Q2 2021 Eastgroup Properties Inc Earnings Call
Good morning, and welcome.
For the Eastgroup properties second quarter 2021 earnings conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
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To withdraw from the question queue. Please press Star then 2 we ask that you limit yourself to 2 questions. Please note. This event is being recorded I would now like to turn the conference over to Marshall Loeb President and CEO. Please go ahead.
Good morning, and thanks for calling in for our.
Tons per quarter 2021 conference call as always we appreciate your interest Brent Wood. Our CFO is also participating on the call.
And since we'll make forward looking statements, we ask that you listen to the following disclaimer.
Please note that our conference call today will contain financial measures such as P. N.
Second in F. F O that are non-GAAP measures as defined in regulation G. Please refer to our most recent financial supplement and to our earnings press release, both available on the Investor page of our website and to our periodic reports furnished or filed with the SEC for definitions and further information regarding.
Oh, our use of these non-GAAP financial measures and a reconciliation of them to our GAAP results.
Please also note that some statements. During this call are forward looking statements as defined in and within the safe harbors under the Securities Act of 1933, the Securities Exchange Act of 1934.
Guarding our in the private Securities Litigation Reform Act of 1995.
Forward looking statements in the earnings press release, along with our remarks are made as of today and we undertake no duty to update them, whether as a result of new information future or actual events or otherwise such statements involved.
For an unknown risks uncertainties and other factors, including those directly and indirectly related to the outbreak of the ongoing coronavirus pandemic that may cause actual results to differ materially we refer to certain of these risks in our SEC filings.
Good morning, and thank.
You for your time, we hope everyone is enjoying their summer I'll start by thanking our team for a great quarter.
They continue performing at a high level and reaping the rewards of a very positive environment.
Our second quarter results were strong and demonstrate the resiliency of our portfolio and of the industrial market.
Some.
The results. The team produced include funds from operation coming in above guidance up 10, 5 per cent compared to second quarter last year.
And 3 cents ahead of our guidance midpoint.
This marks 33 consecutive quarters of higher F F O per share as compared to the prior year quarter truly.
Really a long term trend.
Our second quarter occupancy averaged 96, 8% up 20 basis points from second quarter, 'twenty 'twenty and at quarter end were ahead of projections at 98, 3% leased and 96, 8% occupied.
Our occupancy is benefiting from a hell.
Pocket with accelerating e-commerce and last mile delivery trends.
Orderly releasing spreads were among the best in our history at 31.2% GAAP and 16.2% cash.
And year to date, those results are 28% GAAP and 16% cash.
Finally cash same store NOI rose by 5.6 per cent for the quarter and 5.8% year to date in.
In summary, I'm proud of our team's results putting up 1 of the best quarters in our history.
Today, we're responding to this strength in the market and demand for industrial products both by users.
Yours, and investors about focusing on value creation via development and value add investments.
I'm Grateful we ended the quarter at 98, 3% leased matching our highest quarter on record.
To demonstrate the market strength or last 3 quarters, where the highest 3 quarterly rates in the company's.
These history.
Looking at Houston were $96.5 per cent leased with debt, representing 12, 3% of rents down 150 basis points from a year ago and is projected to continue shrinking.
We will speak to our budget assumptions, but I'm pleased that we finished the quarter to $1.47.
<unk> per share in F F O N.
And are raising our 2021 forecast by 9 cents to $5.88 per share.
Helping us achieve these results is thankfully, having the most diversified rent roll in our sector.
With our top 10 tenants only accounting for 7.9% of rents.
As we've stated before our development starts are pulled by market demand based.
Based on the market strength, we're seeing today, we're raising our forecast it starts to 275 million for 'twenty 'twenty 1.
This represents a record annual level of starts for the company.
And to position us following the pandemic.
We've acquired several new sites with more in our pipeline along with value add and direct investments more details to follow as we close on each of these opportunities.
Brent will now review a variety of financial topics, including our 2021guidance.
Good morning, our second.
Quarter results reflect the terrific execution of our team strong overall performance of our portfolio and the continued success of our time tested strategy.
