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Eastgroup Properties Inc (EGP) Q1 2019 Earnings Call Transcript

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Eastgroup Properties Inc  (NYSE: EGP)
Q1 2019 Earnings Call
April 23, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the EastGroup Properties First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. (Operator Instructions) Please note, this call may be recorded. It is now my pleasure to turn the conference over to Marshall Loeb, President and CEO. Please go ahead.

Marshall A. Loeb -- President & Chief Executive Officer

Thank you. Good morning, and thanks for calling in for our first quarter 2019 conference call. As always, we appreciate your interest. Brent Wood, our CFO is also participating on the call. And since, we'll make forward-looking statements, we ask that you listen to the following disclaimer.

Keena Frazier -- Director Leasing Statistics

The discussion today involves forward-looking statements. Please refer to the Safe Harbor language included in the Company's news release announcing results for this quarter that describe certain risk factors and uncertainties that may impact the Company's future results and may cause the actual results to differ materially from those projected. Also, the content of this conference call contains time sensitive information that is subject to the Safe Harbor statement included in the news release is accurate only as of the date of this call. The Company has disclosed reconciliations of GAAP to non-GAAP measures in its quarterly supplemental information which can be found on the Company's website at www.eastgroup.net.

Marshall A. Loeb -- President & Chief Executive Officer

Thanks, Keena. Our team performed well this quarter starting the year off with a strong trend. Some of the positive trends we saw were funds from operations coming in above guidance achieving a 5.3% increase compared to first quarter last year. This marks 24 consecutive quarters of higher FFO per share as compared to the prior year quarter. Based on the quarter and the market strength, we further raised our annual FFO guidance by $0.05 a share. The vitality of the industrial market is further demonstrated through a number of metrics such as another solid quarter of occupancy, strong same store NOI results and positive releasing spreads. As the statistics bear out, the current operating environment is allowing us to steadily increase rents and create value to ground up development and value add acquisitions.

At quarter end, we were 97.7% leased and 96.9% occupied. This marks 23 consecutive quarters where occupancy has been roughly 95% or better, truly a long term trend and in short demand continues growing for our infill location, small bay buildings. Several markets exceeded 98% leased and Houston, our largest market was over 97% leased, and while still our largest market, Houston has fallen from roughly 21% of NOI to slightly below 14% for 2019.

Supply and specifically shallow bay industrial supply remains in check in our markets. In this cycle, the supply is predominantly institutionally controlled and as a result deliveries remain disciplined and as a byproduct of the institutional control, it's largely focused on big box construction. Our same property NOI growth was 4.5% cash and 3.7% GAAP. We're also pleased with an average quarterly occupancy of 96.9% up 60 basis points from first quarter 2018. Rent spreads continued their positive trend rising 5.3% cash and 14.2% GAAP respectively. Further, the quarterly results were materially impacted by 125,000 square foot Houston lease where the rents declined, pulling that one lease out of our pool, our cash and GAAP numbers rise to 10.6% and 20.2% respectively.

Given the intensely competitive and expensive acquisition market, we view our development program as an attractive risk adjusted path to create value. We effectively manage development risk because the majority of our developments are additional phases within an existing park. The average investment for our shallow bay business distribution buildings is $12 million and while our threshold is 150 basis point projected investment return premium over market cap rates, we've been averaging 200 (ph) basis points to 300 basis point premiums. At quarter end, the development pipeline projected return was 7.3% whereas we estimate an upper fours market cap rate. During the first quarter, we began construction on five buildings in five different cities totaling 650,000 square feet. While coming out of the pipeline, we transfered 300% lease projects totaling 421,000 square feet into the portfolio with an average yield of 7.4%. At quarter end, our development pipeline consisted of 19 projects in 10 cities containing 2.5 million square feet with a projected cost of $230 million.

For 2019, we're raising our projected starts to $160 million and as color commentary, the $148 million in starts we had last year were a record, so we're excited to raise this year's forecast. And as further color on our 2019 starts, we project starting over 70% of those by mid-year. So as the year progresses, we will continue to revisit projected starts. And finally, our activity is spread over nine different cities. This geographic diversity reduces risk while enhances -- while enhancing our ability to grow the development pipeline.

First quarter was relatively quiet for acquisitions, but our pipeline was active. We're committed to acquire three separate off market properties. We expect to close soon on a two building 142,000 square foot, new development at the DFW Airport, which is currently 19% leased for total investment of $15 million. Next, we have a seven acre site in the Miramar area of San Diego on new contract for $13 million, which will accommodate 125,000 square foot building. And finally, we're reacquiring two buildings totaling 142,000 square feet in Phoenix. We sold the buildings to the Arizona Department of Transportation in 2016, but they were not torn down during freeway construction, and as a result, we will reacquire the buildings for just over $9 million and invest an additional $2.6 million to redevelopment. On the disposition side, we sold World Houston 5, a 51,000 square foot building for $3.8 million in first quarter. Brent will now review a variety of financial topics included in our 2019 guidance.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Good morning, we continue to experience positive results due to superior execution by our team in the field, and the strong overall performance of our portfolio. FFO per share for the first quarter exceeded the upper end of our guidance range at $1.20 per share, compared to first quarter 2018 of $1.14, an increase of 5.3%. As noted in the earnings release, we reported FFO of $1.16 per share during the first quarter of 2018. In connection with our adoption of the Nareit Funds from Operations White Paper titled 2018 Restatement, we now exclude gains and losses on sales of non-operating real estate from FFO.

For comparison purposes, we adjusted the prior year results to exclude the gain on the land sale and the gain on the sale of a parcel interest in a private plane, and as tradition for EastGroup, we will continue our standard of reporting FFO as defined by Nareit. Our protracted strong performance both operationally and in share price has continued to allow us to strengthen our balance sheet. While, this is demonstrated in metrics in the earnings release and supplemental information, what is less obvious and perhaps, sometimes overlooked, is the diversity in our revenue stream, our 39.6 million square foot operating portfolio consists of an average ticket size of 28,000 square feet, and our average building size is 100,000 square feet.

Accordingly, 58% of our rental revenue is sourced from tenants smaller than 50,000 square feet, and 84% of our rents are from tenants smaller than 100,000 square feet. We're benefiting from both our tenant and geographic diversity, where we have a presence in 13 of the 15 fastest growing metropolitan areas in the US, mitigating concentration risk for our shareholders. Looking forward, FFO guidance for the second quarter of 2019 is estimated to be in the range of $1.17 to $1.21 per share, and $48.4 to $49.4 for the year. Those mid points represented increase of 2.6% and 4.9% compared to the prior year restated respectively, and an increase of $0.05 per share in the midpoint of our guidance for the year.

