Reit Magazine - March/April 2021 - 35

hen it comes to industrial real
estate, EastGroup Properties Inc.
(NYSE: EGP) has operated under
a simple mantra in its 30 years as a
public company: bigger isn't always
better. The REIT has honed its strategy
in favor of smaller warehouse buildings
located closer to consumers in markets
across the Sun Belt.
EastGroup's properties are more akin to attractive
office parks than typical warehouse space, and instead
of focusing on a handful of prominent tenants, the
REIT rents to a wide variety of businesses that may
need just 15,000 or so square feet.
" Our customers typically serve a local, growing
metro area, " says Marshall Loeb, EastGroup's president
and CEO. " As a result, our 'last-mile' locations are
often irreplaceable as cities grow and our customer
pool continues to grow and diversify. "
The company is also benefiting from shifting demographics as consumers exit coastal cities. " EastGroup's
focus on smaller warehouse buildings has made it
uniquely sensitive to local market economies, which
should work in their favor as we continue to see strong
migration trends towards the Southeast and Sun Belt
markets, " says Blaine Heck, a senior equity research
analyst with Wells Fargo.
The company's strategy has resonated with investors, as EastGroup's market capitalization has soared
from $2.8 billion in early 2016 to roughly $6.8 billion
today. Meanwhile, the dividend has been increased or
maintained for 28 consecutive years, with increases in
each of the last nine, according to the company. " We
have a market-tested strategy and management team, "
Loeb says.

'SECRET SAUCE'
The company, once known as Third ICM Realty,
traces its roots back to 1969. The EastGroup name
was adopted when the current management assumed
control in 1983. Four public REITs have been merged
into or acquired by EastGroup: Eastover Corp. in 1994;
LNH REIT Inc. and Copley Properties Inc. in 1996; and
Meridian Point Realty Trust VIII in 1998.
Throughout its growth over the years, the company's
business model has remained intact. " Their secret sauce
is down pat, " says Alex Goldfarb, REIT analyst with
Piper Sandler. " They've just become phenomenal at it. "

Nareit: Real estate working for you |

35



Reit Magazine - March/April 2021

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