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Portions of the Registrant’s Proxy Statement relating to its 2020 Annual Meeting of Stockholders are incorporated by reference into Part III. The Registrant intends to file such Proxy Statement with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2019.

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•	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.

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•	population and demographic trends;

•	employment and personal income trends;

•	income and other tax laws;

•	changes in interest rates and availability and costs of financing;

•	increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents;

•	changes in the price of oil; and

•	construction costs.

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•	the availability of favorable financing alternatives;

•	the risk that we may not be able to obtain land on which to develop or that due to the increased cost of land, our activities may not be as profitable;

•	construction costs exceeding original estimates due to rising interest rates and increases in the costs of materials and labor;

•	construction and lease-up delays resulting in increased debt service, fixed expenses and construction costs;

•	expenditure of funds and devotion of management's time to projects that we do not complete;

•	fluctuations of occupancy and rental rates at newly completed properties, which depend on a number of factors, including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower return on our investment; and

•	complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits.

•	when we are able to locate a desired property, competition from other real estate investors may significantly increase the purchase price;

•	acquired properties may fail to perform as we project;

•	the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;

•	acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures;

•	we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected; and

•	we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, to the transferor with respect to unknown liabilities. As a result, if a claim were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.

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•	the REIT ownership limit described above;

•	special meetings of our stockholders may be called only by the chairman of the board, the chief executive officer, the president, a majority of the board or by stockholders possessing a majority of all the votes entitled to be cast at the meeting;

•	our Board of Directors may authorize and issue securities without stockholder approval; and

•	advance-notice requirements for proposals to be presented at stockholder meetings.

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(1)	Represents the monthly cash rental rates, excluding tenant expense reimbursements, as of December 31, 2019, multiplied by 12 months.

(2)	Includes month-to-month leases.

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(1)	Includes mortgage loans receivable and unconsolidated investment. See Notes 3 and 4 in the Notes to Consolidated Financial Statements.

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(1)

The Company initially reported FFO of $4.67 per share and $4.26 per share during the years ended December 31, 2018 and 2017, respectively. In connection with the Company's adoption of the Nareit Funds from Operations White Paper - 2018 Restatement, the Company now excludes from FFO the 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 and 2017, to conform to the updated definition of FFO.

•	The change in FFO per share represents the increase or decrease in FFO per share from the current year compared to the prior year.  For 2019, FFO was $4.98 per share compared with $4.66 per share for 2018, an increase of 6.9%.

•	For the year ended December 31, 2019, PNOI increased by $25,137,000, or 11.8%, compared to 2018. PNOI increased $12,550,000 from newly developed and value-add properties, $8,357,000 from same property operations and $5,076,000 from 2018 and 2019 acquisitions; PNOI decreased $971,000 from operating properties sold in 2018 and 2019.

•	The change in Same PNOI represents the PNOI increase or decrease for the same operating properties owned during the entire current and prior year reporting periods (January 1, 2018 through December 31, 2019).  Same PNOI, excluding income from lease terminations, increased 3.7% for the year ended December 31, 2019, compared to 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, 2018 through December 31, 2019). Same property average occupancy for the year ended December 31, 2019, was 96.9% compared to 96.3% for 2018.

•	Occupancy is the percentage of leased square footage for which the lease term has commenced as compared to the total leasable square footage as of the close of the reporting period.  Occupancy at December 31, 2019 was 97.1%.  Quarter-end occupancy ranged from 96.5% to 97.4% over the previous four quarters ended December 31, 2018 to September 30, 2019.

•	Rental rate change represents the rental rate increase or decrease on new and renewal leases compared to the prior leases on the same space.  For the year 2019, rental rate increases on new and renewal leases (16.8% of total square footage) averaged 17.3%.

•	Lease termination fee income is included in Income from real estate operations. For the year 2019, lease termination fee income was $1,336,000 compared to $294,000 for 2018.

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•	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 $448,000 in 2019 compared to $784,000 in 2018.

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(1)

Total cost of the operating properties acquired was $113,218,000, of which $105,301,000 was allocated to Real estate properties as indicated above. The Company allocated $22,750,000 of the total purchase price to land using third party land valuations for the Denver, Greenville, Tampa and San Diego markets. The market values are considered to be Level 3 inputs as defined by FASB Accounting Standards Codification ("ASC") 820, Fair Value Measurement (see Note 18 in the Notes to Consolidated Financial Statements for additional information on ASC 820). Intangibles associated with the purchases of real estate were allocated as follows: $9,597,000 to in-place lease intangibles and $344,000 to above market leases (both included in Other assets on the Consolidated Balance Sheets), and $2,024,000 to below market leases (included in Other liabilities on the Consolidated Balance Sheets).

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(1)

Total cost of the value-add properties acquired was $92,623,000, of which $92,268,000 was allocated to Development and value-add properties as indicated above.  The Company allocated $24,028,000 of the total purchase price to land using third party land valuations for the Dallas, Tampa, Phoenix, Las Vegas and San Diego markets. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement (see Note 18 in the Notes to Consolidated Financial Statements for additional information on ASC 820). The Logistics Center acquisition is under a ground lease; therefore, no value was allocated to land for this transaction. Intangibles associated with the purchases were allocated as follows:  $423,000 to in-place lease intangibles (included in Other assets on the Consolidated Balance Sheets) and $68,000 to below market leases (included in Other liabilities on the Consolidated Balance Sheets). These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition. Costs associated with the value-add property acquisitions, except for the amounts allocated to the acquired lease intangibles, are included in the Development and Value-Add Properties Activity table below.

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(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)	Included in these costs are development obligations of $59.3 million and tenant improvement obligations of $7.5 million on properties under development.

(3)	Represents value-add projects acquired by EastGroup.

(4)	Represents cumulative costs at the date of transfer.

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(1)	See Note 1(o) in the Notes to Consolidated Financial Statements 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.

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(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 working cash line of credit. See Note 1(p) in the Notes to Consolidated Financial Statements.

(1)	See Note 1(o) in the Notes to Consolidated Financial Statements 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.

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•

PNOI increased by $25,137,000 ($0.67 per diluted share) for 2019 as compared to 2018.  PNOI increased $12,550,000 from newly developed and value-add properties, $8,357,000 from same property operations and $5,076,000 from 2018 and 2019 acquisitions; PNOI decreased $971,000 from operating properties sold in 2018 and 2019. For the year 2019, lease termination fee income was $1,336,000 compared to $294,000 for 2018.  The Company recorded reserves for uncollectible rent of $448,000 in 2019 and $784,000 in 2018. Straight-lining of rent increased Income from real estate operations by $4,985,000 and $5,116,000 in 2019 and 2018, respectively.

•	EastGroup recognized gains on sales of real estate investments of $41,068,000 ($1.09 per diluted share) compared to $14,273,000 ($0.40 per diluted share) during 2018.

•	Depreciation and amortization expense increased by $13,020,000 ($0.35 per diluted share) during 2019 compared to 2018.

•	During 2019, EastGroup recognized gain on casualties and involuntary conversion of $428,000 ($0.01 per diluted share), compared to $1,245,000 ($0.04 per diluted share) during 2018.

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(1)	Includes interest on the Company's unsecured bank credit facilities and unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 13 in the Notes to Consolidated Financial Statements.

(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.

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(1)	The interest rate on this unsecured term loan is comprised of LIBOR plus 150 basis points subject to a pricing grid for changes in the Company's coverage ratings. The Company entered into an interest rate swap to convert the loan's LIBOR rate to a fixed interest rate,

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(1)	Reconciliation of Total Real Estate Improvements to Real Estate Improvements on the Consolidated Statements of Cash Flows:

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•

PNOI increased by $18,992,000 ($0.53 per diluted share) for 2018 as compared to 2017. PNOI increased $11,900,000 from newly developed and value-add properties, $6,712,000 from same property operations and $2,134,000 from 2017 and 2018 acquisitions; PNOI decreased $1,831,000 from operating properties sold in 2017 and 2018. For the year 2018, lease termination fee income was $294,000 compared to $468,000 for 2017.  The Company recorded net bad debt expense of $784,000 in 2018 and $499,000 in 2017. Straight-lining of rent increased Income from real estate operations by $5,116,000 and $3,723,000 in 2018 and 2017, respectively.

•	EastGroup recognized gains on sales of real estate investments of $14,273,000 ($0.40 per diluted share) compared to $21,855,000 ($0.64 per diluted share) during 2017.

•	Depreciation and amortization expense increased by $7,830,000 ($0.22 per diluted share).

•	During 2018, EastGroup recognized gain on casualties and involuntary conversion of $1,245,000 ($0.04 per diluted share), compared to zero during 2017.

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(1)	Includes interest on the Company's unsecured bank credit facilities and unsecured debt with fixed interest rates per the debt agreements or effectively fixed interest rates due to interest rate swaps, as discussed in Note 13 in the Notes to Consolidated Financial Statements.

(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.

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(1)	Reconciliation of Total Real Estate Improvements to Real Estate Improvements on the Consolidated Statements of Cash Flows:

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•

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 of the Company's right of use assets and lease liabilities for its ground leases and office leases are less than 1% of the Company’s Total assets as of December 31, 2019.

•	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:

◦

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 $411,000 on the Consolidated Statements of Income and Comprehensive Income during 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 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 Company believes its leases meet the criteria.

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

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(1)	These amounts are included on the Consolidated Balance Sheets net of unamortized debt issuance costs.

(2)

The Company’s balances under its unsecured bank credit facilities change depending on the Company’s cash needs and, as such, both the principal amounts and the interest rates are subject to variability.  At December 31, 2019, the weighted average interest rate was 2.775% on the $112,710,000 of variable rate debt that matures in July 2022. The $350 million unsecured credit facility has options for two six-month extensions (at the Company's election) and a $150 million accordion (with agreement by all parties). The $45 million unsecured credit facility automatically extends for two six-month terms if the extension options in the $350 million revolving facility are exercised. As of December 31, 2019, the interest rate on the $350 million facility was LIBOR plus 100 basis points (weighted average interest rate of 2.776%) with an annual facility fee of 20 basis points, and the interest rate on the $45 million facility, which resets on a daily basis, was LIBOR plus 100 basis points (2.763%) with an annual facility fee of 20 basis points. The margin and facility fee are subject to changes in the Company's credit ratings.

(3)	Represents an estimate of interest due on the Company's unsecured bank credit facilities based on the outstanding unsecured credit facilities as of December 31, 2019 and interest rates and maturity dates on the facilities as of December 31, 2019 as discussed in note 2 above.

(4)	Represents dividends declared during December 2019, which were paid in January 2020. Dividends Payable excludes dividends payable on unvested restricted stock of $1,618,000, which are subject to continued service and will be paid upon vesting in future periods.

(5)	Represents commitments on real estate properties, except for tenant improvement obligations.

(6)	Represents commitments on properties in the Company's development and value-add program, except for tenant improvement obligations.

(7)	Represents tenant improvement allowance obligations.

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(1)	The variable rate unsecured bank credit facilities mature in July 2022 and as of December 31, 2019, have balances of $105,000,000 on the $350 million unsecured bank credit facility and $7,710,000 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.

(3)	Represents the weighted average interest rate for the Company's variable rate unsecured bank credit facilities as of December 31, 2019.

(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.

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(i)	Disclosure Controls and Procedures.

(ii)	Internal Control Over Financial Reporting.

(a)	Management's annual report on internal control over financial reporting.

(b)	Report of the independent registered public accounting firm.

(c)	Changes in internal control over financial reporting.

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*	Indicates a management contract or any compensatory plan, contract or arrangement.

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(1)	SIGNIFICANT ACCOUNTING POLICIES

(a)	Principles of Consolidation

The consolidated financial statements include the accounts of EastGroup Properties, Inc. ("EastGroup" or "the Company"), its wholly owned subsidiaries and its investment in any joint ventures in which the Company has a controlling interest.

During the fourth quarter of 2017, EastGroup closed the acquisition of the 20% noncontrolling interest in two of the four University Business Center buildings which were owned in a joint venture partnership; the Company then directly owned 100% of University Business Center 125 and 175. As of December 31, 2018 and 2017, EastGroup had an 80% controlling interest in University Business Center 120 and 130. During the fourth quarter of 2019, the Company, along with the noncontrolling interest partner, sold University Business Center 130. As of December 31, 2019, EastGroup had an 80% controlling interest in University Business Center 120.

Also during 2019, EastGroup entered into two new joint venture arrangements. On May 31, 2019, the Company acquired 6.5 acres of land in San Diego, known by the Company as the Miramar Land. In the second quarter of 2019, a joint venture was formed through which EastGroup owns a 95% controlling interest in this property.  Also, on December 31, 2019, the Company acquired 41.6 acres of land in San Diego, known by the Company as the Otay Mesa Land, with the same noncontrolling interest partner with EastGroup owning a 99% controlling interest in the property.

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

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

(b)	Income Taxes

EastGroup, a Maryland corporation, has qualified as a real estate investment trust ("REIT") under Sections 856-860 of the Internal Revenue Code and intends to continue to qualify as such.  To maintain its status as a REIT, the Company is required to, among other things, distribute at least 90% of its ordinary taxable income to its stockholders.  If the Company has a capital gain, it has the option of (i) deferring recognition of the capital gain through a tax-deferred exchange, (ii) declaring and paying a capital gain dividend on any recognized net capital gain resulting in no corporate level tax, or (iii) retaining and paying corporate income tax on its net long-term capital gain, with the shareholders reporting their proportional share of the undistributed long-term capital gain and receiving a credit or refund of their share of the tax paid by the Company.  The Company distributed all of its 2019, 2018 and 2017 taxable income to its stockholders.  Accordingly, no significant provisions for income taxes were necessary.  The following table summarizes the federal income tax treatment for all distributions by the Company for the years ended 2019, 2018 and 2017.

Federal Income Tax Treatment of Share Distributions

	Years Ended December 31,
	2019				2018			2017
Common Share Distributions:	(Per share)
Ordinary dividends	$	3.14000			2.14305			2.49146
Nondividend distributions	—				—			0.02686
Unrecaptured Section 1250 capital gain	—				—			—
Other capital gain	—				—			0.00168
Total Common Share Distributions	$	3.14000			2.14305			2.52000

EastGroup applies the principles of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740, Income Taxes, when evaluating and accounting for uncertainty in income taxes.  With few exceptions, the Company’s 2015 and earlier tax years are closed for examination by U.S. federal, state and local tax authorities.  In accordance with the provisions of ASC 740, the Company had no significant uncertain tax positions as of December 31, 2019 and 2018.

The Company’s income may differ for tax and financial reporting purposes principally because of (i) the timing of the deduction for the provision for possible losses and losses on investments, (ii) the timing of the recognition of gains or losses from the sale

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of investments, (iii) different income recognition methods for rental income, (iv) different depreciation methods and lives, (v) real estate properties having a different basis for tax and financial reporting purposes, (vi) mortgage loans having a different basis for tax and financial reporting purposes, thereby producing different gains upon collection of these loans, and (vii) differences in book and tax allowances and timing for stock-based compensation expense.

