EastGroup Properties EGP recently announced that it acquired Hays Commerce Center 3 & 4 in Austin for around $36 million in August. With this, the REIT’s ownership in Austin reached around 1,756,000 square feet. Developed in 2022, this property, which comprised two industrial buildings totaling 179,000 square feet, is fully leased to five tenants.
EastGroup's performance is a testament to its business acumen. As of Sept 4, 2024, the REIT's portfolio boasted a solid 97.0% lease rate and a 96.8% occupancy rate. The company achieved substantial increases in rental rates, with 1.36 million square feet of new and renewal leases signed so far in the third quarter, showing a remarkable average growth of 51.2% on a straight-line basis and 35.8% on a cash basis.
So far in the current quarter, EGP has commenced construction of two development projects located in Houston and Austin. The projects will contain around 310,000 square feet of space with a projected total cost of around $40 million. Moreover, reflecting solid demand for its properties, the company executed five leases on development properties aggregating 250,000 square feet so far in the third quarter.
EastGroup's 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 12.2% in the past three months compared with the industry’s growth of 16.9%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Cousins Properties CUZ and Lamar Advertising LAMR, 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 Cousins Properties’ 2024 FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past month to $8.09.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