You may recall that in second quarter of 2018, we had $1.2 million involuntary conversion gains that is included in FFO. Excluding that (ph) gain, the midpoint of second quarter FFO guidance represents a 5.3% increase over prior year. Our first quarter results combined with the leasing assumptions that comprise updated guidance, produce an increase in both average occupancy for the year from 96.2% to 96.4% and an increase in cash same property range of 30 basis points to 3.8% to 4.8%. Other notable assumption guidance revisions include increasing development starts by $19 million, increasing value add property acquisitions by $55 million, increasing termination fee income by 315,000 due to known upcoming fees and increasing our estimated common stock issuance by $85 million as the direct result of finding more opportunities to invest capital.

In summary, our financial metrics and operating results continue to be some of the best we have experienced and we anticipate that momentum continuing throughout 2019. Now, Marsh will make some final comments.

Marshall A. Loeb -- President & Chief Executive Officer

Thanks, Brent. Industrial property fundamentals are solid and continue improving in the vast majority of our markets. Based on the strength we're seeing, we continue investing in upgrading and geographically diversifying our portfolio. As we pursue opportunities, we're also committed to maintaining a strong healthy balance sheet with improving metrics as demonstrated by the equity we raised the past few years.

We view this combination of pursuing opportunities while continually improving our balance sheet as an effective strategy while -- to manage risk while capitalizing on the strong current operating environment. The mix of our team, our operating strategy and our markets has us optimistic about our future and we will now take your questions.

Questions and Answers:

Operator

(Operator Instructions)

And our first question comes from Jamie Feldman from BAML. Please go ahead.

Jamie Feldman -- BofA Merrill Lynch -- Analyst

Great, thank you. Good morning.

Marshall A. Loeb -- President & Chief Executive Officer

Good Morning.

Jamie Feldman -- BofA Merrill Lynch -- Analyst

So I was hoping, you could talk a little bit more about the supply picture and we have seen stats showing it is creeping in some markets. Just, I mean, can you just give more color around your building size and where you may be seeing some supply and maybe what gives you some comfort that this can continue for some time where your product takes a little bit more protected than some of the others?

Marshall A. Loeb -- President & Chief Executive Officer

Jamie, good morning. It's Marshall. Thanks and good question. You'll see some -- some large supply numbers especially in the major markets at least in our markets we'll see it in Dallas, Atlanta certainly Inland Empire and then really what we do or how our teams do a good job of really digging into it. I'd say, long-term if you said what keeps you guys up at night. We would say finding in-fill -- good in-fill sites that are -- that we can get zoned industrial that we can develop and depart. So we know how hard it is to find land for that next part.

I'll give our team credit that they keep -- seem to keep coming up with the next site. But we struggle and the brokers we work with struggle. A couple of stats to throw at you that will kind of demonstrate it. And in Dallas, for example there's -- and these are CBRE staffs that I'm quoting, there's 22.7 million square feet under construction but 10 buildings count for over 45% of that 22 million. So really, it gives you an idea of and our average building size is 100,000 square feet, what we develop may get up to 120,000 square feet, 130,000 square feet. So if you think of the depth of those buildings and our average tenant size being around 28,000, 30,000 feet. They just aren't configured that you could not divide even a 400,000 or 500,000 square foot building to accommodate that. So I was surprised that only 10 buildings account for -- moving toward half of that supply in Dallas and then in Atlanta for example the market is 6% vacant. But shallow bay and -- I don't know CBRE's definition. It's probably a little bit larger than our average building. It's only 3.7%. So the vacancy rate drops pretty dramatically and in Atlanta there's 19.3 million square feet under construction.

Last year, they absorbed a little over 18 million square feet. So it's pretty much in parity even in the big box but there's eight buildings that are over 900,000 square feet under construction. So both in Dallas and Atlanta and maybe those are extreme in terms of larger markets. Most of what's being delivered is big box and we seem to see that pattern whether we're in Denver, Dallas, Atlanta, Houston where our peers are -- it's nice where our smaller sites helps are so much larger. So for them, Clarion, Heitman, AEW whoever to put the capital out they need to, they need to go to the edge of town and build a 600,000 foot building and by design, our tenants can't make those spaces work. They can't get the loading doors if the buildings are too deep -- if that, hopefully that answers your question.

Jamie Feldman -- BofA Merrill Lynch -- Analyst

Okay and yeah. That's great. That's helpful. And then I guess for Brent, just -- sticking with or moving to the guidance, so you lowered your bad debt expense outlook by $100,000 and you increased your termination fees. Can you just talk about the moving pieces and then maybe also just address your credit watchlist and anything we might need to think about here?

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Sure, Jamie. On term fees, we did guidance 315,000 (ph) That's primarily being driven by one known large second quarter termination fee of $525,000. It's a 50,000 square foot space in Tampa. The company was closing their North American location. We were able to negotiate what we felt was an attractive termination fee represented just in excess of 16 months of rent.

We feel confident in back-filling the space timely. So we felt like net net would come out ahead. And so that was the primary single driver, there wasn't any kind of rash of people wanting out of their spaces per say which is really driven by that one particular transaction. Bad debt, we continue to be very pleased, first quarter just $129,000 which was about $100,000 less than we had budgeted. Just looking at our AR, the good news, it's just a periphery of just miscellaneous here and there, pretty standard items. Last time, we reported, Mattress Firm had affirmed the bulk of all their leases with us. They remain current, we've had no issue there. So bad debt, AR, term fees all of that, it feels good this early into the year, it feels -- feels good.

Jamie Feldman -- BofA Merrill Lynch -- Analyst

Okay.

Marshall A. Loeb -- President & Chief Executive Officer

I'll add to that. And Jamie, I'll give you and Josh credit. You had filled a report together showing tenant concentration and happy to see our top 10 tenants have drifted down, we were 8.3% at the end of the year, we're 8.1% this quarter, so our largest customers, some of them are in multiple locations, multiple buildings is I believe it -- per your report, it's the lowest concentration within the industrial sector and then even when I look at our top 10 tenants, there's a couple of things going on where I think that percentage is -- one as the company grows and then specifically within those tenants where that number should keep drifting down the next two to three quarters.