(c)	Income Recognition

The Company’s primary revenue is rental income from business distribution space. Minimum rental income from real estate operations is recognized on a straight-line basis.  The straight-line rent calculation on leases includes the effects of rent concessions and scheduled rent increases, and the calculated straight-line rent income is recognized over the lives of the individual leases.  The Company maintains allowances for doubtful accounts receivable, including straight-line rents receivable, based upon estimates determined by management.  Management specifically analyzes aged receivables, customer credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Revenue is recognized on payments received from tenants for early terminations after all criteria have been met in accordance with ASC 840, Leases, prior to January 1, 2019, and in accordance with ASC 842, Leases, subsequently.

In February 2016, the 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 $411,000 on the Consolidated Statements of Income and Comprehensive Income during 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 the notes to the consolidated financial statements.

The table below presents the components of Income from real estate operations for the year ended December 31, 2019:

	Year Ended December 31, 2019
	(In thousands)
Lease income — operating leases	$	248,237
Variable lease income (1)	82,576
Income from real estate operations	$	330,813

(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 December 31, 2019:

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Years Ending December 31,		(In thousands)
2020		$	252,654
2021		215,820
2022		171,607
2023		132,274
2024		99,183
Thereafter		171,392
Total minimum receipts		$	1,042,930

 

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

The Company recognizes gains on sales of real estate in accordance with the principles set forth in the Codification. For each transaction, the Company evaluates whether the guidance in ASC 606, Revenue from Contracts with Customers, or ASC 610, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, is applicable. Upon closing of real estate transactions, the provisions of the Codification require consideration of whether the seller has a controlling financial interest in the entity that holds the nonfinancial asset after the transaction. In addition, the seller evaluates whether a contract exists under ASC 606 and whether the counterparty obtained control of each nonfinancial asset that is sold. If a contract exists and the counterparty obtained control of each nonfinancial asset, the seller derecognizes the assets at the close of the transaction with resulting gains or losses reflected on the Consolidated Statements of Income and Comprehensive Income.

The Company recognizes interest income on mortgage loans on the accrual method unless a significant uncertainty of collection exists.  If a significant uncertainty exists, interest income is recognized as collected.  If applicable, discounts on mortgage loans receivable are amortized over the lives of the loans using a method that does not differ materially from the interest method.  The Company evaluates the collectibility of both interest and principal on each of its loans to determine whether the loans are impaired.  A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms.  When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the underlying collateral (if the loan is collateralized) less costs to sell.  As of December 31, 2019 and 2018, there was no significant uncertainty of collection; therefore, interest income was recognized.  As of December 31, 2019 and 2018, the Company determined that no allowance for collectibility of the mortgage loans receivable was necessary.

 

(d)	Real Estate Properties

EastGroup has one reportable segment–industrial properties.  These properties are primarily located in major Sunbelt regions of the United States. The Company's properties have similar economic characteristics and 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

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flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.  As of December 31, 2019 and 2018, the Company did not identify any impairment charges which should be recorded.

Depreciation of buildings and other improvements is computed using the straight-line method over estimated useful lives of generally 40 years for buildings and 3 to 15 years for improvements.  Building improvements are capitalized, while maintenance and repair expenses are charged to expense as incurred.  Significant renovations and improvements that improve or extend the useful life of the assets are capitalized.  Depreciation expense was $86,590,000, $76,007,000 and $69,010,000 for 2019, 2018 and 2017, respectively.

(e)	Development and Value-Add Properties

For properties under development and value-add properties (defined in Note 2) 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 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.  The Company transfers properties from the development and value-add program to Real estate properties as follows: (i) for development properties, at the earlier of 90% occupancy or one year after completion of the shell construction, and (ii) for value-add properties, at the earlier of 90% occupancy or one year after acquisition. Upon the earlier of 90% occupancy or one year after completion of the shell construction, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).

(f)	Real Estate Held for Sale

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

In accordance with ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.

(g)	Derivative Instruments and Hedging Activities

EastGroup applies ASC 815, Derivatives and Hedging, which requires all entities with derivative instruments to disclose information regarding how and why the entity uses derivative instruments and how derivative instruments and related hedged items affect the entity’s financial position, financial performance and cash flows. See Note 13 for a discussion of the Company's derivative instruments and hedging activities.

(h)	Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

(i)	Amortization

Debt origination costs are deferred and amortized over the term of each loan using the effective interest method. Amortization of debt issuance costs was $1,344,000, $1,352,000 and $1,250,000 for 2019, 2018 and 2017, respectively. Amortization of facility fees was $790,000, $736,000 and $670,000 for 2019, 2018 and 2017, respectively. 

 

Leasing costs are deferred and amortized using the straight-line method over the term of the lease.  Leasing costs paid during the period are included in Changes in other assets and other liabilities in the Investing Activities section on the Consolidated Statements of Cash Flows.  Leasing costs amortization expense was $13,167,000, $11,493,000 and $10,329,000 for 2019, 2018 and 2017, respectively.  

Amortization expense for in-place lease intangibles is disclosed below in Real Estate Property Acquisitions and Acquired Intangibles.

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(j)	Real Estate Property Acquisitions and Acquired Intangibles

Upon acquisition of real estate properties, EastGroup applies the principles of 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 or a group of similar identifiable assets; if so, the set is not a business. EastGroup determined that its real estate property acquisitions in 2019, 2018 and 2017 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business. As a result, the Company has capitalized acquisition costs related to its 2019, 2018 and 2017 acquisitions.

 

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 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 current market rents over the remaining term of the lease.  The amounts allocated to above and below market leases are included in Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases. The total amount of intangible assets is further allocated to in-place lease values and customer relationship values based upon management’s assessment of their respective values.  These intangible assets are included in Other assets on the Consolidated Balance Sheets and are amortized over the remaining term of the existing lease, or the anticipated life of the customer relationship, as applicable.

Amortization of above and below market leases increased rental income by $1,229,000, $667,000 and $529,000 in 2019, 2018 and 2017, respectively.  Amortization expense for in-place lease intangibles was $4,967,000, $4,204,000 and $4,535,000 for 2019, 2018 and 2017, respectively.  

Projected amortization of in-place lease intangibles for the next five years as of December 31, 2019 is as follows:

Years Ending December 31,		(In thousands)
2020		$	4,949
2021		3,719
2022		2,697
2023		2,160
2024		1,593

During 2019, the Company acquired the following operating properties: Airways Business Center in Denver; 385 Business Park in Greenville; Grand Oaks 75 Business Center 1 in Tampa; and Siempre Viva Distribution Center 2 and Rocky Point Distribution Center 1 in San Diego. The Company also acquired the following value-add properties: Logistics Center 6 & 7 and Arlington Tech Centre 1 & 2 in Dallas; Grand Oaks 75 Business Center 2 in Tampa; Interstate Commons Distribution Center 2 in Phoenix; Southwest Commerce Center in Las Vegas; and Rocky Point Distribution Center 2 in San Diego. At the time of acquisition, these value-add properties were classified in the lease-up or under construction phase. The total cost for the properties acquired by the Company was $205,841,000, of which $105,301,000 was allocated to Real estate properties and $92,268,000 was allocated to Development and value-add properties. EastGroup allocated $46,778,000 of the total purchase price to land using third party land valuations for the Denver, Greenville, Tampa, Dallas, Phoenix, Las Vegas and San Diego markets. Logistics Center 6 & 7 is located on land under a ground lease; therefore, no value was allocated to land for this transaction. The market values are considered

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to be Level 3 inputs as defined by ASC 820, Fair Value Measurement (see Note 18 for additional information on ASC 820). Intangibles associated with the purchase of real estate were allocated as follows: $10,020,000 to in-place lease intangibles and $344,000 to above market leases (both included in Other assets on the Consolidated Balance Sheets) and $2,092,000 to below market leases (included in Other liabilities on the Consolidated Balance Sheets). These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.

Also during 2019, EastGroup acquired 6.5 acres of operating land in San Diego for $13,386,000. In connection with the acquisition, the Company allocated value to land and below market leases. EastGroup recorded land of $13,979,000 based on 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. This land, which is included in Real estate properties on the Consolidated Balance Sheets, is currently leased to a tenant that operates a parking lot on the site. The Company recorded $593,000 to below market leases in connection with this land acquisition. These costs are amortized over the remaining life of the associated lease in place at the time of acquisition.

EastGroup also acquired 41.6 acres of operating land in San Diego for $15,282,000. This land, which is included in Real estate properties on the Consolidated Balance Sheets, is currently leased (on a month-to-month basis) to various tenants operating outdoor storage on the site.

During 2019, EastGroup also acquired a small parcel of land (0.5 acres) adjacent to its Yosemite Distribution Center in Milpitas (San Francisco), California, for $472,000. This land is included in Real estate properties on the Consolidated Balance Sheets.

During 2018, the Company acquired the following operating properties: Gwinnett 316 in Atlanta; Eucalyptus Distribution Center in Chino (Los Angeles); Allen Station I & II in 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 $71,086,000, of which $54,537,000 was allocated to Real estate properties and $13,934,000 was allocated to Development and value-add properties. EastGroup allocated $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 18 for additional information on ASC 820). Intangibles associated with the purchase of real estate were allocated as follows: $4,350,000 to in-place lease intangibles, $21,000 to above market leases and $1,756,000 to below market leases. These costs are amortized over the remaining lives of the associated leases in place at the time of acquisition.

During 2017, the Company acquired the following operating properties: Shiloh 400, Broadmoor Commerce Park and Hurricane Shoals 1 & 2 in Atlanta and Southpark Corporate Center 5-7 in Austin. The Company also acquired one value-add property, Progress Center 1 & 2 in Atlanta. At the time of acquisition, Progress Center 1 & 2 was classified in the lease-up phase of development. The total cost for the properties acquired by the Company was $65,243,000, of which $51,539,000 was allocated to Real estate properties and $10,312,000 was allocated to Development 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. The market values are considered to be Level 3 inputs as defined by ASC 820, Fair Value Measurement (see Note 18 for additional information on ASC 820). Intangibles associated with the purchase of real estate were allocated as follows: $3,662,000 to in-place lease intangibles, $115,000 to above market leases and $385,000 to below market leases.

The Company periodically reviews the recoverability of goodwill (at least annually) and the recoverability of other intangibles (on a quarterly basis) for possible impairment.  In management’s opinion, no impairment of goodwill and other intangibles existed at December 31, 2019 and 2018.

(k)	Stock-Based Compensation

In May 2004, the stockholders of the Company approved the EastGroup Properties, Inc. 2004 Equity Incentive Plan ("the 2004 Plan"), which was further amended by the Board of Directors in September 2005 and December 2006.  This plan authorized the issuance of common stock to employees in the form of options, stock appreciation rights, restricted stock, deferred stock units, performance shares, bonus stock or stock in lieu of cash compensation.

In April 2013, the Board of Directors adopted the EastGroup Properties, Inc. 2013 Equity Incentive Plan (the “2013 Equity Plan”) upon the recommendation of the Compensation Committee; the 2013 Equity Plan was approved by the Company's stockholders and became effective May 29, 2013. The 2013 Equity Plan was further amended by the Board of Directors in March 2017. The 2013 Equity Plan replaced the 2004 Plan. Typically, the Company issues new shares to fulfill stock grants or upon the exercise of stock options.

EastGroup applies the provisions of ASC 718, Compensation – Stock Compensation, to account for its stock-based compensation plans. ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the financial

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statements and that the cost be measured on the fair value of the equity or liability instruments issued. The cost for market-based awards and awards that only require service are expensed on a straight-line basis over the requisite service periods. The cost for performance-based awards is determined using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period.  This method accelerates the expensing of the award compared to the straight-line method.  

The total compensation expense for service and performance based awards is based upon the fair market value of the shares on the grant date.  The grant date fair value for awards that have been granted and are subject to a future market condition (total shareholder return) are determined using a simulation pricing model developed to specifically accommodate the unique features of the awards.

During the restricted period for awards no longer subject to contingencies, the Company accrues dividends and holds the certificates for the shares; however, the employee can vote the shares.  Share certificates and dividends are delivered to the employee as they vest.

(l)	Earnings Per Share

The Company applies ASC 260, Earnings Per Share, which requires companies to present basic and diluted earnings per share ("EPS").  Basic EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting period.  The Company’s basic EPS is calculated by dividing Net Income Attributable to EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested.

Diluted EPS represents the amount of earnings for the period attributable to each share of common stock outstanding during the reporting period and to each share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during the reporting period.  The Company calculates diluted EPS by dividing Net Income Attributable to EastGroup Properties, Inc. Common Stockholders by the weighted average number of common shares outstanding plus the dilutive effect of unvested restricted stock.  The dilutive effect of unvested restricted stock is determined using the treasury stock method.

(m)	Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, 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.

(n)	Risks and Uncertainties

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

(o)	Recent Accounting Pronouncements

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

In 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 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. The following changes are applicable to the Company’s financial condition and results of 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 of the Company's right of use assets and lease liabilities for its ground leases and office leases are less than 1% of the Company’s Total assets as of December 31, 2019.

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•	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:

◦

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 $411,000 on the Consolidated Statements of Income and Comprehensive Income during 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 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 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 Annual Report on Form 10-K.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU is intended to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition method is a modified retrospective approach that 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 on 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 operations 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 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, 2019, and interim periods within those fiscal years. The Company adopted ASU 2016-13 and ASU 2018-19 on January 1, 2020, and will provide the necessary disclosures beginning with its Form 10-Q for the period ending March 31, 2020. EastGroup does not expect the adoption to have a material impact on its financial condition, results of 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. The Company adopted ASU 2018-13 on January 1, 2020, and will provide the necessary disclosures beginning with its Form 10-Q for the period ending March 31, 2020. EastGroup does not expect the adoption to have a material impact on its financial condition, results of operations or disclosures.

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(p)	Classification of Book Overdraft on Consolidated Statements of Cash Flows

The Company classifies changes in book overdraft in which the bank has not advanced cash to the Company to cover outstanding checks as an operating activity. Such amounts are included in Accounts payable, accrued expenses and prepaid rent in the Operating Activities section on the Consolidated Statements of Cash Flows.

(q)	Reclassifications

Certain reclassifications have been made in the 2018 consolidated financial statements to conform to the 2019 presentation.

(2)	REAL ESTATE PROPERTIES

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

	December 31,
	2019				2018
	(In thousands)
Real estate properties:
Land	$	452,698			380,684
Buildings and building improvements	1,907,963				1,732,592
Tenant and other improvements	471,909				440,205
Right of use assets — Ground leases (operating) (1)	11,997				—
Development and value-add properties (2)	419,999				263,664
	3,264,566				2,817,145
Less accumulated depreciation	(871,139		)		(814,915	)
	$	2,393,427			2,002,230

(1)	See Ground Leases discussion below and in Note 1(o) 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.

EastGroup acquired operating properties during 2019, 2018 and 2017 as discussed in Note 1(j).

The Company sold operating properties during 2019, 2018 and 2017 as shown in the table below. The results of operations and gains and losses on sales for the properties sold during the periods presented are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains and losses on sales are included in Gain on sales of real estate investments.

The Company did not classify any properties as held for sale as of December 31, 2019 and 2018.

