SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE ~~QUARTER~~QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2018~~MARCH 31, 2019 COMMISSION FILE NUMBER 1-07094

EASTGROUP PROPERTIES, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2018~~MARCH 31, 2019



		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets, ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 (unaudited)	3

	Consolidated Statements of Income and Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (unaudited)	4

	Consolidated ~~Statement~~Statements of Changes in Equity for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 (unaudited)	5

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2224

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4042

Item 4.	Controls and Procedures	4143

PART II.	OTHER INFORMATION

Item ~~1A.~~1.	~~Risk Factors~~Legal Proceedings	4143

Item 4.1A.	~~Mine Safety Disclosures~~Risk Factors	4143

Item 6.2.	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	4143

Item 6.	Exhibits	44

SIGNATURES

Authorized signatures		4245

PART I. FINANCIAL INFORMATION.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)


	September 30, 2018			December 31, 2017		March 31, 2019			December 31, 2018
ASSETS
Real estate properties	$	2,511,646		2,336,734		$	2,609,914		2,553,481
Development and value-add properties	244,761			242,014		264,526			263,664
	2,756,407			2,578,748		2,874,440			2,817,145
Less accumulated depreciation	(796,037		)	(749,601	)	(832,925		)	(814,915	)
	1,960,370			1,829,147		2,041,515			2,002,230
Unconsolidated investment	7,686			8,029		7,879			7,870
Cash	257			16		1,831			374
Other assets	120,852			116,029		120,421			121,231
TOTAL ASSETS	$	2,089,165		1,953,221		$	2,171,646		2,131,705

LIABILITIES AND EQUITY

LIABILITIES
Unsecured bank credit facilities	$	169,261		195,709		$	131,189		193,926
Unsecured debt	723,300			713,061		803,397			723,400
Secured debt	191,292			199,512		185,606			188,461
Accounts payable and accrued expenses	105,869			64,967		83,364			86,563
Other liabilities	29,512			28,842		46,616			34,652
Total Liabilities	1,219,234			1,202,091		1,250,172			1,227,002

EQUITY
Stockholders’ Equity:
Common shares; $.0001 par value; 70,000,000 shares authorized; 36,040,155 shares issued and outstanding at September 30, 2018 and 34,758,167 at December 31, 2017	4			3
Excess shares; $.0001 par value; 30,000,000 shares authorized; no shares issued	—			—
Common shares; $0.0001 par value; 70,000,000 shares authorized; 36,752,260 shares issued and outstanding at March 31, 2019 and 36,501,356 at December 31, 2018						4			4
Excess shares; $0.0001 par value; 30,000,000 shares authorized; no shares issued						—			—
Additional paid-in capital	1,176,034			1,061,153		1,245,660			1,222,547
Distributions in excess of earnings	(318,410		)	(317,032	)	(330,184		)	(326,193	)
Accumulated other comprehensive income	10,693			5,348		4,388			6,701
Total Stockholders’ Equity	868,321			749,472		919,868			903,059
Noncontrolling interest in joint ventures	1,610			1,658		1,606			1,644
Total Equity	869,931			751,130		921,474			904,703
TOTAL LIABILITIES AND EQUITY	$	2,089,165		1,953,221		$	2,171,646		2,131,705

See accompanying Notes to Consolidated Financial Statements (unaudited).

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)


	Three Months Ended					Nine Months Ended				Three Months Ended
	September 30,					September 30,				March 31,
	2018			2017		2018		2017		2019			2018
REVENUES
Income from real estate operations	$	75,306		68,712		221,146		202,704		$	78,637		72,120
Other revenue	20			34		1,268		90		161			83
	75,326			68,746		222,414		202,794		78,798			72,203
EXPENSES
Expenses from real estate operations	21,718			20,109		63,847		59,360		22,302			20,676
Depreciation and amortization	22,970			21,011		67,463		62,101		23,746			21,685
General and administrative	3,060			3,205		10,263		11,586		3,844			3,463
Indirect leasing costs										93			—
	47,748			44,325		141,573		133,047		49,985			45,824
OPERATING INCOME	27,578			24,421		80,841		69,747
OTHER INCOME (EXPENSE)
Interest expense	(8,804		)	(8,704	)	(26,253	)	(26,405	)	(8,846		)	(8,607	)
Gain on sales of real estate investments	4,051			—		14,273		21,855		2,325			10,222
Other	216			255		1,192		725		242			754
NET INCOME	23,041			15,972		70,053		65,922		22,534			28,748
Net income attributable to noncontrolling interest in joint ventures	(31		)	(88	)	(103	)	(329	)	(5		)	(35	)
NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS	23,010			15,884		69,950		65,593		22,529			28,713
Other comprehensive income - cash flow hedges	553			224		5,345		650
Other comprehensive income (loss) - cash flow hedges										(2,313		)	3,606
TOTAL COMPREHENSIVE INCOME	$	23,563		16,108		75,295		66,243		$	20,216		32,319
BASIC PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
Net income attributable to common stockholders	$	0.64		0.46		1.99		1.94		$	0.62		0.83
Weighted average shares outstanding	35,716			34,215		35,204		33,857		36,465			34,689
DILUTED PER COMMON SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
Net income attributable to common stockholders	$	0.64		0.46		1.98		1.93		$	0.62		0.83
Weighted average shares outstanding	35,798			34,290		35,265		33,905		36,526			34,736

See accompanying Notes to Consolidated Financial Statements (unaudited).

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN EQUITY

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

Common Stock
Additional
Paid-In Capital
Distributions in Excess of Earnings Accumulated Other Comprehensive Income Noncontrolling Interest in Joint Ventures Total
BALANCE, DECEMBER 31, 2017 $ 3
1,061,153
(317,032 ) 5,348
1,658
751,130
Net income —
—
69,950
—
103
70,053
Net unrealized change in fair value of cash flow hedges —
—
—
5,345
—
5,345
Common dividends declared – $2.00 per share —
—
(71,328 ) —
—
(71,328 )
Stock-based compensation, net of forfeitures —
4,503
—
—
—
4,503
Issuance of 1,245,885 shares of common stock, common stock offering, net of expenses 1
112,324
—
—
—
112,325
Issuance of 1,232 shares of common stock, dividend reinvestment plan —
109
—
—
—
109
Withheld 23,824 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock —
(2,055 ) —
—
—
(2,055 )
Distributions to noncontrolling interest —
—
—
—
(151 ) (151 )
BALANCE, SEPTEMBER 30, 2018 $ 4
1,176,034
(318,410 ) 10,693
1,610
869,931



	Common Stock		Additional Paid-In Capital		Distributions in Excess of Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interest in Joint Ventures		Total
BALANCE, DECEMBER 31, 2018	$	4	1,222,547		(326,193	)	6,701		1,644		904,703
Net income	—		—		22,529		—		5		22,534
Net unrealized change in fair value of cash flow hedges	—		—		—		(2,313	)	—		(2,313	)
Common dividends declared – $0.72 per share	—		—		(26,520	)	—		—		(26,520	)
Stock-based compensation, net of forfeitures	—		1,447		—		—		—		1,447
Issuance of 232,205 shares of common stock, common stock offering, net of expenses	—		24,400		—		—		—		24,400
Issuance of 571 shares of common stock, dividend reinvestment plan	—		54		—		—		—		54
Withheld 28,955 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock	—		(2,788	)	—		—		—		(2,788	)
Distributions to noncontrolling interest	—		—		—		—		(43	)	(43	)
BALANCE, MARCH 31, 2019	$	4	1,245,660		(330,184	)	4,388		1,606		921,474



	Common Stock		Additional Paid-In Capital		Distributions in Excess of Earnings		Accumulated Other Comprehensive Income	Noncontrolling Interest in Joint Ventures		Total
BALANCE, DECEMBER 31, 2017	$	3	1,061,153		(317,032	)	5,348	1,658		751,130
Net income	—		—		28,713		—	35		28,748
Net unrealized change in fair value of cash flow hedges	—		—		—		3,606	—		3,606
Common dividends declared – $0.64 per share	—		—		(22,388	)	—	—		(22,388	)
Stock-based compensation, net of forfeitures	—		1,044		—		—	—		1,044
Issuance of 179,501 shares of common stock, common stock offering, net of expenses	—		14,602		—		—	—		14,602
Issuance of 667 shares of common stock, dividend reinvestment plan	—		54		—		—	—		54
Withheld 23,824 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock	—		(2,055	)	—		—	—		(2,055	)
Distributions to noncontrolling interest	—		—		—		—	(65	)	(65	)
BALANCE, MARCH 31, 2018	$	3	1,074,798		(310,707	)	8,954	1,628		774,676

See accompanying Notes to Consolidated Financial Statements (unaudited).

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)


	Nine Months Ended September 30,					Three Months Ended March 31,
	2018			2017		2019			2018
OPERATING ACTIVITIES
Net income	$	70,053		65,922		$	22,534		28,748
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	67,463			62,101		23,746			21,685
Stock-based compensation expense	4,033			4,266		1,065			1,184
Net gain on sales of real estate investments and non-operating real estate	(14,359		)	(21,815	)	(2,325		)	(10,308	)
Gain on casualties and involuntary conversion	(1,150		)	—		(100		)	—
Changes in operating assets and liabilities:
Accrued income and other assets	628			881		2,153			2,239
Accounts payable, accrued expenses and prepaid rent	13,997			10,586		(5,919		)	(22,310	)
Other	1,330			765		328			476
NET CASH PROVIDED BY OPERATING ACTIVITIES	141,995			122,706		41,482			21,714
INVESTING ACTIVITIES
Development and value-add properties	(118,489		)	(80,462	)	(42,846		)	(31,212	)
Purchases of real estate properties	(52,934		)	(36,739	)
Real estate improvements	(26,779		)	(18,783	)	(5,610		)	(5,158	)
Net proceeds from sales of real estate investments and non-operating real estate	24,508			39,934		3,679			16,826
Proceeds from casualties and involuntary conversion	1,483			—
Repayments on mortgage loans receivable	1,977			96		3			1,958
Changes in accrued development costs	1,896			2,032		701			8,713
Changes in other assets and other liabilities	(9,804		)	(10,835	)	(4,857		)	(2,344	)
NET CASH USED IN INVESTING ACTIVITIES	(178,142		)	(104,757	)	(48,930		)	(11,217	)
FINANCING ACTIVITIES
Proceeds from unsecured bank credit facilities	311,641			281,342		144,635			91,387
Repayments on unsecured bank credit facilities	(336,789		)	(255,988	)	(207,497		)	(85,634	)
Proceeds from unsecured debt	60,000			—		80,000			—
Repayments on unsecured debt	(50,000		)	—
Repayments on secured debt	(8,410		)	(55,478	)	(2,916		)	(2,767	)
Debt issuance costs	(1,857		)	(129	)	(153		)	(88	)
Distributions paid to stockholders (not including dividends accrued)	(45,449		)	(64,623	)	(26,787		)	(22,736	)
Proceeds from common stock offerings	112,325			78,956		24,400			14,466
Proceeds from dividend reinvestment plan	166			170		54			57
Other	(5,239		)	(2,711	)	(2,831		)	(5,161	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	36,388			(18,461	)	8,905			(10,476	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	241			(512	)
INCREASE IN CASH AND CASH EQUIVALENTS						1,457			21
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	16			522		374			16
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	257		10		$	1,831		37
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest, net of amount capitalized of $4,545 and $4,242 for 2018 and 2017, respectively	$	23,112		24,978
Cash paid for interest, net of amounts capitalized of $2,036 and $1,602 for 2019 and 2018, respectively						$	6,646		7,141
Cash paid for operating lease liabilities						281			—
NON-CASH OPERATING ACTIVITY
Operating lease liabilities arising from obtaining right of use assets						$	12,417		—

See accompanying Notes to Consolidated Financial Statements (unaudited).

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(1)	BASIS OF PRESENTATION

The accompanying unaudited financial statements of EastGroup Properties, Inc. (“EastGroup” or “the Company”) have been prepared in accordance with U.S. generally accepted accounting principles ~~(GAAP)~~(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The financial statements should be read in conjunction with the financial statements contained in the ~~2017~~2018 annual report on Form 10-K and the notes thereto. ~~Certain reclassifications have been made in the 2017 consolidated financial statements to conform to the 2018 presentation.~~


(2)	PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of EastGroup, ~~Properties, Inc.,~~ its wholly owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest. During the fourth quarter of 2017, EastGroup closed the acquisition of the 20% noncontrolling interest in two of the four University Business Center buildings; the Company now owns 100% of University Business Center 125 and 175. As of March 31, 2019 and December 31, ~~2017 and September 30,~~ 2018, EastGroup had an 80% controlling interest in University Business Center 120 and 130.

The Company records 100% of the assets, liabilities, revenues and expenses of the buildings held in joint ventures with the noncontrolling interests provided for in accordance with the joint venture agreements.

The equity method of accounting is used for the Company’s 50% undivided tenant-in-common interest in Industry Distribution Center II. All significant intercompany transactions and accounts have been eliminated in consolidation.


(3)	USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period and to disclose material contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.


