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Edited Transcript of EGP earnings conference call or presentation 24-Oct-19 3:00pm GMT

Q3 2019 Eastgroup Properties Inc Earnings Call

Jackson Oct 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Eastgroup Properties Inc earnings conference call or presentation Thursday, October 24, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brent W. Wood

EastGroup Properties, Inc. - Executive VP, CFO & Treasurer

* Keena Frazier

EastGroup Properties, Inc. - Director of Leasing Statistics

* Marshall A. Loeb

EastGroup Properties, Inc. - President, CEO & Director

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Conference Call Participants

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* Alexander David Goldfarb

Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research & Senior REIT Analyst

* Blaine Matthew Heck

Wells Fargo Securities, LLC, Research Division - Senior Equity Analyst

* Craig Allen Mailman

KeyBanc Capital Markets Inc., Research Division - Director and Senior Equity Research Analyst

* Emmanuel Korchman

Citigroup Inc, Research Division - VP and Senior Analyst

* Eric Joel Frankel

Green Street Advisors, LLC, Research Division - Senior Analyst

* James Colin Feldman

BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst

* Jason Daniel Green

Evercore ISI Institutional Equities, Research Division - Analyst

* John William Guinee

Stifel, Nicolaus & Company, Incorporated, Research Division - MD

* Jonathan Michael Petersen

Jefferies LLC, Research Division - Equity Analyst

* Vikram Malhotra

Morgan Stanley, Research Division - VP

* William Andrew Crow

Raymond James & Associates, Inc., Research Division - Analyst

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Presentation

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Operator [1]

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Good morning, everyone, and welcome to the EastGroup Properties' Third Quarter 2019 Earnings Conference Call. (Operator Instructions)

Now it's my pleasure to introduce Marshall Loeb, President and CEO.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [2]

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

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Keena Frazier, EastGroup Properties, Inc. - Director of Leasing Statistics [3]

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Please note that our conference call today will contain financial measures such as PNOI and FFO that are non-GAAP measures as defined in Regulation G. Please refer to our most recent financial supplement and to our earnings press release, both available on the Investor page of our website, and to our periodic reports furnished or filed with the SEC for definitions and further information regarding our use of these non-GAAP financial measures and a reconciliation of them to our GAAP results.

Please also note that some statements during this call are forward-looking statements within the Private Securities Litigation Reform Act. Forward-looking statements in the earnings press release along with our remarks are made as of today and we undertake no duty to update them as actual events unfold. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially. We refer to certain of these risk factors in our SEC filings.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [4]

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Thanks, Keena. We had a strong team performance this quarter, maintaining the pace set earlier in the year. Some of the positive trends we saw were funds from operations came in above guidance, achieving a 9.4% increase compared to third quarter last year. This marks 26 consecutive quarters of higher FFO per share as compared to the prior year quarter. Based on the quarter and the market strength, we're raising our annual FFO guidance $0.03 per share.

The vitality of the industrial market is further demonstrated through a number of metrics such as record quarter for occupancy and leasing and another solid quarter for same-store NOI and re-leasing spreads. As the statistics bear out, the operating environment continues to allow us to steadily increase rents and create value through ground up development and value-add acquisitions.

At quarter end, we were 97.9% leased and 97.4% occupied. These represent record results for us in terms of quarter end occupancy and leasing. Further, our quarterly occupancy has been 95% or better for what is now 25 consecutive quarters. In short, demand continues growing for our in-fill location, small bay last mile parks. Several markets were 98% leased or better, including Huston, our largest market. And while still our largest market, Huston has fallen from roughly 21% of NOI in 2016 to 13.5% this quarter.

Supply and specifically shallow bay industrial supply remains in check in our markets. In this cycle, supply is predominately 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. While sourcing development sites within fast growing Sunbelt markets is a growing challenge for us, it's keeping supply in balance.

Same-property NOI growth was 5.8% cash and 4.7% GAAP. We were also pleased with average quarterly occupancy at 97.2%, up 160 basis points from third quarter 2018. Rent spreads continued their positive trend, rising 8.7% cash and 19.7% GAAP 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 as a majority of our developments are additional phases within an existing park. The average investment for our shallow bay business distribution buildings is roughly $9 million. And while our threshold is 150 basis point projected investment return premium over market cap rates, we've been averaging 200 to 300 basis point premiums. At quarter end, the development pipeline's projected return was 7.4%, whereas we estimate a market cap rate in the 4s.

During the third quarter, we began construction on 5 developments totaling 930,000 square feet. And as of quarter end, our development and value-add pipeline consisted of 26 projects containing 3.8 million square feet with a projected cost of approximately $360 million. For 2019, we're raising our projected starts to $260 million. As color commentary, our $148 million in starts last year were a record, so we're excited to again raise the target and to exceed last year's results.

Finally, our activity is spread over 10 different cities. This geographic diversity further reduces risk while enhances our ability to grow the development pipeline on an ongoing basis. And as a reminder, the majority of our starts are based on the performance of the prior phase within the park. In fact, over 3/4 of this year's starts are the next building on a park. As a result, market demand dictates new construction rather than us pushing supply into the market. Two outcomes of this approach. One, it allows us to manage risk as in most cases we're simply restocking the shelves. In many cases, the start is driven by expansion needs of an existing tenant in the park, and in most of those cases, we're able to backfill the original space at higher rents.

Secondly, our record number of starts demonstrates the strength of the industrial market, our team and our parks. Year-to-date, we've been pleasantly surprised by demand levels and the resiliency in our occupancy.

We've had a busy quarter in terms of transactions closing during the quarter and a few after quarter and others we view as likely transactions prior to year-end. We're pleased with the quality of our investments as well as the geographic diversity. New investments were made or are being made in Las Vegas, San Diego, Dallas, Phoenix, Greenville and Tampa. From a dispositions perspective, we had 4 R&D buildings in Santa Barbara. One we expect to close within a couple of weeks. Two others also have funds at risk with a projected fourth quarter close. And finally, in Tucson, a tenant is acquiring their building and we expect closing there this quarter also.

