EastGroup Properties (NYSE:EGP) executives pointed to a stronger finish to 2025 and improving leasing momentum during the company’s fourth-quarter earnings call, while also emphasizing that rent growth has not yet meaningfully reaccelerated despite tighter supply conditions in its markets.
Fourth-quarter and full-year performance
Chief Executive Officer Marshall Loeb said the company’s results reflected “portfolio quality and resiliency within the industrial market,” highlighting funds from operations (FFO) of $2.34 per share for the fourth quarter, which he said was up 8.8% from the prior-year quarter. For full-year 2025, Loeb reported FFO per share growth of 7.7%.
Occupancy, same-store trends, and rent spreads
Management reported quarter-end leasing of 97% and occupancy of 96.5%, with average quarterly occupancy of 96.2%. Loeb said the average occupancy level was up 40 basis points from the fourth quarter of 2024 and “reverses a downward trend” from the prior several quarters. Same-store occupancy was reported at 97.4%.
On rent metrics, Loeb said fourth-quarter re-leasing spreads were 35% on a GAAP basis and 19% on a cash basis for leases signed during the quarter. For the full year, he cited 40% GAAP and 25% cash spreads. He also reported cash same-store rental rate growth of 8.4% for the quarter and 6.7% for the year.
Executives repeatedly framed market conditions as constructive but not yet fully reflected in rent growth. In response to an analyst question about market rent growth, Loeb said EastGroup has “not really seen that translate into rent growth just yet,” adding that in most of its markets rent growth has been “probably inflation plus a little bit,” with California cited as an outlier.
Development leasing rebound and supply backdrop
President Reid Dunbar said leasing improved “materially” in the fourth quarter after slower activity in the second and third quarters, particularly in development leasing. EastGroup’s fourth-quarter development leasing represented 52% of the company’s annual total leased square footage, which Dunbar said made it the firm’s best overall leasing quarter in more than three years.
Loeb attributed some of the late-year pickup to delayed customer decision-making earlier in the year, saying that after tariff-related uncertainty, “people started finally making a decision and getting leasing, development leases signed.” He described prospect activity as broad-based across markets and said the company had “6-8 conversations in varying stages” involving prospects that could take “a majority of a building” or a “couple of buildings,” including potential pre-leases or build-to-suit opportunities.
COO Brent Wood said multi-tenant industrial vacancy nationally is “about 4% to 4.5%,” which he described as roughly half of the broader industrial vacancy rate. Management also emphasized that permitting and zoning have become more difficult and time-consuming, potentially limiting how quickly new supply can respond when demand improves. Loeb said the company is encountering “materially harder” zoning processes, attributing resistance in part to communities wanting fast delivery but not wanting distribution buildings nearby.
EastGroup executives argued that this backdrop could provide an advantage for the company because it holds land and has development plans and permits ready in many cases. Dunbar said the land bank is “a little over 1,000 acres,” and that “majority of our land, especially for second phase developments, have permit in hand.”
2026 guidance and capital plans
Chief Financial Officer Staci Tyler said EastGroup’s 2025 FFO met the upper end of guidance at $2.34 per share for the fourth quarter and $8.98 per share for the year, excluding gains on involuntary conversions.
For 2026, Tyler guided to:
- First-quarter 2026 FFO of $2.25 to $2.33 per share
- Full-year 2026 FFO of $9.40 to $9.60 per share
She said the midpoints represent increases of 8% for the first quarter and 6.1% for the full year compared with the prior-year periods, excluding involuntary conversion gains.
Tyler also provided key assumptions behind guidance, including:
- Cash same-property NOI growth midpoint of 6.1%
- Same-property occupancy assumed at 96.3%
- $250 million in new development starts
- $160 million in operating property acquisitions, including a Jacksonville acquisition “under contract with money at risk”
- Uncollectible accounts assumed at a typical 30 to 35 basis points of revenue
- 2026 G&A projected at $27 million, including an estimated $4 million (or $0.07 per share) related to executive team transitions announced in December
On the balance sheet, Tyler said EastGroup ended 2025 with $19 million drawn on its unsecured credit facility, leaving more than $650 million of capacity. She reported debt to total market capitalization of 14.7%, fourth-quarter annualized debt to EBITDA of 3 times, and interest and fixed charge coverage of “over 15 times.” She also noted that the company closed $250 million of unsecured term loans in November at 4.13%, contributing to interest expense savings.
Tyler said the company has $140 million of unsecured debt maturing in the fourth quarter of 2026 and plans to fund repayments and investments during the year using bank facilities and $300 million of new debt issuance, while remaining flexible and monitoring equity markets.
Portfolio positioning and capital recycling
Executives reiterated a strategy of improving portfolio quality and diversification. Loeb said EastGroup’s top 10 tenants represent 6.8% of rents, down 40 basis points from the prior year, and described the rent roll as the “most diversified” in its sector.
On market focus, management said it continues expanding in Las Vegas and has added new land sites in San Antonio and the “supply-constrained Northeast Dallas” submarket. The company also discussed ongoing market exits as part of modernization efforts. Loeb said EastGroup has exited Santa Barbara and expects to complete its Fresno exit within “a couple weeks,” while continuing to reduce exposure in Jackson (where it has sold four of five buildings). He also mentioned New Orleans as a market where the company could scale back and noted Salt Lake as a potential future market, while cautioning it may never ultimately enter there.
During Q&A, Loeb contrasted development yields and acquisition pricing, saying the company has been developing at roughly “a low 7” yield (citing a range around 7.1% to 7.3%), while acquisitions have generally been in the “low- to mid-5s,” with some portfolios priced into the 4% range in better markets. He said that dynamic has kept acquisitions largely strategic and one-off rather than large portfolio buys.
Loeb closed by saying demand is “picking up momentum,” though he emphasized the company’s focus remains on growing FFO per share and improving portfolio quality to support net asset value growth over time.
About EastGroup Properties (NYSE:EGP)
EastGroup Properties, Inc (NYSE: EGP) is a real estate investment trust specializing in the ownership, development and management of industrial properties. Focused primarily on distribution-oriented facilities, the company’s portfolio consists of modern warehouse and light manufacturing buildings located in high-growth Sunbelt markets. EastGroup concentrates on delivering strategic logistics solutions to customers requiring proximity to transportation hubs and major population centers across the southern United States.
Since its founding in 1969, EastGroup has pursued a disciplined growth strategy that combines property development, targeted acquisitions and hands-on asset management.