(4)	LEASE REVENUE

The Company’s primary revenue is rental income from business distribution space.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and in subsequent periods, issued ASU 2018-10, 2018-11, and 2018-20, all of which relate to the new lease accounting guidance. The Company adopted the new lease accounting guidance effective January 1, 2019, and has applied its provisions on a prospective basis. Lessor accounting is largely unchanged under ASU 2016-02. The Company’s primary revenue is rental income; as such, the Company is a lessor on a significant number of leases. The Company is continuing to account for its leases in substantially the same manner. The most significant changes for the Company related to lessor accounting include: (i) the new standard’s narrow definition of initial direct costs for leases, and (ii) the guidance applicable to recording uncollectible rents, as discussed in the following paragraphs.

The new standard’s narrow definition of initial direct costs for leases — The new definition of initial direct costs results in certain costs (primarily legal costs related to lease negotiations) being expensed rather than capitalized upon adoption of the new standard. EastGroup recorded Indirect leasing costs of $93,000 on the Consolidated Statements of Income and Comprehensive Income during the three months ended March 31, 2019.

The guidance applicable to recording uncollectible rents — Upon adoption of the lease accounting guidance, reserves for uncollectible accounts are recorded as a reduction to revenue. Prior to adoption, reserves for uncollectible accounts were recorded as bad debt expenses. The standard also provides guidance related to calculating the reserves; however, those changes did not impact the Company.

EastGroup has elected the practical expedient permitting lessors to make an accounting policy election by class of underlying asset to not separate non-lease components (such as common area maintenance) of a contract from the lease component to which they relate when specific criteria are met. The Company believes its leases meet the criteria.

The Company has applied the provisions of the new lease accounting standard and provided the required disclosures in this Quarterly Report on Form 10-Q.

The table below presents the components of Income from real estate operations for the three months ended March 31, 2019:

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	Three Months Ended March 31, 2019
	(In thousands)

Lease income — operating leases	$	58,892
Variable lease income ⁽¹⁾	19,745
Income from real estate operations	$	78,637


(1)	Primarily includes tenant reimbursements for real estate taxes, insurance and common area maintenance.

Future Minimum Rental Receipts Under Non-Cancelable Leases

The Company’s leases with its customers may include various provisions such as scheduled rent increases, renewal options and termination options. The majority of the Company’s leases include defined rent increases rather than variable payments based on an index or unknown rate. In calculating the disclosures presented below, the Company included the fixed, non-cancelable terms of the leases. The following schedule indicates approximate future minimum rental receipts under non-cancelable leases for real estate properties by year as of March 31, 2019:



Years Ending December 31,	(In thousands)
2019 - Remainder of year	$	175,737
2020	208,760
2021	165,837
2022	124,182
2023	93,321
Thereafter	182,876
Total minimum receipts	$	950,713

As noted above, the Company adopted the new lease accounting guidance effective January 1, 2019. Since the Company has applied the provisions on a prospective basis, the following represents approximate future minimum rental receipts under non-cancelable leases for real estate properties by year as of December 31, 2018, as applicable under ASC 840, Leases, prior to the adoption of ASC 842.



Years Ending December 31,	(In thousands)
2019	$	226,330
2020	195,850
2021	151,564
2022	112,007
2023	82,262
Thereafter	163,499
Total minimum receipts	$	931,512


(5)	REAL ESTATE PROPERTIES

EastGroup has one reportable segment – industrial properties. These properties are ~~concentrated~~primarily located in major Sunbelt ~~markets~~regions of the United ~~States, primarily in the states of Florida, Texas, Arizona, California and North Carolina,~~States. The Company’s properties have similar economic characteristics and ~~also meet the other criteria that permit the properties to be~~as a result, have been aggregated into one reportable segment.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows (including estimated future expenditures necessary to substantially complete the asset) expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. ~~As of~~ ~~September 30,~~During the periods ended March 31, 2019 and March 31, 2018 ~~and~~ ~~December 31, 2017~~, the Company did not identify any impairment charges which should be recorded.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Depreciation of buildings and other improvements is computed using the straight-line method over estimated useful lives of generally 40 years for buildings and 3 to 15 years for improvements. Building improvements are capitalized, while maintenance and repair expenses are charged to expense as incurred. Significant renovations and improvements that improve or extend the useful life of the assets are capitalized. Depreciation expense was ~~$18,960,000~~$19,747,000 and ~~$55,785,000~~$17,927,000 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and $17,323,000 and $51,070,000 for the same periods in 2017.~~respectively.

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

The Company’s Real estate properties and Development and value-add properties at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were as follows:



	March 31, 2019			December 31, 2018
	(In thousands)
Real estate properties:
Land	$	388,788		380,684
Buildings and building improvements	1,762,694			1,732,592
Tenant and other improvements	448,391			440,205
Right of use assets — Ground leases (operating) ⁽¹⁾	10,041			—
Development and value-add properties ⁽²⁾	264,526			263,664
	2,874,440			2,817,145
Less accumulated depreciation	(832,925		)	(814,915	)
	$	2,041,515		2,002,230

September 30,
2018 December 31,
2017
(In thousands)
Real estate properties:
   Land                                                                   $ 376,658
345,424
   Buildings and building improvements                                           1,703,237
1,587,130
   Tenant and other improvements                                                                   431,751
404,180
Development and value-add properties ⁽¹⁾
244,761
242,014
2,756,407
2,578,748
   Less accumulated depreciation                                                                   (796,037 ) (749,601 )
$ 1,960,370
1,829,147


(1)	See below and in Note 20 for information regarding the Company’s right of use assets for ground leases.

(2)

Value-add properties are defined as properties that are either acquired but not stabilized or can be converted to a higher and better use. Acquired properties meeting either of the following two conditions are considered value-add properties: (1) Less than 75% occupied as of the acquisition date (or will be less than 75% occupied within one year of acquisition date based on near term lease roll), or (2) 20% or greater of the acquisition cost will be spent to redevelop the property.

~~During 2016, a hail storm caused damage to two~~Ground Leases

On January 1, 2019, EastGroup adopted the principles of ~~EastGroup's properties which were covered by insurance for all losses, subject to~~FASB Accounting Standards Codification (“ASC”) 842, Leases, as further discussed in Note 20. In connection with the Company's deductibles. The recoveries received for damages were in excess of the sum of the incurred losses for clean-up costs and the net book value written off for the damaged property. After all contingencies relating to the casualties were resolved,adoption, the Company recorded ~~casualty gains~~right of ~~approximately $1.15 million during~~use assets for its ground leases, which are classified as operating leases, using the ~~second quarter~~effective date transition option; under this option, prior years are not restated. As of ~~2018, which is~~January 1, 2019, the Company recorded right of use assets for its ground leases of $10,226,000. As of March 31, 2019, the unamortized balance of the Company’s right of use assets for its ground leases was $10,041,000. The right of use assets for ground leases are included in ~~Other revenue~~Real estate properties on the Consolidated ~~Statements~~Balance Sheets.

As of ~~Income~~March 31, 2019, the Company operated two properties in Florida, two properties in Texas and ~~Comprehensive Income.~~ one property in Arizona that are subject to ground leases. These leases have terms of 40 to 50 years, expiration dates of August 2031 to November 2037, and renewal options of 15 to 35 years, except for the one lease in Arizona which is automatically and perpetually renewed annually. The Company has included renewal options in the lease terms for calculating the ground lease assets and liabilities as the Company is reasonably certain it will exercise these options. Total ground lease expenditures for the three months ended March 31, 2019 and 2018 were $198,000 and $195,000, respectively. Payments are subject to increases at 3 to 10 year intervals based upon the agreed or appraised fair market value of the leased premises on the adjustment date or the Consumer Price Index percentage increase since the base rent date. These future changes in payments will be considered variable payments and will not impact the assessment of the asset or liability unless there is a significant event that triggers reassessment, such as amendment with a change in the terms of the lease. The weighted-average remaining lease term as of March 31, 2019, for the ground leases is 45 years. The following schedule indicates approximate future minimum ground lease payments for these properties by year as of March 31, 2019:

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Future Minimum Ground Lease Payments



Years Ending December 31,	(In thousands)
2019 - Remainder of year	$	593
2020	791
2021	791
2022	791
2023	791
Thereafter	30,751
Total minimum payments	34,508
Imputed interest ⁽¹⁾	(24,283		)
Amortization	(184		)
Total ground leases	$	10,041

(1)

As the Company’s leases do not provide an implicit rate, in order to calculate the present value of the remaining ground lease payments, the Company used its incremental borrowing rate as of January 1, 2019, adjusted for a number of factors, including the long-term nature of the ground leases, the Company’s estimated borrowing costs, and the estimated fair value of the underlying land. The Company elected to use the portfolio approach as all of its ground leases have similar characteristics and determined 7.3% as the appropriate rate as of January 1, 2019.

As noted above, the Company adopted the new lease accounting guidance effective January 1, 2019. Since the Company has applied the provisions on a prospective basis, the following represents approximate future minimum ground lease payments by year as of December 31, 2018, as applicable under ASC 840, Leases, prior to the adoption of ASC 842.

Future Minimum Ground Lease Payments



Years Ending December 31,	(In thousands)
2019	$	791
2020	791
2021	791
2022	791
2023	791
Thereafter	30,751
	$	34,706

At December 31, 2018, the Company had the same ground leases in place as mentioned above and recorded ground lease expenditures of $783,000 for the year.


~~(5)~~(6)	DEVELOPMENT

For properties under development and value-add properties acquired in the development stage, costs associated with development (i.e., land, construction costs, interest expense, property taxes and other ~~direct and indirect~~ costs associated with development) are aggregated into the total capitalized costs of the property. Included in these costs are management’s estimates for the portions of internal costs (primarily personnel costs) deemed related to such development activities. The internal costs are allocated to specific development ~~properties~~projects based on development activity. As the property becomes occupied, depreciation commences on the occupied portion of the building, and costs are capitalized only for the portion of the building that remains vacant. ~~Effective January 1, 2018, the~~The Company ~~began transferring~~transfers properties from the development program to Real estate properties at the earlier of 90% occupancy or one year after completion of the shell construction (formerly, the Company transferred at the earlier of 80% occupancy or one year after completion of the shell construction). This change did not materially impact the comparability of the Company's financial statements.construction. Upon transfer, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).


~~(6)~~(7)	REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES

Upon acquisition of real estate properties, EastGroup applies the principles of ~~Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)~~FASB ASC 805, Business Combinations.

The FASB Codification provides a framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the guidance, companies are required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

or a group of similar identifiable assets; if so, the set is not a business. EastGroup determined that its real estate property acquisitions in ~~2017 and the first nine months of~~ 2018 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company capitalized acquisition costs related to its ~~2017 and~~ 2018 acquisitions. The Company did not acquire any properties during the three months ended March 31, 2019.

The FASB Codification also provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their respective fair values. Goodwill for business combinations is recorded when the purchase price exceeds the fair value of the assets and liabilities acquired. Factors considered by management in allocating the cost of the properties acquired include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The allocation to tangible assets (land, building and improvements) is based upon management’s determination of the value of the property as if it were vacant using

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

discounted cash flow models. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties. The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.

The purchase price is also allocated among the following categories of intangible assets: the above or below market component of in-place leases, the value of in-place leases, and the value of customer relationships. The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above and below market leases are included in Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based upon management’s assessment of their respective values. These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable.

Amortization expense for in-place lease intangibles was ~~$1,157,000~~$991,000 and ~~$3,202,000~~$1,012,000 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and $1,101,000 and $3,455,000 for the same periods in 2017.~~respectively. Amortization of above and below market leases increased rental income by ~~$217,000~~$192,000 and ~~$477,000~~$118,000 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and $129,000 and $406,000 for~~respectively.

The Company did not acquire any operating properties during the ~~same periods in 2017.~~

three months ended March 31, 2019. During the ~~first nine months of~~year ended December 31, 2018, the Company acquired the following operating properties: Gwinnett 316 in Atlanta; Eucalyptus Distribution Center in Chino (Los Angeles); ~~and~~ Allen Station I & II in ~~Dallas.~~Dallas; and Greenhill Distribution Center in Austin. The Company also acquired one value-add property, Siempre Viva Distribution Center in San Diego. At the time of acquisition, Siempre Viva was classified in the lease-up phase. The total cost for the properties acquired by the Company was ~~$66,868,000,~~$71,086,000, of which ~~$50,461,000~~$54,537,000 was allocated to Real estate properties and $13,934,000 was allocated to Development and value-add properties. EastGroup allocated ~~$22,461,000~~$23,263,000 of the total purchase price to land using third party land valuations for the Atlanta, Dallas, Austin, San Diego and Chino (Los Angeles) markets. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement (see Note 1617 for additional information on ASC 820). Intangibles associated with the purchase of real estate were allocated as follows: ~~$4,070,000~~$4,350,000 to in-place lease intangibles and $21,000 to above market leases (both included in Other assets on the Consolidated Balance Sheets) and ~~$1,618,000~~$1,756,000 to below market ~~leases.~~

~~During~~leases (included in Other liabilities on the ~~year ended December 31, 2017,~~Consolidated Balance Sheets). These costs are amortized over the ~~Company acquired~~remaining lives of the ~~following operating properties: Shiloh 400, Broadmoor Commerce Park and Hurricane Shoals 1 & 2~~associated leases in ~~Atlanta and Southpark Corporate Center 5-7 in Austin. The Company also acquired one value-add property in the development stage, Progress Center 1 & 2 in Atlanta. At~~place at the time of ~~acquisition, Progress Center 1 & 2 was classified in the lease-up phase. The total cost for the properties acquired by the Company was $65,243,000, of which $51,539,000 was allocated to~~ ~~Real estate properties~~ ~~and $10,312,000 was allocated to~~ ~~Development and value-add properties~~. EastGroup allocated $11,281,000 of the total purchase price to land using third party land valuations for the Atlanta and Austin markets. Intangibles associated with the purchase of real estate were allocated as follows: $3,662,000 to in-place lease intangibles, $115,000 to above market leases, and $385,000 to below market leases.acquisition.

