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EastGroup Sees 96.5% Occupancy, Collects 97.9% of August Rents
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EastGroup Properties Inc. (EGP - Free Report) is witnessing decent demand for its properties. As of Aug 31, 2020, the company’s operating portfolio was 97.3% leased and 96.5% occupied. Also, its Houston portfolio, which represents the company’s largest market, was 96.9% leased and occupied.
The company’s rent collection tally too is healthy. As of Sep 3, the company collected 97.9% of August rents, and 98.2% of both July and June rents. As of Sep 3, August rental receipts are slightly higher than the July rental collections made as of Aug 3.
Further, the rental receipts for May, April and March have been 98.6%, 99.3% and 99.7%, respectively as of Sep 3. In its Houston portfolio too, rental receipts have been healthy with the company collecting 98.6% of August rents, 98.1% for July, as well as 99.9% for June, May, April and March.
Nevertheless, some of its customers’ businesses seem to have been affected. The company received rent relief requests, mainly as payment deferral requests, from roughly 29% of its customers. Through Sep 3, some sorts of relief have been granted to around 16% of such requests. This marked approximately 4% of its customers on a square-foot basis. Rent deferral agreements executed by the company totaled $1.6 million, which denotes just 0.4% of its estimated 2020 revenues.
The industrial asset category is showing resilience amid the coronavirus pandemic with low vacancy rates, high asking rents and robust rent collections. There has been a notable increase in e-commerce’s share of total retail sales, spurring demand for warehouse and distribution space. Also, apart from the fast adoption of e-commerce, the industrial real estate space is anticipated to benefit over the long run from a likely increase in inventory levels by companies as a precaution for any supply-chain disruptions.
This, in turn, will likely keep supporting industrial landlords like EastGroup Properties, Prologis, Inc. (PLD - Free Report) , Duke Realty Corp. , and Terreno Realty Corporation (TRNO - Free Report) to enjoy a favorable market environment.
Particularly for EastGroup, its well-leased industrial portfolio enjoys a solid presence in the Sunbelt region. Further, the company’s focus on value-additive acquisitions and strategic developments will likely be conducive to its bottom-line expansion.
EastGroup also has an investment-grade balance sheet and enjoys a favorable credit rating of Baa2 from Moody’s. Recently, its board of directors approved a 5.3% increase in the company’s quarterly dividend to 79 cents per share from 75 cents.The company will pay the raised dividend on Oct 15, to shareholders on record as of Sep 30, 2020.
However, the pandemic’s adverse impact on the economy might thwart demand for space to some extent in the near term. Rent relief and deferrals are likely to remain concerns.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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EastGroup Sees 96.5% Occupancy, Collects 97.9% of August Rents
EastGroup Properties Inc. (EGP - Free Report) is witnessing decent demand for its properties. As of Aug 31, 2020, the company’s operating portfolio was 97.3% leased and 96.5% occupied. Also, its Houston portfolio, which represents the company’s largest market, was 96.9% leased and occupied.
The company’s rent collection tally too is healthy. As of Sep 3, the company collected 97.9% of August rents, and 98.2% of both July and June rents. As of Sep 3, August rental receipts are slightly higher than the July rental collections made as of Aug 3.
Further, the rental receipts for May, April and March have been 98.6%, 99.3% and 99.7%, respectively as of Sep 3. In its Houston portfolio too, rental receipts have been healthy with the company collecting 98.6% of August rents, 98.1% for July, as well as 99.9% for June, May, April and March.
Nevertheless, some of its customers’ businesses seem to have been affected. The company received rent relief requests, mainly as payment deferral requests, from roughly 29% of its customers. Through Sep 3, some sorts of relief have been granted to around 16% of such requests. This marked approximately 4% of its customers on a square-foot basis. Rent deferral agreements executed by the company totaled $1.6 million, which denotes just 0.4% of its estimated 2020 revenues.
The industrial asset category is showing resilience amid the coronavirus pandemic with low vacancy rates, high asking rents and robust rent collections. There has been a notable increase in e-commerce’s share of total retail sales, spurring demand for warehouse and distribution space. Also, apart from the fast adoption of e-commerce, the industrial real estate space is anticipated to benefit over the long run from a likely increase in inventory levels by companies as a precaution for any supply-chain disruptions.
This, in turn, will likely keep supporting industrial landlords like EastGroup Properties, Prologis, Inc. (PLD - Free Report) , Duke Realty Corp. , and Terreno Realty Corporation (TRNO - Free Report) to enjoy a favorable market environment.
Particularly for EastGroup, its well-leased industrial portfolio enjoys a solid presence in the Sunbelt region. Further, the company’s focus on value-additive acquisitions and strategic developments will likely be conducive to its bottom-line expansion.
EastGroup also has an investment-grade balance sheet and enjoys a favorable credit rating of Baa2 from Moody’s. Recently, its board of directors approved a 5.3% increase in the company’s quarterly dividend to 79 cents per share from 75 cents.The company will pay the raised dividend on Oct 15, to shareholders on record as of Sep 30, 2020.
However, the pandemic’s adverse impact on the economy might thwart demand for space to some extent in the near term. Rent relief and deferrals are likely to remain concerns.
Shares of this Zacks Rank #3 (Hold) company have rallied 12.5%, outperforming the industry’s growth of 3.2% over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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