<unk> per share for the second quarter exceeded our guidance range at $1.47 per share and compared to second quarter 'twenty 'twenty of $1.33.
Represented an increase of 10.5 per cent.
The outperformance continues to be driven by our operating portfolio performing better than anticipated, particularly the quick re leasing of vacated space during the quarter.
From a capital perspective during the second quarter, we issued $60 million of equity at an average price.
Rice over 162 per share and we issued and sold 125 billion of senior unsecured notes with a fixed interest rate of $2.74 per cent and a 10 year term.
In June we amended and restated our unsecured credit facilities, which now mature July 2025.
Capacity was increased from 395 million to 475 million, while the interest rate spread was reduced 22, and a half basis points and our ongoing efforts to bolster our ESG efforts, we incorporated a sustainability linked metric into the renewal.
That activity combined with our already.
The Kona and conservative balance sheet has kept us in a position of financial strength and flexibility.
Our debt to total market capitalization was 17% debt to EBITDA ratio at 4.9 times and our interest in fixed charge coverage ratio increased to over 8 times.
Rent collections have been equally strong.
Bad debt for the first half of the year as a net positive $90000 because of tenants, whose balance whose balance was previously reserved that brought current exceeding new tenant reserves.
Looking forward F F O guidance for the third quarter of 'twenty 'twenty..1 is estimated to be in the range of $1.46 to.
A $1.50 per share and $5.83 to $5.93 for the year, a 9 cent per share increase over our prior guidance. The 2021F F O per share midpoint represents a 9.3% increase over 2020.
Among the notable assumption changes debt comprised.
Our eyes are revised 2021guidance include increasing the cash same property midpoint by 18% to 5.2%.
Increasing projected development starts by over 30% to 275 million and increasing equity issuance from $140 million to a $185 million.
And.
We were very pleased with our second quarter results. We will continue to rely on our financial strength the experience of our team and the quality and location of our portfolio to carry our momentum through the year now Marshall will make some final comments.
Thanks, Brent in closing I'm excited about our first half.
For the year were ahead of our forecast and are carrying that momentum into the back half of the year Our company our team and our strategy are working well as evidenced by our quarterly statistics.
And it's the future that makes me the most excited for Eastgroup. Our strategy has worked for the past few years and we're seeing an acceleration.
And in a number of positive trends for our properties and within our markets.
Meanwhile, our bread and butter traditional tenants remain and will continue needing last mile distribution space in fast growing sunbelt markets. These along with the mix of our team our operating strategy and our market has us optimist.
Optimistic about the future and we will now open up the call for any questions.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then 2 other remind.
Reminder, please limit yourself to 2 questions I have first question is from Daniel Santos of Piper Sandler. Please go ahead.
Hey, guys. Thanks for taking my questions and congratulations on a strong quarter.
So my first 1 is on development yields last quarter, you spoke about potentially seeing some development yield pressure.
But from your results it seems like you've been able to maintain fairly consistent yield. So I guess I would ask for some commentary there.
Sure good morning, and thanks, Danielle Yeah.
Right I guess it shows non inability to predict for perhaps but I'll I'll compliment the team Europe construction prices.
We've continued to rise and then actually deliveries are continuing to get elongated so I.
I still expect more downward pressure on our development yields to date, the offset the market has been so positive as we've been able to offset that with rent growth in the markets and maintain those 7.
Kevin yields and and probably especially if we look back at last year. The other kind of gratifying part of that is cap rates have come down.
They've been low in the major markets within our footprint and say the Los Angeles, Dallas, Atlanta, but they've continued to come down maybe another 50.
<unk> to 70 basis points really across almost all of our significant market. So our spread to develop yields to market value is probably closer to 300 basis points. It at a 7 probably almost everywhere. We are developing is probably close to for in some cases below.
Year to day in a number of cases, so I still think they'll come down, but thankfully they've got room to come down in fronts are still be pretty profitable opportunity for eastgroup.
Perfect. That's Super helpful. The next question is more of a big picture question, you know employers across the country of all.