In sum, while the market is strong, we're working to find development and value-add opportunities, but we're also using this environment to shed those assets which are less likely to drive our future growth.

Brent will now review a variety of financial topics, including fourth quarter guidance.

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [5]

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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 third quarter exceeded the upper end of our guidance range at $1.28 per share compared to third quarter 2018 of $1.17 per share, an increase of 9.4%. Funds from operations excluding gains on casualties and involuntary conversions represented an increase of 7.6% for the 9 months ended September 30, 2019.

Our continued strong performance both operationally and in share price is allowing us to further strengthen our balance sheet. From a capital perspective, during the third quarter, we issued common stock at an average price of $123.56 per share for gross proceeds of $105 million. During the 9 months ended September 30, our gross common stock issuance proceeds totaled $220 million, which represents a record amount in a fiscal year for the company.

Also, during the third quarter, we closed up 2 senior unsecured private placement notes, a 10-year note for $75 million with a fixed interest rate of 3.47% and a 12-year note for $35 million with a fixed interest rate of 3.54%. Subsequent to quarter end, we closed on a 7-year $100 million unsecured term loan at a fixed rate of 2.75%. We remain pleased to have access to capital via debt and equity at attractive pricing.

We declared cash dividends of $0.75 per share in the third quarter, which represented a 4.2% increase over the previous quarter's dividend at an annualized dividend rate of $3 per share. The third quarter dividend was the company's 159th consecutive quarterly cash distribution to shareholders.

Looking forward, FFO guidance for the fourth quarter of 2019 is estimated to be in the range of $1.24 to $1.28 per share and $4.94 to $4.98 for the year. Those midpoints represent an increase of 6.8% and 6.4% compared to the prior year restated respectively and an increase of $0.03 per share to the midpoint of our guidance -- of our prior 2019 guidance.

Our FFO ranges were impacted by an estimated increase in fourth quarter G&A of $0.03 per share directly attributable to the anticipated adoption of a return of policy for equity awards. Since there was no preexisting policy, the company will incur this onetime initial charge to record the medium accounting applications.

These are charges we would have anticipated occurring in future periods, but with a written policy in place, we are required to accelerate the expense recognition for eligible employees. To be clear, we have no employees announcing retirement today, but rather it's simply a policy adoption.

Our third quarter results combined with the leasing assumptions that comprise updated guidance, produce an increase in both average occupancy for the year and an increase in cash and straight line same-property range. Other notable assumption guidance revisions include increasing development starts by $60 million, increasing operating property acquisitions by $50 million, increasing value-add property acquisitions by $35 million, and increasing termination fee income by $250,000 due to known fees.

With opportunities to invest capital ahead of expectations, we continue to take advantage of an attractive stock price and low interest rates. We increase our estimated issuance of common stock by $20 million and unsecured debt by $100 million.

In summary, our financial metrics and operating results continue to be some of the best we have experienced and we anticipate that momentum continuing as we close out the year.

Now Marshall will make some final comments.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [6]

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Thanks, Brent. Industrial property fundamentals are solid and continue improving across our markets. Following these fundamentals, 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 raised year-to-date.

We view this combination of pursuing opportunities while continually improving our balance sheet as an effective strategy 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 the future. And we'll be now happy to take any of your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll go first to Alexander Goldfarb with Sandler O'Neill.

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Alexander David Goldfarb, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research & Senior REIT Analyst [2]

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So the first question is on the external side you guys have been quite busy. Marshall, I think you touched on just the competitive nature of the acquisition market. I noticed that you had nothing in L.A. or the Bay Area. But can you talk a little bit more about development because that's really the key to you guys? Are you seeing -- you continue to see no diminution in your development yields or the way land prices and construction costs, et cetera, are trending? Are you starting to see some of that -- some of those yields erode? So if you just comment.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [3]

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Sure, happy to. Good question. And I -- you're right. With land prices up, there's no fire sale land left, construction price is rising. And then simply as we've developed a little bit in -- Miami is a bigger component where the cap rates are lower, but our yield projections there a little bit lower. I thought our development pipeline yields would trend down, but pleasantly surprised we've hung in there north of 7, 7.4 kind of in both buckets under construction and lease out this quarter.

So they're -- thankfully, rents are rising with construction prices and in fact some cases outpacing it. So we've been able to maintain those spreads. And it's about as larger a gap between market cap rates and construction yields as we've ever had, where we're developing in the kind of lower 7, 7 1/4, 7.4. And the last couple of lease portfolio trades have been in the mid-4s. So it's -- with you, I thought it would drift down a little bit, but stays certainly well above 150 basis points. But as tight as the market is, rents have kept pace and offset that.

And really, in terms of the amount of development, as I mentioned too, I guess to touch on that, I'm pleasantly surprised a little bit that we've gotten the $260 million in starts. Last year was a busy year, $140-something million. And this year, it's really been we'll get a call from the field or the guys will call and say, "We're about out of space in Phase 2," where we had a call earlier this week and the comment was, "We have more prospects than space, so we're going to kick off the next phase." So it's really driven by leasing demand. And we've kind of just said it's restocking the shelves: we're out of this inventory and we need a new -- we need funds from Brent to kind of fund that next round of development at the park.

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Operator [4]

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And it looks like we'll go next to James Feldman with Bank of America.

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James Colin Feldman, BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst [5]

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I guess just first -- hopefully, that's the entirety of the question. But just to confirm on the G&A you mentioned. So that $0.03 was not in your prior range, but it is in the new range. So effectively your guidance would have been $0.03 higher. Is that correct?

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [6]

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Jamie, that's correct. We of course had a $0.03 beat third quarter and we would have guided $0.03 higher fourth quarter. But as I mentioned in the prepared remarks, we anticipate adopting a retirement policy just as a consistent means of treating equity awards when someone retires and that required -- we had a few employees that meet some of those early eligibility requirements once it's adopted. So we had to catch up. And so yes, there is a one-time $0.03 charge that we're incurring in fourth quarter. We plan from operating perspective that we basically absorb that charge and was able to at least maintain our fourth quarter anticipated range.