The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment. ~~In management’s opinion, no~~No impairment of goodwill or other intangibles existed at ~~September 30, 2018~~during the periods ended March 31, 2019 and ~~December~~March 31, ~~2017~~.2018.


~~(7)~~(8)	REAL ESTATE SOLD AND HELD FOR SALE/DISCONTINUED OPERATIONS

The Company considers a real estate property to be held for sale when it meets the criteria established under ASC 360, Property, Plant and Equipment, including when it is probable that the property will be sold within a year. Real estate properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. The Company did not classify any properties as held for sale as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

In accordance with FASB ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an ~~entity's~~entity’s operations and financial results when the component

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.

The Company does not consider its sales in ~~2017~~2018 and the ~~first nine~~three months ~~of 2018~~ended March 31, 2019 to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the ~~entity's~~entity’s operations and financial results.

~~The Company~~During the three months ended March 31, 2019, EastGroup sold World Houston 5. The 51,000 square foot property was sold for $3.8 million and the Company recognized a gain on the sale of $2.3 million.

During the year 2018, EastGroup sold three operating properties: World Houston 18 in Houston; 56 Commerce Park in Tampa; and 35th Avenue Distribution Center ~~during the nine months ended September 30, 2018.~~in Phoenix. The properties ~~which~~ contain a combined 339,000 square feet and ~~are located in Houston, Tampa and Phoenix,~~ were sold for $22.9 ~~million and the Company~~million. EastGroup recognized gains on the sales of $14.3 million. The ~~sale of 35th Avenue Distribution Center closed during the three months ended September 30, 2018, resulting in a gain on sale of $4.1 million recognized in the third quarter.~~

~~During the nine months ended September 30, 2018, the~~ Company also sold 11 acres of land in Houston for $2.6 million and recognized a gain of $86,000 in the first quarter of 2018.

During the year 2017, EastGroup sold two operating properties, Stemmons Circle and Techway Southwest I-IV. Both properties were sold during the three months ended June 30, 2017. The properties, which contain 514,000 square feet and are located in Houston and Dallas, were sold for $38.0 million and the Company recognized gains on the sales of $21.9 million during the second quarter of 2017.

During the year 2017, the Company also sold 19 acres of land in Dallas and El Paso for $3.8 million and recognized net gains of $293,000 (A net loss of $40,000 was recorded in the first quarter of 2017; there were no land sales during the second or third quarters of 2017).

The results of operations and gains ~~and losses~~ on sales for the properties sold during the periods presented are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains ~~and losses on the sales of land are included in~~ ~~Other, and the gains~~ on the sales of operating properties are included in Gain on sales of real estate investments,andthe gains on the sales of land are included in Other.


(9)	OTHER ASSETS

A summary of the Company’s Other assets follows:



	March 31, 2019			December 31, 2018
	(In thousands)
Leasing costs (principally commissions)	$	81,051		78,985
Accumulated amortization of leasing costs	(31,534		)	(30,185	)
Leasing costs (principally commissions), net of accumulated amortization	49,517			48,800

Acquired in-place lease intangibles	21,425			21,696
Accumulated amortization of acquired in-place lease intangibles	(10,553		)	(9,833	)
Acquired in-place lease intangibles, net of accumulated amortization	10,872			11,863

Acquired above market lease intangibles	1,454			1,465
Accumulated amortization of acquired above market lease intangibles	(941		)	(902	)
Acquired above market lease intangibles, net of accumulated amortization	513			563

Straight-line rents receivable	36,725			36,022
Accounts receivable	3,959			5,433
Mortgage loans receivable	2,591			2,594
Interest rate swap assets	4,497			6,701
Right of use assets — Office leases (operating) ⁽¹⁾	2,376			—
Goodwill	990			990
Prepaid expenses and other assets	8,381			8,265
Total Other assets	$	120,421		121,231


(1)	See Note 20 for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets for office leases.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


~~(8)~~	~~OTHER ASSETS~~

~~A summary of the Company’s~~ ~~Other assets~~ ~~follows:~~

September 30,
2018 December 31,
2017
(In thousands)
Leasing costs (principally commissions)                                                                                   $ 76,587
72,722
Accumulated amortization of leasing costs                                                        (28,742 ) (27,973 )
Leasing costs (principally commissions), net of accumulated amortization 47,845
44,749

Straight-line rents receivable                                                                                   35,276
31,609
Allowance for doubtful accounts on straight-line rents receivable (134 ) (48 )
Straight-line rents receivable, net of allowance for doubtful accounts 35,142
31,561

Accounts receivable                                                                                   5,026
6,004
Allowance for doubtful accounts on accounts receivable (515 ) (577 )
Accounts receivable, net of allowance for doubtful accounts 4,511
5,427

Acquired in-place lease intangibles                                                                                   21,752
20,690
Accumulated amortization of acquired in-place lease intangibles (9,168 ) (8,974 )
Acquired in-place lease intangibles, net of accumulated amortization 12,584
11,716

Acquired above market lease intangibles                                                                                   1,465
1,550
Accumulated amortization of acquired above market lease intangibles (852 ) (794 )
Acquired above market lease intangibles, net of accumulated amortization 613
756

Mortgage loans receivable                                                                                   2,604
4,581
Interest rate swap assets 10,693
6,034
Goodwill                                                                                   990
990
Prepaid expenses and other assets                                                                                   5,870
10,215
Total Other assets
$ 120,852
116,029

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~


~~(9)~~(10)	DEBT

The ~~Company's~~Company’s debt is detailed below. EastGroup presents debt issuance costs as reductions of Unsecured bank credit facilities, Unsecured debt and Secured debt on the Consolidated Balance Sheets.



	March 31, 2019			December 31, 2018
	(In thousands)
Unsecured bank credit facilities - variable rate, carrying amount	$	132,868		195,730
Unamortized debt issuance costs	(1,679		)	(1,804	)
Unsecured bank credit facilities	131,189			193,926

Unsecured debt - fixed rate, carrying amount ⁽¹⁾	805,000			725,000
Unamortized debt issuance costs	(1,603		)	(1,600	)
Unsecured debt	803,397			723,400

Secured debt - fixed rate, carrying amount ⁽¹⁾	186,116			189,038
Unamortized debt issuance costs	(510		)	(577	)
Secured debt	185,606			188,461

Total debt	$	1,120,192		1,105,787

September 30,
2018 December 31,
2017
(In thousands)
Unsecured bank credit facilities - variable rate, carrying amount $ 171,191
116,339
Unsecured bank credit facilities - fixed rate, carrying amount ^{(1) (2)}
—
80,000
Unamortized debt issuance costs (1,930 ) (630 )
Unsecured bank credit facilities 169,261
195,709

Unsecured debt - fixed rate, carrying amount ⁽¹⁾
725,000
715,000
Unamortized debt issuance costs (1,700 ) (1,939 )
Unsecured debt 723,300
713,061

Secured debt - fixed rate, carrying amount ⁽¹⁾
191,923
200,354
Unamortized debt issuance costs (631 ) (842 )
Secured debt 191,292
199,512

Total debt $ 1,083,853
1,108,282


(1)	These loans have a fixed interest rate or an effectively fixed interest rate due to interest rate swaps.


~~(2)~~	The Company had designated an interest rate swap to an $80 million unsecured bank credit facility draw that effectively fixed the interest rate on the $80 million draw to 2.020% through the interest rate swap's maturity date. This swap matured on August 15, 2018, and the $80 million draw has reverted to the variable interest rate associated with the Company's unsecured bank credit facilities.

Until June 14, 2018, EastGroup had $300 million and $35 million unsecured bank credit facilities with margins over LIBOR of 100 basis points, facility fees of 20 basis points and maturity dates of July 30, ~~2019.~~2019. The Company amended and restated these credit facilities on June 14, 2018, expanding the capacity to $350 million and $45 million, as detailed below.

The $350 million unsecured bank credit facility is with a group of nine banks and has a maturity date of July 30, ~~2022.~~2022. The credit facility contains options for two six-month extensions (at the ~~Company's~~Company’s election) and a $150 million accordion (with agreement by all parties). The interest rate on each tranche is usually reset on a monthly basis and as of ~~September 30, 2018,~~March 31, 2019, was LIBOR plus 100 basis points with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the ~~Company's~~Company’s credit ratings. The Company had designated an interest rate swap to an $80 million unsecured bank credit facility draw that effectively fixed the interest rate on the $80 million draw to 2.020% through the interest rate ~~swap's~~swap’s maturity date. This swap matured on August 15, 2018, and the $80 million draw has reverted to the variable interest rate associated with the ~~Company's~~Company’s unsecured bank credit facilities. As of ~~September 30, 2018,~~March 31, 2019, the Company had ~~$155,000,000~~$130,000,000 of variable rate borrowings on this unsecured bank credit facility with a weighted average interest rate of ~~3.218%~~3.491%. The Company has athree standby ~~letter~~letters of credit ~~of $674,000~~totaling $704,740 pledged on this facility.

The ~~Company's~~Company’s $45 million unsecured bank credit facility has a maturity date of July 30, 2022, or such later date as designated by the bank; the Company also has two six-month extensions available if the extension options in the $350 million facility are exercised. The interest rate is reset on a daily basis and as of ~~September 30, 2018,~~March 31, 2019, was LIBOR plus 100 basis points with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the ~~Company's~~Company’s credit ratings. As of ~~September 30, 2018,~~March 31, 2019, the interest rate was ~~3.261%~~3.495% on a balance of ~~$16,191,000.~~$2,868,000.

In March 2019, the Company closed $80 million of senior unsecured private placement notes with an insurance company. The notes have a 10-year term and a fixed interest rate of 4.27% with semi-annual interest payments. The notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Scheduled principal payments on long-term debt, including Unsecured debt and Secured debt (not including Unsecured bank credit facilities), as of March 31, 2019, are as follows:

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Scheduled principal payments on long-term debt, including~~ ~~Unsecured debt~~ ~~and~~ ~~Secured debt~~ ~~(not including~~ ~~Unsecured bank credit facilities), as of September 30, 2018, are as follows:~~



Years Ending December 31,	(In thousands)
Remainder of 2019	$	127,647
2020	114,096
2021	129,562
2022	107,769
2023	115,119
2024 and beyond	396,923
Total	$	991,116

Years Ending December 31, (In thousands)
Remainder of 2018 $ 2,882
2019 130,570
2020 114,096
2021 129,563
2022 107,769
2023 and beyond 432,043
Total $ 916,923


~~(10)~~(11)	ACCOUNTS PAYABLE AND ACCRUED EXPENSES

A summary of the Company’s Accounts payable and accrued expenses follows:



	March 31, 2019		December 31, 2018
	(In thousands)
Property taxes payable	$	12,173	10,718
Development costs payable	16,111		15,410
Real estate improvements and capitalized leasing costs payable	5,658		3,911
Interest payable	5,931		4,067
Dividends payable	27,471		27,738
Book overdraft ⁽¹⁾	10,602		15,048
Other payables and accrued expenses	5,418		9,671
Total Accounts payable and accrued expenses	$	83,364	86,563

September 30,
2018 December 31,
2017
(In thousands)
Property taxes payable                                                                                   $ 34,557
12,081
Development costs payable                                                                                   11,595
9,699
Real estate improvements and capitalized leasing costs payable 5,847
3,957
Interest payable                                                                                   5,901
3,744
Dividends payable                                                         27,244
1,365
Book overdraft ⁽¹⁾
14,206
20,902
Other payables and accrued expenses                                                                                   6,519
13,219
Total Accounts payable and accrued expenses
$ 105,869
64,967


(1)	Represents checks written before the end of the period which have not cleared the bank; therefore, the bank has not yet advanced cash to the Company. When the checks clear the bank, they will be funded through the ~~Company's~~Company’s working cash line of credit.