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Sales of Real Estate

A summary of Gain on sales of real estate investments for the years ended December 31, 2019, 2018 and 2017 follows:

Real Estate Properties		Location		Size (in Square Feet)			Date Sold		Net Sales Price				Basis			Recognized Gain
									(In thousands)
2019
World Houston 5		Houston, TX		51,000			01/29/2019		$	3,679			1,354			2,325
Altamonte Commerce Center		Orlando, FL		186,000			05/20/2019		14,423				5,342			9,081
University Business Center 130 (1)		Santa Barbara, CA		40,000			11/07/2019		11,083				2,729			8,354
Southpointe Distribution Center		Tucson, AZ		207,000			12/03/2019		13,699				2,281			11,418
University Business Center 125 & 175		Santa Barbara, CA		133,000			12/11/2019		23,675				13,785			9,890
Total for 2019									$	66,559			25,491			41,068
2018
World Houston 18		Houston, TX		33,000			01/26/2018		$	2,289			1,211			1,078
56 Commerce Park		Tampa, FL		181,000			03/20/2018		12,032				2,888			9,144
35th Avenue Distribution Center		Phoenix, AZ		125,000			07/26/2018		7,683				3,632			4,051
Total for 2018									$	22,004			7,731			14,273
2017
Stemmons Circle		Dallas, TX		99,000			05/12/2017		$	5,051			1,329			3,722
Techway Southwest I-IV		Houston, TX		415,000			06/19/2017		32,506				14,373			18,133
Total for 2017									$	37,557			15,702			21,855

(1)	EastGroup owned 80% of University Business Center 130 through a joint venture. The information shown for this transaction also includes the 20% attributable to the Company's noncontrolling interest partner.

The table above includes sales of operating properties; the Company also sold parcels of land during the years presented. During the year ended December 31, 2019, the Company sold (through eminent domain procedures) a small parcel of land (0.2 acres) in San Diego for $185,000 and recognized a gain on the sale of $83,000. During the year ended December 31, 2018, EastGroup sold a parcel of land in Houston for $2,577,000 and recognized a gain on the sale of $86,000. During the year ended December 31, 2017, EastGroup sold parcels of land in El Paso and Dallas for $3,778,000 and recognized net gains on the sales of $293,000. The net gains on sales of land are included in Other on the Consolidated Statements of Income and Comprehensive Income.

Development and Value-Add Properties

The Company’s development and value-add program as of December 31, 2019, was comprised of the properties detailed in the table below.  Costs incurred include capitalization of interest costs during the period of construction.  The interest costs capitalized on development projects for 2019 were $8,453,000 compared to $6,334,000 for 2018 and $5,765,000 for 2017. In addition, EastGroup capitalized internal development costs of $6,918,000 during the year ended December 31, 2019, compared to $4,696,000 during 2018 and $4,754,000 in 2017.

Total capital invested for development and value-add properties during 2019 was $318,288,000, which primarily consisted of costs of $265,609,000 as detailed in the Development and Value-Add Properties Activity table below, $47,415,000 as detailed in the Development and Value-Add Properties Transferred to Real Estate Properties During 2019 table below and costs of $5,264,000 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).

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DEVELOPMENT AND VALUE-ADD PROPERTIES ACTIVITY					Costs Incurred													Anticipated Building Conversion Date
					Costs Transferred  in 2019 (1)				For the Year Ended 12/31/19			Cumulative as of 12/31/19			Projected Total Costs (2)
					(In thousands)
		(Unaudited)													(Unaudited)			(Unaudited)
LEASE-UP		Building Size (Square feet)
Logistics Center 6 & 7, Dallas, TX (3)		142,000			$	—			15,735			15,735			16,400			01/20
Settlers Crossing 1, Austin, TX		77,000			—				2,999			9,259			10,200			01/20
Settlers Crossing 2, Austin, TX		83,000			—				1,360			8,475			9,200			01/20
Parc North 5, Dallas, TX		100,000			—				1,736			8,689			9,200			02/20
Airport Commerce Center 3, Charlotte, NC		96,000			—				2,763			8,556			9,100			03/20
Horizon VIII & IX, Orlando, FL		216,000			4,967				11,634			16,601			18,800			04/20
Ten West Crossing 8, Houston, TX		132,000			—				3,174			9,764			10,900			04/20
Tri-County Crossing 1 & 2, San Antonio, TX		203,000			—				6,491			15,386			16,700			04/20
CreekView 121 5 & 6, Dallas, TX		139,000			—				7,546			13,151			16,200			06/20
Parc North 6, Dallas, TX		96,000			2,552				5,738			8,290			10,100			07/20
Arlington Tech Centre 1 & 2, Dallas, TX (3)		151,000			—				13,277			13,277			15,100			08/20
Gateway 5, Miami, FL		187,000			11,944				11,161			23,105			23,500			09/20
Grand Oaks 75 2, Tampa, FL (3)		150,000			—				13,115			13,115			13,600			09/20
Southwest Commerce Center, Las Vegas, NV (3)		196,000			—				26,613			26,613			30,100			10/20
SunCoast 6, Ft. Myers, FL		81,000			3,915				4,019			7,934			9,200			10/20
Rocky Point 2, San Diego, CA (3)		109,000			—				19,275			19,275			20,600			12/20
Steele Creek IX, Charlotte, NC		125,000			1,766				7,354			9,120			9,800			12/20
Total Lease-Up		2,283,000			25,144				153,990			226,345			248,700
UNDER CONSTRUCTION
SunCoast 8, Ft. Myers, FL		77,000			4,361				123			4,484			9,000			05/20
Gilbert Crossroads A & B, Phoenix, AZ		140,000			3,221				10,729			13,950			16,000			01/21
Hurricane Shoals 3, Atlanta, GA		101,000			3,890				2,739			6,629			8,800			03/21
Interstate Commons 2, Phoenix, AZ (3)		142,000			—				9,882			9,882			11,800			03/21
Tri-County Crossing 3 & 4, San Antonio, TX		203,000			2,334				6,364			8,698			14,700			05/21
World Houston 44, Houston, TX		134,000			1,546				3,244			4,790			9,100			05/21
Ridgeview 1 & 2, San Antonio, TX		226,000			2,499				4,032			6,531			18,500			06/21
Creekview 121 7 & 8, Dallas, TX		137,000			5,489				1,310			6,799			16,300			07/21
Northwest Crossing 1-3, Houston, TX		278,000			6,109				5,426			11,535			25,700			07/21
Settlers Crossing 3 & 4, Austin, TX		173,000			4,030				4,059			8,089			18,400			07/21
LakePort 1-3, Dallas, TX		194,000			3,542				4,520			8,062			22,500			09/21
Total Under Construction		1,805,000			37,021				52,428			89,449			170,800
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)		Estimated Building Size (Square feet)
Phoenix, AZ		178,000			(3,221		)		785			4,373
Ft. Myers, FL		329,000			(8,276		)		2,457			7,503
Miami, FL		463,000			(11,944		)		9,798			34,185
Orlando, FL		—			(4,967		)		323			1,075
Tampa, FL		349,000			—				4,241			5,801
Atlanta, GA		—			(3,890		)		3,164			—
Jackson, MS		28,000			—				—			706
Charlotte, NC		475,000			(1,766		)		1,884			7,327
Austin, TX		—			(4,030		)		288			—
Dallas, TX		997,000			(11,583		)		18,979			19,588
Houston, TX		1,223,000			(13,126		)		16,135			19,448
San Antonio, TX		373,000			(5,987		)		1,137			4,199
Total Prospective Development		4,415,000			(68,790		)		59,191			104,205
		8,503,000			$	(6,625	)		265,609			419,999
The Development and Value-Add Properties Activity table is continued on the following page.

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DEVELOPMENT AND VALUE-ADD PROPERTIES TRANSFERRED TO REAL ESTATE PROPERTIES DURING 2019					Costs Incurred
					Costs Transferred  in 2019 (1)				For the Year Ended 12/31/19			Cumulative as of 12/31/19
		(Unaudited)			(In thousands)													(Unaudited)
		Building Size (Square feet)																Building Conversion Date
Siempre Viva I, San Diego, CA (3)		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
Horizon XI, Orlando, FL		135,000			—				507			9,230						04/19
Falcon Field, Phoenix, AZ		97,000			—				181			8,413						05/19
Gateway 1, Miami, FL		200,000			—				3,402			23,643						05/19
SunCoast 5, Ft. Myers, FL		81,000			—				1,335			7,870						05/19
Steele Creek V, Charlotte, NC		54,000			—				2,223			5,537						07/19
Broadmoor 2, Atlanta, GA		111,000			—				1,478			7,892						11/19
Eisenhauer Point 9, San Antonio, TX		82,000			1,154				5,175			6,329						11/19
World Houston 43, Houston, TX		86,000			1,041				5,381			6,422						11/19
Eisenhauer Point 7 & 8, San Antonio, TX		336,000			—				9,790			22,880						12/19
World Houston 45, Houston, TX		160,000			4,430				12,522			16,952						12/19
Total Transferred to Real Estate Properties		1,763,000			$	6,625			47,415			156,689			(4)

(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)	Included in these costs are development obligations of $59.3 million and tenant improvement obligations of $7.5 million on properties under development.

(3)	Represents value-add projects acquired by EastGroup.

(4)	Represents cumulative costs at the date of transfer.

Ground Leases

On January 1, 2019, EastGroup adopted the principles of FASB Accounting Standards Codification (“ASC”) 842, Leases, as discussed in Note 1(o). In connection with the adoption, the Company recorded right of use assets for its ground leases, which are classified as operating leases, using the effective date transition option; under this option, prior years are not restated. As of January 1, 2019, the Company recorded right of use assets for its ground leases of $10,226,000. In April 2019, the Company acquired Logistics Center 6 & 7 in Dallas, which is located on land under a ground lease. The Company recorded a right of use asset of $2,679,000 in connection with this acquisition. As of December 31, 2019, the unamortized balance of the Company’s right of use assets for its ground leases was $11,997,000. The right of use assets for ground leases are included in Real estate properties on the Consolidated Balance Sheets.

As of December 31, 2019, the Company owned two properties in Florida, three properties in Texas and one property in Arizona that are subject to ground leases.  These leases have terms of 40 to 50 years, expiration dates of August 2031 to October 2058, 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 years ended December 31, 2019, 2018 and 2017 were $966,000, $783,000 and $760,000, 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 December 31, 2019, for the ground leases is 43 years. The following schedule indicates approximate future minimum ground lease payments for these properties by year as of December 31, 2019:

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Future Minimum Ground Lease Payments as of December 31, 2019

Years Ending December 31,		(In thousands)
2020		$	970
2021		970
2022		970
2023		975
2024		999
Thereafter		38,916
Total minimum payments		43,800
Imputed interest (1)		(31,752		)
Total ground leases		$	12,048

(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, 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, to determine the imputed interest for its ground leases. The Company elected to use the portfolio approach as all of its ground leases in place as of January 1, 2019, have similar characteristics and determined 7.3% as the appropriate rate as of January 1, 2019, for all leases in place at that time. For the ground lease obtained during April 2019, the Company used its incremental borrowing rate, adjusted for the factors discussed above, which was determined to be 8.0%.

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 as of December 31, 2018

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, with the exception of the ground lease associated with Logistics Center 6 & 7 which was obtained in April 2019.

(3)	UNCONSOLIDATED INVESTMENT

(4)	MORTGAGE LOANS RECEIVABLE

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(5)	OTHER ASSETS

A summary of the Company’s Other assets follows:

	December 31,
	2019				2018
	(In thousands)
Leasing costs (principally commissions)	$	89,191			78,985
Accumulated amortization of leasing costs	(34,963		)		(30,185	)
Leasing costs (principally commissions), net of accumulated amortization	54,228				48,800
Acquired in-place lease intangibles	28,834				21,696
Accumulated amortization of acquired in-place lease intangibles	(11,918		)		(9,833	)
Acquired in-place lease intangibles, net of accumulated amortization	16,916				11,863
Acquired above market lease intangibles	1,721				1,465
Accumulated amortization of acquired above market lease intangibles	(1,007		)		(902	)
Acquired above market lease intangibles, net of accumulated amortization	714				563
Straight-line rents receivable	40,369				36,022
Accounts receivable	5,581				5,433
Mortgage loans receivable	1,679				2,594
Interest rate swap assets	3,485				6,701
Right of use assets - Office leases (operating) (1)	2,115				—
Goodwill	990				990
Prepaid expenses and other assets	18,545				8,265
Total Other assets	$	144,622			121,231

 

(1)	See Note 1(o) 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.

(6)	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. 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. The credit facility contains options for two six-month extensions (at the 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 December 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 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 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. As of December 31, 2019, the Company had $105,000,000 of variable rate borrowings outstanding on this unsecured bank credit facility with a weighted average interest rate of 2.776%. The Company has a standby letter of credit of $674,000 pledged on this facility.

The 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 December 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 credit ratings. As of December 31, 2019, the interest rate was 2.763% on a balance of $7,710,000.

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Average unsecured bank credit facilities borrowings were $172,175,000 in 2019, $141,223,000 in 2018 and $114,751,000 in 2017, with weighted average interest rates (excluding amortization of facility fees and debt issuance costs) of 3.34% in 2019, 2.64% in 2018 and 2.07% in 2017.  Amortization of facility fees was $790,000, $736,000 and $670,000 for 2019, 2018 and 2017, respectively.  Amortization of debt issuance costs for the Company's unsecured bank credit facilities was $556,000, $508,000 and $451,000 for 2019, 2018 and 2017, respectively.

The Company’s unsecured bank credit facilities have certain restrictive covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage, and the Company was in compliance with all of its financial debt covenants at December 31, 2019.

See Note 7 for a detail of the outstanding balances of the Company's Unsecured bank credit facilities as of December 31, 2019 and 2018.

