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EastGroup (EGP) Expands Portfolio With Raleigh Acquisition

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EastGroup Properties (EGP - Free Report) has acquired a 275,000-square-foot newly constructed industrial property in Raleigh for $54 million. The property is fully leased to three tenants.

This marks the company’s foray into the Raleigh-Durham market. Backed by its population growth, diversified economic base and prominent universities, this market has been EGP’s target market for several years.

In January 2024, EastGroup acquired Spanish Ridge Industrial Park, comprising three developed business distribution buildings aggregating 231,000 square feet, for $54.86 million. Located in the Southwest submarket of Las Vegas, the buildings are 100% leased.

Also in the same month, the company acquired Brightstar Land, a 34.3-acre parcel of development land in the I-20 West submarket of Atlanta, for $3.3 million. The site will accommodate the planned future development of two buildings containing roughly 315,000 square feet.

EastGroup's performance is a testament to its strategic acumen. As of May 30, 2024, the REIT's portfolio boasted a solid 97.7% lease rate and a 97.0% occupancy rate. The company achieved substantial increases in rental rates, with 1.23 million square feet of new and renewal leases signed so far in the second quarter, showing a remarkable average growth of 69.6% on a straight-line basis and 49% on a cash basis.

EastGroup's strategic moves align with the broader trends in the industrial real estate market. This REIT is engaged in the development, acquisition and operation of industrial properties and focuses on properties in major Sunbelt markets throughout the United States, emphasizing assets in Florida, Texas, Arizona, California and North Carolina. EGP targets providing functional, flexible and quality business distribution space for location-sensitive customers, mainly in the 20,000-100,000 square foot range, in its markets.

With its strategy of ownership of high-quality distribution facilities clustered near major transportation features in supply-constrained submarkets, EastGroup is expected to benefit from the healthy fundamentals of the industrial real estate market.

Carrying a Zacks Rank #3 (Hold), this industrial REIT has gained 2.5% in the past month compared with the industry’s increase of 3.4%.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are American Tower (AMT - Free Report) and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for American Tower’s 2024 FFO per share is pegged at $10.39, which suggests 5.27% year-over-year growth.

The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been revised 2 cents upward over the past month to $2.63.    

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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