Jamie Feldman -- BofA Merrill Lynch -- Analyst

All right. Thanks and keep promoting our research. We appreciate it.

Marshall A. Loeb -- President & Chief Executive Officer

You're welcome.

Operator

And our next question comes from Alexander Goldfarb with Sandler O'Neill. Please go ahead.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Hey, good morning. So just a few questions for you guys. On the guidance, Marshall, you guys on the fourth quarter call, granted the year ended definitely a low point as far as the capital markets were concerned, but you guys still spoke about your portfolio being strong and tenant demand healthy and yet pretty strong improvement in the guidance from the initial just a few months ago to now. So is this just that you guys were just too overly cautious, when you laid out your initial numbers or has something really fundamentally changed in the portfolio operations that's led to this improvement because it doesn't sound like it's anything really onetime apart from that penny of lease-term, it sounds like it was just core operations driving at which $0.05 jump this this early in the year, look it bodes well for shareholders but it seems pretty dramatic in just a few months time.

Marshall A. Loeb -- President & Chief Executive Officer

I guess, a fair question and my answer is -- which was it is almost a yes and that it was a little bit above and that, we were pleasantly surprised. This was a record quarter for us it to average 96.9% occupied. Last year, we averaged or company wide 96.1% and typically, we would say a buildings full at 95%. So the occupancy surprised us to the upside. I don't think we were overly -- we did see a little bit of a pause in the world within our tenants. It's not all of them but a fair number especially the larger the tenant probably the more they hit the pause button. A little bit. It's hard to tell over the holidays but a little bit -- the world was pretty nervous in December and probably the first half of January and that feels now like it was two years ago. That the tenant demand has picked back up and people seem to have kind of moving beyond that time where the government shut down and trade wars and things like that. So I think, it's our job to -- we kid about being paranoidly optimistic. So we were worried about where things were going to head back in January and a little bit cautious although things were still moving and then they have improved since then.

So I don't like to think, we weren't overly cautious based on what we heard and and really in the economy, things feel better than they did a couple of years ago based on everything we read and certainly even more so what we see on the ground.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

And Alex, this is Brent. I would just add to that. You mentioned moving that much early in the year. I would contend that moving early in the year by fair amount is a little easier to do and that we beat by $0.02 then we raise by an additional $0.03 which at this time of the year basically essentially comes out to about penny a quarter, as you get later in the year obviously it's harder to move that delta as much and as Marsh said, the good news, it's being -- and to your point, that's not really -- didn't have no one time items. It's being driven by property net operating income and especially just want to point out from our development pipeline not included in same store all the developments that have rolled in since January 1 of '18 and those properties are contributing more and faster than we're guiding to quarterly.

They continue to outperform which we'll take that as long as it can happen.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay. And then Brent that leads me to the second, part of that $0.05 in total increase, you guys also increased your ATM activity for increased investments. So maybe you could just provide a little bit more color on the acquisition yields. And then two, given how quickly you're able to match whether it's chicken and the egg, whether it's better ATM, so hey guys, go out and get more acquisitions or hey, we have acquisitions if we have better ATM, whichever. It sounds like between the acquisition front and the fact that Marshall, I think you said, 70% of the starts are going to be by mid-year.

It sounds like investment activity in the back half of the year could ramp up even more which I'm guessing would benefit on the earnings front given that you wouldn't do one without the other. So maybe you can just talk a little bit about the interplay between the cost of the ATM versus the cost and the accretion of the acquisitions.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Yeah I'll start then let Marsh also talk more specific about the assets but I want to be clear to say that acquisitions are driving our capital at being at 21%. I think, we ended the quarter at debt to total market cap, we obviously have a very strong balance sheet. So we're not issuing in an effort to continue to lower that and as we stated last call, we're -- be a little more conscious of trying to line up ATM issuance with opportunity and so opportunity will drive what we do or don't do on the ATM and that's assuming that the price is there and we like it. But right now, we view it as readily available. So I will let Marshall touch on it. But as long as each -- whether it's development value add or an acquisition, as long as they stand on their own merit and make good what we feel like are good long term since then we certainly are apt to do it.

Marshall A. Loeb -- President & Chief Executive Officer

Thanks, Brent. And really in terms of color, probably two buckets. We feel some visibility on the $50 million in acquisitions this year although that's the most -- that's the hardest bucket to fill given the competition and everybody's got a checkbook. So we really aren't different from the other bidders but feel comfortable -- more comfortable today on that front than we would have say 60, 90 days ago in our last call.

And then the value add we like long term. They are probably -- or they are -- they are better benefits for 2020 than 2019 and kind of just walking through them the two interstate common buildings that we're buying back in Phoenix, we had a four building complex. We knew that Arizona DOT was going to acquire them. So we kind of stopped spending money for obviously a couple of years before they acquired them.

It's been a couple of years since they've had them. So those will take a little bit to redevelop and release. We like it long term and we think, we'll be just north of a seven in terms of once it's redeveloped. So development type yield on a value add there and DFW, their brand new buildings 18%, 19% leased with good activity. But by the time we get the leases signed, the TIs done and the tenants in, and that's in the high sixes type yield and then the San Diego land that we disclosed, it's -- what I like about it, it's right just east if you know San Diego of the 805 Freeway which may -- in Miramar. So we're just north of Miramar Naval Air Station, it's a former car (ph) lot. So it's really a better lot than we typically see for industrial land and it's really a last mile location right on the other side of the 805 is La Jolla. So if you want to get products delivered quickly into La Jolla that -- we think it's a great site. I said the biggest problem is I wish it was a bigger site. We have a ground lease on it, so we'll get a return until we -- until they decide what when their lease expires really. And then we'll develop it. So we like all three acquisitions. It will just take a minute before we can really get them stabilized and then the portfolio. And so it's probably more 2020. But Brent, we'll raise the capital for us to close this year

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay. Thank you.

Marshall A. Loeb -- President & Chief Executive Officer

Sure. Welcome.

Operator

And our next question comes from John Guinee with Stifel. Please go ahead.

John Guinee -- Stifel -- Analyst

Great, thanks. Hey, just sort of curiosity questions, I love to ask then you could address them. I noticed somewhere that you bought a property with a 40-year ground lease which seemed a little bit unusual, can you talk about maybe some options you have on background lease at the end of the 40th year? Second, in your in-fill development strategy, how often are you actually buying greenfield dirt versus second generation development where an existing asset is being demolished?