~~(11)~~(12)	OTHER LIABILITIES

A summary of the Company’s Other liabilities follows:



	March 31, 2019			December 31, 2018
	(In thousands)
Security deposits	$	19,103		18,432
Prepaid rent and other deferred income	11,951			12,728
Operating lease liabilities — Ground leases ⁽¹⁾	10,041			—
Operating lease liabilities — Office leases ⁽¹⁾	2,376			—

Acquired below-market lease intangibles	5,891			5,891
Accumulated amortization of below-market lease intangibles	(3,270		)	(3,028	)
Acquired below-market lease intangibles, net of accumulated amortization	2,621			2,863

Interest rate swap liabilities	109			—
Prepaid tenant improvement reimbursements	400			614
Other liabilities	15			15
Total Other liabilities	$	46,616		34,652

September 30,
2018 December 31,
2017
(In thousands)
Security deposits                                                                                   $ 17,986
16,668
Prepaid rent and other deferred income                                                      8,391
9,352

Acquired below-market lease intangibles 5,753
4,135
     Accumulated amortization of below-market lease intangibles (2,788 ) (2,147 )
Acquired below-market lease intangibles, net of accumulated amortization 2,965
1,988

Interest rate swap liabilities —
695
Prepaid tenant improvement reimbursements 105
124
Other liabilities                                                                                   65
15
Total Other liabilities
$ 29,512
28,842


(1)	See Note 20 for information regarding the Company’s January 1, 2019, implementation of FASB ASC 842, Leases, and the Company’s right of use assets and related liabilities for ground leases and office leases.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	Three Months Ended March 31,
	2019			2018
	(In thousands)
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance at beginning of period	$	6,701		5,348
Change in fair value of interest rate swaps - cash flow hedges	(2,313		)	3,606
Balance at end of period	$	4,388		8,954

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
(In thousands)
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance at beginning of period $ 10,140
2,421
5,348
1,995
Change in fair value of interest rate swaps - cash flow hedges 553
224
5,345
650
Balance at end of period $ 10,693
2,645
10,693
2,645

The ~~Company's~~Company’s valuation methodology for over-the-counter (“OTC”) derivatives is to discount cash flows based on Overnight Index Swap (“OIS”) rates. Uncollateralized or partially-collateralized trades are discounted at OIS rates, but include appropriate economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. The Company calculates its derivative valuations using mid-market prices.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Interest Rate Derivative	Notional Amount as of March 31, 2019	Notional Amount as of December 31, 2018
	(In thousands)
Interest Rate Swap	$75,000	$75,000
Interest Rate Swap	$75,000	$75,000
Interest Rate Swap	$65,000	$65,000
Interest Rate Swap	$60,000	$60,000
Interest Rate Swap	$40,000	$40,000
Interest Rate Swap	$15,000	$15,000

Interest Rate Derivative Notional Amount as of September 30, 2018 Notional Amount as of December 31, 2017
(In thousands)
Interest Rate Swap — $80,000
Interest Rate Swap $75,000 $75,000
Interest Rate Swap $75,000 $75,000
Interest Rate Swap $65,000 $65,000
Interest Rate Swap $60,000 $60,000
Interest Rate Swap $40,000 $40,000
Interest Rate Swap $15,000 $15,000



	Derivatives As of March 31, 2019			Derivatives As of December 31, 2018
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In thousands)
Derivatives designated as cash flow hedges:
Interest rate swap assets	Other assets	$	4,497	Other assets	$	6,701
Interest rate swap liabilities	Other liabilities	109		Other liabilities	—

As of September 30, 2018

As of December 31, 2017



	Three Months Ended March 31,
	2019			2018
	(In thousands)
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest Rate Swaps:
Amount of income (loss) recognized in Other comprehensive income on derivatives	$	(1,644	)	3,662
Amount of (income) loss reclassified from Accumulated other comprehensive income into Interest expense	(669		)	(56	)

Amount of income (loss) recognized in Other comprehensive income on derivatives

Amount of (income) loss reclassified from Accumulated other comprehensive income into Interest expense

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	Three Months Ended
	March 31,
	2019		2018
	(In thousands)
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
Numerator – net income attributable to common stockholders	$	22,529	28,713
Denominator – weighted average shares outstanding	36,465		34,689
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
Numerator – net income attributable to common stockholders	$	22,529	28,713
Denominator:
Weighted average shares outstanding	36,465		34,689
Unvested restricted stock	61		47
Total Shares	36,526		34,736

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
(In thousands)
BASIC EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
  Numerator – net income attributable to common stockholders                                                                                                      $ 23,010
15,884
69,950
65,593
  Denominator – weighted average shares outstanding                                                                                                      35,716
34,215
35,204
33,857
DILUTED EPS COMPUTATION FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS
  Numerator – net income attributable to common stockholders                                                                                                      $ 23,010
15,884
69,950
65,593
Denominator:
    Weighted average shares outstanding                                                                                                      35,716
34,215
35,204
33,857
    Unvested restricted stock                                                                                                      82
75
61
48
      Total Shares                                                                                                      35,798
34,290
35,265
33,905

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The component of the long-term equity compensation plan based only on continued service as of the vesting dates was awarded on May 10, 2017. On that date, 5,406 shares were granted to certain executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $78.18 per share, vested 25% in the first quarter of each of 2018 and 2019 and will vest 25% on January 1 in years ~~2019,~~ 2020 and 2021. The shares are being expensed on a straight-line basis over the remaining service period.

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

The component of the long-term equity compensation plan based only on continued service as of the vesting dates was awarded on June 1, 2018. On that date, 7,884 shares were granted to the ~~Company's~~Company’s executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $95.19, ~~will vest~~vested 25% in the first quarter of 2019 and will vest 25% on January 1 in years 2020, 2021 and 2022. The shares are being expensed on a straight-line basis over the remaining service period.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The component of the long-term equity compensation plan based only on continued service as of the vesting dates was awarded on March 7, 2019. On that date, 9,947 shares were granted to ~~certain non-executive~~the Company’s executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of ~~$95.17,~~$105.97, will vest ~~20%~~25% in the first quarter of 2020 and 25% on January 1 in years ~~2019, 2020,~~ 2021, 2022 and 2023. The shares are being expensed on a straight-line basis over the remaining service period.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three Months Ended Nine Months Ended
Award Activity: September 30, 2018 September 30, 2018

Shares
Weighted Average Grant Date Fair Value

Shares
Weighted Average Grant Date Fair Value
Unvested at beginning of period 143,596
$ 70.30
152,926
$ 63.22
Granted ^{(1) (2)}
—
—
50,217
84.09
Forfeited —
—
—
—
Vested (71 ) 88.86
(59,618 ) 63.80
Unvested at end of period 143,525
$ 70.29
143,525
$ 70.29



	Three Months Ended
Award Activity:	March 31, 2019
	Shares		Weighted Average Grant Date Fair Value
Unvested at beginning of period	143,525		$	70.29
Granted ^{(1) (2)}	49,768		91.03
Forfeited	(2,685	)	83.05
Vested	(69,363	)	66.99
Unvested at end of period	121,245		$	80.41

(1) Includes shares granted in prior years for which performance conditions have been satisfied and the number of shares have been

(2) Does not include the restricted shares that may be earned if the performance goals established in 2017 and 2018 for long-term ~~performance~~

performance and in ~~2018~~2019 for annual and long-term performance are achieved. Depending on the actual level of achievement of the

end of the open performance periods, the number of shares earned could range from zero to ~~86,836.~~113,301.

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~


~~(16)~~(17)	FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. The Codification requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments in accordance with ASC 820at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018.


	September 30, 2018			December 31, 2017		March 31, 2019			December 31, 2018
	Carrying Amount ⁽¹⁾		Fair Value	Carrying Amount ⁽¹⁾	Fair Value	Carrying Amount ⁽¹⁾		Fair Value	Carrying Amount ⁽¹⁾	Fair Value
	(In thousands)					(In thousands)
Financial Assets:
Cash and cash equivalents	$	257	257	16	16	$	1,831	1,831	374	374
Mortgage loans receivable	2,604		2,531	4,581	4,569	2,591		2,587	2,594	2,571
Interest rate swap assets	10,693		10,693	6,034	6,034	4,497		4,497	6,701	6,701
Financial Liabilities:
Unsecured bank credit facilities - variable rate ⁽²⁾	171,191		171,571	116,339	116,277	132,868		133,272	195,730	196,423
Unsecured bank credit facilities - fixed rate ⁽²⁾	—		—	80,000	80,003
Unsecured debt ⁽²⁾	725,000		700,706	715,000	703,871	805,000		810,450	725,000	718,364
Secured debt ⁽²⁾	191,923		193,304	200,354	206,408	186,116		188,463	189,038	191,742
Interest rate swap liabilities	—		—	695	695	109		109	—	—

(1) Carrying amounts shown in the table are included on the Consolidated Balance Sheets under the indicated captions, except as explained in the notes below.

(2) Carrying amounts and fair values shown in the table exclude debt issuance costs (see Note 910 for additional information).

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~


~~(17)~~(18)	RISKS AND UNCERTAINTIES

The state of the overall economy can significantly impact the Company’s operational performance and thus impact its financial position. Should EastGroup experience a significant decline in operational performance, it may affect the Company’s ability to make distributions to its shareholders, service debt, or meet other financial obligations.


~~(18)~~(19)	LEGAL MATTERS

The Company is not presently involved in any material litigation nor, to its knowledge, is any material litigation threatened against the Company or its properties, other than routine litigation arising in the ordinary course of business. An action is pending against the Company and certain of the Company’s officers relating to the Company’s November 2016 purchase of a land parcel, alleging breach of contract and other claims in law and in equity. The Company has asserted numerous affirmative defenses and believes the lawsuit lacks merit. While discovery is ongoing, as are efforts to reach a mediated resolution of the dispute, in an effort to resolve this litigation, the Company made a settlement offer for $497,000 and has reserved such amount as of December 31, 2018 and March 31, 2019.


(20)	RECENT ACCOUNTING PRONOUNCEMENTS

EastGroup has evaluated all ASUs recently released by the FASB through the date the financial statements were issued and determined that the following ASUs apply to the Company.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers,~~ which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued further guidance in ASU 2016-12, ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,~~ that provides clarifying guidance in certain narrow areas and adds some practical expedients. The new standard was effective for the Company on January 1, 2018, and the Company used the modified retrospective approach upon adoption. The adoption of ASU 2014-09 did not have a material impact on the Company's financial condition or results of operations.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,~~which requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized costs on the balance sheet. EastGroup adopted ASU 2016-01 effective January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company's financial condition or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and in subsequent periods, issued ASU 2018-10, 2018-11, and 2018-20, all of which ~~requires lessees~~relate to ~~recognize~~ the ~~following for all leases (with~~new lease accounting guidance. The Company adopted the ~~exception of short-term leases) at the commencement date: (1) a~~new lease ~~liability, which is a lessee's obligation to make lease payments arising from a lease, measured~~accounting guidance effective January 1, 2019, and has applied its provisions on a ~~discounted basis; and (2) a right-of-use asset, which is an asset that represents~~prospective basis. The following changes are applicable to the lessee's right to use, or control the use of, a specified asset for the lease term. The Company is a lessee on a limited number of leases, including office and ground leases, and while the adoption of ASU 2016-02 will impact the Company's accounting for office and ground leases, the Company anticipates the impact will not be material to its overallCompany’s financial condition and results of ~~operations.~~ operations:

•

Lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right of use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company is a lessee on a limited number of leases, including office and ground leases. As of January 1, 2019, the Company recorded its right of use asset and lease liability values for its operating leases as follows: office leases of $2,376,000 and ground leases of $10,226,000. The combined values are less than 1% of the Company’s Total assets as of March 31, 2019.

Lessor accounting is largely unchanged under ASU 2016-02. The ~~Company's~~Company’s primary revenue is rental income; as such, the Company is a lessor on a significant number of leases. The Company is continuing to ~~evaluate the potential impacts of the ASU and believes it will continue to~~ account for its leases in substantially the same manner. The most significant ~~change~~changes for the Company related to lessor accounting ~~includes the new standard's narrow definition of initial direct costs for leases. The new definition will result~~include:

◦


◦	The guidance applicable to recording uncollectible rents — Upon adoption of the lease accounting guidance, reserves for uncollectible accounts are recorded as a reduction to revenue. Prior to adoption, reserves for uncollectible accounts were recorded as bad debt expenses. The standard also provides guidance related to calculating the reserves; however, those changes did not impact the Company.

EastGroup estimates the new definition of initial direct costs will result in an increase of expenses, and therefore a decrease in earnings, of approximately $200,000 on an annual basis. EastGroup plans to electhas elected the practical expedient permitting lessors and lessees to make an accounting policy election by class of underlying asset to not separate non-lease components (such as common area maintenance) of a contract from the lease component to which they relate when specific criteria are ~~met (the~~met. The Company believes its leases meet the criteria). Public business entities are required to apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. EastGroup plans to adopt ASU 2016-02 effective January 1, 2019. criteria.

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company ~~is continuing~~has applied the ~~process~~provisions of ~~evaluating~~the new lease accounting standard and ~~quantifying~~provided the ~~effect that ASU 2016-02 will have~~required disclosures in this Quarterly Report on ~~its consolidated financial statements and related disclosures beginning with the~~ Form ~~10-Q for the period ending March 31, 2019.~~10-Q.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,~~ which clarifies what constitutes a modification of a share-based payment award. The ASU is intended to provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public entities for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2017-09 on January 1, 2018; the adoption of ASU 2017-09 did not have a material impact on its financial condition or results of operations, as the Company has not had any modifications to share-based payment awards. However, if the Company does have a modification to an award in the future, it will follow the guidance in ASU 2017-09.

