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JACKSON, MS-Citing a conservative and careful approach, EastGroup Properties Inc.’s’ management indicated Q1 2009 operating results exceeded the upper end of its guidance, due to a decrease in both operating and interest expenses. As a result, despite the recession, funds from operations were $20.7 million, the same as figures from Q1 2008 .

Additionally, revenues increased, moving up from $40 million during Q1 2008 to $43.3 million in the quarter just ended. NOI was also slightly up at $30 million from last year’s $29 million. But with the customer retention rate at 67%, same property net operating income declined 2.6%.

President and CEO David H. Hoster II said no new developments were launched during the previous quarter, nor were any likely to begin this year. He did indicate, however, that EastGroup has a 140,000-square-foot property under contract in Las Vegas, NV, which is scheduled for a May 2009 closing.

“That will be a new market for us, one in which we’ve been interested for a long while, but haven’t been able to afford,” he said. Also, he hinted, the Las Vegas acquisition could be the start of a few more. “With no new developments, acquisitions or sales, and a strong balance sheet, we expect to be able to take advantage of acquisition opportunities over the next 12-18 months,” he commented.

Hoster said EastGroup is looking for likely assets between 60,000 and 100,000 square feet throughout the sunbelt, in metropolitan areas that have more than a million on population. The preference is for multitenant product in infill sites with high barriers to entry and a staggered termination.

“We see this current environment as a good opportunity to a achieve a number of things,” he commented. “First is to fill some holes in markets where we’re operating. Second, is to enter some new markets were prices in the past have been so out of our range, we haven’t bid on them before.” In addition to Las Vegas, Hoster said EastGroup is targeting the Carolinas, possibly Austin, TX, and southeast Florida.

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