And then third, when you're leasing up your development, how much of the lease up is basically moving existing tenants of yours into a new building and how much is building up those buildings with new non-EastGroup tenants?

Marshall A. Loeb -- President & Chief Executive Officer

Thanks, John. I'll try to answer those and Brent chime in.

John Guinee -- Stifel -- Analyst

That was just one question.

Marshall A. Loeb -- President & Chief Executive Officer

On the ground lease, clear observation and good observation and if you've studied DFW, I think the number is 18000 acres that that airport has and their typical lease is a 40-year ground lease. So that's -- there's all types of industrial, it's really a who's who in terms of national developers that are there on those ground leases as well as hotel, retail office. So the first -- we have call it 39 years left on our 40 year ground lease. Some of the older ones -- there'll be precedent set well before we roll and go back into DFW to renew.

So we looked at it in terms of pricing, kind of maybe walking you through the weeds but if it were fee simple and it is right at the exit just off one of the tarmacs at DFW, it's probably a four and three quarters yield and in the market. And then in talking to some of the brokers, probably 50 basis point premium to get -- go from fee simple to a ground lease. So that's probably around five and a quarter and as we underwrote market rents and carry and things like that, we're 6.5 to 7 type yield. So we feel like we're getting paid for that premium of the ground lease there and it really ties into your second question.

Most of what we're looking at as I mentioned earlier, we struggle to find good sites, we'd rather it be fee simple but there's simply nothing left at the airport. And in talking to our guys, the good problem they had -- they had one vacancy in our Dallas portfolio, tenants that wanted to expand. So buying these buildings at DFW, we prefer them to be fee simple but we like this location especially given the prominence of DFW Airport over the next 40 years and how that continues to grow. Most of what we did build is still Greenfield but all of it seems to have a story where we're relocating someone or like Churchill Downs, it was semi green, we tore the stables down in Miami and we do things, we're looking at a site in Texas that a church would relocate off of or hear a ground lease. They all -- we kind of apologize to our investment committee, we promised, we're not trying to make things complicated but in-fill sites get harder and harder to find and we'll certainly do more and more redevelopment.

And then what's nice about having the parts, where I'd probably call it moving toward 50% of our development leasing, is we have someone and I'll pick Charlotte and Steele Creek III and they need more space, so they'll either do a renewal -- early renewal and expansion and still create nine or they'll relocate them if they really want to be in one location into the new building. So that's part of our pitch and the market to tenants if you're in World Houston or Steele Creek or Kyrene, we can accommodate your growth and every tenant usually probably overestimates. Most people are optimists, how much they're going to grow but, we like that ability when it's mid-term of someone's lease because then they can't move down the Street if we can accommodate your growth and fill up our parks.

So it's probably approaching half of our development leasing as the economy is good and tenants are expanding and then the good news about a good economy, the spaces we're getting back are typically below market. They'll be vacant a little bit but typically, they're both -- the leases are a couple of three years old and so those are below market. So we get an early at back -- to go back fill those spaces as well.

John Guinee -- Stifel -- Analyst

Great. Thank you.

Marshall A. Loeb -- President & Chief Executive Officer

Sure. You're welcome.

Operator

And our next question comes from Ki Bin Kim with SunTrust. Please go ahead.

Ki Bin Kim -- SunTrust -- Analyst

Thanks. Your tenant retention ratio dropped a little bit this quarter. I mean it's just one quarter in a long history of really high retention. But anything noteworthy there?

Brent W. Wood -- Executive Vice President and Chief Financial Officer

This is Brent. We had, yes Ki Bin, we had a tenant in California, one of our larger tenants that sublet 135,000 square feet to three tenants. Their lease still runs for a number of years and basically those subtenants, we sign leases with them to then lease behind that tenant out into the future.

And just trying to stick to the way we could always done things. We thought the fairest way to treat that, we basically treated that square footage during the quarter as a quote non-renewal, which technically, it won't be at that point will not be renewable. We've leased the space behind that. So I would definitely call the quarter a little bit that skewed -- the retention percentage. But again just in being comparison friendly to how we've handled that type situation in the past. We treated it the same. So I think, you'll definitely see that click back upward in absence of not having another anomaly like that.

Ki Bin Kim -- SunTrust -- Analyst

And is there any maybe besides this quarter any kind discernable trends on why tenants choose not to renew?

Marshall A. Loeb -- President & Chief Executive Officer

Usually if we can't renew them, it -- I think the biggest problem we would run into in some cases, at least we don't have the space for them and they're growing. I would think that. Typically, we average over time around 70% or little over 70% kind of our historical average. But in Tampa, where we had the termination, it was a European company and their business model just did not work in the US. So they've closed or a bankruptcy or probably what we see more and more is they're growing and we try to have that next development ready. But if we don't have the space that's probably where we lose. That's probably our biggest reason right now, is not able to accommodate growth but that said, I still think by the end of the year, we'll average 70% or low 70s kind of retention.

Ki Bin Kim -- SunTrust -- Analyst

Both on the high class problems.

Marshall A. Loeb -- President & Chief Executive Officer

Knock on wood, I hope so. Yes.

Ki Bin Kim -- SunTrust -- Analyst

All right. Thank you.

Marshall A. Loeb -- President & Chief Executive Officer

Thank you.

Operator

And our next question comes from Manny Korchman with Citi. Please go ahead.

Unidentified Participant -- -- Analyst

Hey guys it's (inaudible) here with Manny. Marshall, given your earlier comments on the oversupply in a lender market and also at the same store results in the quarter, give me your perception to that market or a desire to grow in that market changed?

Marshall A. Loeb -- President & Chief Executive Officer

In Atlanta, Jill, I'm sorry. Do you think of...

Unidentified Participant -- -- Analyst

Yeah Atlanta.

Marshall A. Loeb -- President & Chief Executive Officer

Okay. We like Atlanta and we'd like to grow there. We're just adding in the last week, I have hired someone kind of at the Vice President level, where it's a backfill of a spot but they'll be based in Atlanta. And John Coleman, our regional moved to Atlanta. So we like the market a lot with our product type being under 4% vacant. And as I mentioned, there is over, I guess that they have 19 million square feet under construction but absorption last year was over 18 million square feet. So the market is a little -- Dallas and Atlanta are little bit -- and you are worried the supply and it kind of takes your breath away but then you look at the absorption over the last few years and what's being delivered keeps getting absorbed and thankfully, where the numbers get a little bit shocking, it is because of those 600,000 square foot buildings and up that most of our peers gravitate to.