(7)	UNSECURED AND SECURED DEBT

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

	December 31, 2019				December 31, 2018
	(In thousands)
Unsecured bank credit facilities - variable rate, carrying amount	$	112,710			195,730
Unamortized debt issuance costs	(1,316		)		(1,804	)
Unsecured bank credit facilities	111,394				193,926
Unsecured debt - fixed rate, carrying amount (1)	940,000				725,000
Unamortized debt issuance costs	(1,885		)		(1,600	)
Unsecured debt	938,115				723,400
Secured debt - fixed rate, carrying amount (1)	133,422				189,038
Unamortized debt issuance costs	(329		)		(577	)
Secured debt	133,093				188,461
Total debt	$	1,182,602			1,105,787

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

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A summary of the carrying amount of Unsecured debt follows:

						Balance at December 31,
	Margin Above LIBOR	Interest Rate		Maturity Date		2019				2018
						(In thousands)
$75 Million Unsecured Term Loan (1)	1.15%	2.85%		07/31/2019		$	—			75,000
$75 Million Unsecured Term Loan (1)	1.10%	3.45%		12/20/2020		75,000				75,000
$40 Million Unsecured Term Loan (1)	1.10%	2.34%		07/30/2021		40,000				40,000
$75 Million Unsecured Term Loan (1)	1.40%	3.03%		02/28/2022		75,000				75,000
$65 Million Unsecured Term Loan (1)	1.10%	2.31%		04/01/2023		65,000				65,000
$100 Million Senior Unsecured Notes:
$30 Million Notes	Not applicable	3.80%		08/28/2020		30,000				30,000
$50 Million Notes	Not applicable	3.80%		08/28/2023		50,000				50,000
$20 Million Notes	Not applicable	3.80%		08/28/2025		20,000				20,000
$60 Million Senior Unsecured Notes	Not applicable	3.46%		12/13/2024		60,000				60,000
$100 Million Senior Unsecured Notes:
$60 Million Notes	Not applicable	3.48%		12/15/2024		60,000				60,000
$40 Million Notes	Not applicable	3.75%		12/15/2026		40,000				40,000
$25 Million Senior Unsecured Notes	Not applicable	3.97%		10/01/2025		25,000				25,000
$50 Million Senior Unsecured Notes	Not applicable	3.99%		10/07/2025		50,000				50,000
$60 Million Senior Unsecured Notes	Not applicable	3.93%		04/10/2028		60,000				60,000
$80 Million Senior Unsecured Notes	Not applicable	4.27%		03/28/2029		80,000				—
$35 Million Senior Unsecured Notes	Not applicable	3.54%		08/15/2031		35,000				—
$75 Million Senior Unsecured Notes	Not applicable	3.47%		08/19/2029		75,000				—
$100 Million Unsecured Term Loan (1)	1.50%	2.75%		10/10/2026		100,000				—
						$	940,000			725,000

(1)

The interest rates on these unsecured term loans are comprised of LIBOR plus a margin which is subject to a pricing grid for changes in the Company's coverage ratings. The Company entered into interest rate swap agreements (further described in Note 13) to convert the loans' LIBOR rates to effectively fixed interest rates. The interest rates in the table above are the effectively fixed interest rates for the loans, including the effects of the interest rate swaps, as of December 31, 2019.

In March 2019, the Company closed on the private placement of $80 million of senior unsecured 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. In August 2019, the Company closed on the private placement of $35 million of senior unsecured notes with an insurance company. The notes have a 12-year term and a fixed interest rate of 3.54% with semi-annual interest payments. Also in August 2019, the Company closed on the private placement of $75 million of senior unsecured notes with an insurance company. The notes have a 10-year term and a fixed rate of 3.47% with semi-annual interest payments. None of these senior unsecured notes are or will be registered under the Securities Act of 1933, as amended, and they may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

In July 2019, the Company repaid a $75 million unsecured term loan at maturity with an effectively fixed interest rate of 2.85%.

In October 2019, the Company closed a $100 million senior unsecured term loan with a seven-year term and interest only payments. It bears interest at the annual rate of LIBOR plus an applicable margin (1.50% as of December 31, 2019 and February 12, 2020) based on the Company’s senior unsecured long-term debt rating. The Company also entered into an interest rate swap agreement to convert the loan’s LIBOR rate component to a fixed interest rate for the entire term of the loan providing a total effective fixed interest rate of 2.75%.

The Company’s unsecured debt instruments have certain restrictive covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage, and the Company was in compliance with all of its financial debt covenants at December 31, 2019. 

 

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A summary of the carrying amount of Secured debt follows: 

		Interest Rate		Monthly P&I Payment			Maturity Date		Carrying Amount of Securing Real Estate at December 31, 2019				Balance at December 31,
Property													2019			2018
									(In thousands)
Dominguez, Industry I & III, Kingsview, Shaw, Walnut and Washington		7.50%		539,747			Repaid		$	—			—			46,725
Blue Heron II		5.39%		16,176			Repaid		—				—			233
40th Avenue, Beltway Crossing V, Centennial Park, Executive Airport, Interchange Park I, Ocean View, Wetmore 5-8 and World Houston 26, 28, 29 & 30		4.39%		463,778			01/05/2021		66,072				48,772			52,115
Colorado Crossing, Interstate I-III, Rojas, Steele Creek 1 & 2, Venture and World Houston 3-9 (1)		4.75%		420,045			06/05/2021		50,002				44,596			47,445
Arion 18, Beltway Crossing VI & VII, Commerce Park II & III, Concord, Interstate V-VII, Lakeview, Ridge Creek II, Southridge IV & V and World Houston 32		4.09%		329,796			01/05/2022		53,889				37,682			40,046
Ramona		3.85%		16,287			11/30/2026		8,794				2,372			2,474
									$	178,757			133,422			189,038

(1)	During 2019, the Company executed a collateral release for World Houston 5; this property was sold during 2019 and is no longer considered to be collateral securing this loan.

The Company currently intends to repay its debt obligations, both in the short-term and long-term, through its operating cash flows, borrowings under its unsecured bank credit facilities, proceeds from new debt (primarily unsecured), and/or proceeds from the issuance of equity instruments.

 

Scheduled principal payments on long-term debt, including Unsecured debt and Secured debt (not including Unsecured bank credit facilities), due during the next five years as of December 31, 2019 are as follows: 

Years Ending December 31,		(In thousands)
2020		$	114,047
2021		129,562
2022		107,770
2023		115,119
2024		120,122

(8)	ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

	December 31,
	2019				2018
	(In thousands)
Property taxes payable	$	2,696			10,718
Development costs payable	11,766				15,410
Real estate improvements and capitalized leasing costs payable	4,636				3,911
Interest payable	6,370				4,067
Dividends payable	30,714				27,738
Book overdraft (1)	25,771				15,048
Other payables and accrued expenses	10,071				9,671
Total Accounts payable and accrued expenses	$	92,024			86,563

(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 working cash line of credit. See Note 1(p).

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(9)	OTHER LIABILITIES

A summary of the Company’s Other liabilities follows:

	December 31,
	2019				2018
	(In thousands)
Security deposits	$	20,351			18,432
Prepaid rent and other deferred income	13,855				12,728
Operating lease liabilities — Ground leases (1)	12,048				—
Operating lease liabilities — Office leases (1)	2,141				—
Acquired below-market lease intangibles	8,616				5,891
Accumulated amortization of acquired below-market lease intangibles	(4,494		)		(3,028	)
Acquired below-market lease intangibles, net of accumulated amortization	4,122				2,863
Interest rate swap liabilities	678				—
Prepaid tenant improvement reimbursements	56				614
Other liabilities	15,872				15
Total Other liabilities	$	69,123			34,652

(1)	See Note 1(o) 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 office leases.

(10)	COMMON STOCK ACTIVITY

The following table presents the common stock activity for the three years ended December 31, 2019:

	Years Ended December 31,
	2019			2018			2017
	Common Stock (in shares)
Shares outstanding at beginning of year	36,501,356			34,758,167			33,332,213
Common stock offerings	2,388,342			1,706,474			1,370,457
Dividend reinvestment plan	1,893			1,844			2,744
Incentive restricted stock granted	59,943			50,217			93,285
Incentive restricted stock forfeited	(3,010	)		—			(16,000	)
Director common stock awarded	6,384			8,478			8,881
Director restricted stock granted	—			—			282
Restricted stock withheld for tax obligations	(28,955	)		(23,824	)		(33,695	)
Shares outstanding at end of year	38,925,953			36,501,356			34,758,167

Common Stock Issuances

The following table presents the common stock issuance activity for the three years ended December 31, 2019:

Years Ended December 31,		Number of Shares of Common Stock Issued			Net Proceeds
					(In thousands)
2019		2,388,342			$	284,710
2018		1,706,474			157,319
2017		1,370,457			109,207

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Dividend Reinvestment Plan

The Company had a dividend reinvestment plan that allowed stockholders to reinvest cash distributions in new shares of the Company. On December 12, 2019, the dividend reinvestment plan was terminated and any unsold shares pursuant to the plan were deregistered.

(11)	STOCK-BASED COMPENSATION

EastGroup applies the provisions of ASC 718, Compensation – Stock Compensation, to account for its stock-based compensation plans.  ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued.

Equity Incentive Plan

In May 2004, the stockholders of the Company approved the EastGroup Properties, Inc. 2004 Equity Incentive Plan (the “2004 Plan”) that authorized the issuance of up to 1,900,000 shares of common stock to employees in the form of options, stock appreciation rights, restricted stock, deferred stock units, performance shares, bonus stock or stock in lieu of cash compensation.  The 2004 Plan was further amended by the Board of Directors in September 2005 and December 2006.    

In April 2013, the Board of Directors adopted the EastGroup Properties, Inc. 2013 Equity Incentive Plan (the “2013 Equity Plan”) upon the recommendation of the Compensation Committee; the 2013 Equity Plan was approved by the Company's stockholders and became effective May 29, 2013. The 2013 Equity Plan was further amended by the Board of Directors in March 2017. The 2013 Equity Plan permits the grant of awards to employees and directors with respect to 2,000,000 shares of common stock.

There were 1,583,223, 1,629,281 and 1,671,981 total shares available for grant under the 2013 Equity Plan as of December 31, 2019, 2018 and 2017, respectively. Typically, the Company issues new shares to fulfill stock grants.

Stock-based compensation cost for employees was $8,647,000, $5,322,000 and $6,309,000 for 2019, 2018 and 2017, respectively, of which $2,536,000, $1,173,000 and $1,458,000 were capitalized as part of the Company’s development costs for the respective years.

Employee Equity Awards

The Company's restricted stock program is designed to provide incentives for management to achieve goals established by the Compensation Committee of the Company's Board of Directors (the "Committee"). The awards act as a retention device, as they vest over time, allowing participants to benefit from dividends on shares as well as potential stock appreciation. Equity awards align management's interests with the long-term interests of shareholders.  The vesting periods of the Company’s restricted stock plans vary, as determined by the Committee.  Restricted stock is granted to executive officers subject to both continued service and the satisfaction of certain annual performance goals and multi-year market conditions as determined by the Committee.  Restricted stock is granted to non-executive officers subject only to continued service.  The cost for market-based awards and awards that only require service is amortized on a straight-line basis over the requisite service periods. The total compensation expense for service and performance based awards is based upon the fair market value of the shares on the grant date.  

In the second quarter of 2017, the Committee approved a long-term equity compensation plan for certain of the Company’s executive officers that includes three components based on total shareholder return and one component based only on continued service as of the vesting dates.

The three long-term equity compensation plan components based on total shareholder return are subject to bright-line tests that compare the Company's total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The first plan measured the bright-line tests over the one-year period ended December 31, 2017. During the first quarter of 2018, the Committee measured the Company's performance for the one-year period against bright-line tests established by the Committee on the grant date of May 10, 2017.  The number of shares determined on the measurement date was 4,257.  These shares vested 100% on March 1, 2018, the date the earned shares were determined. On the grant date of May 10, 2017, the Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award.

The second plan measured the bright-line tests over the two-year period ended December 31, 2018. During the first quarter of 2019, the Committee measured the Company’s performance for the two-year period against bright-line tests established by the Committee on the grant date of May 10, 2017.  The number of shares determined on the measurement date was 9,460.  These shares vested 100% on February 14, 2019, the date the earned shares were determined. On the grant date of May 10, 2017, the

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Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award.

The third plan will measure the bright-line tests over the three-year period ended December 31, 2019. During the first quarter of 2020, the Committee will measure the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of May 10, 2017.  The number of shares to be earned on the measurement date could range from zero to 18,917.  These shares would vest 75% on the date the earned shares are determined in the first quarter of 2020 and 25% on January 1, 2021. On the grant date of May 10, 2017, the Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award.

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

In the second quarter of 2018, the Committee approved an equity compensation plan for the Company’s executive officers based upon certain annual performance measures for 2018, including funds from operations (“FFO”) per share, same property net operating income change, general and administrative costs, and fixed charge coverage. On February 14, 2019, the Committee measured the Company’s performance for 2018 against bright-line tests established by the Committee on the grant date of June 1, 2018 and determined that 24,690 shares were earned. These shares, which have a grant date fair value of $95.19, vested 20% on the date shares were determined and will vest 20% per year on each January 1 for the subsequent four years. On the grant date of June 1, 2018, the Company began recognizing expense for its estimate of the shares that may be earned pursuant to these awards; the shares are being expensed using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period.

Also in the second quarter of 2018, the Committee approved an equity compensation plan for EastGroup’s executive officers based upon the achievement of individual goals for each of the officers included in the plan. On February 14, 2019, the Committee evaluated the performance of the officers and, in its discretion, awarded 5,671 shares with a grant date fair value of $107.37. These shares vested 20% on the date shares were determined and awarded and will vest 20% per year on each January 1 for the subsequent four years. The Company began recognizing the expense for the shares awarded on the grant date of February 14, 2019, and the shares will be expensed on a straight-line basis over the remaining service period. 

Also in the second quarter of 2018, the Committee approved a long-term equity compensation plan for the Company’s executive officers that includes one component based on total shareholder return and one component based only on continued service as of the vesting dates.

The component of the long-term equity compensation plan based on total shareholder return is subject to bright-line tests that will compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The plan will measure the bright-line tests over the three-year period ending December 31, 2020. During the first quarter of 2021, the Committee will measure the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of June 1, 2018.  The number of shares to be earned on the measurement date could range from zero to 27,596.  These shares would vest 75% on the date the earned shares are determined in the first quarter of 2021 and 25% on January 1, 2022. On the grant date of June 1, 2018, the Company began recognizing expense for this plan based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award.

The component of the long-term equity compensation plan based only on continued service as of the vesting dates was awarded on June 1, 2018. On that date, 7,884 shares were granted to 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 $95.19, vested 25% in the first quarter of 2019 and will vest 25% on each January 1 for the subsequent four years. The shares are being expensed on a straight-line basis over the remaining service period.

In the first quarter of 2019, the Committee approved an equity compensation award (the “2019 Annual Grant”) for the Company’s executive officers based upon certain annual performance measures for 2019; the 2019 Annual Grant is comprised of three components. The first component of the 2019 Annual Grant is based upon the following Company performance measures for 2019: (i) same property net operating income change, (ii) debt-to EBITDAre ratio, and (iii) fixed charge coverage. During the first quarter of 2020, the Committee will measure the Company’s performance for 2019 against bright-line tests established by

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the Committee on the grant date of March 7, 2019. The aggregate number of shares that may be earned for the achievement of the annual performance measures could range from zero to 9,594. These shares, which have a grant date fair value of $105.97, would vest 20% on the date shares are determined and 20% per year on each January 1 for the subsequent four years. On the grant date of March 7, 2019, the Company began recognizing expense for its estimate of the shares that may be earned pursuant to these awards; the shares are being expensed using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period.

The second component of the 2019 Annual Grant is based upon the Company’s FFO per share for 2019. During the first quarter of 2020, the Committee will measure the Company’s performance for 2019 against bright-line tests established by the Committee on the grant date of August 28, 2019. The aggregate number of shares that may be earned for the achievement of the annual performance measures for FFO could range from zero to 15,992. These shares, which have a grant date fair value of $122.61, would vest 20% on the date shares are determined and 20% per year on each January 1 for the subsequent four years. On the grant date of August 28, 2019, the Company began recognizing expense for its estimate of the shares that may be earned pursuant to these awards; the shares are being expensed using the graded vesting attribution method which recognizes each separate vesting portion of the award as a separate award on a straight-line basis over the requisite service period.

