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EastGroup Properties and Standardization of Property Metrics

Introduction

In a significant move for the industrial real estate sector, EastGroup Properties, Inc. (NYSE: EGP) has announced the formation of a coalition with other major Industrial Real Estate Investment Trusts (REITs). This initiative aims to standardize key property metrics to bring about enhanced comparability and confidence in the real estate sector.

The Coalition

This new coalition consists of EastGroup, First Industrial Realty Trust, Inc., Prologis, Inc., and STAG Industrial, Inc., collectively referred to as the Industrial REIT Group. The group's objective is to update their methodology for calculating crucial non-GAAP (Generally Accepted Accounting Principles) property metrics. The focus will be on advancing standards that can be applied consistently across the sector.

Background

The current initiative builds upon a previous harmonization effort that commenced in 2018, which underscored the importance of transparency and consistency in reporting property metrics. The Industrial REIT Group has reaffirmed its commitment to define and evaluate key areas such as property stabilization, occupancy rate, rent changes, and customer retention. Furthermore, the coalition has reiterated criteria for including properties, ensuring that only those stabilized in both the relevant current and prior periods are considered in their reports.

Methodology Updates

A significant aspect of this announcement is the group's alignment on non-GAAP metrics. By adhering to these updated methodologies whenever a metric is disclosed, members of the coalition are committed to providing clearer comparisons across their performance results. This alignment includes stipulations on keeping redevelopments and value-added properties outside the same-store portfolio, ensuring that comparisons remain meaningful and accurate.

Impact on EastGroup

For EastGroup Properties, these new methodologies will be reflected in the company's guidance for 2025 and are not expected to materially impact non-GAAP metrics reported for periods prior to that year. This position indicates a forward-looking approach to operational integrity and transparency, which is advantageous for both investors and clients alike.

Conclusion

While some minor differences in calculation methods or terminology may persist, the overarching goal of the coalition is clear: to promote uniformity and transparency within the industrial real estate sector. The dedication to standardization not only serves to enhance investor confidence but also fosters a coherent understanding of industry health among stakeholders. As the Industrial REIT Group embarks on this journey, the real estate landscape stands to benefit from greater clarity and consistency in the metrics that shape its growth and sustainability.

For more information, visit EastGroup Properties to track updates related to their operational metrics and initiatives.