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James Colin Feldman, BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst [7]

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And then how does that work for the run rate in the next year? Will that -- I mean the G&A is now $0.03 lower next year? Or is that an annual?

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [8]

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That's not an annual beat, $0.03 lower. They'll will be some costs associated year-to-year, but it will be much less material and much more year-to-year comparable from a run rate perspective. But that would not be -- that would just be a lump fourth quarter G&A. Certainly, fourth quarter of 2020, there would not be that amount there. So it's anticipated it will be a onetime catch-up charge.

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James Colin Feldman, BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst [9]

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Okay. All right. And then I guess just big picture. You guys constantly talk about how your shallow bay in-fill product is getting good demand. Can you provide like some anecdotal stories or leases -- examples of leases of why your portfolio really is differentiated and why it does seem to be working here and maybe to talk about why you think it does have such legs here?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [10]

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Sure. I'll take a stab at that and then Brent chime in. Maybe a couple of examples -- and again, it's hard for us to speak about someone else's portfolio, but at least -- I was reading the other day -- we've signed, thankfully, a couple of few leases with Lowe's and some with Best Buy and Home Depot. And was reading -- or Lowe's, just focusing on them, for example. They were saying they were moving their inventory really more from a store-based model to a market-based model. And I'm interpolating too much or assuming too much in that, but I think that's where we pick up -- one of the examples was in Miami and a new development there. They signed a lease where it's cheaper and more efficient to keep white goods, as they call it -- the washer-dryer, refrigerator, stove -- in an EastGroup type building than the back of a store with a higher retail type rent.

So as each of the retailers shifts their model to -- as that supply chain evolution evolves, the faster and faster delivery. And in these fast growing markets like a Miami or a Dallas or a Los Angeles, the traffic is so bad you really need that in-fill location near a growing consumer base. And so it's almost effectively replacing some brick and mortar with industrial space. And that's where we're -- each quarter we seem to pick up a new tenant.

Peloton is a new prospect, we've talked to Tesla, people that we hadn't -- weren't in our portfolio. And those aren't signing leases, but just some of the names that kind of pop up from time to time that are tried and true tenants thankfully are still out there and doing well. But we'll pick up a tenant or a customer we typically haven't dealt with in the past as they -- and I think we're still early-early in, in terms of what we see. Amazon and Lowes and Home Depot. I think there's a whole next wave of retailers that are still just starting to figure out their logistics chain and how they get goods delivered faster and store at a more cheap basis to deliver quickly.

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [11]

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Jamie, the only thing I would add to that is -- and you guys are good at showing the various stats and portfolios. But we have -- 59% of our revenue comes from leases that are less than 50,000 square feet in size, another 25% in the 50,000 to 100,000 square foot in size. So more simply said, 84% of our revenue stream comes from tenants who have leases with us that are less than 100,000 square feet in size. So when we say multi-tenant, that's really -- like we said for many years now, that's really our bailiwick and that kind of shows that there.

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James Colin Feldman, BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst [12]

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And those are the size of leases that like Lowe's is looking for?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [13]

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Yes, for the most part. And we've even seen, yes, I think with some of the -- with Amazon and Best Buy and some of those, I've been pleasantly surprised by some of the smaller sizes that they're seeking in markets.

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James Colin Feldman, BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst [14]

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Okay. And then I guess just as we think about next year, you've got your -- you said your development pipeline is at an all-time high. I mean do you think you could be in a position to have a similar sized pipeline or larger next year? And then similarly on same-store, you're trending at 4.7% this year. I assume you'll have some occupancy headwinds next year just given your peak occupancy. How do we think about what leasing spreads and rent bumps could do to cash same-store next year versus this year?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [15]

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I think at least on the development, I -- if you had asked me earlier in the year to give you odds to get to $260 million -- again, I'm confident in our team and I like our parks and locations and where the market is going. I wouldn't have thought we would get there. I'm not trying to be coy. I'm just not that smart actually.

So I hope we can get back to these type levels. I think what the market -- well, I guess I'm relieved that the market will tell us what we should do. We can make it. You just may not want us to make it in hindsight I think. But hopefully, the tenant demand is there and we keep going from park to park to park and running through land quickly. So it's certainly possible. We'll obviously come out in our next call with our 2020 guidance. And we feel certainly good about the market and where things are going. I hope we can maintain the pace or we'll see where the market takes us.

In terms of same-store next year, you're right, it will be -- we're about as full as we've been ever in the mid 97's, so we probably could see that drift down. But in terms of rent growth if you're seeing from us and from -- some of our peers have reported -- with a tight market and rising construction cost, we keep predicting or I predicting that rents are going to climb even faster. So I don't see demand slowing down thankfully and I don't see rent growth moderating just yet until there's an economic event.

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Operator [16]

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So we'll go next to John Guinee with Stifel.

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John William Guinee, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [17]

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I love your reference development is restocking the shelves. A question for you, Marshall. You guys have a stunningly low cost of capital. How much of your acquisition and development would you attribute to your current cost of capital, i.e., what do you think your volume would be if you were trading at $100 instead of $132.71 a share?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [18]

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Good question. I like to think -- we actually do talk about decoupling stock price or debt cost away. I guess we -- you kind of know -- and thankfully, we've been in a spot where Brent has been able to grab some really low interest rates and where we -- and our stock price has been there, but -- so we could do more. But I've always said I don't want to go buy something and get the volume there, and then in a couple years when we have the same call, John, you're asking me what in the world were we thinking when we bought X, Y or Z property.