<unk> for them to it about the labor shortage in the number of unfilled positions, but it seems like despite that tenants are still growing and taking more space. So I guess my question is are you seeing any sort of on the ground impact.
From the labor shortage as far as taking space or our tenants really commenting that their expansion is hindered by the labor.
For shortage.
A good question and typically the larger the tenant the more it makes sense the larger the labor challenges for them or the more day.
Think about that I've had brokers say to me in the past the kind of the main factors are always the rent the tenant improvement allowance the lease term.
And now.
Now where do you draw your labor force becomes part of that a bigger and bigger part of that equation.
For us, we probably see it more and it's not given the leasing velocity that we've seen this year that has been better than we had anticipated and it feels like it's certainly.
Continued.
Going into the back half of the year, probably more on construction cost of getting the trades and we are seeing a rise in construction pricing and things like that it's probably where we're getting it done but it is probably where we're feeling at the most but it does feel like there's inflation out there and labor will be a factor in that but to date it hasn't affected.
Our leasing you're right.
Got it that's it for me thank you.
Thanks, Dan.
The next question is from Emmanuel Korchman of Citi. Please go ahead.
Hey, this is Chris Mcquarrie on with Manny.
A quick question on development starts so with the increase in development.
<unk> guidance can you just provide some commentary on on funding sources and the balance between common stock as well as dispositions and how this may impact the acquisition pipeline.
Yeah, Hey, good morning. This is this is Brent.
Yeah. The good news is we have we view great access to capital both.
<unk> start issuing equity <unk> the debt markets.
We disclosed this quarter, we just renewed our credit facility, increasing our total capacity from 395 million for $475 million.
And really pleased to have decreased our spread our rate on that by 'twenty, 2 and a half basis points.
They're just going to be significant over the course of each year.
So from a capital standpoint, where we're not constrained.
The guys as they can on earth opportunities, which are more and more challenging, but we have that ability and really our dispositions are more of just good pruning from.
Being a good steward of operating our port.
Portfolio, and just kind of pruning from the bottom, but not so much as a source of capital needs. We just don't.
Don't need capital in that manner again, we view our stock price relative to whatever you want a compute in a V as is attractive and again debt markets attractive.
Pretty much at historical lows in terms of.
So with debt to EBITDA now being for 9 and debt to total market cap in that 16% to 17% range. So a very very good shape for capital sources for sure.
Got it and just a quick follow up on that.
Can you comment on some other markets you are focused on expanding in right now and are some of your top performing.
Our goods this quarter, a good read through on where you'll choose to grow.
Good question, Chris This is Marshall.
Certainly some although to us kind of think of it more if we think really longer term of our portfolio allocation to me it's.
We've been working in the past few years.
Mark we like Houston that kind of reducing debt Houston exposure. So.
Gratifying to see as we were looking back a 50 basis point drop from quarter to quarter down in the low 12 and that that will continue dropping but we'll we'll still stay active in the Houston market, where we're under allocated out west when you.
Here's the cash.
California markets Denver, Las Vegas, some of those.
Love to grow there, but they're really the ones. We're under allocated also the most sales like the most competitive markets, we like Miami.
Continue to develop down there Austin, Texas, and Dallas have been really hot markets and where Alec.
Look can have an allocation there, but would love to keep growing in those and I kind of view. It is brenton I. If we can manage the portfolio allocation and sometimes that comes from it's a good time to be.
Seller of assets so that in each of the teams in the field have that runway of when they find the right opportunity to go.
We're certainly create value and we can execute on that and if it requires us to sell an older asset in the market.
A good problem to have because we.
Thankfully Theres still $10.31 opportunities out there that we can recycle that capital and put it back in the development pipeline. So I hope that's helpful. It's really more of a long.
Long term like do you think of your 401, K allocation or something like that.
Got it thank you.
Sure.
Yeah.
The next question is from Albert Rodriguez of Bank of America. Please go ahead.
Good morning, guys and great quarter.
Perhaps Marshall you can share an update on.
