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JACKSON, MS-Funds from operations that met the upper end of guidance and a still-liquid balance sheet were a couple of highlights addressed at EastGroup Properties Inc.’s Q4 conference call on February 12. The company’s FFO was $21.2 million, an increase of 11.8% compared to the end of 2007.

Despite the good news, company president and CEO David H. Hoster II was under no illusions that the economy is in a downturn. “Though the markets are still alive, the level of activity continues to deteriorate,” he commented. He said he expects EastGroup portfolio occupancy to decrease between 250 and 300 basis points, with a decline in FFO in 2009. “The good news, is we’re facing the downturn with a strong and flexible balance sheet and a strong management team,” he said.

According to Hoster and CFO N. Keith McKey, the goal during 2009 is to weather the recession, keep paying dividends and keep the balance sheet liquid. With this strategy, the executives said, EastGroup will be in a good position to take advantage of opportunities that are likely to pop up at the end of the down cycle.

To that end, McKey said, the company is planning to obtain more debt. In the meantime, the company has current debt maturities of a little more than $31 million in 2009, with none maturing in 2010.

Development activity is also taking a hit. Though EastGroup launched construction in November 2008 on the 88,000-square-foot World Houston 30, “we’re projecting no new development starts in 2009,” Hoster said. “Our program has had a good, long run, but we don’t expect to see opportunities for new development in the near term, other than a possible build-to-suit or to.” Nor are any acquisitions or dispositions planned.

As of the end of 2008, EastGroup had 17 developments under construction, totaling 1.6 million square feet at a total projected cost of $119 million. The properties collectively were 22% leased as of February 10, 2009.

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