So try to decouple that as best we can and buy things that we think -- where we -- some of the assets we've owned for 20, 30 years. So I hope what we're buying today we want to own for those same time period. So try to decouple it. It does help in terms of spread. I mean we do look certainly in some expensive markets like South Florida and L.A., San Diego's Bay Area, "Okay. Where do we think our weighted average cost of capital is versus market cap rates?" But we certainly also look at the rent growth we've gotten in those markets or that we anticipate for the next few years.

So try to -- the short answer is try to decouple it as best we can and just "Does this make sense for our shareholders that we buy this and own it for the next decade or not?"

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Operator [19]

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And we'll go next to Bill Crow with Raymond James.

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William Andrew Crow, Raymond James & Associates, Inc., Research Division - Analyst [20]

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Marshall, you talked about some of those well known mostly retail tenants: Lowe's, Home Depot, Amazon, et cetera, Best Buy. Is there any difference in the lease duration that you're signing with those big companies compared to maybe your local or regional tenants?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [21]

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Good question. And not really. I mean for the most part, they've been about the same. In terms of kind of within that lease -- and I hope I'm not saying a couple -- sometimes Wayfair -- and I always think just their model is evolving so quickly. They'll lean towards a 3-year lease, but I've seen them execute leases that are longer than that.

And our -- we track it and keep that statistic. And it seems like every quarter, we end up at about -- 4.5 years is our average lease term. Usually, in the new development, it's longer than that. But average lease term -- but by and large -- or the other tenants that may have a unique lease term -- we'll see the third-party logistics, especially if they're awarded a contract, well, they'll want to match the lease term up with their contract. So you could end up with a 3-year term, 5-year term.

But for the most part, they've been the same. And we've seen people a little bit -- and I think they've pulled the requirement back in-house, but Walmart was -- kind of as I say that wave is coming -- they were looking at multiple small -- I'll stick with shallow bay, kind of smaller spaces. And they were -- I think a lot -- so many of the retailers were figuring out "Do we going" -- or is it going to be order online, pick up and store or order online and have it delivered from an EastGroup type warehouse.

So Walmart was tinkering with that. We heard they pulled the requirement back in-house. And I think if people like Walmart and Amazon are figuring this out, then the rest of the world was likely following suit.

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William Andrew Crow, Raymond James & Associates, Inc., Research Division - Analyst [22]

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Yes. Okay. My follow up question is how much does price per foot and its relationship to replacement cost figure into your decision on acquisitions?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [23]

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It's certainly something we look at. We look at yield probably a little more heavily. And it really varies by market too. Like in where -- one of the acquisitions we announced was in North San Diego, the Rocky Point, North County. And that's an expensive one. It's just under $200 a square foot. And I had to talk to some of our Investment Committee Members, Leland and David off the ledge a little bit.

But when you look there, there's really no land left. You've got Camp Pendleton to the north, obviously Pacific Ocean to the west, and really no great freeway system running to the east and mountains. So you get into some of those like in L.A. and San Francisco and in Miami, where I think it's less of a factor because there's so little industrial land left. If we were in a Jacksonville or some of our other markets, it would be a bigger factor.

If you're on the edge of town, I would say cost per square foot should be a really large factor. On an in-fill side it's a factor, but maybe a little bit less because there's so little competing land around you.

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Operator [24]

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And we'll go next to Craig Mailman with KeyBanc Capital Markets.

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Craig Allen Mailman, KeyBanc Capital Markets Inc., Research Division - Director and Senior Equity Research Analyst [25]

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A couple of questions here. I guess to go back to commentary, you guys are definitely seeing more national kind of Fortune 100 tenants versus more of a regional kind of tenant that you had seen earlier in the cycle and in past cycles. I guess just as -- your space as a percent of their cost structure is much lower than maybe traditionally where your tenants were. Your retention is really still pretty high. Rent spreads are good. But how are you guys kind of changing the mindset of the people on the ground to push even harder on rents knowing that location kind of trumps a couple of percent of higher rent for some of these newer tenants that you're talking to?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [26]

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Good question. I think we certainly do spend a lot of time talking about rents, occupancy, all the -- kind of maximizing NOI certainly on any given year or even given quarter. The good news I think at this point in the cycle, all of our tenants just about -- in fact 99-plus percent have a tenant rep broker or at least an in-house real estate department, and then we'll have the third-party brokers typically that we're working with. So there's usually -- and I think the best ones -- everybody will know, both sides, where the market rents are. And then depending if it's a new tenant or a renewal tenant, you kind of know what your competitive advantage is or how your space works for them. So it's really almost a I guess -- and it helps hopefully that Brent and I have both been in the field and been asset managers at times.

I've always thought it's best case you knew exactly who your prospect or your tenant, what their other options were, and how your property compared to that property and even priced to that property.

So I think the guys are pushing rents as hard as they can without losing too much. I think you can keep occupancy and push rents at the same time. We certainly save on the downtime and the re-leasing cost and TI, things like that once you lose someone. But I think they're pushing rents -- or hopefully we believe they're pushing rents about as hard as they can. Brent, any color?

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [27]

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Yes, I would agree with that and used to weigh that all the time in the field. And when you put pencil to paper -- you want to push as hard as you can. But if you push to the edge of saying, "Okay. We're going to lose the tenant -- and if they're really close to what you perceive as a market rent, then you only have a few months of downtime to where you could come out positive. And much past that from a time frame over, say, a 4 to 5-year lease period, then you lose even if you get a higher rate in the future.

So it's something just like Marshall said we look at, we push hard on. And we like to think we're pushing and doing both. Certainly, with the rental increases we've seen in California, we're making a push to get more exposure there, to try and get more exposure to some of these really high increased markets. But the guys -- our guys are pushing every day occupancy and rents.