The third component of the 2019 Annual Grant is based upon the achievement of individual goals for each of the officers to whom shares were granted. Any shares issued pursuant to the individual goals in this compensation plan will be determined by the Committee in its discretion and issued in the first quarter of 2020. The number of shares to be issued on the grant date for the achievement of individual goals could range from zero to 6,394. These shares would vest 20% on the date shares are determined and awarded and 20% per year on each January 1 for the subsequent four years. The Company will begin recognizing the expense for any shares awarded on the grant date in the first quarter of 2020, and the shares will be expensed on a straight-line basis over the remaining service period. 

Also in the first quarter of 2019, the Committee approved a long-term equity compensation award for the Company’s executive officers that includes one component based on total shareholder return and one component based only on continued service as of the vesting dates.

The component of the long-term equity compensation award based on total shareholder return is subject to bright-line tests that will compare the Company’s total shareholder return to the Nareit Equity Index and to the member companies of the Nareit industrial index. The award will measure the bright-line tests over the three-year period ending December 31, 2021. During the first quarter of 2022, the Committee will measure the Company’s performance for the three-year period against bright-line tests established by the Committee on the grant date of March 7, 2019.  The aggregate number of shares to be earned on the measurement date could range from zero to 34,812.  These shares would vest 75% on the date the earned shares are determined in the first quarter of 2022 and 25% on January 1, 2023. On the grant date of March 7, 2019, the Company began recognizing expense for this award based on the grant date fair value of the awards which was determined using a simulation pricing model developed to specifically accommodate the unique features of the award.

The component of the long-term equity compensation award based only on continued service as of the vesting dates was awarded on March 7, 2019. On that date, an aggregate of 9,947 shares were granted to 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 $105.97, will vest 25% in the first quarter of 2020 and 25% on January 1 in years 2021, 2022 and 2023. The shares are being expensed on a straight-line basis over the remaining service period.

During the second quarter of 2019, 10,175 shares were granted to certain non-executive officers subject only to continued service as of the vesting dates. These shares, which have a grant date fair value of $112.14, will vest 20% on January 1 in years 2020, 2021, 2022, 2023 and 2024. The shares are being expensed on a straight-line basis over the remaining service period.

During the fourth quarter of 2019, the Committee adopted the Equity Award Retirement Policy (the "retirement policy") which allows for accelerated vesting of unvested shares for retirement-eligible employees (defined as employees who meet certain age and years of service requirements). In order to qualify for accelerated vesting upon retirement, the eligible employees must provide required notification under the retirement policy and must retire from the Company. The Company has adjusted its stock-based compensation expense to accelerate the recognition of expense for retirement-eligible employees.

During the restricted period for awards no longer subject to contingencies, the Company accrues dividends and holds the certificates for the shares; however, the employee can vote the shares.  For shares subject to contingencies, dividends are accrued based upon the number of shares expected to be awarded.  Share certificates and dividends are delivered to the employee as they vest.  As of December 31, 2019, there was $4,556,000 of unrecognized compensation cost related to unvested restricted stock compensation for employees and directors that is expected to be recognized over a weighted average period of 2.7 years.

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Following is a summary of the total restricted shares granted, forfeited and delivered (vested) to employees with the related weighted average grant date fair value share prices for 2019, 2018 and 2017. Of the shares that vested in 2019, 2018 and 2017, 28,955 shares, 23,824 shares and 33,695 shares, respectively, were withheld by the Company to satisfy the tax obligations for those employees who elected this option as permitted under the applicable equity plan. As of the grant date, the fair value of shares that were granted during 2019, 2018 and 2017 was $5,672,000, $4,223,000 and $7,155,000, respectively. As of the vesting date, the fair value of shares that vested during 2019, 2018 and 2017 was $6,662,000, $5,142,000 and $6,441,000, respectively.

Restricted Stock Activity:	Years Ended December 31,
	2019							2018							2017
	Shares			Weighted Average Grant Date Fair Value				Shares			Weighted Average Grant Date Fair Value				Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year	143,314			$	70.26			152,644			$	63.18			162,087			$	51.97
Granted (1)	59,943			94.62				50,217			84.09				93,285			76.70
Forfeited	(3,010	)		86.19				—			—				(16,000	)		36.98
Vested	(69,363	)		66.99				(59,547	)		63.77				(86,728	)		61.62
Unvested at end of year	130,884			82.78				143,314			70.26				152,644			63.18

⁽¹⁾ Does not include the restricted shares that may be earned if the performance goals established in 2017 and 2018 for long-term performance and in 2019 for annual and long-term performance are achieved. Depending on the actual level of achievement of the goals at the end of the open performance periods, the number of shares earned could range from zero to 113,305.

Following is a vesting schedule of the total unvested shares as of December 31, 2019:

Unvested Shares Vesting Schedule		Number of Shares
2020		63,931
2021		30,897
2022		21,934
2023		12,152
2024		1,970
Total Unvested Shares		130,884

Directors Equity Awards

The Board of Directors has adopted a policy under the 2013 Equity Plan pursuant to which awards will be made to non-employee Directors. The current policy provides that the Company shall automatically award an annual retainer share award to each non-employee Director who has been elected or reelected as a member of the Board of Directors at the Annual Meeting. The number of shares shall be equal to $90,000 divided by the fair market value of a share on the date of such election. If a non-employee Director is elected or appointed to the Board of Directors other than at an Annual Meeting of the Company, the annual retainer share award shall be pro rated. The policy also provides that each new non-employee Director appointed or elected will receive an automatic award of restricted shares of Common Stock on the effective date of election or appointment equal to $25,000 divided by the fair market value of the Company's Common Stock on such date. These restricted shares will vest over a four-year period upon the performance of future service as a Director, subject to certain exceptions.

Directors were issued 6,384 shares, 8,478 shares and 8,881 shares of common stock as annual retainer awards for 2019, 2018 and 2017, respectively.

During the third quarter of 2017, 282 shares were granted to a newly elected non-employee Director subject only to continued service as of the vesting date. The shares, which have a grant date fair value of $88.86 per share, vested 25% on each of September 8, 2018 and 2019, and will vest 25% per year on September 8 in years 2020 and 2021. The shares are being expensed on a straight-line basis over the remaining service period.

During 2013, 417 shares were granted to a newly elected non-employee Director subject only to continued service as of the vesting date. The shares, which have a grant date fair value of $59.97 per share, vested 25% on each of December 6, 2014, 2015, 2016 and 2017.

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(12)	COMPREHENSIVE INCOME

Total Comprehensive Income is comprised of net income plus all other changes in equity from non-owner sources and is presented on the Consolidated Statements of Income and Comprehensive Income.  The components of Accumulated other comprehensive income for 2019, 2018 and 2017 are presented in the Company’s Consolidated Statements of Changes in Equity and are summarized below.  See Note 13 for information regarding the Company’s interest rate swaps.

	Years Ended December 31,
	2019				2018			2017
ACCUMULATED OTHER COMPREHENSIVE INCOME:	(In thousands)
Balance at beginning of year	$	6,701			5,348			1,995
Change in fair value of interest rate swaps - cash flow hedges	(3,894		)		1,353			3,353
Balance at end of year	$	2,807			6,701			5,348

(13)	DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.

Specifically, the Company has entered into derivative instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative instruments, described below, are used to manage differences in the amount, timing and duration of the Company's known or expected cash payments principally related to certain of the Company's borrowings.

The Company's objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreements without exchange of the underlying notional amount. 

As of December 31, 2019, EastGroup had six interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans. All of the Company's interest rate swaps convert the related loans' LIBOR rate components to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective.

The changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Other comprehensive income and is subsequently reclassified into earnings through interest expense as interest payments are made in the period that the hedged forecasted transaction affects earnings.

Amounts reported in Other comprehensive income (loss) related to derivatives will be reclassified to Interest expense as interest payments are made or received on the Company's variable rate debt. The Company estimates that an additional $223,000 will be reclassified from Other comprehensive income (loss) as a decrease to Interest expense over the next twelve months.

The Company's valuation methodology for over-the-counter ("OTC") derivatives is to discount cash flows based on Overnight Index Swap ("OIS") rates.  Uncollateralized or partially-collateralized trades are discounted at OIS 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 values using mid-market prices.

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans

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as it relates to derivatives and cash markets exposed to USD-LIBOR. The Company has material contracts that are indexed to USD-LIBOR and is monitoring this activity and evaluating the related risks.

As of December 31, 2019 and 2018, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk:

Interest Rate Derivative		Notional Amount as of December 31, 2019		Notional Amount as of December 31, 2018
		(In thousands)
Interest Rate Swap		—		$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 Swap		$100,000		—

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of December 31, 2019 and 2018. See Note 18 for additional information on the fair value of the Company's interest rate swaps.

	Derivatives As of December 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		$	3,485			Other assets		$	6,701
Interest rate swap liabilities	Other liabilities		678				Other liabilities		—

The table below presents the effect of the Company's derivative financial instruments on the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017:

	Years Ended December 31,
	2019				2018			2017
	(In thousands)
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest Rate Swaps:
Amount of income (loss) recognized in Other comprehensive income (loss) on derivatives	$	(1,975	)		2,757			1,437
Amount of (income) loss reclassified from Accumulated other comprehensive income into Interest expense	(1,919		)		(1,404	)		1,916

See Note 12 for additional information on the Company's Accumulated other comprehensive income resulting from its interest rate swaps.

Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with financial institutions the Company regards as credit-worthy.

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(14)	EARNINGS PER SHARE

The Company applies ASC 260, Earnings Per Share, which requires companies to present basic and diluted EPS.  Reconciliation of the numerators and denominators in the basic and diluted EPS computations is as follows:

(15)	QUARTERLY RESULTS OF OPERATIONS – UNAUDITED

	2019 Quarter Ended													2018 Quarter Ended
	Mar 31				Jun 30			Sep 30			Dec 31			Mar 31			Jun 30			Sep 30			Dec 31
	(In thousands, except per share data)
Revenues	$	81,365			91,425			84,180			116,532			83,179			75,107			79,593			78,196
Expenses	(58,831		)		(64,476	)		(61,605	)		(65,250	)		(54,431	)		(56,843	)		(56,552	)		(59,613	)
Net income	22,534				26,949			22,575			51,282			28,748			18,264			23,041			18,583
Net income attributable to noncontrolling interest in joint ventures	(5		)		4			(4	)		(1,673	)		(35	)		(37	)		(31	)		(27	)
Net income attributable to EastGroup Properties, Inc. common stockholders	$	22,529			26,953			22,571			49,609			28,713			18,227			23,010			18,556
BASIC PER SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS (1)
Net income attributable to common stockholders	$	0.62			0.73			0.60			1.29			0.83			0.52			0.64			0.51
Weighted average shares outstanding	36,465				36,944			37,771			38,561			34,689			35,196			35,716			36,135
DILUTED PER SHARE DATA FOR NET INCOME ATTRIBUTABLE TO EASTGROUP PROPERTIES, INC. COMMON STOCKHOLDERS (1)
Net income attributable to common stockholders	$	0.62			0.73			0.60			1.28			0.83			0.52			0.64			0.51
Weighted average shares outstanding	36,526				37,019			37,869			38,687			34,736			35,259			35,798			36,232

(1)

The above quarterly earnings per share calculations are based on the weighted average number of shares of common stock outstanding during each quarter for basic earnings per share and the weighted average number of outstanding shares of common stock and common stock share equivalents during each quarter for diluted earnings per share.  The annual earnings per share calculations in the Consolidated Statements of Income and Comprehensive Income are based on the weighted average number of shares of common stock outstanding during each year for basic earnings per share and the weighted average number of outstanding shares of common stock and common stock share equivalents during each year for diluted earnings per share.  The sum of quarterly financial data may vary from the annual data due to rounding.

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(16)	DEFINED CONTRIBUTION PLAN

EastGroup maintains a 401(k) plan for its employees.  The Company makes matching contributions of 50% of the employee’s contribution (limited to 10% of compensation as defined by the plan) and may also make annual discretionary contributions.  The Company’s total expense for this plan was $786,000, $769,000 and $672,000 for 2019, 2018 and 2017, respectively.

(17)	LEGAL MATTERS

The Company is not presently involved in any material litigation nor, to its knowledge, is any material litigation threatened against the Company or its properties, other than routine litigation arising in the ordinary course of business.

As previously reported in the Company’s annual report on Form 10-K for the year ended December 31, 2018 and the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2019, the Company had been involved in pending litigation related to an action against the Company and certain of its officers in connection with the Company’s November 2016 purchase of a land parcel, alleging breach of contract and other claims in law and in equity. The Company asserted numerous affirmative defenses. In an effort to resolve the litigation, EastGroup made an initial settlement offer for $497,000, which was reserved in the Company’s financial statements as of December 31, 2018 and March 31, 2019. During the three months ended June 30, 2019, the parties came to a mediated resolution of the matter; losses related to the matter are included in Other on the Consolidated Statements of Income and Comprehensive Income. As of June 30, 2019, the matter was resolved. Even though the matter was settled, the case was dismissed, and releases exchanged among all parties, the Plaintiff filed an appeal of the order compelling him to comply with the settlement. The Court of Appeal has since dismissed the appeal. All monies due under the settlement have been paid to the Plaintiff’s lawyers and were accounted for as stated above.

(18)	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 820 at December 31, 2019 and 2018.

	December 31,
	2019							2018
	Carrying Amount (1)				Fair Value			Carrying Amount (1)			Fair Value
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	224			224			374			374
Mortgage loans receivable	1,679				1,703			2,594			2,571
Interest rate swap assets	3,485				3,485			6,701			6,701
Financial Liabilities:
Unsecured bank credit facilities - variable rate (2)	112,710				113,174			195,730			196,423
Unsecured debt (2)	940,000				959,177			725,000			718,364
Secured debt (2)	133,422				136,107			189,038			191,742
Interest rate swap liabilities	678				678			—			—

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

(2)	Carrying amounts and fair values shown in the table exclude debt issuance costs (see Notes 6 and 7 for additional information).

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The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents:  The carrying amounts approximate fair value due to the short maturity of those instruments.

Mortgage loans receivable (included in Other assets on the Consolidated Balance Sheets):  The fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (Level 2 input).

Interest rate swap assets (included in Other assets on the Consolidated Balances Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 13 for additional information on the Company's interest rate swaps.

Unsecured bank credit facilities: The fair value of the Company’s unsecured bank credit facilities is estimated by discounting expected cash flows at current market rates (Level 2 input), excluding the effects of debt issuance costs.

Unsecured debt: The fair value of the Company’s unsecured debt is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers (Level 2 input), excluding the effects of debt issuance costs.

Secured debt: The fair value of the Company’s secured debt is estimated by discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities, as advised by the Company’s bankers (Level 2 input), excluding the effects of debt issuance costs.

Interest rate swap liabilities (included in Other liabilities on the Consolidated Balance Sheets): The instruments are recorded at fair value based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract (Level 2 input). See Note 13 for additional information on the Company's interest rate swaps.