~~EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

ASU. The primary provision in the ASU that will require an adjustment to beginning retained earnings is the change in timing and income statement presentation for ineffectiveness related to cash flow and net investment hedges. As a result of the transition guidance in the ASU, cumulative ineffectiveness that has previously been recognized on cash flow and net investment hedges that are still outstanding and designated as of the date of adoption will be adjusted and removed from beginning retained earnings and placed in Accumulated other comprehensive income. The Company adopted ASU 2017-12 ison January 1, 2019; the adoption of ASU 2017-12 did not have a material impact on its financial condition, results of operations or disclosures.

In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU applies to all entities that elect to apply hedge accounting to benchmark interest rates under Topic 815 and permits the use of the OIS rate based on SOFR as a United States (U.S.) benchmark rate for hedge accounting purposes under Topic 815 in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Inter-bank Offered Rate (“LIBOR”) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Rate. ASU 2018-16 was effective upon adoption of ASU 2017-12. The Company adopted ASU 2017-12 and ASU 2018-16 on January 1, 2019, and the adoption of both ASUs did not have a material impact on its financial condition, results of operation or disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequently issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses in November 2018. The ASUs amend guidance on reporting credit losses for ~~public business~~assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available for sale debt securities (EastGroup does not currently hold any and does not intend to hold any in the future), credit losses should be measured in a similar manner to current GAAP; however, Topic 326 will require that credit losses be presented as an allowance rather than a write-down. The ASUs affect entities holding financial assets and are effective for annual periods beginning after December 15, ~~2018, and~~2019, an interim periods within those fiscal years. ~~Early adoption is permitted; however, the~~The Company plans to adopt ASU ~~2017-12~~2016-13 and ASU 2018-19 on January 1, ~~2019. While the Company continues to assess all potential impacts of ASU 2017-12, it~~2020. EastGroup does not expect the adoption to have a material impact on ~~the Company's~~its financial condition, or results of ~~operations.~~operations or disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU is intended to improve the effectiveness of fair value measurement disclosures. ASU 2018-13 is effective for all entities for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted; however, the Company plans to adopt ASU 2018-13 on January 1, 2020. EastGroup does not expect the adoption to have a material impact on its financial condition, results of operations or disclosures.


~~(19)~~(21)	SUBSEQUENT EVENTS

On April 5, 2019, EastGroup repaid a mortgage loan with a balance of $46.0 million, an interest rate of 7.5% and an original maturity date of May 5, 2019.

Subsequent to quarter-end, EastGroup closed the acquisition of 29Logistics Center 6 & 7, which contains a total of 142,000 square feet of multi-tenant distribution space in two buildings in Dallas. The buildings, which are located in a master-planned park on DFW International Airport-owned property with a 40-year ground lease, were developed in 2018 and are currently 19% leased. The value-add property was acquired for $13 million, and the Company estimates its total investment in the property, including improvements during the lease-up phase, will be approximately $15 million.

The Company has exercised an option to re-purchase Interstate Commons Distribution Center in the southwest submarket of Phoenix for $9.2 million. Through eminent domain procedures, the Company previously sold the property to the Arizona Department of Transportation in 2016. The two multi-tenant distribution buildings, which are located adjacent to existing EastGroup

EASTGROUP PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

assets, contain 142,000 square feet and will be re-developed by the Company with a projected total investment of $12 million. The value-add acquisition is expected to close during the second quarter of 2019.

EastGroup is under contract to acquire, with a joint venture partner, 7 acres of ~~development~~ land in the central submarket of San ~~Antonio~~Diego for ~~$3 million.~~$13 million; the Company will be a 95% partner in the venture. The Company expects the land acquisition to close during the second quarter of 2019. The land is ~~expected~~currently leased to ~~accommodate~~a company that operates a parking lot on the site. In the future, ~~development of four buildings totaling 370,000~~EastGroup and its joint venture partner plan to develop a distribution building containing approximately 125,000 square ~~feet; the Company anticipates initiating the first phase of development on this land in 2019.~~feet.


ITEM 2.	~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of results of operations and financial condition should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.

~~CAUTIONARY STATEMENT REGARDING~~ FORWARD-LOOKING ~~INFORMATION~~STATEMENTS

~~Certain statements contained in this report may be deemed~~

This Quarterly Report on Form 10-Q includes “forward-looking statements” ~~within~~(within the meaning of the ~~Private~~federal securities laws, Section 27A of the Securities ~~Litigation Reform~~ Act of ~~1995. Words such~~1933, as ~~“will,” “anticipates,” “expects,” “believes,” “intends,” “plans,” “seeks,” “estimates,” variations~~amended (the “Securities Act”), and Section 21E of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that the Company expects or anticipates will occur in the future, including statements relating to rent and occupancy growth, development activity, the acquisition or sale of properties, general conditions in the geographic areas where the Company operates and the availability of capital, are forward-looking statements. Forward-looking statements are inherently subject to known and unknown risks and uncertainties, many of which the Company cannot predict, including, without limitation: changes in general economic conditions; the extent of tenant defaults or of any early lease terminations; the Company's ability to lease or re-lease space at current or anticipated rents; the availability of financing; the failure to maintain credit ratings with rating agencies; changes in the supply of and demand for industrial/warehouse properties; increases in interest rate levels; increases in operating costs; natural disasters, terrorism, riots and acts of war, and the Company's ability to obtain adequate insurance; changes in governmental regulation, tax rates and similar matters; and other risks associated with the development and acquisition of properties, including risks that development projects may not be completed on schedule, development or operating costs may be greater than anticipated or acquisitions may not close as scheduled, and those additional factors discussed under “Item 1A. Risk Factors” in Part II of this report and in the Company’s Annual Report on Form 10-K. Although the Company believes the expectations reflected in the forward-looking statements are based upon reasonable assumptions at the time made, the Company can give no assurance that such expectations will be achieved. The Company assumes no obligation whatsoever to publicly update or revise any forward-looking statements. See also the information contained in the Company’s reports filed or to be filed from time to time with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).) that reflect EastGroup’s expectations and projections about the Company’s future results, performance, prospects and opportunities. The Company has attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. These forward-looking statements are based on information currently available to the Company and are subject to a number of known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, those discussed below. The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. The Company does not undertake publicly to update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or new information, future events or otherwise, except as may be required to satisfy the Company’s obligations under federal securities law.

The following are some, but not all, of the risks, uncertainties and other factors that could cause the Company’s actual results to differ materially from those presented in the Company’s forward-looking statements (the Company refers to itself as “we,” “us” or “our” in the following):

international, national, regional and local economic conditions;

the general level of interest rates and ability to raise equity capital on attractive terms;

financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;

the competitive environment in which the Company operates;

fluctuations of occupancy or rental rates;

potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants;

potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate laws or real estate investment trust (“REIT”) or corporate income tax laws, and potential increases in real property tax rates;

our ability to maintain our qualification as a REIT;

acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections;

natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;

the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;

credit risk in the event of non-performance by the counterparties to the interest rate swaps;

lack of or insufficient amounts of insurance;

litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;

our ability to retain key personnel;

the consequences of future terrorist attacks or civil unrest; and

environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A. Risk Factors within the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. In addition, the Company’s current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended, or the Code, and depends on the Company’s ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.

OVERVIEW

EastGroup’s goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 15,000 to ~~50,000~~70,000 square foot range). The Company develops, acquires and operates distribution facilities, the majority of which are clustered around major transportation features in supply constrained submarkets in major Sunbelt regions. The Company’s core markets are in the states of Florida, Texas, Arizona, California and North Carolina.

EastGroup believes its current operating cash flow and unsecured bank credit facilities provide the capacity to fund the operations of the Company, and the Company also believes it can issue common and/or preferred equity and obtain debt financing. During the ~~first nine~~three months ~~of 2018,~~ended March 31, 2019, EastGroup issued ~~1,245,885~~232,205 shares of common stock through its continuous common equity program, providing net proceeds to the Company of ~~$112.3~~$24.4 million. Also during the ~~first nine~~three months ~~of 2018,~~ended March 31, 2019, the Company closed ~~$60~~$80 million of senior unsecured private placement ~~notes and replaced its $300 million and $35 million unsecured bank credit facilities with new $350 million and $45 million facilities. EastGroup's~~notes. EastGroup’s financing and equity issuances are further described in Liquidity and Capital Resources.below.

The Company’s primary revenue source is rental ~~income; as such, EastGroup’s greatest priority is leasing space.~~income. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, EastGroup executed new and renewal leases on ~~5,551,000~~1,639,000 square feet ~~(14.3%~~(4.1% of EastGroup’s total square footage of ~~38,806,000)~~39,601,000 as of March 31, 2019). During the ~~first nine~~three months ~~of 2018,~~ended March 31, 2019, average rental rates on new and renewal leases increased by ~~15.6.%~~14.2%.

Property net operating income (PNOI) excluding income from lease terminations from same properties, defined as operating properties owned during the entire current and prior year reporting periods (January 1, ~~2017~~2018 through ~~September 30, 2018)~~March 31, 2019), increased ~~4.2%~~3.7% for the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the same period in ~~2017.~~2018.

EastGroup’s ~~total~~portfolio was 97.7% leased ~~percentage was 97.1%~~ as of ~~September 30, 2018~~March 31, 2019, compared to ~~97.4%~~97.0% at ~~September 30, 2017.~~March 31, 2018. Leases scheduled to expire for the remainder of ~~2018~~2019 were ~~1.7%~~7.9% of the portfolio on a square foot basis at ~~September 30, 2018,~~March 31, 2019, and this percentage was reduced to ~~1.5%~~6.9% as of ~~October 19, 2018.~~April 23, 2019.

The Company generates new sources of leasing revenue through its development and acquisition programs. The Company mitigates risks associated with development through a Board-approved maximum level of land held for development and by adjusting development start dates according to leasing activity.

During the ~~first nine~~three months ~~of 2018,~~ended March 31, 2019, EastGroup acquired Siempre Viva Distribution Center, a value-add property containing 115,000 square feet in San Diego, for $14 million and 30 acres of development land in Dallas for $5.7 million. During the same

~~period, the Company~~ began construction of 11five development projects containing ~~1,558,000~~650,000 square feet in Miami, ~~Orlando, Ft. Myers, Atlanta,~~ Dallas, ~~Houston,~~Charlotte, San Antonio and ~~Charlotte.~~Houston. EastGroup also transferred 10three fully-leased development projects and value-add acquisitions ~~(1,338,000~~(421,000 square feet) in ~~Orlando, Tampa, Ft. Lauderdale, Ft. Myers, Atlanta,~~ San ~~Antonio, Tucson, Phoenix~~Diego, Dallas and ~~Charlotte~~Orlando from its development and value-add program to real estate properties, with costs of ~~$105.2~~$41.5 million at the date of transfer. As of ~~September 30, 2018,~~March 31, 2019, EastGroup’s development program consisted of 2019 projects ~~(2,506,000~~(2,493,000 square feet) located in 1110 cities. The projected total investment for the development projects, which were collectively ~~43%~~50% leased as of ~~October 19, 2018,~~April 23, 2019, is ~~$220~~$232 million, of which ~~$76~~$65 million remained to be invested as of ~~September 30, 2018.~~March 31, 2019.

Also ~~during~~in the ~~first nine~~three months ~~of 2018, EastGroup acquired 467,000~~ended March 31, 2019, the Company sold 51,000 square feet of operating properties, ~~in Atlanta, Dallas and Chino (Los Angeles) for $53 million.~~

~~Also in the first nine months of 2018, the Company sold 339,000 square feet of operating properties and 11 acres of land,~~ generating gross proceeds of ~~$25.4~~$3.8 million. EastGroup recognized ~~$14,273,000~~$2.3 million in Gain on sales of real estate investments~~and $86,000 in~~ ~~Gain on sales of non-operating real estate~~ ~~(included in~~ ~~Other~~ ~~on the Consolidated Statements of Income and Comprehensive Income)~~.

~~Typically, the~~The Company typically initially funds its development and acquisition programs through its $395 million unsecured bank credit facilities (as discussed in Liquidity and Capital Resources). As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace short-term bank borrowings. In June 2018, Moody's Investors Service affirmed EastGroup's issuer rating of Baa2 with a stable outlook. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. For future debt issuances, the Company intends to issue primarily unsecured fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps. The Company may also access the public debt market in the future as a means to raise capital.

EastGroup has one reportable segment – industrial properties. These properties are primarily located in major Sunbelt regions of the United ~~States,~~States. The Company’s properties have similar economic characteristics and, ~~also meet the other criteria permitting the properties to be~~as a result, have been aggregated into one reportable segment.

The Company’s chief decision makers use two primary measures of operating results in making decisions: (1) property net operating income ~~(PNOI)~~(“PNOI”), defined as Income from real estate operations less Expenses from real estate operations (including market-based internal management fee expense) plus the ~~Company's~~Company’s share of income and property operating expenses from its less-than-wholly-owned real estate investments, and (2) funds from operations attributable to common stockholders ~~(FFO)~~(“FFO”), defined as net income (loss) attributable to common stockholders computed in accordance with U.S. generally accepted accounting principles ~~(GAAP)~~(“GAAP”), excluding gains or losses from sales of ~~depreciable~~ real estate property and impairment losses, plus real estate related

depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company calculates FFO based on the National Association of Real Estate Investment Trusts’ ~~(NAREIT)~~(“Nareit”) definition.