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Craig Allen Mailman, KeyBanc Capital Markets Inc., Research Division - Director and Senior Equity Research Analyst [28]

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Okay. I mean I guess maybe I'll ask in another way. One of your competitors was talking about "A couple of years ago rent was never the reason people left. Today it's a little bit higher, but not high enough" kind of -- when you guys do exit interviews or exit surveys, how often is it rent versus expansion space, maybe they need more than you guys currently have in a park or just more than what your typical size is?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [29]

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Yes, good point. Usually, it's -- you're right, it's not rents. We'll push rents up as much as we can, and in some cases -- like I was glad we got the -- in detail, the Tampa acquisition that we got, for example, it's contiguous to an existing park. We're in the process of tying the 2 together. But that was -- we lost a national tenant in Tampa simply because we didn't -- I won't say simply -- but we didn't have the land to build the next building for them. And we've got a couple of other tenants that are outgrowing their space.

So you try to have that inventory on hand to kind of keep up with demand. But it's usually -- you're right, it's -- they've outgrown the space or they've been acquired and they're consolidating with another company or consolidating several locations into one on the outskirts of town or doing some kind of bigger strategic shift is probably by far more the reason we lose them, unless you're just well over market and then somebody -- it's worth the moving cost.

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Craig Allen Mailman, KeyBanc Capital Markets Inc., Research Division - Director and Senior Equity Research Analyst [30]

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Just -- you had mentioned earlier too now is a good time to be a seller. As you guys look at the portfolio, look at your different market exposures, how much of the portfolio do you think should be culled at this point where there's just no more growth left or there's better use of that capital?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [31]

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Thankfully, it's not that much. I guess I'll thank the team that's been here. We've -- almost all of it is industrial. We don't have really anything meaningful -- other product types in terms of like office or medical office or anything kind of unique.

Probably where we've looked at our dispositions is really managing the size of Houston. We really like the market a lot. We've created a lot of value in Houston over the time. But we realized when we were north of 20% that, that was a lot and the market certainly agreed with us a few years ago. And so we'll continue.

We're delivering -- I'll give the guys credit too -- 100% lease buildings that they're finishing construction up there. So probably look to keep selling in Houston. And then we're kind of picking and choosing the good assets. And they're well leased. It's more R&D buildings in Santa Barbara that really are true industrial buildings or service center buildings that we've sold. You've seen us sell in Tampa and Orlando. Or trying different things.

We sold a couple of 50-plus year old assets that were industrial, but they were 100% leased: one in Dallas and then one in Phoenix that worked well. You and I could own them and they were cash flow. It's just the rent growth and the NOI growth is going to be less than the portfolio average.

So that as we try to really think about a batting order. And I think we should always be pruning the portfolio from the bottom, unless it's just an absolutely horrible market. But you're right, now is a good time to be a seller. There's this wall of capital that likes industrial. So we're selling as much as we can, as fast as we can while maintaining the earning, maintaining FFO, dividends, all the things like that, and trying to raise capital while we have an attractive stock price. So it's a little bit of a 3D equation, which we work at daily I suppose.

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Operator [32]

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And we'll take our next question from Jason Green with Evercore.

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Jason Daniel Green, Evercore ISI Institutional Equities, Research Division - Analyst [33]

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Just a question on the acquisition side. How has the bidder pool changed for, call it, $15 million to $20 million assets? And are you seeing a lot more competition today than you were, call it, 12 months ago?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [34]

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Good question. Certainly, more competition than 12 months ago. But it was a lot, call it, a year ago. And the bidder pool still the same groups that we've typically have, although you used to -- it could drop down to smaller assets and it wouldn't be as many institutional buyers, and I'd say that certainly changed. And there's -- it always -- there's groups that are industrial, that have an industrial platform or forming an industrial platform that weren't industrial companies that have been around but really weren't an industrial a few years ago.

So every kind of year or every quarter -- it's not a very well-kept secret that industrial has been an attractive sector in the last handful of years. And every quarter it seems like someone else is becoming an industrial REIT or launching an industrial platform.

And so that's I'd say by definition what's pushed us more into development and into value-add. And really even looking at our acquisitions, we thankfully had an active year. But outside the airways in Denver, everything we've acquired or are acquiring has been off market. So it's really been just turning over a lot of stones, that, if you wait and get a sales package, it's highly competitive. Even -- it's certainly at the $1 billion plus portfolio pool type thing, but even at the $15 million, $20 million asset size in a major city it will be highly competitive.

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Jason Daniel Green, Evercore ISI Institutional Equities, Research Division - Analyst [35]

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Got it. And then on the development side. Yields have continued -- or at least projected yields under your pipeline have continued to be in the mid 7s. But we know that construction costs are rising. So how have you been able to manage to maintain those yields? Is that just passing on the increases in construction to consumers? Or is there something else that we should be thinking about?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [36]

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Yes. I think -- again, I've been kind of waiting for some -- not horrible downward pressure, but a little bit of downward pressure on them for those reasons you name. And thankfully, as tight as the markets have been, the rents have maintained that pace. So we've hung in there in the north of 7 to kind of 7.4 this quarter.

So knock on wood, we can hang in there. In the meantime, cap rates I'd say have been compressed in the major markets. And maybe that's one thing we've seen in the last 12 to 18 months is cap rates getting compressed, not only being low in the major kind of top 5, 6 markets, but in Denver, Phoenix, Last Vegas, Orlando, Charlotte -- I won't call them secondary markets, but maybe markets number 6 to 30 around the country, those cap rates have come down because all the capital can't -- simply can't go to -- more to New Jersey, Los Angeles, Chicago, Atlanta.

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [37]

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Yes, I would just add to that too. I think it's a testament to our multi-tenant. Our 80,000 to 100,000 square foot building, they tend to be less of a commodity in each of our markets. If we were building big box, which -- nothing wrong with those assets, but if we were building those, there certainly would be more pressure from a commodity standpoint, from a rental rate pressure standpoint.

So I think if you compare our development yields maybe to the peer group or someone that does a bigger box, you're going to see that spread because of the smaller tenant size pay a little more in rent and a little less commodity -- a little less supply in each of those markets as well.

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Operator [38]

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And we'll go next to Manny Korchman with Citi.

