EastGroup Properties NYSE: EGP reported first-quarter 2026 results that management said highlighted the “quality and resiliency” of its industrial portfolio, with funds from operations (FFO) exceeding the midpoint of company guidance and leasing spreads remaining strong.
First-quarter performance and operating metrics
CEO Marshall Loeb said EastGroup generated FFO of $2.30 per share in the first quarter, excluding gains on involuntary conversion. He said that figure was up 8.5% from the prior-year quarter and continued a streak in which quarterly FFO per share has exceeded the same quarter of the prior year for more than a decade.
Loeb pointed to solid occupancy and leasing conditions. Quarter-end leasing was 96.5%, with occupancy at 95.9%, while average quarterly occupancy was 96.1%, up 30 basis points from the first quarter of 2025. Quarter-end same-store occupancy was 97.4%.
EastGroup also reported sizable re-leasing spreads. Loeb said re-leasing spreads for leases signed during the quarter were 37% on a GAAP basis and 20% on a cash basis. Cash same-store NOI increased 9.2% in the quarter, which Loeb tied to high same-store occupancy.
Loeb also emphasized tenant diversification, stating that EastGroup’s top 10 tenants represented 6.7% of rents at quarter end, down 40 basis points from the prior year. He said the company targets geographic and tenant diversity “as strategic paths to stabilize earnings regardless of the economic environment.”
Development leasing improving, but decision cycles remain extended
President Reid Dunbar said development leasing continued a trend seen in the fourth quarter, noting that year-to-date development leasing had already reached 54% of last year’s total. Still, he said decision cycles “continue to remain extended” as businesses operate amid “headline volatility.”
During the Q&A, Dunbar told Citigroup’s Craig Mailman that the company is “actually seeing some tenants move a little bit quicker,” pointing to an example in an Atlanta project where competition for space helped EastGroup sign a 107,000-square-foot lease faster than expected. Dunbar added that as demand picks up and supply tightens, the company anticipates decision cycles will shorten.
Dunbar also quantified remaining availability in “first-gen” space—projects delivered last year that were “under leased”—at about 775,000 square feet.
Management highlighted an emerging driver within development leasing: data center-related users. Loeb said EastGroup is seeing demand tied to data centers largely on the supply side, including HVAC, racking equipment, and other suppliers. Dunbar added that of the company’s 685,000 square feet of development leasing signed year to date, “about half of that was related to data center-related type users.”
Loeb characterized data center-related demand as a “new source of demand,” comparing it to e-commerce’s impact in prior years, while noting EastGroup does not plan to become a data center developer.
Development pipeline, acquisitions, and dispositions
EastGroup increased its 2026 development starts guidance to $265 million. Dunbar said the company commenced construction on four projects totaling 586,000 square feet during the first quarter, with 27% pre-leased. CFO Staci Tyler added that EastGroup began construction on four projects in the first quarter and one in April, totaling $105 million, and projected the remaining starts for the second half of the year.
Dunbar said sourcing new infill development sites remains challenging, and zoning and entitlements remain “difficult and time-consuming.” He said tighter competing supply and stabilizing demand could “place upward pressure on rents.”
On investment activity, Dunbar said EastGroup acquired two Class A buildings in Jacksonville totaling 177,000 square feet. Subsequent to quarter end, the company sold a 46,000-square-foot building in Jacksonville and completed its previously announced exit from the Fresno market totaling 398,000 square feet.
Guidance raised; balance sheet highlighted by Moody’s upgrade
Tyler said first-quarter outperformance was “primarily driven by lower than anticipated G&A expense and higher than projected property net operating income,” reflecting what she called continued strong performance of EastGroup’s 62 million-square-foot operating portfolio.
Tyler also highlighted a Moody’s Ratings upgrade of EastGroup’s issuer rating to Baa1 with a stable outlook. She said the company ended the quarter with no balance drawn on its unsecured bank credit facility, leaving $675 million of available capacity. Tyler cited balance sheet metrics including debt to total market capitalization of 14% at quarter end, first-quarter annualized debt-to-EBITDA of 3x, and interest and fixed charge coverage of 14.8x.
EastGroup guided to second-quarter FFO of $2.30 to $2.38 per share. For full-year 2026, Tyler said the company raised the midpoint of its FFO guidance to $9.52 per share, excluding gains on involuntary conversion, representing a 6.4% increase over 2025 actual results and 30 basis points above initial guidance.
The company also raised the midpoint of its cash same-property NOI growth assumption by 10 basis points to 6.2% and increased its expected same-property occupancy assumption by 10 basis points to 96.4%.
Tyler explained that EastGroup’s guidance assumes $0.04 of NOI contribution from speculative development leasing in the second half of the year, with none assumed for the second quarter and a ramp through the third and fourth quarters. She described the $0.04 as “more as an opportunity,” contingent on additional leasing.
Regarding capital plans, Tyler said the company’s gross capital proceeds guidance remained $300 million, but the mix shifted from 100% debt to a mix of debt and equity after EastGroup accessed the equity market in the first quarter. She said EastGroup issued $70 million of common stock through its equity offering program at over $191 per share and has an additional $50 million in forward equity sale agreements available for issuance at over $196 per share.
In response to Barclays’ Brendan Lynch about leverage flexibility following the Moody’s upgrade, Tyler said EastGroup has “a lot of runway” to increase leverage on a measured basis and cited a target range of roughly 4.5x to “sub-5x” debt to EBITDA. She noted $140 million of debt maturities later in the year and said the company would remain flexible in sourcing the remaining proceeds implied in guidance.
Occupancy outlook and management updates
While first-quarter occupancy was strong, Tyler said EastGroup’s full-year average occupancy guidance assumes a decline as the year progresses, reflecting suite-by-suite renewal probabilities and downtime assumptions rather than known move-outs the company expects to be unable to backfill. She said the company typically runs at about 75% customer retention, and noted first-quarter retention was in the 83% range. She added that early in the second quarter, the company was tracking ahead of projections.
COO Brent Wood noted one known vacancy: a 222,000-square-foot tenant in Tampa expected to vacate around the end of the second quarter into the third quarter. He also said the 775,000 square feet of first-generation space creates more variability in leasing assumptions compared to renewing existing tenants.
Loeb also addressed executive team changes, saying he was “excited to welcome Jim Trainor” and thanked John Coleman, who will retire June 30.
Looking ahead, Loeb said the company’s goals remain driving FFO per share growth while improving portfolio quality, which he said supports net asset value growth. He cited secular tailwinds including population migration, nearshoring and onshoring, evolving logistics chains, and historically lower shallow-bay vacancy levels.
About EastGroup Properties NYSE: EGP
EastGroup Properties, Inc NYSE: EGP is a real estate investment trust specializing in the ownership, development and management of industrial properties. Focused primarily on distribution-oriented facilities, the company's portfolio consists of modern warehouse and light manufacturing buildings located in high-growth Sunbelt markets. EastGroup concentrates on delivering strategic logistics solutions to customers requiring proximity to transportation hubs and major population centers across the southern United States.
Since its founding in 1969, EastGroup has pursued a disciplined growth strategy that combines property development, targeted acquisitions and hands-on asset management.
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