FOR MORE INFORMATION, CONTACT:
David H. Hoster II, President and Chief Executive Officer
N. Keith McKey, Chief Financial Officer
(601) 354-3555
Jackson, Mississippi, December 5, 2005– EastGroup Properties (NYSE-EGP) today announced the acquisition of two properties and the closing of a mortgage loan.
Wetmore Business Center in San Antonio, Texas was acquired for a purchase price of $13,000,000. Constructed in 1998 and 1999, Wetmore contains 198,000 square feet in four buildings and is currently 85% leased to 13 customers. It is projected to generate an 8.2% stabilized unleveraged cash yield at 95% occupancy.
David H. Hoster II, President and CEO stated, “The acquisition of Wetmore Business Center is EastGroup’s third investment in San Antonio and increases our ownership to 1,074,000 square feet including our two properties under development. Wetmore is in the north central airport submarket of San Antonio and complements our January purchase of Arion Business Park in the same submarket.”
EastGroup also reported the acquisition of the Castilian Research Center in Goleta (Santa Barbara), California for a purchase price of $4,092,000. Castilian, which contains 35,000 square feet and is currently vacant, is planned to be redeveloped into a state-of-the-art incubator R & D facility with a projected additional investment of approximately $3,100,000. EastGroup will sell (at cost) a 20% ownership interest to an entity controlled by its co-developer partner who is currently also a 20% co-owner of the Company’s University Business Center complex in the same submarket. At a stabilized occupancy of 95%, Castilian is projected to generate an unleveraged cash yield of 8.2%.
Mr. Hoster added, “The purchase and redevelopment of Castilian provides an opportunity to increase EastGroup’s ownership in the supply constrained Santa Barbara market and to again partner there with a proven local developer/operator.”
In addition, the Company announced the closing of a $39 million first mortgage loan with an institutional lender. The nonrecourse loan, secured by five properties, has a fixed interest rate of 4.98% and a ten-year term with a 20-year amortization schedule. The net proceeds were used to reduce short-term bank debt.
EastGroup Properties, Inc. is a self-administered equity real estate investment trust focused on the development, acquisition, and operation of industrial properties in major Sunbelt markets throughout the United States with a special emphasis in the states of Florida, Texas, California and Arizona. Its strategy for growth is based on its property portfolio orientation toward premier business distribution facilities clustered near major transportation features. EastGroup’s portfolio currently includes 21.6 million square feet with an additional 939,000 square feet of properties under development.
Certain statements in this release are forward-looking and as such are based upon the Company's current belief as to the outcome and timing of future events. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the real estate industry and in performance of the financial markets; the demand for and market acceptance of the Company's properties for rental purposes; the amount and growth of the Company's expenses; tenant financial difficulties; and general economic conditions, including interest rates, as well as economic conditions in those areas where the Company owns properties, the risks associated with the development of real property, and other risks and uncertainties detailed from time to time in the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's results could differ materially from those expressed in the forward-looking statements.
EastGroup Properties, Inc. press releases are available at www.eastgroup.net.
P.O. Box 22728, Jackson, MS 39225-2728
Telephone: 601/354-3555 Fax: 601/352-1441