
8
9
,
7
7
4
3
,
5
3
2
1
,
0
1
2
4
6
,
4
1
6
1
8
,
4
4
9
2
1
9
6
8
7
4
2
3
6
0
3
3
2
5
3
8
7
6
4
1
8
3
7
3
4
2
3
6
0
,
1
3
6
8
,
1
4
3
9
,
1
0
8
—
—
—
—
9
0
2
,
8
9
4
6
,
6
—
—
—
—
—
—
—
—
—
7
5
7
,
9
1
6
5
7
,
4
1
9
8
5
,
7
8
9
3
,
8
2
8
4
9
4
3
,
3
2
4
7
,
1
2
5
6
,
1
0
9
0
,
1
5
5
8
,
1
0
5
6
3
5
4
,
4
8
3
7
,
2
2
1
4
5
0
5
6
4
5
6
5
0
,
1
4
4
6
,
1
3
8
0
,
1
7
0
6
4
9
7
2
7
7
3
5
7
3
2
6
2
0
4
7
0
9
5
5
5
1
8
8
,
1
2
0
6
,
4
0
7
6
,
2
1
0
3
,
1
4
2
8
,
2
7
3
8
5
5
4
5
7
7
0
8
3
3
5
3
9
9
5
0
5
4
8
1
9
0
9
4
,
1
1
8
2
2
,
3
6
4
2
,
8
3
5
2
,
7
8
9
4
,
—
—
—
—
—
—
—
—
—
—
—
1
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
k
a
O
d
n
a
s
u
o
h
T
2
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
k
a
O
d
n
a
s
u
o
h
T
3
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
k
a
O
d
n
a
s
u
o
h
T
4
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
k
a
O
d
n
a
s
u
o
h
T
I
k
r
a
P
s
s
e
n
i
s
u
B
e
g
d
i
R
o
m
a
l
A
I
I
k
r
a
P
s
s
e
n
i
s
u
B
e
g
d
i
R
o
m
a
l
A
I
I
I
k
r
a
P
s
s
e
n
i
s
u
B
e
g
d
i
R
o
m
a
l
A
2
&
1
k
r
a
P
s
s
e
n
i
s
u
B
t
n
i
o
P
r
e
u
a
h
n
e
s
i
E
4
k
r
a
P
s
s
e
n
i
s
u
B
t
n
i
o
P
r
e
u
a
h
n
e
s
i
E
)
f
(
5
r
e
t
n
e
C
s
s
e
n
i
s
u
B
e
r
o
m
t
e
W
)
f
(
6
r
e
t
n
e
C
s
s
e
n
i
s
u
B
e
r
o
m
t
e
W
)
f
(
7
r
e
t
n
e
C
s
s
e
n
i
s
u
B
e
r
o
m
t
e
W
)
f
(
8
r
e
t
n
e
C
s
s
e
n
i
s
u
B
e
r
o
m
t
e
W
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
a
m
i
t
t
i
R
k
r
a
P
s
s
e
n
i
s
u
B
s
d
n
u
o
r
g
r
i
a
F
n
o
i
t
p
i
r
c
s
e
D
3
1
9
,
2
1
)
g
(
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
g
n
i
s
s
o
r
C
o
d
a
r
o
l
o
C
n
i
t
s
u
A
—
—
—
—
—
—
—
—
—
—
—
—
4
&
3
r
e
t
n
e
C
e
t
a
r
o
p
r
o
C
k
r
a
p
h
t
u
o
S
7
-
5
r
e
t
n
e
C
e
t
a
r
o
p
r
o
C
k
r
a
p
h
t
u
o
S
r
e
t
n
e
C
s
s
e
n
i
s
u
B
e
l
a
d
g
n
i
r
p
S
a
e
r
a
x
i
n
e
o
h
P
A
N
O
Z
I
R
A
I
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
I
I
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
I
I
I
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
V
I
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
V
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
I
V
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
I
I
V
k
r
a
P
l
a
i
r
t
s
u
d
n
I
y
a
w
d
a
o
r
B
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
n
e
r
y
K
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
r
a
p
h
t
u
o
S
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
5
0
0
2
7
0
0
2
3
1
0
2
4
1
0
2
4
1
0
2
5
1
0
2
7
6
9
1
7
8
9
1
9
7
/
7
7
9
1
9
8
/
7
8
9
1
1
8
9
1
7
8
9
1
8
8
9
1
8
0
0
2
1
7
9
1
8
0
0
2
8
0
0
2
5
1
0
2
6
1
0
2
1
0
0
2
4
0
0
2
2
1
0
2
1
1
0
2
1
1
0
2
1
1
0
2
6
9
9
1
7
9
9
1
8
9
9
1
8
9
9
1
0
1
0
2
8
9
9
1
9
9
9
1
0
0
0
2
3
0
0
2
4
0
0
2
6
0
0
2
4
1
0
2
5
1
0
2
3
0
0
2
/
4
9
9
1
3
0
0
2
/
7
9
9
1
0
0
0
2
9
0
0
2
5
9
9
1
9
8
9
1
1
0
0
2
7
0
0
2
7
0
0
2
9
9
9
1
5
0
0
2
0
0
0
2
/
8
9
9
1
2
7
4
,
1
8
3
2
,
2
4
2
1
,
1
2
9
5
2
5
3
1
7
3
1
5
1
,
4
1
5
2
,
6
6
0
9
,
8
0
3
4
,
6
1
0
8
,
3
6
2
2
,
9
5
0
3
,
3
3
6
1
,
5
1
8
3
,
7
7
7
7
,
5
4