(19)	SUBSEQUENT EVENTS

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Real Estate Properties (c):
Industrial:
FLORIDA
Tampa
Jetport Commerce Park		$	—			1,575			6,591			6,920			1,575			13,511			15,086			9,287			1993-99		1974-85
Westport Commerce Center		—				980			3,800			2,996			980			6,796			7,776			4,966			1994		1983/87
Benjamin Distribution Center I & II		—				843			3,963			1,915			883			5,838			6,721			4,120			1997		1996
Benjamin Distribution Center III		—				407			1,503			658			407			2,161			2,568			1,638			1999		1988
Palm River Center		—				1,190			4,625			2,957			1,190			7,582			8,772			5,272			1997/98		1990/97/98
Palm River North I & III		—				1,005			4,688			2,886			1,005			7,574			8,579			4,639			1998		2000
Palm River North II		—				634			4,418			454			634			4,872			5,506			3,547			1997/98		1999
Palm River South I		—				655			3,187			654			655			3,841			4,496			2,018			2000		2005
Palm River South II		—				655			—			4,415			655			4,415			5,070			2,319			2000		2006
Walden Distribution Center I		—				337			3,318			696			337			4,014			4,351			2,315			1997/98		2001
Walden Distribution Center II		—				465			3,738			1,492			465			5,230			5,695			3,145			1998		1998
Oak Creek Distribution Center I		—				1,109			6,126			1,395			1,109			7,521			8,630			4,484			1998		1998
Oak Creek Distribution Center II		—				647			3,603			1,715			647			5,318			5,965			2,893			2003		2001
Oak Creek Distribution Center III		—				439			—			3,213			556			3,096			3,652			1,334			2005		2007
Oak Creek Distribution Center IV		—				682			6,472			837			682			7,309			7,991			3,274			2005		2001
Oak Creek Distribution Center V		—				724			—			6,007			916			5,815			6,731			2,584			2005		2007
Oak Creek Distribution Center VI		—				642			—			5,579			812			5,409			6,221			2,011			2005		2008
Oak Creek Distribution Center VII		—				740			—			6,399			740			6,399			7,139			441			2005		2017
Oak Creek Distribution Center VIII		—				843			—			6,251			1,051			6,043			7,094			841			2005		2015
Oak Creek Distribution Center IX		—				618			—			5,121			781			4,958			5,739			1,620			2005		2009
Oak Creek Distribution Center A		—				185			—			1,498			185			1,498			1,683			560			2005		2008
Oak Creek Distribution Center B		—				227			—			1,555			227			1,555			1,782			583			2005		2008
Airport Commerce Center		—				1,257			4,012			1,037			1,257			5,049			6,306			2,983			1998		1998
Westlake Distribution Center		—				1,333			6,998			2,623			1,333			9,621			10,954			5,999			1998		1998/99
Expressway Commerce Center I		—				915			5,346			1,585			915			6,931			7,846			3,711			2002		2004
Expressway Commerce Center II		—				1,013			3,247			798			1,013			4,045			5,058			2,151			2003		2001
Silo Bend Distribution Center		—				4,131			27,497			3,872			4,132			31,368			35,500			8,026			2011		1987/90

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Tampa East Distribution Center		—				791			4,758			671			791			5,429			6,220			1,634			2011		1984
Tampa West Distribution Center		—				2,139			8,502			1,276			2,140			9,777			11,917			2,833			2011		1975/93/94
Madison Distribution Center		—				495			2,779			437			495			3,216			3,711			989			2012		2007
Madison Distribution Center II & III		—				624			—			7,028			624			7,028			7,652			1,227			2012		2015
Madison Distribution Center IV & V		—				565			—			8,232			565			8,232			8,797			1,231			2012		2016
Grand Oaks 75 Business Center I		—				3,572			12,979			5			3,572			12,984			16,556			171			2019		2017
Orlando
Chancellor Center		—				291			1,711			513			291			2,224			2,515			1,416			1996/97		1996/97
Exchange Distribution Center I		—				603			2,414			2,348			603			4,762			5,365			3,538			1994		1975
Exchange Distribution Center II		—				300			945			482			300			1,427			1,727			909			2002		1976
Exchange Distribution Center III		—				320			997			408			320			1,405			1,725			973			2002		1980
Sunbelt Distribution Center		—				1,472			5,745			6,043			1,472			11,788			13,260			9,239			1989/97/98		1974/87/97/98
John Young Commerce Center I		—				497			2,444			1,443			497			3,887			4,384			2,387			1997/98		1997/98
John Young Commerce Center II		—				512			3,613			533			512			4,146			4,658			2,855			1998		1999
Sunport Center I		—				555			1,977			1,049			555			3,026			3,581			1,729			1999		1999
Sunport Center II		—				597			3,271			1,907			597			5,178			5,775			3,675			1999		2001
Sunport Center III		—				642			3,121			1,268			642			4,389			5,031			2,461			1999		2002
Sunport Center IV		—				642			2,917			1,820			642			4,737			5,379			2,773			1999		2004
Sunport Center V		—				750			2,509			2,427			750			4,936			5,686			2,944			1999		2005
Sunport Center VI		—				672			—			3,750			672			3,750			4,422			1,575			1999		2006
Southridge Commerce Park I		—				373			—			4,992			373			4,992			5,365			3,084			2003		2006
Southridge Commerce Park II		—				342			—			4,532			342			4,532			4,874			2,398			2003		2007
Southridge Commerce Park III		—				547			—			5,683			547			5,683			6,230			2,462			2003		2007
Southridge Commerce Park IV (g)		2,574				506			—			4,918			506			4,918			5,424			2,052			2003		2006
Southridge Commerce Park V (g)		2,339				382			—			4,547			382			4,547			4,929			2,284			2003		2006
Southridge Commerce Park VI		—				571			—			5,396			571			5,396			5,967			2,216			2003		2007
Southridge Commerce Park VII		—				520			—			6,787			520			6,787			7,307			2,766			2003		2008
Southridge Commerce Park VIII		—				531			—			6,368			531			6,368			6,899			2,213			2003		2008
Southridge Commerce Park IX		—				468			—			6,460			468			6,460			6,928			1,971			2003		2012
Southridge Commerce Park X		—				414			—			4,879			414			4,879			5,293			1,181			2003		2012
Southridge Commerce Park XI		—				513			—			5,939			513			5,939			6,452			1,600			2003		2012

---

SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Southridge Commerce Park XII		—				2,025			—			17,180			2,025			17,180			19,205			5,547			2005		2008
Horizon Commerce Park I		—				991			—			6,586			991			6,586			7,577			1,450			2008		2014
Horizon Commerce Park II		—				1,111			—			7,249			1,111			7,249			8,360			1,383			2008		2014
Horizon Commerce Park III		—				991			—			6,480			991			6,480			7,471			1,071			2008		2016
Horizon Commerce Park IV		—				1,097			—			8,549			1,097			8,549			9,646			1,334			2008		2015
Horizon Commerce Park V		—				1,108			—			8,604			1,108			8,604			9,712			857			2008		2017
Horizon Commerce Park VI		—				1,099			—			11,130			1,099			11,130			12,229			514			2008		2019
Horizon Commerce Park VII		—				962			—			7,523			962			7,523			8,485			929			2008		2017
Horizon Commerce Park X		—				846			—			6,601			846			6,601			7,447			465			2009		2018
Horizon Commerce Park XI		—				1,101			—			9,873			1,101			9,873			10,974			220			2009		2019
Horizon Commerce Park XII		—				1,416			—			10,581			1,416			10,581			11,997			697			2009		2017
Jacksonville
Deerwood Distribution Center		—				1,147			1,799			4,112			1,147			5,911			7,058			3,828			1989		1978
Phillips Distribution Center		—				1,375			2,961			4,545			1,375			7,506			8,881			5,611			1994		1984/95
Lake Pointe Business Park		—				3,442			6,450			9,538			3,442			15,988			19,430			12,272			1993		1986/87
Ellis Distribution Center		—				540			7,513			1,981			540			9,494			10,034			5,401			1997		1977
Westside Distribution Center		—				2,011			15,374			9,725			2,011			25,099			27,110			13,614			1997/2008		1984/85
Beach Commerce Center		—				476			1,899			856			476			2,755			3,231			1,535			2000		2000
Interstate Distribution Center		—				1,879			5,700			2,089			1,879			7,789			9,668			4,562			2005		1990
Flagler Center		—				7,317			14,912			486			7,317			15,398			22,715			1,690			2016		1997 & 2005
Ft. Lauderdale/Palm Beach area
Linpro Commerce Center		—				613			2,243			3,553			616			5,793			6,409			3,680			1996		1986
Cypress Creek Business Park		—				—			2,465			2,582			—			5,047			5,047			3,335			1997		1986
Lockhart Distribution Center		—				—			3,489			3,051			—			6,540			6,540			4,701			1997		1986
Interstate Commerce Center		—				485			2,652			1,782			485			4,434			4,919			2,375			1998		1988
Executive Airport Distribution Ctr (e)		6,016				1,991			4,857			5,506			1,991			10,363			12,354			5,339			2001		2004/06
Sample 95 Business Park		—				2,202			8,785			4,123			2,202			12,908			15,110			8,220			1996/98		1990/99
Blue Heron Distribution Center		—				975			3,626			2,441			975			6,067			7,042			3,852			1999		1986
Blue Heron Distribution Center II		—				1,385			4,222			2,088			1,385			6,310			7,695			3,071			2004		1988
Blue Heron Distribution Center III		—				450			—			2,833			450			2,833			3,283			1,059			2004		2009
Weston Commerce Park		—				4,163			9,951			1,693			4,163			11,644			15,807			1,141			2016		1998

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Ft. Myers
SunCoast Commerce Center I		—				911			—			4,830			928			4,813			5,741			1,961			2005		2008
SunCoast Commerce Center II		—				911			—			5,002			928			4,985			5,913			2,210			2005		2007
SunCoast Commerce Center III		—				1,720			—			6,700			1,763			6,657			8,420			2,599			2006		2008
SunCoast Commerce Center IV		—				1,733			—			7,546			1,762			7,517			9,279			659			2006		2017
SunCoast Commerce Center V		—				1,511			—			6,722			1,594			6,639			8,233			203			2006		2019
Miami
Gateway Commerce Park 1		—				5,746			—			18,841			5,746			18,841			24,587			545			2016		2018
CALIFORNIA
San Francisco area
Wiegman Distribution Center I		—				2,197			8,788			2,211			2,308			10,888			13,196			6,903			1996		1986/87
Wiegman Distribution Center II		—				2,579			4,316			152			2,579			4,468			7,047			947			2012		1998
Huntwood Distribution Center		—				3,842			15,368			3,228			3,842			18,596			22,438			11,996			1996		1988
San Clemente Distribution Center		—				893			2,004			944			893			2,948			3,841			2,022			1997		1978
Yosemite Distribution Center		—				259			7,058			1,992			731			8,578			9,309			5,185			1999		1974/87
Los Angeles area
Eucalyptus Distribution Center		—				11,392			11,498			194			11,392			11,692			23,084			637			2018		1988
Kingsview Industrial Center		—				643			2,573			883			643			3,456			4,099			2,209			1996		1980
Dominguez Distribution Center		—				2,006			8,025			1,170			2,006			9,195			11,201			5,922			1996		1977
Main Street Distribution Center		—				1,606			4,103			831			1,606			4,934			6,540			2,998			1999		1999
Walnut Business Center		—				2,885			5,274			2,500			2,885			7,774			10,659			4,779			1996		1966/90
Washington Distribution Center		—				1,636			4,900			751			1,636			5,651			7,287			3,434			1997		1996/97
Chino Distribution Center		—				2,544			10,175			1,623			2,544			11,798			14,342			8,865			1998		1980
Ramona Distribution Center		2,372				3,761			5,751			83			3,761			5,834			9,595			801			2014		1984
Industry Distribution Center I		—				10,230			12,373			4,750			10,230			17,123			27,353			10,054			1998		1959
Industry Distribution Center III		—				—			3,012			(157	)		—			2,855			2,855			2,855			2007		1992
Chestnut Business Center		—				1,674			3,465			361			1,674			3,826			5,500			2,109			1998		1999
Los Angeles Corporate Center		—				1,363			5,453			3,614			1,363			9,067			10,430			6,277			1996		1986
Santa Barbara
University Business Center		—				1,375			5,517			4,587			1,375			10,104			11,479			6,031			1996		1987/88

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Fresno
Shaw Commerce Center		—				2,465			11,627			7,236			2,465			18,863			21,328			12,043			1998		1978/81/87
San Diego
Eastlake Distribution Center		—				3,046			6,888			1,955			3,046			8,843			11,889			5,687			1997		1989
Miramar Land		—				13,980			—			—			13,980			—			13,980			—			2019		n/a
Ocean View Corporate Center (e)		7,322				6,577			7,105			1,353			6,577			8,458			15,035			3,158			2010		2005
Otay Mesa Land		—				15,282			—			—			15,282			—			15,282			—			2019		n/a
Rocky Point Distribution Center I		—				8,857			13,388			—			8,857			13,388			22,245			51			2019		2019
Siempre Viva Distribution Center I		—				4,628			9,211			209			4,628			9,420			14,048			375			2018		2003
Siempre Viva Distribution Center II		—				2,868			5,694			28			2,877			5,713			8,590			46			2019		2002
TEXAS
Dallas
Allen Station 1 & 2		—				5,815			17,612			764			5,815			18,376			24,191			997			2018		2001
Interstate Warehouse I & II (f)		4,997				1,746			4,941			3,812			1,746			8,753			10,499			6,955			1988		1978
Interstate Warehouse III (f)		1,964				519			2,008			1,599			519			3,607			4,126			2,481			2000		1979
Interstate Warehouse IV		—				416			2,481			762			416			3,243			3,659			1,714			2004		2002
Interstate Warehouse V, VI, & VII (g)		4,078				1,824			4,106			2,663			1,824			6,769			8,593			3,670			2009		1979/80/81
Venture Warehouses (f)		3,793				1,452			3,762			2,755			1,452			6,517			7,969			5,496			1988		1979
ParkView Commerce Center I-3		—				2,663			—			18,861			2,663			18,861			21,524			2,717			2014		2015
Shady Trail Distribution Center		—				635			3,621			1,371			635			4,992			5,627			2,750			2003		1998
Valwood Distribution Center		—				4,361			34,405			4,146			4,361			38,551			42,912			10,498			2012		1986/87/97/98
Northfield Distribution Center		—				12,470			50,713			4,845			12,471			55,557			68,028			14,922			2013		1999-2001/03/04/08
Parc North 1-4		—				4,615			26,358			6,021			4,615			32,379			36,994			3,669			2016		2016
CreekView 121 1 & 2		—				3,275			—			14,614			3,275			14,614			17,889			1,771			2015		2017
CreekView 121 3 & 4		—				2,600			—			13,518			2,600			13,518			16,118			839			2015		2018
Houston
World Houston Int'l Business Ctr 1 & 2		—				660			5,893			2,457			660			8,350			9,010			5,166			1998		1996
World Houston Int'l Business Ctr 3 & 4 (f)		2,969				820			5,130			289			707			5,532			6,239			3,518			1998		1998
World Houston Int'l Business Ctr 6 (f)		1,674				425			2,423			669			425			3,092			3,517			2,034			1998		1998