PNOI is a non-GAAP, property-level supplemental ~~industry reporting measurement~~measure of performance used to evaluate the performance of the Company’s investments in real estate ~~investments.~~assets and its operating results. The Company believes the exclusion of depreciation and amortization in the industry’s calculation of PNOI provides a supplemental indicator of the properties’ performance since real estate values have historically risen or fallen with market conditions. PNOI as calculated by the Company may not be comparable to similarly titled but differently calculated measures for other ~~real estate investment trusts (REITs).~~REITs. The major factors influencing PNOI are occupancy levels, acquisitions and sales, development ~~properties~~projects that achieve stabilized operations, rental rate increases or decreases, and the recoverability of operating expenses. The Company’s success depends largely upon its ability to lease space and to recover from tenants the operating costs associated with those leases.

Same PNOI is a non-GAAP, property-level supplemental measure of performance used to evaluate the performance of the Company’s investments in real estate assets and its operating results on a same property basis. Same properties are operating properties owned during the entire current and prior year reporting periods. For the three months ended March 31, 2019, this includes properties which were included in the operating portfolio for the entire period from January 1, 2018 through March 31, 2019.

PNOI was calculated as follows for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018.


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended March 31,
	2018			2017		2018		2017		2019			2018
	(In thousands)									(In thousands)
Income from real estate operations	$	75,306		68,712		221,146		202,704		$	78,637		72,120
Expenses from real estate operations	(21,718		)	(20,109	)	(63,847	)	(59,360	)	(22,302		)	(20,676	)
Noncontrolling interest in PNOI of consolidated 80% joint ventures	(77		)	(145	)	(237	)	(493	)	(52		)	(79	)
PNOI from 50% owned unconsolidated investment	217			224		652		673		244			217
PROPERTY NET OPERATING INCOME (PNOI)	$	53,728		48,682		157,714		143,524
PROPERTY NET OPERATING INCOME (“PNOI”)										$	56,527		51,582

Income from real estate operations is comprised of rental income, expense reimbursement pass-through income and other real estate income including lease termination fees. Expenses from real estate operations is comprised of property taxes, insurance, utilities, repair and maintenance expenses, management fees and other operating ~~costs and bad debt expense.~~costs. Generally, the Company’s most significant operating expenses are property taxes and insurance. Tenant leases may be net leases in which the total operating expenses are recoverable, modified gross leases in which some of the operating expenses are recoverable, or gross leases in which no expenses are recoverable (gross leases represent only a small portion of the Company’s total leases). Increases in property operating expenses are fully recoverable under net leases and recoverable to a high degree under modified gross leases. Modified gross leases often include base year amounts, and expense increases over these amounts are recoverable. The Company’s exposure to property operating expenses is primarily due to vacancies and leases for occupied space that limit the amount of expenses that can be recovered.

The following table presents reconciliations of Net Income to PNOI, Same PNOI and Same PNOI Excluding Income from Lease Terminations for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018.


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended March 31,
	2018			2017		2018		2017		2019			2018
	(In thousands)									(In thousands)
NET INCOME	$	23,041		15,972		70,053		65,922		$	22,534		28,748
(Gain) on sales of real estate investments	(4,051		)	—		(14,273	)	(21,855	)	(2,325		)	(10,222	)
(Gain) loss on sales of non-operating real estate	—			—		(86	)	40
(Gain) on sales of non-operating real estate										—			(86	)
(Gain) on sales of other	—			—		(427	)	—		—			(427	)
Interest income	(32		)	(62	)	(122	)	(185	)	(33		)	(55	)
Other revenue	(20		)	(34	)	(1,268	)	(90	)	(161		)	(83	)
Indirect leasing costs										93			—
Depreciation and amortization	22,970			21,011		67,463		62,101		23,746			21,685
Company's share of depreciation from unconsolidated investment	33			31		95		93
Company’s share of depreciation from unconsolidated investment										35			31
Interest expense	8,804			8,704		26,253		26,405		8,846			8,607
General and administrative expense	3,060			3,205		10,263		11,586		3,844			3,463
Noncontrolling interest in PNOI of consolidated 80% joint ventures	(77		)	(145	)	(237	)	(493	)	(52		)	(79	)
PROPERTY NET OPERATING INCOME (PNOI)	$	53,728		48,682		157,714		143,524
PROPERTY NET OPERATING INCOME (“PNOI”)										56,527			51,582
PNOI from 2018 Acquisitions										(822		)	—
PNOI from 2018 and 2019 Development and Value-Add Properties										(3,314		)	(822	)
PNOI from 2018 and 2019 Operating Property Dispositions										(23		)	(299	)
Other PNOI										47			102
SAME PNOI										52,415			50,563
Net lease termination fee (income) from same properties										(140		)	(131	)
SAME PNOI EXCLUDING INCOME FROM LEASE TERMINATIONS										$	52,275		50,432

Funds from operations (FFO) attributable to common stockholders

of the Nareit Funds from Operations White Paper - 2018 Restatement, the Company now excludes gains and losses on sales of non-operating real estate and assets incidental to the Company’s business and therefore adjusted the prior year results, including the Company’s FFO for 2018, to conform to the updated definition of FFO.

For the nine months ended September 30, 2018, PNOI increased by $14,190,000, or 9.9%, compared to the same period in 2017. PNOI increased $8,701,000 from newly developed and value-add properties, $5,688,000 from same property operations and $1,245,000 from 2017 and 2018 acquisitions; PNOI decreased $1,499,000 from operating properties sold in 2017 and 2018.

~~Lease termination fee income is included in~~ ~~Income from real estate operations.~~ ~~Lease termination fee income for the three and nine months ended September 30, 2018 was $34,000 and $173,000 respectively, compared to $65,000 and $198,000 for the same periods of 2017.~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Real Estate Properties

FINANCIAL CONDITION

EastGroup’s assets were ~~$2,089,165,000~~$2,171,646,000 at ~~September 30, 2018,~~March 31, 2019, an increase of ~~$135,944,000~~$39,941,000 from December 31, ~~2017.~~2018. Liabilities increased ~~$17,143,000~~$23,170,000 to ~~$1,219,234,000,~~$1,250,172,000, and equity increased ~~$118,801,000~~$16,771,000 to ~~$869,931,000~~$921,474,000 during the same period. The following paragraphs explain these changes in detail.

Assets

Real Estate Properties

Real estate properties increased ~~$174,912,000~~$56,433,000 during the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, primarily due toto: (i) the transfer of 10three projects from Development and value-add properties (as detailed under Development and Value-Add Properties below)~~, the purchase of the operating properties detailed below and~~; (ii) capital improvements at the ~~Company's properties.~~Company’s properties; and (iii) right of use assets for the Company’s ground leases. These increases were partially offset by the operating property ~~sales~~sale discussed below.

REAL ESTATE PROPERTIES ACQUIRED IN 2018 Location Size
Date
Acquired

Cost ⁽¹⁾
(Square feet) (In thousands)
Gwinnett 316 Atlanta, GA 65,000
04/24/2018 $ 4,147
Eucalyptus Distribution Center Chino, CA 182,000
06/20/2018 22,890
Allen Station I & II Dallas, TX 220,000
08/29/2018 23,424
Total Real Estate Property Acquisitions 467,000
$ 50,461

~~(1)~~

Total cost of the properties acquired was $52,835,000, of which $50,461,000 was allocated to Real estate properties as indicated above. The Company allocated $17,738,000 of the total purchase price to land using third party land valuations for the Atlanta, Dallas and Chino (Los Angeles) markets. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement (see Note 16 in the Notes to Consolidated Financial Statements for additional information on ASC 820). Intangibles associated with the purchases of real estate were allocated as follows: $3,944,000 to in-place lease intangibles and $21,000 to above market leases (included in Other assets on the Consolidated Balance Sheets) and $1,591,000 to below market leases (included in Other liabilities on the Consolidated Balance Sheets).

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company made capital improvements of ~~$28,937,000~~$6,451,000 on existing and acquired properties (included in the Real Estate Improvements table under Results of Operations). Also, the Company incurred costs of ~~$8,164,000~~$463,000 on development projects subsequent to transfer to Real estate properties; the Company records these expenditures as development costs on the Consolidated Statements of Cash Flows.

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company sold World Houston 185 in ~~Houston, 56 Commerce Park in Tampa and 35th Avenue Distribution Center in Phoenix.~~Houston. The ~~properties (339,000~~51,000 square ~~feet combined) were~~foot property was sold for ~~$22.9~~$3.8 million and the Company recognized gains on the ~~sales~~sale of ~~$14.3~~$2.3 million.

In connection with the Company’s January 1, 2019, implementation of the new lease accounting standard, EastGroup recorded right of use assets for its ground leases (classified as operating leases). The unamortized right of use assets for ground leases was $10,041,000 as of March 31, 2019.

Development and Value-Add Properties

EastGroup’s investment in Development and value-add properties at ~~September 30, 2018~~March 31, 2019 consisted of projects in lease-up and under construction of ~~$144,199,000~~$166,915,000 and prospective development (primarily land) of ~~$100,562,000.~~$97,611,000. The Company’s total investment in Development and value-add properties at ~~September 30, 2018~~March 31, 2019 was ~~$244,761,000~~$264,526,000 compared to ~~$242,014,000~~$263,664,000 at December 31, ~~2017.~~2018. Total capital invested for development during the ~~first nine~~three months ~~of 2018~~ended March 31, 2019, was ~~$118,489,000,~~$42,846,000, which ~~primarily~~ consisted of costs of ~~$93,948,000~~$36,962,000 and ~~$13,959,000~~$5,421,000 as detailed in the Development and Value-Add Properties Activity table below and costs of ~~$8,164,000~~$463,000 on projects subsequent to transfer to Real estate properties. The capitalized costs incurred on development projects subsequent to transfer to Real estate properties include capital improvements at the properties and do not include other capitalized costs associated with development (i.e., interest expense, property taxes and internal personnel costs).

The Company capitalized internal development costs of ~~$1,271,000~~$1,571,000 and ~~$3,504,000~~$1,123,000 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~respectively, compared to $1,056,000 and $3,650,000 in the same periods of 2017.~~respectively.

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, EastGroup acquired one value-add property, Siempre Viva Distribution Center in San Diego. At the time of acquisition, Siempre Viva was classified in the lease-up phase and was occupied by the seller under a short-term lease that expired during the third quarter. EastGroup has successfully re-leased the multi-tenant distribution center, which will be 100% occupied during the first quarter of 2019. The total cost for the property acquired by the Company was $14,033,000, of which $13,934,000 was allocated to ~~Development and value-add properties~~. EastGroup allocated $4,723,000 of the total purchase price to land using third party land valuations for the San Diego market. The market values are considered to be Level 3 inputs as defined by ASC 820, ~~Fair Value Measurement~~ ~~(see Note 16 for additional information on ASC 820). Intangibles~~

~~associated with the purchase were allocated as follows: $126,000 to in-place lease intangibles (included in~~ ~~Other assets~~ ~~on the Consolidated Balance Sheets), and $27,000 to below market leases.~~

~~Also during the nine months ended September 30, 2018, the Company acquired 30 acres of development land in Flower Mound (Dallas) for $5,700,000.~~

~~During the nine months ended September 30, 2018, EastGroup sold 11 acres of development land in Houston for $2,577,000. The Company also~~ transferred 10three development and value-add properties to Real estate properties ~~during the first nine months of 2018~~ with a total investment of ~~$105,160,000~~$41,521,000 as of the date of transfer.