1
4
,
3
0
9
2
,
8
1
5
2
,
0
1
4
7
7
,
6
1
7
4
8
,
4
1
7
8
4
,
1
4
4
9
,
1
6
3
3
0
2
1
,
4
7
6
2
,
3
8
0
3
,
1
5
3
0
,
1
8
3
8
,
1
8
7
0
,
2
6
8
1
,
7
3
8
1
2
8
0
6
6
,
2
2
1
2
,
1
9
7
2
,
4
7
2
8
,
3
0
5
4
,
4
4
2
4
,
1
7
1
9
,
4
4
2
3
,
3
1
0
4
,
7
4
6
5
,
1
5
4
7
,
5
7
4
4
,
2
1
2
3
,
3
5
9
9
,
3
2
6
7
,
6
9
9
4
,
4
4
2
0
,
3
1
8
2
,
6
1
2
1
,
1
8
2
8
,
4
6
3
1
,
2
9
7
0
,
3
5
9
9
,
2
9
5
0
,
6
3
9
5
,
7
2
4
5
7
,
1
2
4
8
9
,
2
7
7
5
,
6
3
4
2
,
6
7
2
1
,
4
7
7
1
,
2
8
0
0
,
5
0
5
5
,
5
8
1
4
,
3
0
4
2
,
3
1
5
6
6
,
1
1
4
9
6
,
7
2
3
9
,
6
7
9
1
,
3
1
9
2
,
6
2
3
9
,
6
0
9
4
,
2
6
4
8
8
8
0
,
1
5
2
5
,
1
3
5
6
7
8
3
6
3
9
8
1
4
0
0
3
7
2
9
,
1
0
2
1
,
1
3
4
4
7
1
9
1
1
3
2
4
2
3
0
7
0
0
0
,
1
9
3
8
,
5
7
0
8
9
6
5
,
1
3
9
6
9
0
7
5
7
5
,
1
3
0
4
,
1
—
7
0
7
8
5
6
3
6
1
,
5
1
8
3
,
7
7
7
7
,
5
4
1
4
,
3
0
9
2
,
8
9
3
1
,
7
8
1
1
,
2
5
9
9
2
2
4
9
9
7
,
1
6
1
1
,
1
0
2
7
9
7
0
,
3
5
8
4
,
1
9
5
0
,
6
4
5
7
,
1
2
7
7
1
,
2
9
0
0
,
5
4
0
3
3
7
1
,
2
3
3
8
,
1
1
9
1
6
,
1
0
5
9
,
2
8
4
6
1
8
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
—
—
—
—
—
8
0
7
,
7
1
8
3
,
2
9
2
0
,
2
8
9
6
2
8
4
,
4
7
1
7
,
3
6
1
4
,
1
—
0
1
5
,
1
—
—
—
—
—
4
6
5
,
3
1
8
3
,
3
2
7
6
,
4
2
8
9
,
3
2
4
8
,
1
7
4
6
,
2
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
6
4
8
8
8
0
,
1
5
2
5
,
1
3
5
6
7
8
3
6
3
9
8
1
4
0
0
3
7
2
9
,
1
0
2
1
,
1
4
4
4
2
1
9
1
1
3
2
4
2
3
0
7
0
0
0
,
1
9
3
8
,
5
7
0
8
8
6
5
,
1
6
0
5
2
4
4
7
0
4
,
1
3
0
4
,
1
—
7
0
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
0
1
n
a
t
n
a
S
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
0
1
n
a
t
n
a
S
I
k
r
a
P
s
s
e
n
i
s
u
B
2
0
2
e
n
e
r
y
K
I
I
k
r
a
P
s
s
e
n
i
s
u
B
2
0
2
e
n
e
r
y
K
I
V
k
r
a
P
s
s
e
n
i
s
u
B
2
0
2
e
n
e
r
y
K
k
r
a
P
s
s
e
n
i
s
u
B
o
r
t
e
M
s
y
a
w
e
e
r
F
r
e
l
d
n
a
h
C
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
u
n
e
v
A
h
t
5
3
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
u
n
e
v
A
t
s
1
5
d
n
a
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
y
t
i
s
r
e
v
i
n
U
t
s
a
E
I
I
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
y
t
i
s
r
e
v
i
n
U
t
s
a
E
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
u
n
e
v
A
h
t
5
5
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
n
o
m
m
o
C
e
t
a
t
s
r
e
t
n
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
n
o
m
m
o
C
e
t
a
t
s
r
e
t
n
I
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
s
n
o
m
m
o
C
t
r
o
p
r
i
A
0
6
8
3
,
)
f
(
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
u
n
e
v
A
h
t
0
4
—
—
—
—
—
—
—
—
—
V
I
&
I
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
b
u
l
C
y
r
t
n
u
o
C
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
b
u
l
C
y
r
t
n
u
o
C
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
b
u
l
C
y
r
t
n
u
o
C
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
t
n
i
o
p
h
t
u
o
S
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
o
p
r
i
A
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
n
a
n
e
B
r
e
t
n
e
C
s
s
e
n