So Atlanta land acquisition, and I know you mentioned some potential opportunities to acquire more in the balance of the year in particular, how much runway does that give you to develop in Atlanta and then also what other markets are you currently looking into.
Sure Good morning, and I hope, you're well at Atlanta, and I was just.
In Europe recently, and I'll compliment, John Coleman and our team there we are.
An acquisition this quarter was really an add on to a parcel on <unk> west that we had acquired at the end of the year that will hopefully put into production later this year pending steel deliveries and timing of that.
And then.
<unk> got a few sites tied up that we're working our way through zoning and permitting and kind of the pricing given the topography is a little more challenging in Atlanta say than most of Texas for example, or things like that but we've got some good runway for growth in Atlanta and the other.
Then the nice aspect of Atlanta is going back to the end of the year, we had tied up for rebuilding on the value add that we have agreed to purchase when they were complete and we've been able the team has to execute all 3 of those are in the portfolio at 100% leased in.
Blended.
Well on all 3 of those is probably a 6869, so taking the construction risk out of the market cap rate on each of those is probably around a for so we love the value creation from their other markets, where we're looking and it really kind of pins on where we've got land, but we've got.
Various stages between.
The yield a little bit of time left to close with Charlotte, we're running out of land Thankfully. It Steele Creek and have some land that's been publicly announced there that the airport authority is selling Charlotte Austin as I mentioned a market we like we've got some land parcels there.
Phoenix working on land Dallas.
Thats kind of each of the markets, it's harder and harder and I'll say the number of developers.
Developers the strength in the industrial market broadly is not a well kept secret. So the number of active developers in our market is up pretty materially over the last couple of years.
So it's harder and harder.
So it has good parcels, but we've got a fair amount several hundred acres kind of tied up in working our way through diligence on those and hopefully.
We will close as many of them as makes sense as we get to the end, if we can get permitting and zoning and all other things like that that take time.
Thanks, Marshall for the update and then perhaps you can.
Maybe speak to the tenant retention in.
In the quarter and how you look at that versus rent growth for sort of like the push and pull of keeping a tenant in the revenue in the portfolio versus really pushing for that higher rent.
That you can probably expect from our new tubular.
Good good question and typically weak we've been keeping.
Well performing tenant long term is where you'd rather go in.
Thankfully almost every tenant I'd say high 90% have their own tenant rep broker by the time they sit down.
With us and so there they are aware of the market and we'll push rents.
Honestly, we were GAAP over 31%, so we've had lower tenant retention year to date.
Typically we retain about 70% of our tenants last year, we were closer to 80 and probably too.
Yours have driven our retention down year to date, as we think about it or.
1 is COVID-19 hit last year, everybody understandably put there.
Growth plans and what they were thinking on hold and that helped us in the short term and that most tenants just stay put and didn't move and.
<unk> now as the economy kind of <unk>.
Stabilizes or people get caught.
Comparable operating in this environment, we are seeing.
Let's expand Thats helped us leased a number of our developments have been existing tenants that have taken on more space and we've moved them from building 2 in a park to building 8 and apart for example.
And I think things like that and then.
The other thing I'll compliment the team on there's been a few of our.
The 'twenty 'twenty rent deferral customers that they came in they struggled through it but given how tight the market or is it.
Non as much pushing rents is improving our credit.
Quality, so we've vacated some pretty large tenants within our within our buildings up 190000 foot and the Amazon lease that we signed in San Diego in first quarter was <unk>.
Tenant that had struggled over the years another 1 in southern California, and second quarter, and we got strong re leasing spreads in each.
Each of those cases, but it was also a good opportunity to move a tenant where maybe their business was struggling a little bit and put up better quality.
Tenant and you saw 1 it's in our top 10 tenants, but its a 3 PL and net replace to tenant who had struggled a bit over the past couple of years. So that's if that helps that's really how we.
Think about it.
Great time now to improve our credit quality of our tenants are like how diversified our RP.
Our portfolios with our top 10 under just under 8% and then in the meantime push rents as best we can but probably not create vacancy because I think most of the tenants know where the market is.