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Emmanuel Korchman, Citigroup Inc, Research Division - VP and Senior Analyst [39]

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Marshall, you had mentioned in one of the discussions about investing you had to talk David off the ledge on some of these valuations. I guess if we were to say if he were still CEO, whether you were there or not, what would he be doing differently, if anything? Or do you think that this is just a move in the market and it's a matter of him adjusting to the times?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [40]

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Good question. And I guess -- and David is just a little bit -- a little bit facetious. And I'm as much in shock. Just we've seen prices per square foot -- I'd like to think -- and David is certainly Chair of our Board and on our Investment Committee. So I think the difference would be very little or -- it's still a team. It's not -- as you guys don't want me making the decisions. You rather it be a team type thing. So David is still in the room.

For us to see prices at $200 a square foot -- or I -- we chased and lost a property in the Bay Area the other day and I kidded him we had 2 or 3 options. And the first one started in the high 300s per square foot. I said, "Let me" -- I don't think either of us thought we'd see industrial prices, where cap rates -- again really, a combination of where cap rates have gone and rents have gone that you'd ever see these type of prices per square foot is what I would typically think of offices prices per square foot.

But even what we bought in North San Diego or we're about to acquire in North San Diego -- we have a detailed replacement cost from one of our brokers. And so at 190-something dollars a foot, it's actually below replacement cost. And Rexford bought a building within the same park fairly recently and it's at an even higher price per square foot.

So it's numbers none of us ever really thought we'd see. So you kind of go in and go, "Your" -- people that have done it for a few decades, you go, "You're not going to believe" -- where we're used to it being $60, $70, $80 a square foot, we're announcing, "Hey, here's one that's $200 a foot and I think it's a good deal" -- "we think it's a good deal type thing." So it's certainly no major pushback. It's just prices you say wow to, which is a good problem that shows where industrial is going.

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Emmanuel Korchman, Citigroup Inc, Research Division - VP and Senior Analyst [41]

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Okay. And Brent, a question for you. So in the last couple of quarters, you guys have beat your own internal quarterly guidance for the following quarter. Can you just walk us through sort of how your approach to budgeting may have been a little bit off there or if trends are just that much better that you're having trouble keeping up with what's actually happening on the grounds?

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [42]

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I think it's more of the latter, Manny, that each time we -- we do a very thorough lease by lease roll up from the field all the way up to the top and then put in corporate expense. And just our occupancies have continued to pace higher than we had anticipated. We're 97.4% occupied or whatever it is this quarter and it's just very difficult to budget from that standpoint.

I would also say our developments have been rolling in faster than anticipated, leasing up quicker. The guys in the field have been able to find a few one-off operating acquisitions. We've been able to find several value-add acquisitions. And from quarter-to-quarter -- I don't know as we sit here today. In another 3, 3.5 months, we may buy another value-add project or 2 or an operating project or 2.

And so the good thing about it, Manny, mainly challenging budgeting, is it's not just been one thing. It's been bad debts come in a little better, termination fees are a little higher, occupancy a little higher, development is done a little better. So when you roll all that up and then you wind up being a few cents a share ahead.

And if you had told me that we would have been able to beat and raise as consistently and at the margins we've been able to do this year, I would have really been skeptical of that at the beginning of the year. But it's just been a testament to our strategy and a very strong industrial market. And so Manny, I hope that trend continues into -- in perpetuity.

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Operator [43]

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We'll go next to Vikram Malhotra with Morgan Stanley.

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Vikram Malhotra, Morgan Stanley, Research Division - VP [44]

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I just wanted -- the rent spread overall has been very strong. But clearly, (inaudible) market very, very high numbers. But can you just give us some color between the markets where sort of spread may come in -- like in Fort Myers I think maybe they were negative and maybe some of the other markets where they're something closer to -- somewhat decelerated versus ones where they were very strong. What's causing that (inaudible)?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [45]

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Sure. I'm happy to -- Vikram, it was coming through a little bit weaker quality. But I think I would say our strongest rent growth markets, we certainly see California. When I say California, the major markets, Southern California, L.A., Orange County, San Diego, Bay Area, and thankfully, all of the markets -- all the major markets that we're active. And we're seeing good rent growth in the major markets in Texas and Florida, as well where we're I guess good or bad.

Where we're not seeing rent growth quite as strong, I would say it's usually the secondary markets where -- and we don't have much in those market, the Jackson, Mississippi and New Orleans, Louisiana, some of those markets. The rents aren't going backwards certainly by any stretch, but they're not growing as fast. And that's why you see us -- or in other product types, where Santa Barbara rents are back about where they were at the peak, but they haven't really picked up since then. But again, that's R&D rent, not industrial rent.

So we're continuing to see pretty strong rent growth and really where you see us placing our capital. It's something we talk about when we do that. I know we talked about earlier price per square foot and yields going in, but also we do look at where have rents grown and where do we think rents will continue to grow. Las Vegas is a market -- for example, I'm excited about our Southwest Commerce. And that land prices are in that submarket above in many cases, where industrial can be developed in terms of where rents are, and the vacancy rate is about 1.5% and there's a lot of new construction in Las Vegas.

So we're in the southwest submarket, which is near the airport, near the strip, where the new Raider stadium is being built. It's going to displace a lot of industrial buildings. So that's one where we like the project going in. And I think I'll like it better 10 years from now if the crystal ball is right.

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Operator [46]

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And we'll go next to Blaine Heck with Wells Fargo.

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Blaine Matthew Heck, Wells Fargo Securities, LLC, Research Division - Senior Equity Analyst [47]

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Just on the acquisition side. What's the difference in pricing you guys are finding between core deals and value-add maybe if you're looking at them on a stabilized yield basis? And has that spread gotten any narrower or wider over the past few quarters as other investors may be chasing one strategy over the other?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [48]

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Good thought. We've typically -- I'd say value-add is something -- I'll give Brent credit. Our first one I can remember I think was in 2016 and in Fort Worth. And there we kind of said we're not taking the construction risk obviously, but we are taking the leasing risk. So kind of using really round numbers, if market cap rates are 4.5 for the last few portfolios of trading and if our development yields were 7.5 -- and I realize I'm rounding up slightly there versus our supplement -- then you'd want to be about the middle for value-add. It depends on how much vacancy is there and what lead time we can get on leasing.