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
World Houston Int'l Business Ctr 7 & 8 (f)		4,893				680			4,584			5,017			680			9,601			10,281			6,305			1998		1998
World Houston Int'l Business Ctr 9 (f)		3,455				800			4,355			2,105			800			6,460			7,260			3,451			1998		1998
World Houston Int'l Business Ctr 10		—				933			4,779			824			933			5,603			6,536			2,889			2001		1999
World Houston Int'l Business Ctr 11		—				638			3,764			1,799			638			5,563			6,201			3,078			1999		1999
World Houston Int'l Business Ctr 12		—				340			2,419			383			340			2,802			3,142			1,734			2000		2002
World Houston Int'l Business Ctr 13		—				282			2,569			769			282			3,338			3,620			2,094			2000		2002
World Houston Int'l Business Ctr 14		—				722			2,629			1,329			722			3,958			4,680			2,188			2000		2003
World Houston Int'l Business Ctr 15		—				731			—			6,278			731			6,278			7,009			3,568			2000		2007
World Houston Int'l Business Ctr 16		—				519			4,248			1,602			519			5,850			6,369			3,421			2000		2005
World Houston Int'l Business Ctr 17		—				373			1,945			799			373			2,744			3,117			1,557			2000		2004
World Houston Int'l Business Ctr 19		—				373			2,256			1,127			373			3,383			3,756			2,095			2000		2004
World Houston Int'l Business Ctr 20		—				1,008			1,948			2,053			1,008			4,001			5,009			2,313			2000		2004
World Houston Int'l Business Ctr 21		—				436			—			4,155			436			4,155			4,591			1,717			2000/03		2006
World Houston Int'l Business Ctr 22		—				436			—			4,542			436			4,542			4,978			2,337			2000		2007
World Houston Int'l Business Ctr 23		—				910			—			7,428			910			7,428			8,338			3,298			2000		2007
World Houston Int'l Business Ctr 24		—				837			—			6,065			838			6,064			6,902			2,727			2005		2008
World Houston Int'l Business Ctr 25		—				508			—			4,287			508			4,287			4,795			1,781			2005		2008
World Houston Int'l Business Ctr 26 (e)		1,808				445			—			3,267			445			3,267			3,712			1,263			2005		2008
World Houston Int'l Business Ctr 27		—				837			—			5,242			838			5,241			6,079			2,139			2005		2008
World Houston Int'l Business Ctr 28 (e)		2,540				550			—			4,665			550			4,665			5,215			2,042			2005		2009
World Houston Int'l Business Ctr 29 (e)		2,416				782			—			4,179			974			3,987			4,961			1,461			2007		2009
World Houston Int'l Business Ctr 30 (e)		3,348				981			—			5,894			1,222			5,653			6,875			2,403			2007		2009
World Houston Int'l Business Ctr 31A		—				684			—			4,092			684			4,092			4,776			1,820			2008		2011
World Houston Int'l Business Ctr 31B		—				546			—			3,561			546			3,561			4,107			1,407			2008		2012
World Houston Int'l Business Ctr 32 (g)		3,265				1,225			—			5,655			1,526			5,354			6,880			1,563			2007		2012
World Houston Int'l Business Ctr 33		—				1,166			—			7,867			1,166			7,867			9,033			1,973			2011		2013
World Houston Int'l Business Ctr 34		—				439			—			3,405			439			3,405			3,844			932			2005		2012
World Houston Int'l Business Ctr 35		—				340			—			2,576			340			2,576			2,916			569			2005		2012
World Houston Int'l Business Ctr 36		—				684			—			4,882			684			4,882			5,566			1,339			2011		2013
World Houston Int'l Business Ctr 37		—				759			—			6,411			759			6,411			7,170			1,758			2011		2013

---

SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
World Houston Int'l Business Ctr 38		—				1,053			—			7,324			1,053			7,324			8,377			1,989			2011		2013
World Houston Int'l Business Ctr 39		—				620			—			5,203			621			5,202			5,823			1,068			2011		2014
World Houston Int'l Business Ctr 40		—				1,072			—			9,347			1,072			9,347			10,419			1,659			2011		2014
World Houston Int'l Business Ctr 41		—				649			—			5,950			649			5,950			6,599			1,090			2011		2014
World Houston Int'l Business Ctr 42		—				571			—			4,814			571			4,814			5,385			741			2011		2015
World Houston Int'l Business Ctr 43		—				443			—			6,026			443			6,026			6,469			42			2011		2019
World Houston Int'l Business Ctr 45		—				3,243			—			13,711			3,243			13,711			16,954			38			2015		2019
Central Green Distribution Center		—				566			4,031			1,041			566			5,072			5,638			2,716			1999		1998
Glenmont Business Park		—				936			6,161			3,029			937			9,189			10,126			5,980			1998		1999/2000
Beltway Crossing Business Park I		—				458			5,712			2,786			458			8,498			8,956			5,267			2002		2001
Beltway Crossing Business Park II		—				415			—			2,998			415			2,998			3,413			1,461			2005		2007
Beltway Crossing Business Park III		—				460			—			3,305			460			3,305			3,765			1,505			2005		2008
Beltway Crossing Business Park IV		—				460			—			3,315			460			3,315			3,775			1,414			2005		2008
Beltway Crossing Business Park V (e)		2,898				701			—			5,249			701			5,249			5,950			2,378			2005		2008
Beltway Crossing Business Park VI (g)		3,432				618			—			6,614			618			6,614			7,232			2,258			2005		2008
Beltway Crossing Business Park VII (g)		3,227				765			—			6,035			765			6,035			6,800			2,669			2005		2009
Beltway Crossing Business Park VIII		—				721			—			5,516			721			5,516			6,237			1,950			2005		2011
Beltway Crossing Business Park IX		—				418			—			2,141			418			2,141			2,559			640			2007		2012
Beltway Crossing Business Park X		—				733			—			3,907			733			3,907			4,640			1,077			2007		2012
Beltway Crossing Business Park XI		—				690			—			4,138			690			4,138			4,828			1,006			2007		2013
West Road Business Park I		—				621			—			4,031			541			4,111			4,652			1,019			2012		2014
West Road Business Park II		—				981			—			4,819			854			4,946			5,800			975			2012		2014
West Road Business Park III		—				597			—			4,222			520			4,299			4,819			537			2012		2015
West Road Business Park IV		—				621			—			4,622			541			4,702			5,243			915			2012		2015
West Road Business Park V		—				484			—			4,372			421			4,435			4,856			313			2012		2018
Ten West Crossing 1		—				566			—			3,039			566			3,039			3,605			784			2012		2013
Ten West Crossing 2		—				829			—			4,483			833			4,479			5,312			1,472			2012		2013
Ten West Crossing 3		—				609			—			4,367			613			4,363			4,976			1,322			2012		2013
Ten West Crossing 4		—				694			—			4,512			699			4,507			5,206			1,341			2012		2014
Ten West Crossing 5		—				933			—			5,872			940			5,865			6,805			1,325			2012		2014
Ten West Crossing 6		—				640			—			4,646			644			4,642			5,286			935			2012		2014

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Ten West Crossing 7		—				584			—			5,321			589			5,316			5,905			877			2012		2015
El Paso
Butterfield Trail		—				—			20,725			9,457			—			30,182			30,182			20,462			1997/2000		1987/95
Rojas Commerce Park (f)		4,023				900			3,659			3,893			900			7,552			8,452			5,512			1999		1986
Americas Ten Business Center I		—				526			2,778			1,741			526			4,519			5,045			2,425			2001		2003
San Antonio
Alamo Downs Distribution Center		—				1,342			6,338			1,842			1,342			8,180			9,522			4,746			2004		1986/2002
Arion Business Park 1-13, 15		—				4,143			31,432			9,283			4,143			40,715			44,858			20,344			2005		1988-2000/06
Arion Business Park 14		—				423			—			3,484			423			3,484			3,907			1,613			2005		2006
Arion Business Park 16		—				427			—			3,715			427			3,715			4,142			1,577			2005		2007
Arion Business Park 17		—				616			—			4,377			616			4,377			4,993			2,539			2005		2007
Arion Business Park 18 (g)		1,338				418			—			2,402			418			2,402			2,820			1,173			2005		2008
Wetmore Business Center 1-4		—				1,494			10,804			3,755			1,494			14,559			16,053			8,077			2005		1998/99
Wetmore Business Center 5 (e)		2,085				412			—			3,870			412			3,870			4,282			1,843			2006		2008
Wetmore Business Center 6 (e)		2,189				505			—			3,991			505			3,991			4,496			1,652			2006		2008
Wetmore Business Center 7 (e)		2,595				546			—			4,783			546			4,783			5,329			1,644			2006		2008
Wetmore Business Center 8 (e)		4,574				1,056			—			8,337			1,056			8,337			9,393			3,166			2006		2008
Fairgrounds Business Park		—				1,644			8,209			2,483			1,644			10,692			12,336			5,670			2007		1985/86
Rittiman Distribution Center		—				1,083			6,649			602			1,083			7,251			8,334			1,760			2011		2000
Thousand Oaks Distribution Center 1		—				607			—			4,356			607			4,356			4,963			1,709			2008		2012
Thousand Oaks Distribution Center 2		—				794			—			4,793			794			4,793			5,587			1,484			2008		2012
Thousand Oaks Distribution Center 3		—				772			—			4,547			772			4,547			5,319			1,380			2008		2013
Thousand Oaks Distribution Center 4		—				753			—			4,744			753			4,744			5,497			733			2013		2015
Alamo Ridge Business Park I		—				623			—			8,145			623			8,145			8,768			1,887			2007		2015
Alamo Ridge Business Park II		—				402			—			5,368			402			5,368			5,770			858			2007		2015
Alamo Ridge Business Park III		—				907			—			10,144			907			10,144			11,051			1,054			2007		2017
Alamo Ridge Business Park IV		—				354			—			7,479			355			7,478			7,833			703			2007		2017
Eisenhauer Point Business Park 1 & 2		—				1,881			—			14,717			1,881			14,717			16,598			2,061			2015		2016
Eisenhauer Point Business Park 3		—				577			—			6,094			577			6,094			6,671			673			2015		2017
Eisenhauer Point Business Park 4		—				555			—			4,817			555			4,817			5,372			482			2015		2017
Eisenhauer Point Business Park 5		—				818			—			7,015			818			7,015			7,833			650			2015		2018

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Eisenhauer Point Business Park 6		—				569			—			4,856			569			4,856			5,425			224			2015		2018
Eisenhauer Point Business Park 7 & 8		—				1,000			—			22,202			2,593			20,609			23,202			400			2016		2019
Eisenhauer Point Business Park 9		—				632			—			5,718			632			5,718			6,350			27			2016		2019
Austin
Colorado Crossing Distribution Center (f)		11,680				4,602			19,757			184			4,595			19,948			24,543			5,583			2014		2009
Greenhill Distribution Center		—				802			3,273			201			802			3,474			4,276			129			2018		1999
Southpark Corporate Center 3 & 4		—				2,670			14,756			1,813			2,670			16,569			19,239			3,504			2015		1995
Southpark Corporate Center 5-7		—				1,301			7,589			1,029			1,301			8,618			9,919			1,030			2017		1995
Springdale Business Center		—				2,824			8,398			395			2,824			8,793			11,617			1,774			2015		2000
ARIZONA
Phoenix area
Broadway Industrial Park I		—				837			3,349			1,144			837			4,493			5,330			3,055			1996		1971
Broadway Industrial Park II		—				455			482			390			455			872			1,327			500			1999		1971
Broadway Industrial Park III		—				775			1,742			589			775			2,331			3,106			1,431			2000		1983
Broadway Industrial Park IV		—				380			1,652			915			380			2,567			2,947			1,687			2000		1986
Broadway Industrial Park V		—				353			1,090			748			353			1,838			2,191			851			2002		1980
Broadway Industrial Park VI		—				599			1,855			793			599			2,648			3,247			1,753			2002		1979
Broadway Industrial Park VII		—				450			650			288			450			938			1,388			297			2011		1999
Kyrene Distribution Center		—				1,490			4,453			1,951			1,490			6,404			7,894			4,164			1999		1981/2001
Falcon Field Business Center		—				1,312			—			7,458			1,312			7,458			8,770			270			2015		2018
Southpark Distribution Center		—				918			2,738			1,982			918			4,720			5,638			2,404			2001		2000
Santan 10 Distribution Center I		—				846			2,647			692			846			3,339			4,185			1,675			2001		2005
Santan 10 Distribution Center II		—				1,088			—			5,343			1,088			5,343			6,431			2,477			2004		2007
Chandler Freeways		—				1,525			—			7,381			1,525			7,381			8,906			1,732			2012		2013
Kyrene 202 Business Park I		—				653			—			5,777			653			5,777			6,430			1,040			2011		2014
Kyrene 202 Business Park II		—				387			—			3,414			387			3,414			3,801			594			2011		2014
Kyrene 202 Business Park III, IV, & V		—				1,244			—			11,878			1,244			11,878			13,122			760			2011		2018
Kyrene 202 Business Park VI		—				936			—			8,333			936			8,333			9,269			1,194			2011		2015
Metro Business Park		—				1,927			7,708			7,911			1,927			15,619			17,546			11,373			1996		1977/79
51st Avenue Distribution Center		—				300			2,029			1,134			300			3,163			3,463			2,182			1998		1987

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
East University Distribution Center I and II		—				1,120			4,482			1,926			1,120			6,408			7,528			4,736			1998		1987/89
East University Distribution Center III		—				444			698			461			444			1,159			1,603			467			2010		1981
55th Avenue Distribution Center		—				912			3,717			1,149			917			4,861			5,778			3,662			1998		1987
Interstate Commons Distribution Center I		—				311			1,416			863			311			2,279			2,590			1,498			1999		1988
Interstate Commons Distribution Center III		—				242			—			3,112			242			3,112			3,354			1,207			2000		2008
Airport Commons Distribution Center		—				1,000			1,510			1,610			1,000			3,120			4,120			2,150			2003		1971
40th Avenue Distribution Center (e)		3,294				703			—			6,061			703			6,061			6,764			2,409			2004		2008
Sky Harbor Business Park		—				5,839			—			21,925			5,839			21,925			27,764			8,387			2006		2008
Sky Harbor Business Park 6		—				807			—			2,177			807			2,177			2,984			347			2014		2015
Ten Sky Harbor Business Center		—				1,568			—			5,125			1,569			5,124			6,693			576			2015		2016
Tucson
Country Club Commerce Center I		—				506			3,564			3,916			693			7,293			7,986			3,260			1997/2003		1994/2003
Country Club Commerce Center II		—				442			3,381			1,065			709			4,179			4,888			1,455			2007		2000
Country Club Commerce Center III & IV		—				1,407			—			12,250			1,575			12,082			13,657			4,914			2007		2009
Country Club Commerce Center V		—				2,885			—			21,437			2,886			21,436			24,322			1,063			2016		2018
Airport Distribution Center		—				1,403			4,672			1,834			1,403			6,506			7,909			4,145			1998/2000		1995
Benan Distribution Center		—				707			1,842			737			707			2,579			3,286			1,538			2005		2001
NORTH CAROLINA
Charlotte area
NorthPark Business Park		—				2,758			15,932			5,138			2,758			21,070			23,828			10,793			2006		1987-89
Lindbergh Business Park		—				470			3,401			668			470			4,069			4,539			1,908			2007		2001/03
Commerce Park Center I		—				765			4,303			1,064			765			5,367			6,132			2,384			2007		1983
Commerce Park Center II (g)		1,107				335			1,603			395			335			1,998			2,333			763			2010		1987
Commerce Park Center III (g)		1,803				558			2,225			1,016			558			3,241			3,799			1,219			2010		1981
Nations Ford Business Park		—				3,924			16,171			5,099			3,924			21,270			25,194			10,211			2007		1989/94
Airport Commerce Center		—				1,454			10,136			2,604			1,454			12,740			14,194			5,232			2008		2001/02
Interchange Park I (e)		4,689				986			7,949			694			986			8,643			9,629			3,228			2008		1989
Interchange Park II		—				746			1,456			65			746			1,521			2,267			324			2013		2000
Ridge Creek Distribution Center I		—				1,284			13,163			1,091			1,284			14,254			15,538			4,898			2008		2006
Ridge Creek Distribution Center II (g)		7,902				3,033			11,497			2,116			3,033			13,613			16,646			3,688			2011		2003