i
s
u
B
r
o
b
r
a
H
y
k
S
n
e
T
6
k
r
a
P
s
s
e
n
i
s
u
B
r
o
b
r
a
H
y
k
S
k
r
a
P
s
s
e
n
i
s
u
B
r
o
b
r
a
H
y
k
S
n
o
s
c
u
T
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
n
o
i
t
p
i
r
c
s
e
D
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
9
8
-
7
8
9
1
3
0
/
1
0
0
2
3
8
9
1
7
8
9
1
1
8
9
1
4
9
/
9
8
9
1
2
0
/
1
0
0
2
9
8
9
1
0
0
0
2
6
0
0
2
3
0
0
2
3
1
0
2
6
9
9
1
4
1
0
2
4
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
0
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
0
1
0
2
0
1
0
2
7
0
0
2
8
0
0
2
8
0
0
2
3
1
0
2
8
0
0
2
1
1
0
2
4
1
0
2
1
1
0
2
3
1
0
2
3
1
0
2
3
1
0
2
3
1
0
2
8
0
0
2
4
1
/
3
1
0
2
9
5
4
,
9
1
0
6
,
1
9
9
9
,
1
6
2
6
1
7
9
4
8
8
,
8
0
6
2
,
4
9
5
7
,
2
4
2
2
7
5
1
,
4
9
9
6
,
2
4
7
4
,
1
2
9
4
,
1
0
7
7
5
7
7
9
8
8
7
6
4
7
2
2
6
7
2
,
1
5
3
3
,
3
2
7
7
5
,
0
2
8
5
7
,
2
5
4
6
,
4
2
3
9
,
5
1
8
5
7
,
2
3
5
3
,
4
0
1
9
,
5
2
4
2
,
2
5
3
7
,
3
6
3
5
,
3
2
0
5
8
,
3
1
3
3
5
,
9
7
5
2
,
2
3
2
4
,
5
1
6
4
6
,
6
1
4
4
1
,
4
1
6
7
3
,
7
8
0
3
,
5
0
0
4
,
5
6
7
8
,
7
9
2
6
,
4
1
4
8
,
7
1
0
7
,
4
3
8
8
,
3
5
4
1
,
5
7
0
9
,
1
7
7
1
,
3
2
1
6
,
9
1
6
9
3
,
2
1
7
4
5
,
8
1
1
5
,
1
9
3
1
,
4
1
3
1
6
,
3
1
5
8
6
,
1
1
4
8
9
,
5
8
9
2
,
4
3
4
4
,
4
7
0
4
,
6
2
4
9
,
3
2
7
9
,
6
7
4
0
,
4
0
7
4
5
6
7
5
3
3
8
5
5
4
2
9
,
3
4
5
4
,
1
6
8
9
6
4
7
4
8
2
,
1
3
3
0
,
3
9
5
4
,
2
2
9
3
,
1
0
1
0
,
1
7
5
9
9
6
4
,
1
7
8
6
9
6
8
4
5
6
2
8
4
2
4
8
4
0
3
2
5
9
1
4
4
,
3
0
6
2
,
2
8
9
5
5
5
6
7
9
8
3
5
6
1
9
6
1
1
,
2
5
1
3
,
4
9
5
4
,
4
2
1
4
,
6
5
4
9
,
3
4
7
9
,
6
5
5
6
2
8
1
0
4
,
3
3
0
3
,
4
3
0
6
,
1
5
2
2
,
2
1
7
1
,
6
1
6
3
1
,
0
1
9
4
9
,
7
6
5
4
,
1
3
6
1
,
3
1
7
9
4
,
1
1
7
4
1
,
1
1
8
6
0
,
5
—
—
—
—
—
2
9
3
,
3
0
7
4
5
6
7
5
3
3
8
5
5
4
2
9
,
3
4
5
4
,
1
6
8
9
6
4
7
4
8
2
,
1
3
3
0
,
3
9
5
4
,
2
2
9
3
,
1
3
9
9
1
4
9
4
6
4
,
1
4
8
6
7
6
8
4
5
6
—
—
—
1
2
2
1
,
4
3
0
2
,
—
—
2
4
4
5
,
—
—
7
6
0
9
,
—
7
1
0
4
,
3
0
8
2
,
2
5
8
2
,
—
—
—
—
)
h
(
I
I
r
e
t
n
e
C
k
r
a
P
e
c
r
e
m
m
o
C
)
h
(
I
I
I
r
e
t
n
e
C
k
r
a
P
e
c
r
e
m
m
o
C
k
r
a
P
s
s
e
n
i
s
u
B
d
r
o
F
s
n
o
i
t
a
N
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
r
o
p
r
i
A
k
r
a
P
s
s
e
n
i
s
u
B
k
r
a
P
h
t
r
o
N
k
r
a
P
s
s
e
n
i
s
u
B
h
g
r
e
b
d
n
i
L
I
r
e
t
n
e
C
k
r
a
P
e
c
r
e
m
m
o
C
)
f
(
I
k
r
a
P
e
g
n
a
h
c
r
e
t
n
I
I
I
k
r
a
P
e
g
n
a
h
c
r
e
t
n
I
A
N
I
L
O
R
A
C
H
T
R
O
N
a
e
r
a
e
t
t
o
l
r
a
h
C
n
o
i
t
p
i
r
c
s
e
D
)
h
(
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
e
g
d
i
R
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
e
g
d
i
R
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
e
g
d
i
R
)
g
(
I
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
)
g
(
I
I
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
)
h
(
r
e
t
n
e
C
s
s
e
n
i
s
u
B
w
e
i
v
e
k
a
L
I
I
I
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
V
I
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
I
V
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
r
o
f
r
e
t
a
W
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
