Marshall Loeb: Sure. Hey, good morning, Jeff. I guess we view it or my view in case it’s wrong, it’s really a long-term trend. When people make the decision on their kind of China Plus One manufacturing, which port it comes through. And I think that – I was kind of reading through some of the pieces on the Suez Canal. That’s why there’s – look you can make money being an owner and a developer around ports but it really reinforced to me that’s a very fluid dynamic environment. We want to be near the consumer and a growing base of consumers because I don’t think that flips from Houston is gaining market share from L.A. and then last year L.A. is gaining it back and things like that although, we like both of those markets. We do feel when I look at El Paso, we’re 100% leased Phoenix 99%, San Diego is strong.
And some of our best rent growth markets and our company are in those – in our portfolio in those markets. So we still feel long-term strong and it really is a function of we’re looking for opportunities in all of those markets to kind of take steps one at a time to grow our portfolio. We’re really – we’ve looked for that next opportunity in San Diego and El Paso. We’re active there. Phoenix, we’ve got some development land. It’s really a timing issue of when we kick that off. But we like that segment of our portfolio. What I like and I was reading when you look at where so many of the EV manufacturers are besides the nearshoring, which I know it was your question but on the onshoring, it really they run through the Carolinas, Georgia and into Florida.
And certainly Texas is seeing a lot of kind of technology manufacturing. I like the tailwinds we have, whether it’s green energy, we seem to get an awful lot of it within our footprint in the Carolinas and Georgia. And then what we’re seeing in Dallas and Austin, especially in terms of more tech. And again we won’t have the manufacturer but we’ll have the supplier. And if we don’t have the supplier there’ll still be that ripple effect of just growth in the local economy.
Jeff Spector: Great. Thank you. And then again a follow-up on the acquisition guidance. I believe you talked about the $130 million. Is that — that’s strictly for operating properties. Can you talk about I guess land purchases in 2024?
Marshall Loeb: Sure. We’ve got a little bit of land, yes. And on acquisitions I’ll preface it that’s always a hard — look we’ve usually missed that number. Obviously, we spent a fair amount of that. We had the Spanish Ridge in Las Vegas which we closed. I hope we beat that number. If we find the right opportunities and we have affordable capital we’d like to beat that number. On land, so we have land that we have tied up as EastGroup. Maybe it’s kind of come in the last year two different ways. Land that we tie-up and we’ll try to get as far through the zoning and permitting and wetlands issue and everything else that may come up before closing to kind of minimize that time between closing. And we’ve got a few parcels tied up currently you saw us close.
And then some like in Atlanta this year where it’s — the other kind of newer path to finding land has been someone’s approached us and they’ve done all of that work. But now you’re not selling forward lands on a forward sale that you used to and that’s expenses. So they’ve come to us and we’ve seen it in Denver and Tampa, Atlanta and in Austin a couple of times where it’s another local regional developer has done all the legal work and things are ready and they could use our help in closing. Either we buy it completely for them or work out some kind of venture where they have upside. And that’s been an interesting new path kind of given the constrained capital markets where the legal risk because sometimes we don’t get through the zoning. Everyone wishes they wants their package delivered quickly you just don’t want it to originate from your neighborhood.
So kind of that NIMBY effect where we’ve tied up land and sometimes we don’t close it and it’s kind of a dry well. You’ve put some time and money into it and you have to walk away. But we like where people have come to us at the 11th hour to kind of help them get it closed and that’s the other part. So with the land we have on our balance sheet we feel good about and there’s always another kind of to me like an iceberg the part you don’t see if we’ve got another 100 to 200 acres tied up here and there where we’re kicking tires. And if everything checks out we’ll go ahead and close, but we have it under control but we haven’t closed yet. So we feel it’s market by market. But overall I’d say we feel pretty good about the land we have. And I think when things — I think it’s things are going to turn given the drop in supply where when the business environment does stabilize a little bit where I could be optimistic about our starts this year I think it will be a fairly quick or reasonably quick turn where buildings are going to fill up and there’s not a lot of inventory in the stores especially in our size range right now.
The vacancy is higher in the big box and it’s still fairly tight in kind of the 200,000 and below sized buildings.
Jeff Spector: Great. Thank you.
Marshall Loeb: You’re welcome.
Operator: Your next question comes from Alexander Goldfarb of Piper Sandler. Your line is open.