So we're pursuing growth but trying to be disciplined in Atlanta and I -- we just came in second unfortunately on the building in the last week trying to acquire it. So we'll kind of keep picking our battles and trying to stay disciplined but we -- we like the market long-term and it's right in our backyard and kind of identified that, call it 10 o'clock to 2 o'clock on the map right now, we're kind of 12 to 2, what they call the golden triangle of Atlanta seems to be a good fit for our type building and our -- where the path of growth is also in Atlanta up north in terms of residential -- higher end residential.

So hopefully that's helpful.

Unidentified Participant -- -- Analyst

Okay, great and any interest in looking at bigger acquisitions or maybe bigger portfolios just given where your stock price is trading?

Marshall A. Loeb -- President & Chief Executive Officer

We look at those -- and yes, interest. The bigger the -- we usually look at the bigger the portfolio and the better the sales package, the more intense that competition is. And it just gets priced to perfection really where we would, will -- we -- our acquisitions will look maybe two to four years in the future and not a 10-year (inaudible) like a lot of our peers and that typically no one underwrites a downturn in years five through seven type thing. So we try to not go too far out there and assume too much in terms of rent growth and maybe as a result of that it makes it awfully hard. We like them. We certainly have picked up the value add acquisitions this quarter. We like those. It's almost a shadow development pipeline in terms of getting a good attractive return and managing the risk for our shareholders.

And we feel more comfortable on our acquisition assumptions. So we'll stay at it. It's just -- it's hard. In Atlanta, there was a package we looked at in the last year and we were one of 24, 25 bids in the initial round and it's just hard to. If you're the winner of it, I'm not -- It's hard to believe you are winning of it almost. Time will tell. It will take a few years on just how competitive the wall of capital -- global capital for industrial as the brokers talk about, it is real and we lose a lot of bids each month on those. But we'll keep -- keep trying and I hope, we can surprise you with one at some point.

Unidentified Participant -- -- Analyst

Great, thanks, Marshall.

Marshall A. Loeb -- President & Chief Executive Officer

Sure. You're welcome.

Operator

And our next question comes from Craig Mailman with KeyBanc Capital. Please go ahead.

Craig Allen Mailman -- KeyBanc Capital Markets Inc -- Analyst

Hey, Good morning, guys. Marshall, just maybe follow-up on your competition talk. You guys -- it sounds like the yields on some of these value add plays is pretty close to development without the construction risk. Can you just kind of talk about what the competition was for these and how you source them?

Marshall A. Loeb -- President & Chief Executive Officer

Each of -- now -- good question. And each of these was off market in no particular order and Dallas, our guys there called on the developer, it's a local regional developer and kind of developed a relationship and I think it was going on a year before he agreed to sell that. And then again, I think, we liked the yield there. We need to get it leased but we have good activity. So far Interstate Commons in Phoenix was an anomaly, a little bit and that we had sold the buildings to P DOT and had a right to repurchase if they didn't tear them down. And now that freeway work is done. So our visibility and access is even better and thankfully, they didn't tear our buildings down in the process. So there we had a right to repurchase at appraised value.

So again off market there and then the Miramar land, it's a little bit the same. It's a 20 year relationship that we've had with a group out of Southern California based in LA. And they had tied up this land thinking it was a friends and family deal and we cajoled them a little bit and letting us participate in it and doing a 95 5 (ph) JV. So we're excited about the site and it's turning over a lot of stones to maybe find a small deal here or there but hopefully, they add up over the course of the year for us. So when it goes to market, we'll bid on it but it's awfully hard to be the winning bidder in that case.

And it's really driving around in a car with a broker and they'll say, if you, lobbying in all from this -- this seller may be willing to sell and that's, all of them are long shots but that's almost a better path to buy things for us or find value adds than to wait and get the email blast that everybody gets.

Craig Allen Mailman -- KeyBanc Capital Markets Inc -- Analyst

That's helpful. And unlike the DFW deal, it sounds like the developers got sort of a construction fee. Is there anything on the back end that they try to negotiate with you?

Marshall A. Loeb -- President & Chief Executive Officer

Yeah not -- that's not -- definitely not on that. Because they were like -- and on those a lot of times and I don't know on in this case. I know who the developer is but I don't know how his financings arranged. Usually it's -- they've got a financial partner and we'll get you into your IRR promote and you can go down the road and build your next building which is really what they typically want to do. And so they will make some money and take some take some chips off the table and and he'll hop -- probably move on to his next development but no promote down the road for him and he was doing the leasing in-house which is good for him but we like having a third party broker that's really fully focused on leasing and so we think hopefully, we can pick up some leasing velocity by stepping in.

He did a nice job finding the site and designing the buildings and hopefully, we'll take the back half of it from here.

Craig Allen Mailman -- KeyBanc Capital Markets Inc -- Analyst

That's helpful. And then just separately, you guys have a -- little bit of a different product mix than some of your peers has. I'm just curious, how the -- we all know demand is good but you guys have had sort of a presence in some of your legacy EastGroup markets for a long time. I mean, how your guys on the ground seen the demand composition change, has there been a change or is it sort of evolving at e-commerce and those type of tenants evolve?

Marshall A. Loeb -- President & Chief Executive Officer

We would say -- and Brent chime in, our traditional tenants are still there and typically almost all of them, it's about 1,500, 1,600 tenants doing well and kind of, if you almost call it old economy. The floor supply guy, the granite tile, the HVAC contractor, different industries like that all want to be closer to their customer and they typically are doing well. And as that evolves also in our legacy markets, the traffic gets worse in Tampa and in Dallas and in Houston, so we'll see them like in Dallas, that's what we liked about Fort Worth as you may need Goodman HVAC who is a tenant in Dallas also needed a facility in Fort Worth because it's -- you could spend all day in traffic and when your air conditioner is out in Dallas in July, you want someone there immediately. So we see a little bit of that evolution and then each quarter there's more and more e-commerce tenant, so people change their model like Lowe's is a tenant we've worked with recently, the retailer where no one drives home with a washer, dryer, or refrigerator, but they've leased space with us, a couple of spaces from us as they roll out their strategy. So you buy it in the store, or buy it online and it gets delivered from an EastGroup facility. And that's been a new change. So some e-commerce, some just people closing physical brick-and-mortar and we're lower rents. But if it's lower rents and close to the consumer, we can be that last touch and get it to your house fairly quickly.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Yes. The only thing I would add to that, Craig, is a lot of times I think it just -- a lot of it is dictated on tenant psychology and I think across the board in all our markets the tenant psychology, how they feel about their business and overall economy is good, and so anytime you have that kind of underlying the current is a positive. And then also I think we have enough depth and activity in most of our markets where there's competition for spaces and always equate there's a lot to residential because people relate to that better.