And we have seen those spreads come in. I mean we're still in the 6s. But given the market strength, I would say one thing we've seen is people are less and less afraid of maybe a vacancy than we are in some cases, that those spreads have come in.

I'm happy with the project we're buying in Fort Worth, that we bought it -- or not Fort Worth -- the Arlington Tech Center in the great southwest submarket. But there was a portfolio that traded there that was partially occupied that had some vacancy that was listed. Ours was off market. And the one that was listed went for about 120, 130 basis points below us is what I was told.

So you're seeing where it gets listed and out there in the market that people are willing to pay up because they're having a hard time placing their industrial allocation. So that's why we've done better just -- we really spent the last couple of years trying to get boots on the ground in more and more markets and finding things that are off market where we can maintain those spread.

So it's a -- we're making good profits. And they're probably about -- the spreads are maybe 1/2 -- or probably averaging more like a 1/2 to 2/3 of what we are on our development yields.

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Blaine Matthew Heck, Wells Fargo Securities, LLC, Research Division - Senior Equity Analyst [49]

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Got it. That's helpful. And Marshall, you touched a little bit on selling Houston assets. And one of your peers recently identified Houston once again as one of the markets with potential oversupply concerns. Clearly, there's significant differences from submarket-to-submarket. So can you discuss just what you're seeing in that market in general and whether you guys have any exposure to those submarkets that are seeing the high levels of supply?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [50]

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Sure. Good question. And I guess, as I mentioned, we like Houston and it's been a good market for us. There's probably 3 main submarkets where the majority of the new supply has been: Northwest, where we're active there; North, where we're active; or where Houston is, for example, up by George Bush Airport; and in Southeast, where we're not.

But a few -- if I can -- bear with me, I'll throw a few stats at you. The market is 5.6% vacant. Construction has been up in Houston, but it actually came down this quarter. It was at 20 million. It's down to 17 million. And then really where we fit in -- that's a big number. And probably it's not much by submarket. It's the type of building that gets delivered. That the numbers we read, about 55% of the new supply is in buildings over 225,000 square feet and over 70% of the build -- some of the supply is in buildings over 150,000 square feet. So most of it is really not aimed as kind of -- as Brent touched on earlier, those tenants 50,000, 75,000 feet and below. Absorption year-to-date again was 17 million under construction. And obviously, it won't all deliver this year. There's -- 7.3 million square feet got absorbed. And per JLL, there's 15.5 million square feet of active requirements in the market.

I know Houston makes people nervous, but a couple of other things that we like about it. It was -- over 80,000 jobs got created in the last 12 months. And then I was surprised, in the last decade they've added 1.3 million people. So that's a ton of growth for a metro area. And there's probably not many cities in the country that have grown that much population-wise, Dallas and maybe a few others.

As I talk about our Houston dispositions, we're -- and maybe again I've thrown stats defending the market. We're 98% leased. So happy with those numbers. We're 8.5% rolling next year. We're down to 13.6%, which is the lowest number we've been as a percentage of our portfolio in a decade. But also know we're just finishing up 2 buildings. And thankfully, before we could finish them, they leased both of those. And that's in that North submarket.

So kind of our thoughts as we've talked about Houston, we like -- certainly, don't want to get in the high teens or even kind of mid-teens again. We'll keep -- develop in the 7s and then pick some other assets in Houston and sell. So if you can develop into the 7s and sell at a 5, round it, or maybe below a 5 in some cases, I like that value creation model and let the rest of the portfolio keep growing.

So it's more of a portfolio allocation than a Houston specific. I think we'll be doing the same thing if it were Los Angeles or Orlando, for example. So I know Houston always seems to make people nervous. And we like it and I think we have a really good team there. So we'll just manage the size of Houston.

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Operator [51]

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We'll take our next question from Jon Petersen with Jefferies.

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Jonathan Michael Petersen, Jefferies LLC, Research Division - Equity Analyst [52]

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So you're -- I just wanted to ask a quick clarification on guidance. I think your guidance is 96.8% is your average month end occupancy. I think you're 96.9% if you average the first 3 quarters and you were 97.4% at the end of the third quarter. So that would imply a modest drop into the fourth quarter. Is that just conservatism or are there some expected move outs in the portfolio?

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [53]

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I guess it will prove if it's conservative or not, Jon. But third quarter, we really took a nice bump up in our occupancy. For example, first quarter, we were 96.8%, second quarter 96.6%, and then we swung up to 97.1% this quarter. Our fourth quarter same-store budget is showing 96.5%, which is pretty much in line with the first and second quarter. That obviously shows a little bit of decline from third quarter. But I think part of that may play into budgeting. We don't have any large known specific move outs that we're trying that's dialed into that. So we will see if that third quarter was another bump up and we can hold that or if it will come down slightly. Our budget shows it will come down slightly.

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Jonathan Michael Petersen, Jefferies LLC, Research Division - Equity Analyst [54]

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Okay. And then what are you guys seeing from municipalities in terms of property taxes and what they're pushing for in warehouses these days? Obviously, valuations continue to rise. Should we expect that to be a pressure on margins at all?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [55]

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The short answer will be, yes, (inaudible). Obviously, values keep rising and the municipalities are noticing that. And we do appeal our taxes or protest where appropriate. Thankfully, we're 98% leased and almost all of those 99% -- or the 98% are triple net, where it gets passed through. So short term, we're covered in terms of property tax increases. But you're right, they continue to drift higher and higher. And in certain markets, though, they're a little more aggressive than others in terms of pushing those.

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Jonathan Michael Petersen, Jefferies LLC, Research Division - Equity Analyst [56]

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Okay. And then in terms of incremental investment, what are your thoughts on kind of debt versus equity given where your stock price is and your cost of equity? Would you I guess lean towards over-equitizing acquisitions versus historical investment standard?