Certainly by the time, we finished negotiations.
Thank you.
Sure.
The next question is from Tom Catherwood of BT I G. Please go ahead.
Thank you and good morning, everyone.
Marshall in your opening remarks.
You mentioned continuing demand from e-commerce tenants and.
Specifically last mile delivery.
It feels like <unk> been talking about last mile delivery in gateway cities for a while now but with population growth in the Sun belt. It seems like there's been more attention on swift or fulfillment.
Where.
For markets in terms of the build out of last mile distribution facilities and are you seeing any shifts in how your tenants are using your shallow base space for this.
Yes.
Yes, yes, and no I guess, we certainly see it.
Part of the leasing volume this year it seems to be.
More and more and also 3 pls, so kind of that freight fulfillment and really last mile delivery I do see tenants, we've seen an increase in retail oriented tenants taking space for delivery and then as the brokers has explained it to us anything that speeds up delivery.
Whether it's a good or a service that's where the world's going right now so and a lot of our cases, we also have.
It can be the Eric and train air conditioning Goodman any of those Baker the large HVAC companies the pool supply guys. So if you're in Atlanta or Dallas in Euro.
I guess residential or commercial operator at this time of year if you're.
If your HVAC goes out you want that delivery person for this service person there quickly and then we do see it within ecommerce also of well as you know.
It's really what used to be acceptable demand was maybe 3 to 4 days. If you go back even.
Even further than that and now its Amazon Prime Amazon Prime now and we really anticipate Amazon certainly Ben.
As we've all talked about a large consumer of space over the last call. It 18 months and doesn't really feel like they're slowing down their program and.
We think the other retailers.
If our business cards.
Switch you've got to find ways to compete with Amazon on price and delivery. So I think that's where our portfolio fits well in our pitch to a number of these retailers via whereas e-commerce or or delivery or.
As we day dream at Curbside pickup our buildings are efficient and close in in last mile and you're going to have to compete with Amazon Prime now. So it is moving in that direction and it really depends more on that that retailer than it does.
By market, Yeah, you're right certainly in.
Los Angeles, and New York, but I don't think Dallas for.
Phoenix, Atlanta, Miami or very far behind.
Certainly see it in Miami, where our project is our parks is pretty far east compared to the competition and when you think in South Florida that basically means.
Closer to the coast closer to where the.
The high end residential is all along the Atlantic.
Got it appreciate that Marshall.
And then.
Final for me.
Picked up some additional value add properties in this quarter.
2 parts first when youre doing underwriting of value add versus.
<unk> stabilized, what's the kind of spread in terms of yield that you are typically underwriting on these deals and then second are there some markets that have more opportunities for value add than others right. Now obviously, you've been active in Atlanta, and Greenville, So far but kind of what are you seeing as far as trends in specific markets.
Yes.
I guess historically you are looking back we would say we developed to a 7 and maybe the markets and now as I mentioned in a down to 4.
And then the value add would maybe pencil out around mid fives to 6 so youre getting maybe half.
The spread is maybe half of what it is but you don't carry the land go through the zoning entitlement construction risk everything like that for the returns should be a little lower the teams executed well until we've had really strong returns almost the same as our development yields without that land carry or consumer.
Construction risk.
The tricky part now I think for market.
The appetite is so great for industrial and what we've seen over the years, we really moved to our value add because acquisitions lease products. Scott. So expensive. We said why don't we take on the leasing risk and we can do that and development but.
I think the market for less and less afraid of vacancy. So we've seen spreads continuing to come down on value add it really depends on those developer relationships.
They usually have a financial partner and the model works, where we will talk to them and say, we'll buy you out its certificate.
Total of occupancy Youll get part of your promote with your financial partner and you can move down the street and go build the next building so that's where it is.
Its work and its typically where we've been able to develop a relationship with that particular developer and maybe do multiple transactions.
I do think where the market is more and more of those cases, we see them listing it with 1 of the national brokerage groups and that's where the pricing.