But it's -- if you're looking at a home and there's very little activity, you don't feel that pressure to get that offer out very quickly. But if you're looking at residential market where it goes on market, if you don't put the offering in 24 hours, it's going to be gone. So there is that sense of urgency, which are all signs of a landlord market. But there is that bit more sense of urgency in our markets to which all that adds up. And like Marshall said, with the varying type tenants that are out there and it's all stacking up to just be solid, deep activity.

Craig Allen Mailman -- KeyBanc Capital Markets Inc -- Analyst

Thanks guys.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Sure.

Operator

And our next question comes from Jason Greene with Evercore. Please go ahead.

Jason Greene -- Evercore -- Analyst

Good morning. Given good portion of the guidance increase was due to better than expected impact from development, is there any additional upside to that development impact for fiscal year '19 or is everything more or less baked into guidance at this point?

Marshall A. Loeb -- President & Chief Executive Officer

I hope, I guess, I'll preface it by saying, I'm an optimist, but we did move it this quarter, by call it the $19 million and 70%, a little north of that are starts in the first half of the year. So we have our development starts, and really on leasing, what I love about our model is rather than corporately decide that you're going to go build an 800,000 foot building south of Atlanta or on the southwest side of Phoenix. It's really almost like a retail store where they're out of inventory and we deliver the next building to put on the shelve. So we keep a shadow development pipeline and that's still a pretty good material size out there. So I'm hopeful, there could be upside to our $160 million, although I'm also talking to the guys in the field appreciative that $160 million would be a record this year in terms of starts for us. So we used to say $100 million in starts and have worked our way up to $140 million and $160 million and so our -- we will push it as much as the market allows us to and Brent and the team have done a nice job of deleveraging the balance sheet, which I like having a more as we stretch on some operational risk and a good market, let's also keep our balance sheet almost as a hedge safe or unsafe or. So we would love -- I'd love to bump the $160 million up another -- one of these quarters and have that news for you. And it will really depend on what our tenants want to do.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

And I would just add to that, Jason, we are a little more back in weighted in the year with our FFO growth, especially third and fourth quarters. And that is being driven pretty heavily by what we're factoring in for development and value-add. And when I say developments and value add, I am talking about properties that had been added into the portfolio since 1/1/18, in other words, they're not saying store property, so outside of same-store increase. So we have a fair factor in first quarter, I think we have about $3.3 million of property net operating income from that development pot and we're looking by fourth quarter that growing to $5.7 million. So it is playing a large and significant role and we're counting on it, continuing to push through the rest of the year.

Jason Greene -- Evercore -- Analyst

All right. Thank you. And then maybe we could just touch on development costs and how those are impacting the yields -- your yields and how development costs have been trending over the last 12 months?

Marshall A. Loeb -- President & Chief Executive Officer

Yeah. Good question. And we think rents will keep following and I guess as an aside, and it's easy to say, if we pull the one lease out in Houston, we would have had record GAAP releasing spreads at over 20%. So you're seeing a tight market in construction costs, rising construction costs, push rents, we feel like that -- but concrete prices, steel prices have gone up. And then underlying all that, it's a good economy. So all of this -- the GCs and all of the subs are busy and we've even heard stories of competition at one of our sites trying to hire the workers away during construction. Just the labor shortage is also pushing rents up. So it's probably moved -- our yields are 73, 74 (ph). I think what, Iam doing it from memory, what we rolled into the portfolio, was it 74 , what's in the portfolio, is it 73. Miami is a little bit lower yield but lower cap rate. So it should come down. But those probably would have been about 7.5 two years ago. It's just construction prices continue to creep up in a good economy. So that's certainly something we launch and talk about a fair amount.

Jason Greene -- Evercore -- Analyst

Okay. Thank you.

Marshall A. Loeb -- President & Chief Executive Officer

Sure.

Operator

And our next question comes from Bill Crow with Raymond James. Please go ahead.

Bill Crow -- Raymond James -- Analyst

Thanks. Good morning, Marshall. Just curious, with your in-fill portfolio. Are you seeing increased demand from grocers? I mean, that's -- one of your retailer is seems to be growing. And what is your thought about getting into lease partially if not fully refrigerated space on new developments?

Marshall A. Loeb -- President & Chief Executive Officer

Good question. And we've read about that and that certainly seems to be the trend where things are going. And I know there's even a cold storage REIT that's come public what in the last year, a year and change. Lease -- and Brent chime in because he's had direct experience with it. We like keeping our buildings fairly generic that when you get into that freezer cooler space sometimes you can have issues. One the equipment gets dated fairly quickly and then sometimes too it can damage the slab and some issues like that. So we -- and some of the tenants are also start-ups. So we steered away from a start-up in the Bay area just because the TIs were heavy. It was an online grocery, delivery and just all in a tight market we had better options and we could -- thinking about if something happened and the next tenant down the road. So we may be missing it. And it seems to be a growing area, but we really haven't pursued it or focused on it because I like having about $0.40 per square foot per year of TI when our tenants move out is what our average is. Brent, you've lived with it, you've had a bad experience or two on that.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Yes, I think Bill, and good morning. The challenge with freezer cooler space, as Marshall said, ideally on the front end going into it, that's what you're building for because they are design specific things you are new to -- protect your slab, protect your sub-slab, meaning the dirt underneath the concrete to keep it from not freezing and unfreezing and then structural issues. So there would be some commitment of TI or building specific improvements that you would ideally want to do on the front end and then your very small percentage chance for us that we would lease to an actual grocer. Then you suck that money into the building and it doesn't actually get utilized. So in a build to suit situation, we would definitely look deeper and you won't plenty of term, but then you can design it more specifically. But on a day in, day out basis, it's just not something prevalent enough that we've seen to warrant changing and taking on that additional capital risk on the front end.

Bill Crow -- Raymond James -- Analyst

So within your markets, you're not seeing Publix or Kroger clamoring to get direct-to-consumer space or anything like that?

