DEF 14A: EastGroup Properties Reports Strong 2023 Performance and Outlines Corporate Governance Initiatives
Proxy Statement
EastGroup Properties highlights record financial performance in 2023, driven by FFO growth and strategic investments, while emphasizing strong governance and sustainability initiatives.
Summary
- EastGroup Properties had a record year in 2023, with funds from operations (FFO) increasing by over 11% and same property net operating income (PNOI) excluding lease termination fees increasing by over 6% compared to 2022.
- The company acquired almost 1 million square feet of operating properties and nearly 330 acres of development land in 2023.
- As of December 31, 2023, the development and value-add program consisted of 18 projects in 12 cities located in major Sunbelt markets.
- In 2023, construction began on 11 projects totaling approximately 2.4 million square feet, and 13 properties with approximately 2.3 million square feet were transferred into the operating portfolio, being 100% leased as of December 31, 2023.
- Dividends of $5.04 per share were declared for 2023, marking 44 years of consecutive quarterly cash dividends, with increases in each of the last 12 years.
- The five-year compounded annual total return to shareholders was almost 18% at December 31, 2023.
- The company completed its first GRESB Real Estate Assessment in 2023 and is expanding its development of properties to high sustainability standards, including electric vehicle charging stations.
- The company's portfolio includes approximately 59.7 million square feet as of March 31, 2024.
- Net income attributable to common stockholders was $4.42 per diluted share in 2023.
- The company issued $699.3 million in common stock under its continuous common equity program in 2023 at an average of $170.77 per share.
Sentiment
Score: 9
Explanation: The document presents a highly positive outlook with record financial performance, strategic acquisitions, and a commitment to strong governance and sustainability. The company's consistent dividend growth and high shareholder returns contribute to the strong sentiment.
Positives
- The company has a strong track record of dividend growth, increasing dividends in each of the last 12 years.
- The company is committed to corporate sustainability initiatives, including developing properties to high sustainability standards and investing in energy-efficient improvements.
- The company has a strong employee-focused culture, evidenced by low employee turnover and strong lease metrics.
- The company has a strong balance sheet and is judicious with capital allocation and incremental risk.
- The company has a demonstrated record of being responsive to shareholder feedback on matters such as Board refreshment and diversity, shareholder voting rights and supply chain responsibility.
- The company's leadership team actively engages with shareholders.
Future Outlook
The company believes it is positioned to continue to create value for its shareholders despite economic uncertainties, with confidence in its growth strategy of acquiring, developing, and operating multi-tenant business distribution parks.
Management Comments
- We are proud of our people and our performance, and we are excited for the future, stated Marshall A. Loeb, Chief Executive Officer, President and Director.
Industry Context
The company operates in the industrial real estate sector, focusing on multi-tenant business distribution parks in major Sunbelt markets, which are generally supply-constrained submarkets. The company's strategy aligns with the growing demand for e-commerce and last-mile delivery locations.
Comparison to Industry Standards
- The company's peer group includes Agree Realty Corporation, Americold Realty Trust, Inc., and National Retail Properties, Inc.
- The company's general and administrative expense as a percentage of revenue was less than 5% for the years ended December 31, 2023 and 2022.
- The company's compensation of our Named Executive Officers is generally at the median of our asset and size peer groups.
Stakeholder Impact
- Shareholders benefit from the company's strong financial performance and dividend growth.
- Employees benefit from the company's employee-focused culture and comprehensive benefits program.
- Tenants benefit from the company's functional, flexible, and quality business distribution space.
- Local communities benefit from the company's commitment to corporate sustainability initiatives.
Next Steps
- Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
- The company will hold its 2024 Annual Meeting of Shareholders on May 23, 2024.
- The company will continue to engage with shareholders on its performance and priorities.
Key Dates
| Date | Description |
|---|---|
| 1970 | KPMG first appointed as independent registered public accounting firm. |
| 2001 | H. Eric Bolton, Jr. became Chief Executive Officer of Mid-America Apartment Communities, Inc. (MAA). |
| 2002 | H. Eric Bolton, Jr. became Chairman of the Board of Directors of MAA. |
| 2005 | Marshall A. Loeb served as President and Chief Operating Officer of Glimcher Realty Trust from 2005 to 2015. |
| 2015 | Marshall A. Loeb rejoined EastGroup Properties as President and Chief Operating Officer in March 2015. |
| 2016 | Marshall A. Loeb named Chief Executive Officer and a director in January 2016. |
| 2017 | Brent W. Wood became Executive Vice President in May 2017 and Chief Financial Officer and Treasurer in August 2017. |
| 2018 | Donald F. Colleran has served on the Board of Directors of ABM Industries since 2018. |
| 2019 | Donald F. Colleran became President and Chief Executive Officer of FedEx Express from 2019 to 2023. |
| 2020 | The Audit Committee conducted an audit proposal process with multiple firms and selected KPMG LLP (KPMG) to continue serving as the Company’s independent registered public accounting firm. |
| 2021 | The Nominating and Corporate Governance Committee engaged Korn Ferry, a third-party search firm, to assist the committee in the identification and recruitment of an experienced, ethnically diverse candidate for our Board. |
| 2022 | David M. Fields was appointed to our Board in February 2022. |
| 2023 | The Board amended our Corporate Governance Guidelines to reflect that, in evaluating candidates, the Board will consider diversity (including diversity of gender, race, ethnicity, age, sexual orientation and gender identity) as it deems appropriate given the current needs of the Board and the Company. |
| 2023 | In May 2023, we changed our Board leadership structure to have an independent Chairman of the Board. |
| 2023 | The company completed its first GRESB Real Estate Assessment in 2023. |
| March 22, 2024 | Record date for shareholders entitled to vote at the 2024 Annual Meeting. |
| April 12, 2024 | Date on or about which the proxy statement and 2023 Annual Report to Shareholders are first being made available to shareholders. |
| May 23, 2024 | Date of the 2024 Annual Meeting of Shareholders. |
| December 13, 2024 | Deadline for shareholders to submit proposals for inclusion in the Company's proxy statement for the 2025 Annual Meeting of Shareholders. |
| January 23, 2025 | Earliest date for shareholders to give written notice of a proposal or director nomination for the 2025 Annual Meeting of Shareholders. |
| February 22, 2025 | Latest date for shareholders to give written notice of a proposal or director nomination for the 2025 Annual Meeting of Shareholders. |
Keywords
EastGroup Properties, real estate investment trust, industrial properties, Sunbelt markets, funds from operations, FFO, net operating income, PNOI, dividends, corporate governance, sustainability, proxy statement, executive compensation, board of directors, shareholder value
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