Alexander Goldfarb: Great. Hey. Good morning. And Staci echoing Jeff’s comments congrats on all the terms on the promotion. So that’s awesome.
Staci Tyler: Thank you, Alex.
Alexander Goldfarb: And hopefully the comp committee takes notice. Two questions here. First, just going back to the ATM Marshall. EastGroup has long used the ATM to fund its investments. Going to a forward is that’s sort of a playbook out of what the apartment guys have done more over the past few years. So do you see you shifting in terms of how you use the ATM? Or what was it about the forward issuance now where traditionally you guys have been quite comfortable using sort of a traditional ATM mindset? And then Staci does this affect timing of the settlement of the shares? You guys have issuance in the guidance, but I’m not sure now if we should think about this settling later in the year or sort of modeling ratable as we normally would?
Marshall Loeb: Okay. Hey, Alex. Good morning. On the ATM look we still like the ATM a lot and we’ll — we intend to use both and really, as we’ve — again, we’re — we’ve thought given where our — you’re always historically tempted to use your line. Short-term debt with long-term assets is how you get in trouble as a REIT. But our line cost is higher than our equity cost for this past year. So we’ll use the traditional ATM probably until we really get the line to a fairly low or flat balance. And at that point, if we still like the price given the blackout periods and things like that, that Staci mentioned earlier, that’s probably where — if I generalize, that’s where we’ll toggle over to the forward. And its money that we know we will have a good use for and we’re at attractive pricing.
And we can kind of put that on the shelf for it’s really when you need it. You give the banks a couple 48 or 72 hours’ notice and bring it down later. So that’s how we’re thinking. We’ll still use both and we’ll probably have a limit where we will have a limit on how much we have of each. We’re not going to get out too far over our skis in terms of uses. But it gives us an ability to kind of have equity on the shelf like when we closed Las Vegas earlier in the year, even though we’re in a blackout, we were able to fund that through the forward. And Staci, I’ll let you — I’ll echo the congrats, definitely well deserved, but I’ll let you talk about the timing.
Staci Tyler: Yes. Sounds good. Yeah. And I agree with what Marshall was saying that the forward will continue to issue under the regular ATM as well. It’s all part of one program. So we can easily toggle back and forth and some of it will just depend on the market, pricing, timing, whether we’re in blackout. But what we have built into our guidance is funding, more heavily weighted to the back half of the year. And that really is in line with the timing of potential development starts and acquisitions. But all of that will obviously change based on market conditions and actual. But in terms of the actual funding, when we execute forward, like Marshall said, we can have that forward outstanding. And then whenever we need the funding, we just give 24, 48 hours notice and then we issue the shares and actually receive the cash.
So it gives us a lot of flexibility in terms of our cash needs. And we know that, we have the forwards that we have outstanding on the shelf, we’ll hope to add to that. And then in the meantime, we can issue under the regular ATM as long as we’re not in the blackout.
Alexander Goldfarb: Okay. Second question is — and Brent is not on the call, so you guys will have to fill in for his conservative assumptions. But the past — this year and in the past 2 years, you guys have come out with expectations of occupancy drop and sort of, hey, things could get worse. And in fact, the markets hold up well, your performance holds up well and the occupancy outperforms, everything does well. Yes, we hear your comments about just normal caution, hey, it’s the third year in a row. But still, what — is it just normal EastGroup caution that’s caused me to think occupancy could drop 100 bps? Or are you actually seeing pushback of client — of tenants or potential for credit issues or trouble backfilling space, longer downtime, et cetera, that’s leading you to the occupancy drop?
Marshall Loeb: Yeah. Good question, and I’ll — Staci, jump in. I’ll say it’s really more return to the norm. The last two years, given our 40-year history, we’ve had our record occupancy in the — tied at 98% in the last two years. So there’s no major known move-outs. There’s no major identified bad debt or anything that’s — any specific space that’s keeping us up at night. Its more things have been really good for a few years. I think at the beginning of the year, especially, are they going to keep on this path? And then especially now with higher interest rates, global unease, that it feels like things could rotate back to the normal a little more. And then I think the other thing that affects us on our same-store, because people are — this is unique to EastGroup, a little more deliberate right now, understandably in growing their businesses about one-third at one point of our development leasing was to our existing tenants and so we still have that, especially Florida and Texas, where our developments are leasing up to customers and what we were seeing in the budget where before we may have 60 days of downtime, now it’s four months of — look, we’ll try to minimize it.