Rather than we're buying at a 6 in the markets for the market is paying for in a quarter and a market cap rate that spreads gotten awfully tight because of the fear of vacancies.
<unk> continues to go down with.
This much capital and only so many places.
For it to go to work.
Understood. Thank you Marshall.
Sure. Thanks, Tom.
The next question is from Dave Rodgers with Baird. Please go ahead.
Hey, guys. This is Nick.
Dave I just had a question on utilization store shelves continue to be somewhat empty and then warehouses are somewhat for gist.
And in Port activities rising I guess whats the disconnect on getting products to the consumer in this market.
And I guess, if I am answering that and then Brent jump in.
Well, we've kind of used the phrase that demand sales like its here today and certainly we've seen it with our leasing and our tenant growth and what's what's been a net.
And it doesn't feel like it's going to get resolved anytime soon as you mentioned is getting product, there's still a backlog of ships at the ports.
On free play in long Beach, and with the Delta area and things like that that supply chains or just.
<unk> snarled and won't be resolved anytime soon so it's Pete.
People seem to be purchasing what's available not what's your choice of appliances or whatever item. It is.
You seem to pick.
And I think we're as we watch it and try to evaluate it and experience it to its putting stress on our development pipeline because it takes longer for us to get for steel which is usually.
Historically made in China.
So that Theres no capacity right now with the ships and the other reports and things to get the steel to the U S and it's more expensive, but in the meantime, although its taking us longer to build out our spaces.
Same same impact on all of our competition. So that's.
Thats partially.
Some economic shutdown again, unless there is another big big enough Covid spike that the government shuts down the economy.
Great. Thanks for that and then.
I guess 1 question just on development you had that build to suit opportunity in San Diego last quarter just commentary on.
Have been tenants approached you on build to suit opportunities on your land bank or whats your appetite for that.
Yes.
Good good good catch for good note.
Happy.
About that and then what you are planning a multi building park and it work for Amazon for a facility. There. So we are under construction and hopefully we will deliver it in first quarter of next year and.
And really we set our goal when we bought the land we like the building design, although it's a building rather than 5.
5 or so which we originally had planned for the site, but we are seeing more and more of that that tenant sizes seem to be growing and we've got another 1 or 2 you never know I mean, it's always competitive.
<unk> for those pre lease opportunities, but if we can manage the construction risk which we.
We have by the time, we give them their their bids.
But if at worst case, we run out of land, which is what was our goal when we acquired it in.
Now we're looking for other sites in San Diego, So, we'll find that but we.
We had a bunch of land in Atlanta or in San Diego in fourth quarter and suddenly we're out. So now were scrambling to find the next land parcel, but I hope we'll see.
A few more and more of those and where cap rates are and we think we're getting a great return without long.
12, plus year lease with Amazon on that side.
Great. Thanks, guys.
Sure.
The next question is from Michael Carroll of RBC capital markets. Please go ahead.
<unk>.
Yes, Marshall talked a little bit about the the land acquisitions and I think you mentioned this in your prepared remarks, and a little bit through the Q&A that you have a number of pending transactions for potential land sites.
I think you were talking about that you need to get them entitled before you close on those deals maybe you could provide some color on what type.
But you are looking at and the timing of those acquisitions and when could day closing how much development because they support.
I'm trying to go working back through that we do and I'll really speak which I like our model and everybody's got a little bit of a different model in and breath.
And I were both in the field, although especially with me it's been a minute.
But where if you had Texas for example, you're responsible for everything in Texas, and that's existing portfolio as well as finding opportunities. So we don't have a chief operating officer, we don't have a chief investment officer.
Besides maybe saving a little bit of G&A, it's really up to those those teams in the field to go find the opportunities. So it's typically your you know your <unk>.
Looking at aerials on you know on the computer or in the car with brokers and just turned over a lot of stones and I'll compliment the team they keep.
Finding ways to honors parcels every once in a while it's a greenfield usually it's something in this market is as many developers on a number of here's a stat that surprised me recently when I was in Dallas and was meeting with the CBRE team that they said they were tracking maybe.