		Costs Incurred							Anticipated Building Conversion Date		Costs Incurred						Anticipated Building Conversion Date
DEVELOPMENT AND VALUE-ADD PROPERTIES ACTIVITY		Costs Transferred in 2018 ⁽¹⁾			For the Nine Months Ended 9/30/2018		Cumulative as of 9/30/2018	Estimated Total Costs	Anticipated Building Conversion Date		Costs Transferred in 2019 ⁽¹⁾			For the Three Months Ended 3/31/2019	Cumulative as of 3/31/2019	Projected Total Costs	Anticipated Building Conversion Date
		(In thousands)									(In thousands)
LEASE-UP	Building Size (Square feet)									Building Size (Square feet)
Horizon XII, Orlando, FL	140,000	$	—		711		11,941	12,500	10/18
Eisenhauer Point 6, San Antonio, TX	85,000	—			1,353		5,403	5,700	11/18
West Road 5, Houston, TX	58,000	1,022			3,513		4,535	5,300	12/18
Eisenhauer Point 5, San Antonio, TX	98,000	—			1,688		7,492	8,000	01/19
Siempre Viva, San Diego, CA ⁽²⁾	115,000	—			13,934		13,934	14,400	01/19
CreekView 121 3 & 4, Dallas, TX	158,000	—			2,415		12,726	14,800	04/19
Falcon Field, Phoenix, AZ	96,000	—			4,960		7,907	9,000	05/19	96,000	$	—		157	8,389	9,400	05/19
Total Lease-Up	750,000	1,022			28,574		63,938	69,700
UNDER CONSTRUCTION
Gateway 1, Miami, FL										200,000	—			3,497	23,738	25,600	05/19
Horizon XI, Orlando, FL										135,000	—			444	9,167	12,100	05/19
SunCoast 5, Ft. Myers, FL										81,000	—			730	7,265	8,300	06/19
Broadmoor 2, Atlanta, GA	111,000	705			5,017		5,722	7,400	10/19	111,000	—			234	6,648	7,400	11/19
Settlers Crossing 1, Austin, TX	77,000	—			3,997		5,553	7,400	10/19	77,000	—			129	6,389	7,400	01/20
Settlers Crossing 2, Austin, TX	83,000	—			4,236		5,909	8,400	10/19	83,000	—			1,054	8,169	8,400	01/20
Gateway 1, Miami, FL	200,000	9,110			9,041		18,151	25,000	11/19
Horizon XI, Orlando, FL	135,000	3,171			4,188		7,359	10,400	12/19
SunCoast 5, Ft. Myers, FL	81,000	2,704			2,523		5,227	7,700	12/19
Airport Commerce Center 3, Charlotte, NC	96,000	—			1,641		3,374	7,300	01/20
Parc North 5, Dallas, TX										100,000	—			1,020	7,973	9,200	02/20
Total Lease-Up										883,000	—			7,265	77,738	87,800
UNDER CONSTRUCTION
Steele Creek V, Charlotte, NC	54,000	1,366			408		1,774	5,800	01/20	54,000	—			1,013	4,327	5,900	07/19
Parc North 5, Dallas, TX	100,000	1,683			3,161		4,844	9,200	02/20
Eisenhauer Point 9, San Antonio, TX										82,000	1,154			344	1,498	6,400	12/19
World Houston 45, Houston, TX										160,000	4,430			1,921	6,351	17,600	12/19
Ten West Crossing 8, Houston, TX										132,000	—			1,760	8,350	10,900	04/20
Tri-County Crossing 1 & 2, San Antonio, TX	203,000	2,012			4,275		6,287	14,600	02/20	203,000	—			3,043	11,938	14,600	04/20
Eisenhauer Point 7 & 8, San Antonio, TX	336,000	4,916			2,755		7,671	23,600	03/20	336,000	—			5,527	18,617	24,900	05/20
Ten West Crossing 8, Houston, TX	132,000	1,947			2,045		3,992	10,900	03/20
Horizon VI, Orlando, FL	148,000	3,418			980		4,398	12,700	04/20
Airport Commerce Center 3, Charlotte, NC										96,000	—			1,025	6,818	8,000	06/20
CreekView 121 5 & 6, Dallas, TX										139,000	—			2,065	7,670	14,900	07/20
Gateway 5, Miami, FL										187,000	11,944			4,592	16,536	22,400	08/20
Parc North 6, Dallas, TX										96,000	2,552			2,102	4,654	8,900	09/20
Steele Creek IX, Charlotte, NC										125,000	1,766			652	2,418	9,800	10/20
Total Under Construction	1,756,000	31,032			44,267		80,261	150,400		1,610,000	21,846			24,044	89,177	144,300
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)	Estimated Building Size (Square feet)									Estimated Building Size (Square feet)
Phoenix, AZ										318,000	—			163	6,972
Ft. Myers, FL	488,000	(2,704		)	399		11,807			488,000	—			177	13,499
Miami, FL	650,000	(9,110		)	12,288		34,054			463,000	(11,944		)	2,806	27,193
Orlando, FL	214,000	(6,589		)	1,064		5,595			216,000	—			323	6,042
Tampa, FL	32,000	—			—		1,560			32,000	—			—	1,560
Atlanta, GA	100,000	(705		)	131		633			100,000	—			22	748
Jackson, MS	28,000	—			—		706			28,000	—			—	706
Charlotte, NC	600,000	(1,366		)	1,083		6,446			475,000	(1,766		)	98	5,541
Austin, TX	180,000	—			541		3,561			180,000	—			118	3,860
Dallas, TX	752,000	(1,683		)	7,069		14,982			516,000	(2,552		)	1,475	11,115
Houston, TX ⁽³⁾	1,123,000	(2,969		)	(2,311	)	15,910			963,000	(4,430		)	33	12,042
San Antonio, TX	548,000	(6,928		)	843		5,308			826,000	(1,154		)	438	8,333
Total Prospective Development	4,715,000	(32,054		)	21,107		100,562			4,605,000	(21,846		)	5,653	97,611
	7,221,000	$	—		93,948		244,761			7,098,000	$	—		36,962	264,526
DEVELOPMENT AND VALUE-ADD PROPERTIES TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2018	Building Size (Square feet)								Building Conversion Date
Alamo Ridge IV, San Antonio, TX	97,000	$	—		320		7,417		03/18
Oak Creek VII, Tampa, FL	116,000	—			601		6,732		03/18
Weston, Ft. Lauderdale, FL ⁽⁴⁾	134,000	—			222		15,742		03/18
Progress Center 1 & 2, Atlanta, GA ⁽⁵⁾	132,000	—			143		10,476		04/18
Horizon X, Orlando, FL	104,000	—			3,352		6,902		05/18
SunCoast 4, Ft. Myers, FL	93,000	—			71		9,191		05/18
Country Club V, Tucson, AZ	305,000	—			7,078		21,029		06/18
Eisenhauer Point 3, San Antonio, TX	71,000	—			231		6,390		06/18
Kyrene 202 III, IV & V, Phoenix, AZ	166,000	—			1,146		12,689		09/18
Steele Creek VII, Charlotte, NC	120,000	—			795		8,592		09/18
DEVELOPMENT AND VALUE-ADD PROPERTIES TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2019										Building Size (Square feet)							Building Conversion Date
Siempre Viva, San Diego, CA										115,000	$	—		—	14,075		01/19
CreekView 121 3 & 4, Dallas, TX										158,000	—			1,739	15,539		03/19
Horizon VI, Orlando, FL										148,000	—			3,682	11,907		03/19
Total Transferred to Real Estate Properties	1,338,000	$	—		13,959		105,160	(6)		421,000	$	—		5,421	41,521	(2)

~~See footnotes for the table on the following page.~~

(1)Represents costs transferred from Prospective Development (primarily land) to Under Construction during the period. Negative amounts represent land inventory costs transferred to Under Construction.

(2) ~~This value-add project was acquired by EastGroup on 7/12/18.~~

~~(3) Negative amount represents land inventory costs transferred to Under Construction and land sold on 3/28/18.~~

~~(4) This project was acquired by EastGroup on 11/1/16 and underwent redevelopment.~~

~~(5) This project was acquired by EastGroup on 12/12/17 during the lease-up phase.~~

~~(6)~~ Represents cumulative costs at the date of transfer.

Accumulated Depreciation

Other assets ~~increased $4,823,000~~ decreased $810,000 during the ~~first~~ ~~nine~~three months of ~~2018~~.ended March 31, 2019. A summary of Other assets follows:

Total Accounts payable and accrued expenses

Total Other liabilities

RESULTS OF OPERATIONS

~~(Comments are for the three and nine months ended September 30, 2018, compared to the three and nine months ended September 30, 2017.)~~

Net Income Attributable to EastGroup Properties, Inc. Common Stockholders for the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, was ~~$23,010,000~~$22,529,000 ($~~.64~~0.62 per basic and diluted share) ~~and $69,950,000 ($1.99 per basic and $1.98 per diluted share), respectively,~~ compared to ~~$15,884,000~~$28,713,000 ($~~.46~~0.83 per basic and diluted share) ~~and $65,593,000 ($1.94 per basic and $1.93 per diluted share)~~ for ~~the same periods in 2017.~~

~~PNOI for the three months ended September 30, 2018, increased by $5,046,000, or 10.4%, compared to~~ the same period in ~~2017. PNOI increased $3,191,000~~2018. The following paragraphs explain the change:

•

PNOI increased by $4,945,000 ($0.14 per diluted share), or 9.6%, for the three months ended March 31, 2019, as compared to the same period of 2018. PNOI increased $2,492,000 from newly developed and value-add properties, $1,852,000 from same property operations and $822,000 from 2018 acquisitions; PNOI decreased $276,000 from operating properties sold in 2018 and 2019. Lease termination fee income was $140,000 and $131,000 for the three months ended March 31, 2019 and 2018, respectively. The Company recorded reserves for uncollectible rent of $129,000 and $90,000 during the three months ended March 31, 2019 and 2018, respectively. Straight-lining of rent increased Income from real estate operations by $798,000 and $1,019,000 for the three months ended March 31, 2019 and 2018, respectively.

EastGroup recognized gains on sales of real estate investments and value-add properties, $1,617,000 from same property operations and $433,000 from 2017 and 2018 acquisitions; PNOI decreased $242,000 from operating properties sold in 2017 and 2018. Lease termination fee income was $34,000 and $65,000 for the three months ended September 30, 2018 and 2017, respectively. The Company recorded net bad debt expensenon-operating real estate of ~~$196,000 and $134,000~~$2,325,000 ($0.06 per diluted share) during the three months ended ~~September 30, 2018 and 2017, respectively. Straight-lining of rent increased~~ ~~Income from real estate operations~~ ~~by $1,432,000 and $1,235,000 for the three months ended September 30, 2018 and 2017, respectively.~~

~~PNOI for the nine months ended September 30, 2018, increased by $14,190,000, or 9.9%,~~March 31, 2019, as compared to $10,308,000 ($0.30 per diluted share) during the same period in 2017. PNOI increased $8,701,000 from newly developed and value-add properties, $5,688,000 from same property operations and $1,245,000 from 2017 and 2018 acquisitions; PNOI decreased $1,499,000 from operating properties sold in 2017 andof 2018. Lease termination fee income was $173,000 and $198,000 for the nine months ended September 30, 2018 and 2017, respectively. The Company recorded net bad debt expense of $282,000 and $332,000 during the nine months ended September 30, 2018 and 2017, respectively. Straight-lining of rent increased ~~Income from real estate operations~~ ~~by $3,950,000 and $2,674,000 for the nine months ended September 30, 2018 and 2017, respectively.~~


•	Depreciation and amortization expense increased by $2,061,000 ($0.06 per diluted share) during the first quarter of 2019 as compared to the same period of 2018.

EastGroup signed 3640 leases with free rent concessions on ~~1,343,000~~1,288,000 square feet during the three months ended ~~September 30, 2018,~~March 31, 2019, with total free rent concessions of ~~$2,409,000~~$1,630,000 over the lives of the leases. During the same period of ~~2017,~~2018, the Company signed 3523 leases with free rent concessions on ~~845,000~~533,000 square feet with total free rent concessions of ~~$1,387,000~~$618,000 over the lives of the leases.

During the nine months ended September 30, 2018, EastGroup signed 99 leases with free rent concessions on 2,820,000 square feet with total free rent concessions of $3,991,000 over the lives of the leases. During the same period of 2017, EastGroup signed 112 leases with free rent concessions on 3,179,000 square feet with total free rent concessions of $4,484,000 over the lives of the leases.

The Company’s percentage of leased square footage was ~~97.1%~~97.7% at ~~September 30, 2018,~~March 31, 2019, compared to ~~97.4%~~97.0% at ~~September 30, 2017.~~March 31, 2018. Occupancy at ~~September 30, 2018~~March 31, 2019 was ~~95.7%~~96.9% compared to ~~95.6%~~96.4% at ~~September 30, 2017.~~March 31, 2018.

Same property average occupancy represents the average month-end percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage for the same operating properties owned during the entire current and prior year reporting periods (January 1, ~~2017~~2018 through ~~September 30, 2018)~~March 31, 2019). Same property average occupancy for the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, was ~~96.5% and 96.9%, respectively,~~96.8% compared to ~~96.5% and~~ 96.4% for the same ~~periods~~period of ~~2017.~~2018.

The same property average rental rate calculated in accordance with GAAP represents the average annual rental rates of leases in place for the same operating properties owned during the entire current and prior year reporting periods (January 1, ~~2017~~2018 through ~~September 30, 2018)~~March 31, 2019). The same property average rental rate was ~~$5.99 and $5.96~~$6.08 per square foot for the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to ~~$5.80 and $5.75~~$5.92 per square foot for the same ~~periods~~period of ~~2017.~~2018.