8
0
0
2
9
9
9
1
7
1
0
2
9
7
9
1
4
8
9
1
7
8
9
1
7
9
/
6
9
9
1
9
9
9
1
4
1
0
2
0
0
0
2
0
9
9
1
7
9
9
1
6
1
0
2
1
8
9
1
2
0
0
2
3
0
0
2
7
1
0
2
7
1
0
2
7
1
0
2
7
9
9
1
7
9
9
1
8
8
9
1
7
9
/
6
9
9
1
8
9
/
7
9
9
1
2
1
0
2
7
0
0
2
7
0
0
2
9
0
0
2
6
1
0
2
7
9
9
1
1
0
0
2
1
0
0
2
9
0
3
,
4
2
8
7
,
2
2
9
0
,
3
3
2
6
6
9
9
,
1
2
2
8
,
1
6
4
7
3
2
8
,
1
9
8
5
,
5
6
2
9
,
4
6
7
5
,
1
2
7
6
8
2
2
0
4
6
9
7
,
8
1
3
6
3
,
5
4
7
8
,
7
1
4
0
7
,
5
1
6
5
0
,
4
0
9
5
,
3
1
1
4
8
,
7
3
7
5
,
4
1
4
2
2
,
4
1
1
5
6
,
8
2
3
6
3
,
1
1
4
9
0
,
6
2
7
7
9
,
6
0
8
3
,
4
3
1
9
,
6
2
1
9
,
8
7
6
2
,
6
2
2
9
,
5
4
5
9
,
5
0
5
1
,
4
5
1
8
,
5
2
2
3
,
8
6
1
2
,
5
2
7
1
,
5
2
9
0
,
3
7
0
3
,
1
4
8
2
,
4
1
6
8
,
2
7
5
5
,
2
0
3
2
3
2
0
,
1
8
9
0
,
1
0
9
5
1
5
0
,
1
0
5
7
8
8
4
,
1
6
9
4
1
4
1
,
1
6
2
0
,
5
1
7
4
,
8
3
9
0
,
2
3
7
1
,
1
1
3
9
,
1
2
2
3
,
8
3
4
4
3
5
8
,
1
6
1
2
,
4
1
0
6
5
,
3
9
4
4
,
2
1
7
3
3
,
6
3
2
6
,
7
1
1
6
8
,
3
7
7
9
,
2
4
8
8
,
3
—
3
7
7
,
4
9
1
3
,
3
2
9
0
,
3
7
0
3
,
1
4
8
2
,
4
1
6
8
,
2
7
5
5
,
2
0
3
2
3
2
0
,
1
0
9
5
8
9
0
,
1
1
5
0
,
1
0
5
7
1
5
4
,
0
1
5
7
0
,
1
4
8
1
5
,
5
7
0
0
,
8
2
3
3
9
,
4
8
6
0
,
3
1
4
2
4
2
8
6
,
1
4
9
0
,
5
5
2
3
,
6
2
3
3
9
,
4
8
6
0
,
3
1
4
3
3
,
9
5
9
8
,
1
1
6
1
9
,
2
1
9
9
,
8
8
7
8
,
1
1
3
1
6
,
2
3
4
3
7
1
3
0
3
4
8
9
,
3
7
3
9
,
1
4
3
1
,
1
7
0
0
,
5
8
5
9
,
9
9
7
4
,
1
3
4
3
—
3
0
3
5
7
2
,
9
4
7
9
5
4
,
5
3
3
,
2
5
3
0
,
0
9
9
,
1
4
2
4
,
5
4
3
7
7
7
,
1
6
9
8
2
4
,
0
3
0
,
1
4
5
2
,
3
4
3
4
5
3
,
0
0
2
3
8
—
—
—
—
—
—
—
—
—
3
1
4
3
,
1
8
3
3
,
—
—
—
—
—
I
I
&
I
r
e
t
n
e
C
s
s
e
n
i
s
u
B
0
0
4
h
o
l
i
h
S
I
k
r
a
P
e
c
r
e
m
m
o
C
r
o
o
m
d
a
o
r
B
I
I
&
I
s
l
a
o
h
S
e
n
a
c
i
r
r
u
H
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
a
p
m
a
R
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
a
p
m
a
R
I
I
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
a
p
m
a
R
V
I
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
t
r
a
p
m
a
R
)
h
(
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
d
r
o
c
n
o
C
)
f
(
k
r
a
P
l
a
i
n
n
e
t
n
e
C
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
r
o
p
r
i
A
o
r
t
e
M
k
r
a
P
s
s
e
n
i
s
u
B
e
g
n
a
h
c
r
e
t
n
I
e
v
i
t
o
m
o
t
u
A
r
e
w
o
T
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
e
l
l
i
v
r
A
k
r
a
P
e
t
a
r
o
p
r
o
C
s
e
n
o
J
I
P
P
I
S
S
I
S
S
I
M
a
e
r
a
n
o
s
k
c
a
J
A
D
A
V
E
N
s
a
g
e
V
s
a
L
k
r
a
P
s
s
e
n
i
s
u
B
d
o
o
w
m
E
l
k
r
a
P
s
s
e
n
i
s
u
B
d
n
e
b
r
e
v
i
R
O
D
A
R
O
L
O
C
r
e
v
n
e
D
A
N
A
I
S
I
U
O
L
s
n
a
e
l
r
O
w
e
N
A
I
G
R
O
E
G
n
o
i
t
p
i
r
c
s
e
D
a
t
n
a
l
t
A
a
/
n
a
/
n
7
1
0
2
a
/
n
7
1
0
2
a
/
n
7
1
0
2
8
9
9
1
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
7
1
0
2
7
1
0
2
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
5
0
0
2
5
0
0
2
9
0
0
2
8
0
0
2
9
0
/
8
0
0
2
6
0
0
2
6
0
0
2
6
1
0
2
6
1
0
2
6
1
/
5
1
0
2
6
1
/
5
1
0
2
6
1
0
2
7
0
0
2
1
1
0
2
5
1
0
2
2
1
0
2
2
1
0
2
7
0
0
2
5
1
0
2
5
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
7
1
0
2
7
1
0
2
7
1
0
2
—
—
—
4
1
—
6