Marshall A. Loeb -- President & Chief Executive Officer

Right away from the store, where you buying -- clicking online, pull up and they bring it out and pick it up, certainly that, but we've not seen a lot of grocers yet out in the market. And it's something that's been tried for a long, long time. We signed the lease with a group called gotoworks.com back in like 2000 -- about 18 years ago. And that didn't work at that time. And here we are 18 years later and still people are trying to figure out how to make groceries online work. So it will get there in some of the heavy metropolitan areas and really densely populated. But I don't see that in the near-term being a big catalyst industrial, lease of not traditional space.

Brent W. Wood -- Executive Vice President and Chief Financial Officer

I guess, we've -- I've seen Walmart, out looking and again, if we could do dry goods, we certainly would, but I wouldn't say a good question. I would -- I have read more about it than we've seen it in terms of people clamoring, whether as you say, Publix, Kroger, Heb in Texas, people like that who just have seen it

Bill Crow -- Raymond James -- Analyst

And one last one for me, and this maybe premature, but certainly there's talk in California about the Prop 13 changes. Have you done a preliminary assessment of what that might mean to you?

Marshall A. Loeb -- President & Chief Executive Officer

Thankfully, we've owned some buildings for a fair amount of time in California, so we would have some types jobs. But everything, almost all of our leases knock on wood, not 100% but the high 90% are going to be triple net. So we could pass it through and all of our peers would have it. I guess, depending on how recently they acquired their building. It could hinder rental rate growth in California. In short-term, it would have minimal effect, but because we pass it through to our tenants and it would be -- an impact on them. It would be when those leases rolled, our ability to push those rents to market, that everythings, knock on wood generally well below market in California. If it's just a few years old and it, some of that may end up being camera than rent was what would happen under Prop 13.

So we're watching it and have read about it and just know there'll be -- I can't imagine, Irvine Company Watson Land, Carson land. There will be some huge players that get involved in the lobbying for this that would be pretty heavily impacted, I would imagine -- and how this plays out.

Bill Crow -- Raymond James -- Analyst

Okay thanks. That's it for me. Appreciate it.

Marshall A. Loeb -- President & Chief Executive Officer

Thanks, Bill.

Operator

And our next question comes from Eric Frankel with Green Street Advisor. Please go ahead.

Eric Frankel -- Green Street Advisor -- Analyst

Thank you. Can we just talk about Houston and I think lease roll down. Are -- I see fundamentals in the market are better there but there seems to be a fair amount of supply in the market. I'm just wondering, if that lease roll was an anomaly.

Marshall A. Loeb -- President & Chief Executive Officer

I would call it a good -- fair question, good one, an anomaly in the sense that it was a single -- I guess what rolled in Houston, what kind of the details of it? It was a single tenant pre-leased or /build-to-suit, 125,000 foot lease up at World Houston. And that tenet, it was about a quarter office within the 125,000 feet and a fair amount of that was 50/50 mezzanine office. So second storey office, and that tenant also had as a 3PL. They were able to use an outside yard storage. So they consolidated, moved out during the downturn. We sat on the space for a couple of years with it vacant and then decided, this is a little bit of a unique animal and we had a similar situation in Phoenix a couple of years ago, where you end up with a building, tie it to freezer cooler when a tenant, when a building becomes pretty specific for a tenet's use, it makes it harder to release it. So after a 10-year lease with annual bumps, and it's out there vacant, we decided to stretch and just make the deal we could. So without that again our GAAP numbers would've been as a Company over -- just over 20% and even in Houston, our GAAP releasing spreads would have been 19%. So we can't pick and choose our metrics obviously and we're not doing that. But if it helps you, out of 84 of the 85 leases we signed this quarter, all looked, you kind of nod your head and nod along here. We had a pretty tenant-specific building that rolled -- sat vacant for a while and we finally just said, all right, and then my fingerprints are on the gun whether we should have done it or not, let's just take the tenant on hand and partially guilty to Brent's given me a look, if my fingerprints are on it of let's do this deal and move on. And Brent's only defense has been, hey, I wasn't there to do the renewal as well. I would've got a better rate where it was his original deal. Any color Brent or did I cover it?

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Yes. I think that covers it. I think the bigger point is that the 19% GAAP is what it would have been absent that one lease. And talking to the guys in the field, we don't anticipate. We do think that's a one-off situation, not a -- we've got four more of these coming over the next couple of quarters. So I fully expect that to bump back up. I would just point out to the Texas that pulled Texas down and just again without that one lease, would go from 3% to 16% as a GAAP increase which is really where we've been as a run rate as a Company for the past where we were there '17, '18 and really minus that lease, we're slightly better than that -- first quarter '19.

Marshall A. Loeb -- President & Chief Executive Officer

Couple of other just kind of Houston stats. I was glancing at. That the overall market is 5.4% vacant and the north market where our World Houston Park is 6.2% at the end of first quarter, which is the lowest it's been since 2012. So we were encouraged by that. And then Houston's a little bit of an anomaly market for us as well. And that rents in the north market are pretty much back to peak. And usually when we say that, people would refer to the downturn, but in north Houston that actually is -- they're back to where they were in 2015. So as Brent said, we think this was an anomaly and it's glad to see the market recover back to where we were in 2015. So that was a much more recent downturn than the balance of our markets..

Eric Frankel -- Green Street Advisor -- Analyst

Okay, I appreciate the additional color. Just a follow-up question on external growth and acquisitions and asset pricing. I think, you've alluded to a pretty competitive environment, but maybe you could quantify where you think stabilized cap rates have trended for some of the markets you're targeting. Are cap rates down 10, 20, 30 basis points since say six months ago?

Marshall A. Loeb -- President & Chief Executive Officer

Yes, they -- I would say, broad brush kind of the major markets is kind of what we hear and see, LA, Dallas, Atlanta, maybe Miami, they're high 3s, maybe to 4, and you can get prices per square foot that are pushing $150, $200 per square foot land, approaching $60 a square foot in LA, which is -- and then San Diego in the 40s or we've seen a $70 per square foot land comp in San Diego. And these are all industrial sites. And then what we've heard, again, I'll quote CBRE, they said, they've been predicting cap rates would compress in the secondary markets, meaning that Charlotte, Denver, Phoenix, Tampa, those types markets and last year, they did compress there, so that now you're in the 5 to 5.5 in most of those markets, and it is a long laundry list of international capital that we've seen coming into US industrial. We've been the favorite asset class we met with -- Brent and I met with HFF recently and their comment was there's a bid ask spread and about every product type right now that there's more dry powder on the sidelines than they've ever kind of -- as they measure it, kept track of. And there's a bid ask spread in all product types, but for industrial and that there is such demand, it's the most efficient product when they bring properties to market.