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Brent W. Wood, EastGroup Properties, Inc. - Executive VP, CFO & Treasurer [57]

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That has been our trend lately and we like that we have the option of both and we feel very good about low interest debt and very good stock price relative to any internal calculation of NAV. It will be primarily driven -- the main reason we've raised so much capital is that we've been able to generate -- the guys in the field have been able to generate so much opportunity. But as we continue to go -- if the price stays where it is, I think you'll see us tend to be a little more heavy handed with the ATM and continue to go that route. But we'll still supplement that with some debt.

We don't have any large debt maturing anytime soon. So that won't have something coming at us quickly where it might prompt us to go out and do debt more quickly than we would if not. So you'll see us play both sides and probably a little heavier on the equity side given the price where it is.

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Operator [58]

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And we'll take our next question from Eric Frankel with Green Street Advisors.

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Eric Joel Frankel, Green Street Advisors, LLC, Research Division - Senior Analyst [59]

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I think most of my questions have already been answered. But maybe you could just comment a little bit further on small box rent growth versus large box rent growth across your market. Is it fair to say that submarkets is a greater determinant of how rents have been trending? Obviously, where there's been a lot of supply, there tends to be a lot of land. That's where the large boxes are built, but small boxes probably wouldn't do as well there. Are you seeing that across your markets as well generally? It sounds like Houston is kind of the case.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [60]

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Yes, I'm trying follow -- and even in Houston -- and what we typically see is -- we'll look at supply -- and if I'm answering your question correctly. But -- and that probably 80%, 85% of that supply isn't really competitive. It's usually larger buildings -- if it's a -- it's typically a larger institution. So they've got capital to place. But even the local regional players will have a [Heitmann], [AW], [Clarion] kind of the list of names as their partner. And there are competitive developments, but it's usually larger box and then these in-fill sites.

And certainly, what we're reading from CBRE's research and things like that, that it's the smaller in-fill sites the rents are growing faster than they are in the big boxes on the edge of town. I think -- I also like to believe, and time will tell, that obsolescence is less of a factor in those type because there's going to be less new product delivered in in-fill sites.

What certainly worries us long term is finding the land to keep feeding the development pipeline. But right now it's also helping keep supply in check and helping us push rents there.

So it is a little bit submarket by submarket. And that's why we like being in-fill, and then even infill kind of -- I guess what you might say the right side of town where the population is growing and where the consumers are living. And that's pretty sticky compared to a logistics chain from China to Orange County, for example.

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Eric Joel Frankel, Green Street Advisors, LLC, Research Division - Senior Analyst [61]

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Sure. Just a quick -- another quick question just related to Texas. It looks like re-leasing spreads especially accelerated in Dallas and San Antonio. So just wondering if that was just a lease issue or are rents growing faster in those markets?

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [62]

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Probably in any given quarter I'd say it's just a mix of leases. But we've been happy in both of those markets. Dallas is -- it -- what -- if I can go back to the numbers. It was 100-plus thousand new jobs -- 116,000 new jobs in Dallas for the year ended through August. It is -- and we're spread out from Fort Worth to Northeast Dallas. So it feels like driving in Southern California, that you'll drive 50 miles and still be in the same city more or less.

But it is a really healthy, strong economy and a lot of companies relocating there. So I don't think either one of those should slow down. And really Texas -- if you dug in and said how is your development pipeline gone from where you started, I'll admit we were at 140 million and kept bumping it up to 260 million, a lot of that has been the Texas markets.

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Operator [63]

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And we will take a follow up question from Alex Goldfarb with Sandler O'Neill.

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Alexander David Goldfarb, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research & Senior REIT Analyst [64]

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Just -- Marshall, just big picture. Everything you've talked about at the call is incredible demand from tenants and it seems like the trade war and the issues that we hear about certain -- either manufacturers or producers or whoever having their business get impacted doesn't show up at all in any of your portfolio. So is it just a matter that the market is just so deep that the tenants that are being -- or the people who are being hit by the trade war just have 0 overlap? Or is it that, yes, they are -- your tenants are being impacted by the trade war, but that hasn't impacted their need to expand their space and take more -- and rent more or pay more in rent to be closer to their tenant? So I'm just trying to rationalize the headlines that we read versus the results and the commentary that you guys provide.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [65]

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And a good question and a hard one to answer scientifically. I think it's more of the latter. And that with 1,600 tenants -- I mean our top 10 are just 8% of our revenues. So we have the lowest percent of kind of tenant concentration of the industrial REITs. I have to believe somebody or some of them are being affected by the trade wars.

But I also hope that within that as things continue to shift to industrial -- and we're a low cost provider if you're delivering goods into these major cities. Or maybe they're being impacted and we're offsetting it with 116,000 new jobs in Dallas type thing. But if your business is typically local or metro area deliveries, that, if you're there with a growing pie, you could lose some of your customers, but replace them just with the growth in Orlando or Dallas or Austin, for example.

So hopefully, it's got to be there. But hopefully, it's being muted by the kind of that evolution and the supply chain as well as growth in Sunbelt markets.

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Operator [66]

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And we'll take our next question, a follow up from James Feldman with Bank of America.

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James Colin Feldman, BofA Merrill Lynch, Research Division - Director and Senior US Office and Industrial REIT Analyst [67]

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My questions has been answered.

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Operator [68]

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So there are no further questions in the queue at this time. I will turn this call back over to you, speakers -- Marshall, for any closing remarks.

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Marshall A. Loeb, EastGroup Properties, Inc. - President, CEO & Director [69]

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Okay. Thank you. Thanks, everybody, for your time. We realize everybody is busy. It's earning season. Appreciate your time. And Brent and I are certainly available for any follow up questions people may have. Thanks again.

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Operator [70]

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This will conclude today's program. Thank you for your participation. You may now disconnect.