5
—
1
3
2
—
—
—
—
—
—
—
—
—
3
2
—
—
—
—
—
—
—
—
1
3
1
,
6
0
6
5
,
1
0
5
5
,
3
0
3
2
,
1
1
0
2
1
,
1
1
0
2
1
,
9
2
1
1
,
4
1
0
2
5
,
5
1
6
7
8
,
0
3
1
1
3
,
0
1
5
2
5
,
6
1
7
0
,
3
8
0
1
,
5
6
5
9
,
5
2
7
1
,
7
2
3
9
,
1
2
2
0
,
1
7
9
0
,
7
9
5
1
,
6
4
0
8
,
5
0
5
0
,
4
2
3
7
,
5
2
6
6
,
5
6
5
5
,
1
3
7
6
,
1
0
2
0
,
3
3
5
8
1
9
3
,
5
4
0
7
,
2
4
1
8
,
9
0
8
6
,
6
8
5
3
,
7
9
6
7
,
4
7
5
3
,
1
1
8
9
9
,
3
1
1
7
,
7
3
0
2
,
1
2
5
5
5
8
3
,
1
6
3
0
,
3
1
3
1
,
1
7
9
7
1
0
6
2
4
7
,
6
1
8
5
,
5
6
8
9
,
4
1
8
4
,
3
7
0
5
,
2
2
0
4
5
4
3
7
6
3
6
4
2
0
4
7
7
0
7
6
4
8
6
1
4
,
1
0
4
4
,
4
2
6
7
,
1
3
4
3
,
9
3
6
1
,
4
8
7
8
,
6
2
0
0
6
,
2
2
2
3
,
5
9
1
5
,
2
3
2
7
,
3
1
9
3
,
5
4
7
0
,
1
4
0
7
,
2
4
1
8
,
9
1
8
6
,
6
7
8
3
,
7
3
5
9
,
4
6
0
4
,
1
8
4
1
,
4
1
1
7
,
7
3
0
2
,
1
2
5
5
9
1
1
,
2
0
2
9
,
2
0
2
3
,
4
1
4
0
,
6
5
3
1
,
1
1
2
4
5
5
3
8
7
5
8
1
8
9
6
5
5
2
2
,
3
0
6
2
,
5
1
1
2
,
1
6
0
3
,
1
4
7
7
,
2
2
3
1
,
1
6
0
8
8
3
5
3
4
7
,
6
2
8
5
,
5
6
8
9
,
4
1
8
4
,
3
7
0
5
,
2
2
0
4
5
4
3
7
6
3
6
4
2
4
8
—
—
—
—
—
—
—
1
5
9
,
9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0
4
7
6
8
4
6
4
8
6
1
4
,
1
9
3
4
,
4
3
3
7
,
1
9
5
1
,
9
3
6
1
,
4
8
2
7
,
6
2
0
0
6
,
2
2
2
3
,
5
9
1
5
,
2
9
8
9
,
2
6
3
6
,
1
0
4
0
,
6
6
2
1
,
1
4
8
4
4
5
3
7
7
5
8
1
8
9
6
5
5
2
2
,
3
0
6
2
,
5
1
1
2
,
1
6
0
3
,
1
4
7
7
,
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
I
I
V
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
d
n
a
l
r
e
t
n
e
C
n
o
i
t
u
b
i
r
t
s
i
D
k
e
e
r
C
k
a
O
I
I
X
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
d
n
a
l
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
X
k
r
a
P
e
c
r
e
m
m
o
C
n
o
z
i
r
o
H
d
n
a
l
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
s
a
o
C
n
u
S
V
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
s
a
o
C
n
u
S
d
n
a
l
k
r
a
P
e
c
r
e
m
m
o
C
y
a
w
e
t
a
G
k
r
a
P
e
c
r
e
m
m
o
C
n
o
t
s
e
W
:
)
d
(
t
n
e
m
p
o
l
e
v
e
D
l
a
i
r
t
s
u
d
n
I
n
o
i
t
p
i
r
c
s
e
D
A
D
I
R
O
L
F
4
&
3
1
2
1
w
e
i
V
k
e
e
r
C
d
n
a
l
1
2
1
w
e
i
V
k
e
e
r
C
d
n
a
l
h
t
r
o
N
c
r
a
P
S
A
X
E
T
-
d
n
a
l
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
n
o
i
s
n
a
p
x
e
1
1
0
2
-
d
n
a
l
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
n
o
i
s
n
a
p
x
e
5
1
0
2
d
n
a
l
r
t
C
s
s
e
n
i
s
u
B
l
'
t
n
I
n
o
t
s
u
o
H
d
l
r
o
W
d
n
a
l
k
r
a
P
s
s
e
n
i
s
u
B
d
a
o
R
t
s
e
W
V
I
k
r
a
P
s
s
e
n
i
s
u
B
e
g
d
i
R
o
m
a
l
A
3
k
r
a
P
s
s
e
n
i
s
u
B
t
n
i
o
P
r
e
u
a
h
n
e
s
i
E
5
k
r
a
P
s
s
e
n
i
s
u
B
t
n
i
o
P
r
e
u
a
h
n
e
s
i
E
6
k
r
a
P
s
s
e
n
i
s
u
B
t
n
i
o
P
r
e
u
a
h
n
e
s
i
E
d
n
a
l
g
n
i
s
s
o
r
C
t
s
e
W
n
e
T
e
s
a
h
p
d
n
a
l
k
r
a
P
s
s
e
n
i
s
u
B
t
n
i
o
P
r
e
u
a
h
n
e
s
i
E
d
n
a
l
g
n
i
s
s
o
r
C
y
t
n
u
o
C
-
i
r
T
d
n
a
l
g
n
i
s
s
o
r
C
s
r
e
l
t
t
e
S
1
g
n
i
s
s
o
r
C
s
r
e
l
t
t
e
S
2
g
n
i
s
s
o
r
C
s
r
e
l
t
t
e
S
2
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
S
E
I
T
R
E
P
O
R
P
E
T
A
T
S
E
L
A
E
R
)
s
e
t
o
n
t
o
o
f
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