Interest expense increased ~~$100,000~~$239,000 for the three months ~~and decreased $152,000 for the nine months~~ ended ~~September 30, 2018,~~March 31, 2019, compared to the same ~~periods~~period in ~~2017.~~2018. The following table presents the components of Interest expense for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017:~~2018:


	Three Months Ended September 30,							Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017		Increase (Decrease)		2018		2017		Increase (Decrease)		2019			2018		Increase (Decrease)
	(In thousands)													(In thousands)
VARIABLE RATE INTEREST EXPENSE
Unsecured bank credit facilities interest - variable rate (excluding amortization of facility fees and debt issuance costs)	$	1,028		591		437		2,182		1,681		501		$	1,864		793		1,071
Amortization of facility fees - unsecured bank credit facilities	199			169		30		537		501		36		195			165		30
Amortization of debt issuance costs - unsecured bank credit facilities	139			113		26		369		339		30		139			113		26
Total variable rate interest expense	1,366			873		493		3,088		2,521		567		2,198			1,071		1,127
FIXED RATE INTEREST EXPENSE
Unsecured bank credit facilities interest - fixed rate ^{(1) (2)} (excluding amortization of facility fees and debt issuance costs)	200			407		(207	)	1,001		1,208		(207	)	—			398		(398	)
Unsecured debt interest ⁽¹⁾ (excluding amortization of debt issuance costs)	6,078			5,606		472		18,464		16,721		1,743		6,057			5,961		96
Secured debt interest (excluding amortization of debt issuance costs)	2,500			2,904		(404	)	7,609		9,592		(1,983	)	2,424			2,573		(149	)
Amortization of debt issuance costs - unsecured debt	133			119		14		425		358		67		136			135		1
Amortization of debt issuance costs - secured debt	69			79		(10	)	211		247		(36	)	67			71		(4	)
Total fixed rate interest expense	8,980			9,115		(135	)	27,710		28,126		(416	)	8,684			9,138		(454	)
Total interest	10,346			9,988		358		30,798		30,647		151		10,882			10,209		673
Less capitalized interest	(1,542		)	(1,284	)	(258	)	(4,545	)	(4,242	)	(303	)	(2,036		)	(1,602	)	(434	)
TOTAL INTEREST EXPENSE	$	8,804		8,704		100		26,253		26,405		(152	)	$	8,846		8,607		239

(excluding amortization of facility fees and debt issuance costs)

SECURED DEBT REPAID IN 2017 Interest Rate Date Repaid Payoff Amount
(In thousands)
Arion 16, Broadway VI, Chino, East University I & II, Northpark I-IV, Santan 10 II, 55th Avenue and World Houston 1 & 2, 21 & 23 5.57% 08/07/2017 $ 45,069

During the third quarter of 2018, Eastgroup sold 35th Avenue Distribution Center in Phoenix. The 125,000 square foot property was sold for $7,941,000, and the Company recognized a gain on the sale of $4,051,000 during the third quarter of 2018.

Real Estate Improvements

Total Real Estate Improvements ⁽¹⁾

Reconciliation of Total Real Estate Improvements to Real estate improvements on the Consolidated Statements of Cash Flows:

Capitalized Leasing Costs

Real Estate Sold and Held for Sale/Discontinued Operations

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU is intended to better align a ~~company's~~company’s financial reporting for hedging activities with the economic objectives of those activities. The transition method is a modified retrospective approach that ~~will require the Company~~requires companies to recognize the cumulative effect of initially applying the ASU as an adjustment to Accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year the entity adopts the ASU. The primary provision in the ASU that will require an adjustment to beginning retained earnings is the change in timing and income statement presentation for ineffectiveness related to cash flow and net investment hedges. As a result of the transition guidance in the ASU, cumulative ineffectiveness that has previously been recognized on cash flow and net investment hedges that are still outstanding and designated as of the date of adoption will be adjusted and removed from beginning retained earnings and placed in Accumulated other comprehensive income. The Company adopted ASU 2017-12 ison January 1, 2019; the adoption of ASU 2017-12 did not have a material impact on its financial condition, results of operations or disclosures.

LIQUIDITY AND CAPITAL RESOURCES

Unsecured bank credit facilities - fixed rate, carrying amount ^{(1) (2)}

Unsecured debt - fixed rate, carrying amount ⁽¹⁾

Contractual Obligations

INFLATION AND OTHER ECONOMIC CONSIDERATIONS


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to interest rate changes primarily as a result of its unsecured bank credit facilities and long-term debt maturities. This debt is used to maintain liquidity and fund capital expenditures and expansion of the Company’s real estate investment portfolio and operations. The Company’s objective for interest rate risk management is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. The Company has two variable rate unsecured bank credit facilities as discussed under Liquidity and Capital Resources. As market conditions permit, EastGroup issues equity and/or employs fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, to replace the short-term bank borrowings. The ~~Company's~~Company’s interest rate swaps are discussed in Note 1314 in the Notes to Consolidated Financial Statements. The table below presents the principal payments due and weighted average interest rates, which include the impact of interest rate swaps, for both the fixed-rate and variable-rate debt as of ~~September 30, 2018~~March 31, 2019.


	October – December 2018			2019		2020		2021		2022			Thereafter		Total		Fair Value		April – December 2019			2020		2021		2022			2023		Thereafter		Total		Fair Value
Unsecured bank credit facilities - variable rate (in thousands)	$	—		—		—		—		171,191		(1)	—		171,191		171,571	(2)	$	—		—		—		132,868		(1)	—		—		132,868		133,272	(2)
Weighted average interest rate	—			—		—		—		3.22	%	(3)	—		3.22	%			—			—		—		3.49	%	(3)	—		—		3.49	%
Unsecured debt - fixed rate (in thousands)	$	—		75,000		105,000		40,000		75,000			430,000		725,000		700,706	(4)	$	75,000		105,000		40,000		75,000			115,000		395,000		805,000		810,450	(4)
Weighted average interest rate	—			2.85	%	3.55	%	2.34	%	3.03	%		3.53	%	3.34	%			2.85		%	3.55	%	2.34	%	3.03	%		2.96	%	3.84	%	3.44	%
Secured debt - fixed rate (in thousands)	$	2,882		55,570		9,096		89,563		32,769			2,043		191,923		193,304	(4)	$	52,647		9,096		89,562		32,769			119		1,923		186,116		188,463	(4)
Weighted average interest rate	5.20		%	7.01	%	4.43	%	4.55	%	4.09	%		3.85	%	5.18	%			7.11		%	4.43	%	4.55	%	4.09	%		3.85	%	3.85	%	5.18	%

Represents the weighted average interest rate for the ~~Company's~~Company’s variable rate unsecured bank credit facilities as of ~~September 30, 2018~~March 31, 2019.


ITEM 4.	CONTROLS AND PROCEDURES.

(i) Disclosure Controls and Procedures.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act ~~Rule 13a-15.~~Rules 13a-15 and 15d-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2018~~March 31, 2019, the Company’s disclosure controls and procedures were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

(ii) Changes in Internal Control Over Financial Reporting.

There was no change in the ~~Company's~~Company’s internal control over financial reporting during the ~~Company's~~ ~~third~~Company’s first fiscal quarter ended ~~September 30, 2018~~March 31, 2019, that has materially affected, or is reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

PART II. OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS.

The Company is not presently involved in any material litigation nor, to its knowledge, is any material litigation threatened against the Company or its properties, other than routine litigation arising in the ordinary course of business or which is expected to be covered by the Company’s liability insurance. The Company cannot predict the outcome of any litigation with certainty, and some lawsuits, claims or proceedings may be disposed of unfavorably to the Company, which could materially affect its financial condition or results of operations.


ITEM 1A.	RISK FACTORS.

There have been no material changes to the risk factors disclosed in EastGroup’s Form 10-K for the year ended December 31, ~~2017~~2018, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors. For a full description of these risk factors, please refer to “Item 1A. Risk Factors” in ~~the~~ ~~2017~~EastGroup’s Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers



Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
01/01/19 thru 01/31/19	21,248	(1)	$	92.26	—	—
02/01/19 thru 02/28/19	7,707	(1)	107.37		—	—
03/01/19 thru 03/31/19	—		—		—	—
Total	28,955		$	96.29	—


~~ITEM 4.~~(1)	~~MINE SAFETY DISCLOSURES.~~As permitted under the Company’s equity compensation plans, these shares were withheld by the Company to satisfy the tax withholding obligations for those employees who elected this option in connection with the vesting of shares of restricted stock.

~~Not applicable.~~


ITEM 6.	EXHIBITS.



Exhibits
The following exhibits are included in or incorporated by reference into, this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019:



~~(a)~~Exhibit Number	~~Form 10-Q Exhibits:~~Description
31.1
	~~(31~~	)	Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
			~~(a)~~	of Marshall A. Loeb, Chief Executive Officer (filed herewith).
			~~(b)~~31.2	Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) of Brent W. Wood, Chief Financial Officer (filed herewith).
32.1	~~(32~~	)	Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
			~~(a)~~	of Marshall A. Loeb, Chief Executive Officer (furnished herewith).
			~~(b)~~32.2	Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) of Brent W. Wood, Chief Financial Officer (furnished herewith).
	~~(101~~	)101.1	The following materials from ~~EastGroup Properties, Inc.’s~~the Company’s Quarterly Report on Form 10-Q for
			the quarter ended ~~September 30, 2018,~~March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language):
			(i) consolidated balance sheets, (ii) consolidated statements of income and comprehensive income,
			(iii) consolidated ~~statement~~statements of changes in equity, (iv) consolidated statements of cash flows, and
			(v) the notes to ~~the~~these consolidated financial statements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~October 22, 2018~~April 24, 2019



	EASTGROUP PROPERTIES, INC.

	/s/ BRUCE CORKERN
	Bruce Corkern, CPA
	Senior Vice President, Chief Accounting Officer and Secretary

	/s/ BRENT W. WOOD
	Brent W. Wood
	Executive Vice President, Chief Financial Officer and Treasurer

~~-42-~~-45-



MARYLAND	13-2711135
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

400 W PARKWAY PLACE
SUITE 100
RIDGELAND, MISSISSIPPI	39157
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number: (601) 354-3555



Large Accelerated Filer ~~(x)~~x	Accelerated Filer ~~( )~~o	Non-accelerated Filer ~~( )~~o
		~~(Do not check if a smaller reporting company)~~
Smaller Reporting Company ~~( )~~o	Emerging Growth Company ~~( )~~o


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017		Increase (Decrease)	2018		2017		Increase (Decrease)		2019			2018		Increase (Decrease)
	(In thousands, except rates of interest)												(In thousands, except rates of interest)
Average borrowings on unsecured bank credit facilities - variable rate	$	131,775		104,928		26,847	101,571		112,632		(11,061	)	$	216,296		123,484		92,812
Weighted average variable interest rates (excluding amortization of facility fees and debt issuance costs)	3.10		%	2.24	%		2.87	%	2.00	%			3.50		%	2.60	%



Years Ending December 31,	(In thousands)
Remainder of 2018	$	2,882
2019	130,570
2020	114,096
2021	129,563
2022	107,769
2023 and beyond	432,043
Total	$	916,923



Interest Rate Derivative	Notional Amount as of September 30, 2018	Notional Amount as of December 31, 2017
	(In thousands)
Interest Rate Swap	—	$80,000
Interest Rate Swap	$75,000	$75,000
Interest Rate Swap	$75,000	$75,000
Interest Rate Swap	$65,000	$65,000
Interest Rate Swap	$60,000	$60,000
Interest Rate Swap	$40,000	$40,000
Interest Rate Swap	$15,000	$15,000



	Derivatives As of September 30, 2018			Derivatives As of December 31, 2017
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In thousands)
Derivatives designated as cash flow hedges:
Interest rate swap assets	Other assets	$	10,693	Other assets	$	6,034
Interest rate swap liabilities	Other liabilities	—		Other liabilities	695


(1)	The Company initially reported FFO of $1.16 per share during the first quarter of 2018. In connection with the Company's adoption


•	Lease termination fee income is included in Income from real estate operations. Lease termination fee income for the three months ended March 31, 2019 was $140,000 compared to $131,000 for the same period of 2018.


•	In 2018 and prior years, the Company’s bad debt expense was included in Expenses from real estate operations. In 2019, the Company began recording reserves for uncollectible rent as reductions to Income from real estate operations. The Company recorded reserves for uncollectible rent of $129,000 and $90,000 for the three months ended March 31, 2019 and 2018, respectively.



REAL ESTATE PROPERTIES ACQUIRED IN 2018	Location	Size	Date Acquired	Cost ⁽¹⁾
		(Square feet)		(In thousands)
Gwinnett 316	Atlanta, GA	65,000	04/24/2018	$	4,147
Eucalyptus Distribution Center	Chino, CA	182,000	06/20/2018	22,890
Allen Station I & II	Dallas, TX	220,000	08/29/2018	23,424
Total Real Estate Property Acquisitions		467,000		$	50,461


(1)	Includes interest on the ~~Company's~~Company’s unsecured bank credit facilities and unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 1314 in the Notes to Consolidated Financial Statements.



SECURED DEBT REPAID IN 2017	Interest Rate	Date Repaid	Payoff Amount
			(In thousands)
Arion 16, Broadway VI, Chino, East University I & II, Northpark I-IV, Santan 10 II, 55th Avenue and World Houston 1 & 2, 21 & 23	5.57%	08/07/2017	$	45,069


(1)	The variable-rate unsecured bank credit facilities mature in July 2022 and as of ~~September 30, 2018,~~March 31, 2019, have balances of ~~$155,000,000~~$130,000,000 on the $350 million unsecured bank credit facility and ~~$16,191,000~~$2,868,000 on the $45 million unsecured bank credit facility.


(2)	The fair value of the Company’s variable rate debt is estimated by discounting expected cash flows at current market rates, excluding the effects of debt issuance costs.


(4)	The fair value of the Company’s fixed-rate debt, including variable-rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps, is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers, excluding the effects of debt issuance costs.