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Ridge Creek Distribution Center III		—				2,459			11,147			696			2,459			11,843			14,302			2,207			2014		2013
Lakeview Business Center (g)		3,504				1,392			5,068			922			1,392			5,990			7,382			1,921			2011		1996
Steele Creek Commerce Park I (f)		2,554				993			—			4,372			1,010			4,355			5,365			1,175			2013		2014
Steele Creek Commerce Park II (f)		2,594				941			—			4,510			957			4,494			5,451			1,190			2013		2014
Steele Creek Commerce Park III		—				1,464			—			6,604			1,469			6,599			8,068			1,547			2013		2014
Steele Creek Commerce Park IV		—				684			—			4,021			687			4,018			4,705			908			2013		2015
Steele Creek Commerce Park V		—				610			—			5,222			631			5,201			5,832			94			2013/14/15		2019
Steele Creek Commerce Park VI		—				867			—			7,032			919			6,980			7,899			845			2013/14		2016
Steele Creek Commerce Park VII		—				1,207			—			7,988			1,253			7,942			9,195			557			2013/14/15		2017
Waterford Distribution Center		—				654			3,392			918			654			4,310			4,964			1,571			2008		2000
SOUTH CAROLINA
Greenville
385 Business Park		—				1,308			10,822			512			1,308			11,334			12,642			246			2019		2019
GEORGIA
Atlanta
Shiloh 400 Business Center I & II		—				3,092			14,216			2,268			3,092			16,484			19,576			2,045			2017		2008
Broadmoor Commerce Park I		—				1,307			3,560			907			1,307			4,467			5,774			759			2017		1999
Broadmoor Commerce Park II		—				519			—			7,370			519			7,370			7,889			126			2017		2018
Gwinnett 316		—				531			3,617			21			531			3,638			4,169			179			2018		1990
Hurricane Shoals I & II		—				4,284			12,449			3,457			4,284			15,906			20,190			1,208			2017		2017
Progress Center I & II		—				1,297			9,015			258			1,297			9,273			10,570			867			2017		2017
LOUISIANA
New Orleans
Elmwood Business Park		—				2,861			6,337			6,496			2,861			12,833			15,694			8,741			1997		1979
Riverbend Business Park		—				2,557			17,623			9,692			2,557			27,315			29,872			16,814			1997		1984
COLORADO
Denver
Airways Business Center		—				6,137			39,637			2			6,137			39,639			45,776			880			2019		2007/08
Rampart Distribution Center I		—				1,023			3,861			2,530			1,023			6,391			7,414			4,874			1988		1987
Rampart Distribution Center II		—				230			2,977			1,659			230			4,636			4,866			3,067			1996/97		1997
Rampart Distribution Center III		—				1,098			3,884			2,606			1,098			6,490			7,588			3,637			1997/98		1999
Rampart Distribution Center IV		—				590			—			8,340			590			8,340			8,930			1,318			2012		2014
Concord Distribution Center (g)		3,113				1,051			4,773			735			1,051			5,508			6,559			2,248			2007		2000

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Centennial Park (e)		2,998				750			3,319			2,087			750			5,406			6,156			2,093			2007		1990
NEVADA
Las Vegas
Arville Distribution Center		—				4,933			5,094			446			4,933			5,540			10,473			2,111			2009		1997
Jones Corporate Park		—				13,068			26,325			1,913			13,068			28,238			41,306			2,697			2016		2016
MISSISSIPPI
Jackson area
Interchange Business Park		—				343			5,007			5,168			343			10,175			10,518			6,322			1997		1981
Tower Automotive		—				—			9,958			1,937			17			11,878			11,895			5,583			2001		2002
Metro Airport Commerce Center I		—				303			1,479			1,251			303			2,730			3,033			1,666			2001		2003
RIGHT OF USE ASSETS, NET - GROUND LEASES (OPERATING)		—				—			—			—			—			—			11,997			—			n/a		n/a
		133,422				448,401			1,142,571			1,241,598			452,698			2,379,872			2,844,567			869,988

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Development and Value-Add Properties (d):
CALIFORNIA
Rocky Point Distribution Center II		—				7,623			11,614			38			7,623			11,652			19,275			—			2019		2019
FLORIDA
Suncoast Commerce Center 6		—				1,537			—			6,397			1,594			6,340			7,934			6			2006		2019
Suncoast Commerce Center 8		—				1,533			—			2,951			1,534			2,950			4,484			—			2006		n/a
Suncoast Commerce Center Land		—				1,533			—			5,970			4,851			2,652			7,503			—			2006		n/a
Gateway Commerce Park 5		—				5,746			—			17,359			5,357			17,748			23,105			114			2016		2019
Gateway Commerce Park Land		—				21,132			—			13,053			15,775			18,410			34,185			—			2016		n/a
Horizon Commerce Park VIII & IX		—				1,590			—			15,011			1,590			15,011			16,601			42			2008		2019
Horizon Commerce Park Land		—				—			—			1,075			650			425			1,075			—			2008/09		n/a
Grand Oaks 75 Business Center II		—				2,589			10,226			300			2,589			10,526			13,115			—			2019		2019
Grand Oaks 75 Land		—				4,101			—			140			4,109			132			4,241			—			2019		n/a
Oak Creek Distribution Center Land		—				841			—			719			707			853			1,560			—			2005		n/a
TEXAS
Arlington Tech Centre 1 & 2		—				2,510			10,096			671			2,515			10,762			13,277			—			2019		2019
Basswood Land		—				15,766			—			158			15,767			157			15,924			—			2019		n/a
CreekView 121 5 & 6		—				2,682			—			10,469			2,681			10,470			13,151			6			2016		n/a
CreekView 121 7 & 8		—				2,640			—			4,159			2,640			4,159			6,799			—			2016		n/a
LakePort 2499		—				2,984			—			5,078			2,983			5,079			8,062			—			2018		n/a
LakePort 2499 Land		—				2,716			—			948			2,715			949			3,664			—			2018		n/a
Logistics Center 6 & 7		—				—			12,605			3,130			—			15,735			15,735			186			2019		2018
Parc North 5		—				1,286			—			7,403			1,286			7,403			8,689			103			2016		2019
Parc North 6		—				1,233			—			7,057			1,233			7,057			8,290			—			2016		2019
Grand West Crossing Land		—				8,757			—			596			8,749			604			9,353			—			2019		n/a
Lee Road Land		—				2,689			—			—			1,960			729			2,689			—			2007		n/a
Northwest Crossing 1-3		—				5,665			—			5,870			5,665			5,870			11,535			—			2019		n/a
Ten West Crossing 8		—				1,126			—			8,638			1,134			8,630			9,764			151			2012		2019
World Houston Int'l Business Ctr 44		—				653			—			4,137			653			4,137			4,790			—			2011		n/a
World Houston Int'l Business Ctr land - 2011 expansion		—				1,636			—			1,831			1,824			1,643			3,467			—			2011		n/a
World Houston Int'l Business Ctr land - 2015 expansion		—				2,798			—			1,141			2,798			1,141			3,939			—			2015		n/a
Ridgeview 1 & 2		—				2,004			—			4,527			2,004			4,527			6,531			—			2018		n/a

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SCHEDULE III
REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2019 (In thousands, except footnotes)
Description		Encumbrances				Initial Cost to the Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at Close of Period									Accumulated Depreciation			Year Acquired		Year Constructed
						Land			Buildings and Improvements						Land			Buildings and Improvements			Total
Ridgeview Land		—				1,269			—			382			1,269			382			1,651			—			2018		n/a
Tri-County Crossing 1 and 2		—				1,623			—			13,763			1,623			13,763			15,386			182			2017		2019
Tri-County Crossing 3 and 4		—				1,733			—			6,965			1,733			6,965			8,698			—			2017		n/a
Tri-County Crossing Land		—				1,904			—			644			1,904			644			2,548			—			2017		n/a
Settlers Crossing 1		—				1,211			—			8,048			1,212			8,047			9,259			—			2017		2019
Settlers Crossing 2		—				1,306			—			7,169			1,305			7,170			8,475			188			2017		2019
Settlers Crossing 3 & 4		—				2,774			—			5,315			2,774			5,315			8,089			—			2017		n/a
ARIZONA
Gilbert Crossroads A & B		—				2,825			—			11,125			2,825			11,125			13,950			—			2018		n/a
Gilbert Crossroads Land		—				3,709			—			664			3,602			771			4,373			—			2018		n/a
Interstate Commons Distribution Center II		—				2,298			7,088			496			2,298			7,584			9,882			19			2019		1988/2001
NEVADA
Southwest Commerce Center		—				9,008			16,576			1,029			9,008			17,605			26,613			—			2019		2019
NORTH CAROLINA
Airport Commerce Center III		—				855			—			7,701			855			7,701			8,556			154			2008		2019
Steele Creek Commerce Park IX		—				949			—			8,171			949			8,171			9,120			—			2016		2019
Steele Creek Commerce Park Land		—				2,726			—			4,601			3,953			3,374			7,327			—			2016/17		n/a
GEORGIA
Hurricane Shoals 3		—				497			—			6,132			644			5,985			6,629			—			2017		n/a
MISSISSIPPI
Metro Airport Commerce Center II land		—				307			—			399			307			399			706			—			2001		n/a
		—				140,364			68,205			211,430			139,247			280,752			419,999			1,151
Total real estate owned (a)(b)		$	133,422			588,765			1,210,776			1,453,028			591,945			2,660,624			3,264,566			871,139
See accompanying Report of Independent Registered Public Accounting Firm.

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(a)  Changes in Real Estate Properties follow:                                                                                                                                                                                                                                                                                                                                                                                            

	Years Ended December 31,
	2019				2018			2017
	(In thousands)
Balance at beginning of year	$	2,817,145			2,578,748			2,407,029
Purchases of real estate properties	135,033				54,537			51,802
Development of real estate properties and value-add properties	318,288				167,667			124,938
Improvements to real estate properties	37,558				36,921			28,698
Right-of-use assets, net – ground leases	11,997				—			—
Carrying amount of investments sold	(51,662		)		(18,372	)		(32,787	)
Write-off of improvements	(3,793		)		(2,356	)		(932	)
Balance at end of year (1)	$	3,264,566			2,817,145			2,578,748

(1)	Includes noncontrolling interest in joint ventures of $3,148,000 and $3,296,000 at December 31, 2019 and 2018, respectively.

Changes in the accumulated depreciation on real estate properties follow:                                                                                                                                                                                                                                                                                                                                                                                  

	Years Ended December 31,
	2019				2018			2017
	(In thousands)
Balance at beginning of year	$	814,915			749,601			694,250
Depreciation expense	86,590				76,007			69,010
Accumulated depreciation on assets sold	(27,030		)		(8,670	)		(12,735	)
Other	(3,336		)		(2,023	)		(924	)
Balance at end of year	$	871,139			814,915			749,601

  

(b)	The estimated aggregate cost of real estate properties at December 31, 2019 for federal income tax purposes was approximately $3,179,014,000 before estimated accumulated tax depreciation of $619,405,000.  The federal income tax return for the year ended December 31, 2019, has not been filed and accordingly, this estimate is based on preliminary data.

(c)	The Company computes depreciation using the straight-line method over the estimated useful lives of the buildings (generally 40 years) and improvements (generally 3 to 15 years).

(d)

The Company transfers properties from the development and value-add program to Real estate properties as follows: (i) for development properties, at the earlier of 90% occupancy or one year after completion of the shell construction, and (ii) for value-add properties, at the earlier of 90% occupancy or one year after acquisition. Upon the earlier of 90% occupancy or one year after completion of the shell construction, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).

(e)	EastGroup has a $48,772,000 non-recourse first mortgage loan with an insurance company secured by 40th Avenue, Beltway Crossing V, Centennial Park, Executive Airport, Interchange Park I, Ocean View, Wetmore 5-8 and World Houston 26, 28, 29 & 30.

(f)	EastGroup has a $44,596,000 non-recourse first mortgage loan with an insurance company secured by Colorado Crossing, Interstate I-III, Rojas, Steele Creek 1 & 2, Venture and World Houston 3-4 and 6-9.

(g)	EastGroup has a $37,682,000 non-recourse first mortgage loan with an insurance company secured by Arion 18, Beltway Crossing VI & VII, Commerce Park II & III, Concord, Interstate V-VII, Lakeview, Ridge Creek II, Southridge IV & V and World Houston 32.

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SCHEDULE IV

MORTGAGE LOANS ON REAL ESTATE

December 31, 2019

	Number of Loans		Interest Rate				Maturity Date		Periodic Payment Terms
First mortgage loan:
JCB Limited - California	1		5.15	%			December 2022		Principal and interest due monthly
Total mortgage loans (a)	1

	Face Amount of Mortgages Dec. 31, 2019				Carrying Amount of Mortgages			Principal Amount of Loans Subject to Delinquent Principal or Interest (b)
	(In thousands)
First mortgage loans:
JCB Limited - California	$	1,679			1,679			—
Total mortgage loans	$	1,679			1,679	(c)(d)		—

 

(a)	Reference is made to allowance for possible losses on mortgage loans receivable in the Notes to Consolidated Financial Statements.

(b)	Interest in arrears for three months or less is disregarded in computing principal amount of loans subject to delinquent interest.

(c)	Changes in mortgage loans follow:

	Years Ended December 31,
	2019				2018			2017
	(In thousands)
Balance at beginning of year	$	2,594			4,581			4,752
Payments on mortgage loans receivable	(915		)		(1,987	)		(171	)
Balance at end of year	$	1,679			2,594			4,581

 

(d)  The aggregate cost for federal income tax purposes is approximately $1.68 million.  The federal income tax return for the year ended December 31, 2019, has not been filed and, accordingly, the income tax basis of mortgage loans as of December 31, 2019, is based on preliminary data.

See accompanying Report of Independent Registered Public Accounting Firm.

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