t
n
I
(
7
1
0
2
,
1
3
R
E
B
M
E
C
E
D
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
a
/
n
7
1
0
2
7
1
0
2
a
/
n
a
/
n
a
/
n
1
1
0
2
5
1
0
2
6
1
0
2
5
1
/
4
1
/
3
1
0
2
8
0
0
2
7
1
/
6
1
0
2
6
1
0
2
-
3
1
0
2
7
1
0
2
7
1
0
2
7
1
0
2
1
0
0
2
—
—
—
—
—
—
—
2
—
—
—
6
2
3
3
4
5
,
1
1
7
4
9
,
2
1
5
9
,
3
1
7
9
7
,
7
3
3
7
,
1
8
6
5
,
4
0
6
1
,
2
9
9
2
,
0
1
5
3
6
,
1
5
6
0
,
1
1
8
8
5
,
6
8
7
8
8
3
2
,
1
4
9
2
5
0
7
2
0
5
6
0
7
5
6
8
1
9
9
3
3
3
3
,
0
1
6
3
0
,
9
4
4
2
,
1
2
1
3
,
1
6
8
8
,
2
9
0
2
,
1
5
5
8
0
3
3
,
3
6
6
8
,
1
9
1
5
7
9
4
7
9
2
,
1
7
0
3
9
9
2
,
0
1
5
3
6
,
1
6
6
0
,
1
1
0
9
5
,
6
8
7
8
0
5
2
,
1
4
9
2
1
2
6
8
1
5
9
9
3
—
—
—
—
—
—
—
—
—
—
5
1
0
,
9
4
1
0
,
2
4
2
0
2
6
,
5
3
1
4
9
3
,
6
0
1
1
2
2
,
9
1
1
6
6
9
,
8
1
4
4
2
,
1
2
1
3
,
1
5
8
8
,
2
7
0
2
,
1
5
5
8
8
1
3
,
3
6
6
8
,
1
9
1
5
7
9
4
7
9
2
,
1
7
0
3
7
2
8
,
3
0
1
—
—
—
—
—
—
—
—
—
—
—
—
d
e
t
c
u
r
t
s
n
o
C
r
a
e
Y
d
e
r
i
u
q
c
A
r
a
e
Y
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
l
a
t
o
T
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
t
n
u
o
m
A
s
s
o
r
G
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
o
t
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
y
n
a
p
m
o
C
e
h
t
o
t
t
s
o
C
l
a
i
t
i
n
I
d
n
a
s
g
n
i
d
l
i
u
B
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
e
c
n
a
r
b
m
u
c
n
E
5
&
4
,
3
k
r
a
P
s
s
e
n
i
s
u
B
2
0
2
e
n
e
r
y
K
V
r
e
t
n
e
C
e
c
r
e
m
m
o
C
b
u
l
C
y
r
t
n
u
o
C
r
e
t
n
e
C
s
s
e
n
i
s
u
B
d
l
e
i
F
n
o
c
l
a
F
I
I
V
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
I
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
r
o
p
r
i
A
d
n
a
l
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
A
N
I
L
O
R
A
C
H
T
R
O
N
n
o
i
t
p
i
r
c
s
e
D
A
N
O
Z
I
R
A
4
e
s
a
h
P
d
n
a
l
k
r
a
P
e
c
r
e
m
m
o
C
k
e
e
r
C
e
l
e
e
t
S
d
n
a
l
I
I
r
e
t
n
e
C
e
c
r
e
m
m
o
C
t
r
o
p
r
i
A
o
r
t
e
M
d
n
a
l
k
r
a
P
e
c
r
e
m
m
o
C
r
o
o
m
d
a
o
r
B
I
I
&
I
r
e
t
n
e
C
s
s
e
r
g
o
r
P
A
I
G
R
O
E
G
d
n
a
l
r
e
t
n
e
C
s
s
e
r
g
o
r
P
I
P
P
I
S
S
I
S
S
I
M
1
0
6
,
9
4
7
3
7
4
,
7
7
5
,
2
5
5
6
,
5
2
1
,
2
8
1
8
,
1
5
4
8
9
9
,
0
8
0
,
1
4
9
3
,
9
4
0
,
1
1
8
0
,
7
4
4
4
5
3
,
0
0
2
$
)
b
(
)
a
(
d
e
n
w
o
e
t
a
t
s
e
l
a
e
r
l
a
t
o
T
.
m
r
i
F
g
n
i
t
n
u
o
c
c
A
c
i
l
b
u
P
d
e
r
e
t
s
i
g
e
R
t
n
e
d
n
e
p
e
d
n
I
f
o
t
r
o
p
e
R
g
n
i
y
n
a
p
m
o
c
c
a
e
e
S
5
8
(a) Changes in Real Estate Properties follow:
Balance at beginning of year
Purchases of real estate properties
Development of real estate properties
Improvements to real estate properties
Carrying amount of investments sold
Write-off of improvements
Balance at end of year (1)
Years Ended December 31,
2017
2016
2015
$
$
2,406,981
51,802
124,938
27,471
(32,787)
(932)
2,577,473
(In thousands)
2,219,448
22,228
203,765
23,157
(61,121)
(496)
2,406,981
2,074,946
28,648
95,032
25,778
(4,750)
(206)
2,219,448
(1) Includes 20% noncontrolling interest in University Business Center of $3,217,000 and $6,853,000 at December 31, 2017 and
2016, respectively.