5 years ago, 20, plus active developers and the Dallas market and now that number's approaching 100 for industrial and so that tells you how.
Before he got 20 call. It 28 people out looking for land sites in maybe in the Ninety's today of how hard it is to find land but.
Our building footprints are smaller and so sometimes there's parcels who work for us that may not work for developer that's building bigger boxes and things like that which is mostly where the new supply falls as it's the edge of town and a half million square foot in a million plus square foot.
But building so they keep finding them we have.
Then, we'll see where these all shake out but several hundred acres still under contract that would close by the end of the year and then value adds as well and then a few probably another close to 100 I'll have to look further.
Bill out into 2022, but on other some parcels that take longer than that and and what we'll try to do obviously, we'll tie it up as long as that seller will allow us to reduce debt construction risk ideally in a lot of cases, we're ready to go and put it into production as quickly as we can but the more we can minimize.
Further on any of that construction risk.
Zoning risk permitting things like that getting through the city. So we think that's.
Kind of that risk reward is helpful for our shareholders.
So it's all tied up in our whole process. We'll go through and then as soon as we close ideally we'd love to break ground next day to minimize.
Does the carry.
And that's really great color.
Yes, that's a big part of their job Brent.
Any color you've lived that world for a long time too.
I think that's exactly it when we say entitlement of price you have some states like Texas is a little easier to migrate through the process, but.
In the end you're trying to make sure you've got a clear path to close meaning theres no surprises regarding zoning or improving your plans for those type things and like I say in some markets that process is quicker like in Texas and in some other markets that process takes quite a bit more time.
And so you know.
1 thing that.
Behind the scenes has become more.
Noticeable internally, maybe not externally is just the time it takes to procure land you know when you guys see it hit the supplemental schedule and you say well you always say, it's land constraints, you're always buying sites, but I would say our lead time over the last 15 years or probably come from 3 to 6.
Tying up land and closing to 18 to 24 months and meeting the time it takes to to go through the hoops or 2 if you've got a redevelopment where you're going to close a golf course, or a horse race track or move somewhat off the site that type thing. It just takes away more time and so that's why it's good.
<unk> from public Reits have an advantage over others as debt you've got boots on the ground and we've got a great team in the field that can continue to make that happen and it's allowing us to create tons of niv through that platform.
So what's increasing that timeframe is it just that you're being more creative I'm trying to find sites that could support.
For industrial and you need to entitle it.
That was before maybe you are buying stuff that was already entitled for industrial as there's more competition I mean, what is increasing debt that timeline.
It's the it's what's available I mean, when I moved out Houston 20 years ago, when you literally can still pull.
It's what the green the Green, we say great day.
Undeveloped tract of land that had utilities at the street and you put it under contract by it and build buildings and time the Street and you went about your business and then now you know those type opportunities arent there. So youre looking at trying to rezone, a property, which trying to get most of the time, that's down zoning, meaning it's probably a higher.
Up to and better use or do you hire them better than industrial so you're trying to get at zone down to industrial you're trying to buy a business or 2 and close them and replant the land into 1 piece I mean, there's no now there's just so much other leg work that goes into getting it shovel ready as opposed to literally.
Higher than that and sticking your shovel in the ground, there's a lot of behind the scenes.
Work that has to go into it it's not an easy it's 1 reason that that you've seen supply not be.
As great somebody why aren't more people doing this well quite frankly, it's not you know the development side of the business is not an easy and some of the public REIT.
Have a great team to make it look easy, but it's not an easy thing to do would not be easy for you and how to go out and.
You know get a great track of land in a major metropolitan area and just go to town on I mean, there's a lot of people trying to do that.
Okay, great. Thank you.
Sure.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Marshall Loeb for closing remarks.
Okay. Thanks, everyone for your time appreciate your interest in Eastgroup.
I know, it's a busy earnings season, any follow up questions, Brent and I are certainly available and hopefully for you in person at our conference before.
For too long.
Thanks again, thanks, everybody.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.