Reit Magazine - March/April 2021 - 36

Credit: Aerial Innovations, Inc.

Gateway Commerce Center,
Miami Gardens, Florida

ADDRESS
400 W Parkway Place,
Suite 100
Ridgeland, Mississippi 39157
WEBSITE
eastgroup.net
MANAGEMENT TEAM
Marshall Loeb
President & CEO
Brent Wood
EVP & CFO
Staci Tyler
SVP & Chief Accounting
Officer

36 |

reit

oday, the portfolio includes approximately 47
million square feet in 13 of the 15 fastest-growing major Sun Belt markets. EastGroup focuses
on local economies that are growing faster
than the broader U.S. economy and are better
positioned to handle the ups and downs of economic
cycles.
Most of EastGroup's properties are industrial facilities known as " shallow bay " that support distribution,
light manufacturing, and last-mile logistics. Some
tenants have office space on site. The company prefers
to operate a model somewhat similar to building out a
residential development.
" We like developing a whole park. We'll build
two buildings and as those lease up, we'll then break
ground on one or two more, " Loeb explains. " The
market demand pulls the supply rather than the
company feeding supply into the market. This dramatically reduces our development risk. "
As EastGroup nears critical mass in a park, original
tenants may need to move to a larger space, creating
an opening for a new tenant paying higher rent. And,
" as we complete the park, our ability to control the
tenancy, the architectural design, and the landscaping
creates a real sense of place, " Loeb says.

E-COMMERCE AND COVID
While e-commerce has grown dramatically in recent
years, pushing companies to focus on having distribution as close to consumers as possible-EastGroup's
exact niche-the COVID-19 pandemic only increased

the demand. " COVID has actually accelerated the
EastGroup model in a variety of ways that will play out
over the next several years, " Loeb says.
What's more, the shift to work from home has accelerated population movement to the Sun Belt markets,
pushing companies to follow, Loeb says. Meanwhile,
" we've begun seeing companies carry more 'safety
stock' inventory to avoid the shortages they had
during COVID, " he adds. " That shift leads to increased
square footage. "
Still, there has been some concern amongst investors that EastGroup's portfolio of warehouses, which
has a smaller average building size than its peers in
the industrial REIT sector, could be more exposed to
small businesses that are struggling to make it through
the pandemic, Heck says. For now, " their rent collections have been strong, " he notes.

HOTTEST MARKETS " ROTATE "
Today, more than one third of EastGroup's net income
comes from Texas, where it has properties in El Paso,
Dallas, Austin, San Antonio, and Houston. The latter
is its largest market in the state.
Some analysts think the company found itself
overexposed to Texas when the price of oil plummeted
in 2014, causing it to sell some properties. " In the past,
EastGroup's high exposure to the Houston market
has been a disadvantage, but the company has done a
great job of diversifying away from Houston through
dispositions and additional investment in other Sun
Belt markets, " Heck says.


http://www.eastgroup.net

Reit Magazine - March/April 2021

Table of Contents for the Digital Edition of Reit Magazine - March/April 2021

Contents
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Reit Magazine - March/April 2021 - Contents
Reit Magazine - March/April 2021 - 1
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