Changes in the accumulated depreciation on real estate properties follow:
Balance at beginning of year
Depreciation expense
Accumulated depreciation on assets sold
Other
Balance at end of year
Years Ended December 31,
2017
2016
2015
$
694,250
(In thousands)
657,454
69,010
(12,735)
(924)
749,601
$
63,793
(26,501)
(496)
694,250
600,526
59,882
(2,748)
(206)
657,454
(b) The estimated aggregate cost of real estate properties at December 31, 2017 for federal income tax purposes was approximately
$2,536,820,000 before estimated accumulated tax depreciation of $518,257,000. The federal income tax return for the year
ended December 31, 2017, has not been filed and accordingly, this estimate is based on preliminary data.
(c) The Company computes depreciation using the straight-line method over the estimated useful lives of the buildings (generally
40 years) and improvements (generally 3 to 15 years).
(d) The Company transfers development projects to Real estate properties the earlier of 80% occupancy or one year after
completion of the shell construction. Effective January 1, 2018, the Company is implementing an accounting policy change
and will begin transferring properties from Development to Real estate properties at the earlier of 90% occupancy or one
year after completion of the shell construction.
(e) EastGroup has a $49,580,000 non-recourse first mortgage loan with an insurance company secured by Dominguez, Industry
I & III, Kingsview, Shaw, Walnut and Washington.
(f) EastGroup has a $55,317,000 non-recourse first mortgage loan with an insurance company secured by 40th Avenue, Beltway
Crossing V, Centennial Park, Executive Airport, Interchange Park I, Ocean View, Wetmore 5-8 and World Houston 26, 28,
29 & 30.
(g) EastGroup has a $50,161,000 non-recourse first mortgage loan with an insurance company secured by Colorado Crossing,
Interstate I-III, Rojas, Steele Creek 1 & 2, Venture and World Houston 3-9.
(h) EastGroup has a $42,315,000 non-recourse first mortgage loan with an insurance company secured by Arion 18, Beltway
Crossing VI & VII, Commerce Park II & III, Concord, Interstate V-VII, Lakeview, Ridge Creek II, Southridge IV & V and
World Houston 32.
86
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
December 31, 2017
Number of
Loans
Interest
Rate
Maturity Date
Periodic
Payment Terms
1
1
2
$
$
5.15% December 2022
Principal and interest due monthly
5.15% December 2022
Principal and interest due monthly
Face Amount
of Mortgages
Dec. 31, 2017
Carrying
Amount of
Mortgages
(In thousands)
Principal
Amount of Loans
Subject to Delinquent
Principal or Interest (b)
1,826
2,755
4,581
1,826
2,755
4,581 (c)(d)
—
—
—
First mortgage loans:
JCB Limited - California
JCB Limited - California
Total mortgage loans (a)
First mortgage loans:
JCB Limited - California
JCB Limited - California
Total mortgage loans
(a) Reference is made to allowance for possible losses on mortgage loans receivable in the Notes to Consolidated Financial
Statements.
(b) Interest in arrears for three months or less is disregarded in computing principal amount of loans subject to delinquent
interest.
(c) Changes in mortgage loans follow:
Balance at beginning of year
Payments on mortgage loans receivable
Balance at end of year
Years Ended December 31,
2017
2016
2015
(In thousands)
4,875
(123)
4,752
4,752
(171)
4,581
$
$
4,991
(116)
4,875
(d) The aggregate cost for federal income tax purposes is approximately $4.58 million. The federal income tax return for the
year ended December 31, 2017, has not been filed and, accordingly, the income tax basis of mortgage loans as of December 31,
2017, is based on preliminary data.
See accompanying Report of Independent Registered Public Accounting Firm.
87
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
EASTGROUP PROPERTIES, INC.
By: /s/ MARSHALL A. LOEB
Marshall A. Loeb, Chief Executive Officer, President & Director
February 14, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
*
D. Pike Aloian, Director
February 14, 2018
*
H. Eric Bolton, Jr., Director
February 14, 2018
*
Hayden C. Eaves III, Director
February 14, 2018
*
H. C. Bailey, Jr., Director
February 14, 2018
*
Donald F. Colleran, Director
February 14, 2018
*
Fredric H. Gould, Director
February 14, 2018
*
Mary Elizabeth McCormick, Director
February 14, 2018
*
Leland R. Speed, Chairman Emeritus of the Board
February 14, 2018
*
David H. Hoster II, Chairman of the Board
February 14, 2018
/s/ BRENT W. WOOD
* By Brent W. Wood, Attorney-in-fact
February 14, 2018
/s/ MARSHALL A. LOEB
Marshall A. Loeb, Chief Executive Officer,
President & Director
(Principal Executive Officer)
February 14, 2018
/s/ BRUCE CORKERN
Bruce Corkern, Sr. Vice-President, Chief Accounting Officer
and Secretary
(Principal Accounting Officer)
February 14, 2018
/s/ BRENT W. WOOD
Brent W. Wood, Executive Vice-President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
February 14, 2018
88
Inside Front Cover
Inside Front Cover
Inside Back Cover
Inside Back Cover
First and foremost, thank you for your interest in EastGroup Properties. We’re focused on 2018
First and foremost, thank you for your interest in EastGroup Properties. We’re focused on 2018
and the opportunities-challenges that lie ahead, but before we turn the page, I’m pleased to share
and the opportunities-challenges that lie ahead, but before we turn the page, I’m pleased to share
an overview of 2017. This past year was a solid year for the Company from several vantage points
an overview of 2017. This past year was a solid year for the Company from several vantage points
– funds from operations, occupancy, same property operating results, the development pipeline
– funds from operations, occupancy, same property operating results, the development pipeline
and acquisitions. All of which were achieved while improving an already strong balance sheet.
and acquisitions. All of which were achieved while improving an already strong balance sheet.