Eric Frankel -- Green Street Advisor -- Analyst

That's interesting. Thanks and just one quick follow-up question. It's related to I guess the grocery question you -- that was mentioned earlier. Is -- are tenants investing at all more in some sort of equipment handling budgets just to move product more quickly through your facilities, so more robotics or they're more just general automation that's occurring in some of the new leases that have been signed?

Marshall A. Loeb -- President & Chief Executive Officer

I would say generally, yes. Usually, the larger the tenant and probably the better capitalized the Company. Certainly like we have FedEx in a number of locations, they're cutting edge on that. And tenants do do that, certainly they're -- all of them are doing it a little more. It's just a matter of what their product is and how fast and what their balance sheet looks like. But we think with the labor shortage, I think it will keep trending that way and they'll get more efficient and how they're moving product through the warehouse and probably -- and again, we think we're early on, smaller space is closer to the consumer, so they can get that quick delivery

Eric Frankel -- Green Street Advisor -- Analyst

Okay, thank you.

Marshall A. Loeb -- President & Chief Executive Officer

Sure.

Operator

And our next question comes from Rich Anderson with SNBC Nico. Please go ahead.

Rich Anderson -- SNBC Nico -- Analyst

Thanks, good morning. Hey, Brent. Did you mention the rise in the G&A guidance from a couple of months ago in your prepared remarks, I don't think, I heard it but if you didn't, I'd love to know what the nature of it is?

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Yes. Rich, good to speak with you, good to hear you. Yes, G&A was up a bit and a little bit of it's comp and restricted stock oriented. But there is some component of it -- that's relates to a -- (inaudible) of a lawsuit that we've been involved with that, that was discussed in the notes to the 10-K, it will be discussed very summarily in the 10-Q, they'll be out in the next day or two.

We incurred I think $320,000 of that -- costs related to defending ourselves in that suit, which we feel is without merit, but yet you have to defend yourself. And then we have some costs down in, into the year to deal with that. So there are few moving pieces up and down, but I would say that was the new piece that's primarily drove the increase that you see there in the guidance.

Rich Anderson -- SNBC Nico -- Analyst

Okay, good enough. And then for Marshall or anyone, I'd like to sort of ask a question about risk management. There's nothing on your balance sheet of course, but you're increasing your development spend, you're going after value add acquisitions and given the demand that's out there for your product. But what are you looking for to not go forward, but just take a step backwards. You're getting 200 basis point to 300 basis point premium spreads versus acquisitions and development. If that start -- number starts trending down, is that a sort of a foreshadow though. Maybe we got to take our foot off the accelerator or is it maybe the spread between leased and occupancy, which is only 80 basis points now. What are some of the things that you're looking for to manage not this year but two or three years from now?

Marshall A. Loeb -- President & Chief Executive Officer

Good. Fair question and you're right -- usually we'll target, kind of our internal rule of thumb is 150 basis point premium kind of we do a development over market cap rates. And again, thankfully we've been north of that. And then typically when we do our underwriting, we'll use the yields, we project our own current market rents. So we won't put an inflation factor on rent. So albeit, we've benefited from those over the past few years. If that number gets closer to 150, we certainly would take our foot off the accelerator or like as our model work where I compare this to retail earlier. If we're delivering buildings and they're not leasing up and in during that downturn in Houston, we were able to stop. We stopped development. I'll give our model credit for working. And same time in Phoenix, we -- a couple of years ago, we had vacancy and some fairly -- within our portfolio and then some new developments and we really stopped development and really stopped looking at acquisitions until we kind of caught up and digested what was on our plate.

We've done a little bit, we're about there in Atlanta, but even more recently, we had added some value add product in Atlanta had vacancy. And so we had -- there we said, all right, let's kind of finish and catch up to what our own internal supply is in that market before we really pursue new acquisitions or new land sites. So we try to almost market-by-market and if what's on the shelves isn't moving, we won't add to the shelves there. And unless it's -- in a compelling reason, and if we've developed vacancy, I don't want to go to our investment committee and say, the third or fourth vacant buildings is the charm, let us build another one, we will really get our first buildings leased up and then go back to committee. But when things are good, I kind of view it, if we can build those yields, we will try to make hay while the sun shines, where it's been the last couple of years and keep up a safe balance sheet because when things do slow down, they may slow down quickly.

So I like that we're trying to be more geographically diversified in case it slows down in one market and not another. And then just kind of watch each development, knock on wood, our last, 16 developments that we started and we'll miss one or two here probably coming up, that have all rolled into the portfolio. We'll roll them in earlier if when they get 90% leased or one year pass completion. But our last 16 have all rolled in at 100% which that's an anomaly. But that to me feels like OK, the market's telling you to kind of keep doing that and keep creating that value for our shareholder until you see it starts to slip and then we'll play defense again.

Rich Anderson -- SNBC Nico -- Analyst

All right, fair enough. And just one comment, I mean if you're making churches move to accommodate your industrial buildings, I just suspect, perhaps not walking outside during a lightning storm. And that's all I have. Thank you.

Marshall A. Loeb -- President & Chief Executive Officer

Bless you. Thank you.

Operator

And it does appear that there are no further questions over the phone at this time.

Marshall A. Loeb -- President & Chief Executive Officer

Thank you. Thanks everyone for your time. Appreciate your interest in EastGroup. And we're certainly available for any follow-up questions you may have. Take care.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Duration: 66 minutes

Call participants:

Marshall A. Loeb -- President & Chief Executive Officer

Keena Frazier -- Director Leasing Statistics

Brent W. Wood -- Executive Vice President and Chief Financial Officer

Jamie Feldman -- BofA Merrill Lynch -- Analyst

Alexander Goldfarb -- Sandler O'Neill -- Analyst

John Guinee -- Stifel -- Analyst

Ki Bin Kim -- SunTrust -- Analyst

Unidentified Participant -- -- Analyst

Craig Allen Mailman -- KeyBanc Capital Markets Inc -- Analyst

Jason Greene -- Evercore -- Analyst

Bill Crow -- Raymond James -- Analyst

Eric Frankel -- Green Street Advisor -- Analyst

Rich Anderson -- SNBC Nico -- Analyst

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