This mix led to higher dividends and increased shareholder value. Total return to shareholders
This mix led to higher dividends and increased shareholder value. Total return to shareholders
(dividends plus the change in our common stock price) was over 23% for 2017.
(dividends plus the change in our common stock price) was over 23% for 2017.
Transition was a key theme during the year at a Company where we’ve historically had little
Transition was a key theme during the year at a Company where we’ve historically had little
transition. After 37 years with the Company, Keith McKey retired in July as our CFO. I’m simply not
transition. After 37 years with the Company, Keith McKey retired in July as our CFO. I’m simply not
articulate enough to adequately thank Keith for what he has meant to our Company. Upon Keith’s
articulate enough to adequately thank Keith for what he has meant to our Company. Upon Keith’s
retirement, Brent Wood, our Senior Vice President for Texas, relocated to our corporate office to
retirement, Brent Wood, our Senior Vice President for Texas, relocated to our corporate office to
become CFO. Brent joined EastGroup over 20 years ago as assistant controller, transitioned to
become CFO. Brent joined EastGroup over 20 years ago as assistant controller, transitioned to
the operating side of the business and now rotated back into our financial side. Following Brent’s
the operating side of the business and now rotated back into our financial side. Following Brent’s
transition we hired Reid Dunbar to be Senior Vice President for Texas. Ryan Collins joined us in
transition we hired Reid Dunbar to be Senior Vice President for Texas. Ryan Collins joined us in
June as Senior Vice President for the Western Region and opened our first California office. Our
June as Senior Vice President for the Western Region and opened our first California office. Our
California office is important to our strategy given our goal to patiently find an opportunistic way
California office is important to our strategy given our goal to patiently find an opportunistic way
to grow our western portfolio.
to grow our western portfolio.
We were also pleased to see internal career progression as well for John Coleman, Bruce Corkern
We were also pleased to see internal career progression as well for John Coleman, Bruce Corkern
and Staci Tyler. Finally, we were excited to welcome Don Colleran, Executive Vice President, Chief
and Staci Tyler. Finally, we were excited to welcome Don Colleran, Executive Vice President, Chief
Sales Officer for FedEx Corporation, to the Board. Whew – as you can tell, it’s a lengthy list of
Sales Officer for FedEx Corporation, to the Board. Whew – as you can tell, it’s a lengthy list of
moving pieces. Given all those parts and with benefit of hindsight, we are pleased to see how
moving pieces. Given all those parts and with benefit of hindsight, we are pleased to see how
seamlessly everyone stepped into new roles allowing the Company to accomplish all it did in 2017.
seamlessly everyone stepped into new roles allowing the Company to accomplish all it did in 2017.
“Total return to shareholders was over 23% for 2017.”
“Total return to shareholders was over 23% for 2017.”
S
S
R
R
E
E
D
D
L
L
O
O
H
H
E
E
R
R
A
A
H
H
S
S
O
O
T
T
R
R
E
E
T
T
T
T
E
E
L
L
Officers
Officers
(left to right) RYAN COLLINS, Senior Vice President; REID DUNBAR, Senior Vice President; CHRIS SEGREST, Vice President; STACI TYLER, CPA, Vice President
(left to right) RYAN COLLINS, Senior Vice President; REID DUNBAR, Senior Vice President; CHRIS SEGREST, Vice President; STACI TYLER, CPA, Vice President
and Controller; BRIAN LAIRD, Vice President; BRUCE CORKERN, CPA, Senior Vice President and Chief Accounting Officer; BILL GRAY, CPA, Vice President;
and Controller; BRIAN LAIRD, Vice President; BRUCE CORKERN, CPA, Senior Vice President and Chief Accounting Officer; BILL GRAY, CPA, Vice President;
BRENT WOOD, Chief Financial Officer; JOHN COLEMAN, Executive Vice President; MARSHALL LOEB, Chief Executive Officer; MICHAEL SACCO, Vice President;
BRENT WOOD, Chief Financial Officer; JOHN COLEMAN, Executive Vice President; MARSHALL LOEB, Chief Executive Officer; MICHAEL SACCO, Vice President;
KEVIN SAGER, Vice President; JOHN TRAVIS, Vice President; FARRAH KENNEDY, CPA, Vice President; NICK JONES, Vice President; DAVID HICKS, Vice President.
KEVIN SAGER, Vice President; JOHN TRAVIS, Vice President; FARRAH KENNEDY, CPA, Vice President; NICK JONES, Vice President; DAVID HICKS, Vice President.
Not pictured, MICHELLE RAYNER, CPA, Vice President
Not pictured, MICHELLE RAYNER, CPA, Vice President
COVER-EGAR17-4p-to Broadridge R1.indd 2
COVER-EGAR17-4p-to Broadridge R1.indd 2
3/9/18 12:48 PM
3/9/18 12:48 PM
Oak Creek Distribution Center, Tampa, FLOak Creek Distribution Center, Tampa, FL
S
E
I
T
R
E
P
O
R
P
P
U
O
R
G
T
S
A
E
BackCover
Front Cover
T
E
E
F
E
R
A
U
Q
S
CORPORATE HEADQUARTERS
400 West Parkway Place
Suite 100
Ridgeland, MS 39157
601.354.3555
Regional Offices
2966 Commerce Park Drive
Suite 450
Orlando, FL 32819
407.251.7075
7301 North State Highway 161
Suite 215
Irving, TX 75039
972.386.8700
10250 Constellation Boulevard
Suite 100
Los Angeles, CA 90067
323.457.0648
www.eastgroup.net
COVER-EGAR17-4p-to Broadridge R1.indd 1
3/9/18 12:48 PM
201740 million