EastGroup Properties surges after massive FFO beat, dividend hike
Industrial REIT delivers 87% earnings beat as rental rates soar 40%
EastGroup Properties shares jumped in Wednesday trading after the industrial real estate investment trust reported quarterly results that dramatically exceeded Wall Street expectations, fueled by surging rental rates and a 14th consecutive annual dividend increase.
The Jackson, Mississippi-based REIT reported funds from operations of $2.34 per share for the fourth quarter of 2025, crushing analyst estimates of $1.25 and representing an 87.4% beat, according to regulatory filings with the Securities and Exchange Commission. Revenue of $187.5 million also topped expectations by 3%.
The standout performance was driven by exceptional strength in the Sunbelt industrial property market, where EastGroup focuses its portfolio of logistics and distribution facilities. Same-property net operating income increased 8.5% year-over-year, while rental rates on new and renewal leases surged 34.6% in the fourth quarter alone and 40.1% for the full year 2025.
"These outstanding results reflect the continued strength of the Sunbelt industrial markets and our high-quality portfolio," the company stated in its earnings announcement.
The occupancy rate remained robust at 97%, demonstrating strong tenant demand even as the broader industrial sector faces headwinds from rising interest rates and economic uncertainty. EastGroup's focus on high-growth markets including Florida, Texas, Arizona, California and North Carolina has positioned it to benefit from the ongoing e-commerce boom and supply chain reconfiguration.
The company rewarded shareholders with a 10.7% dividend increase to $1.55 per share, marking its 14th consecutive annual dividend hike. The stock currently yields approximately 3.2% at recent trading levels.
Looking ahead, EastGroup provided full-year 2026 FFO guidance of $9.40 to $9.60 per share, suggesting continued growth momentum. Analysts have maintained a predominantly bullish outlook on the stock, with 14 analysts rating it a buy or strong buy and a consensus target price of $199.84, according to market data.
EastGroup's market capitalization stands at approximately $9.6 billion, with the stock trading at 37.75 times trailing earnings. The shares have gained more than 36% over the past year, significantly outperforming the broader REIT sector.
The industrial real estate sector has been a beneficiary of secular trends including the growth of e-commerce, nearshoring of supply chains, and inventory replenishment cycles. However, rising construction costs and higher borrowing costs have created a more challenging environment for development, potentially benefiting established owners with existing high-quality portfolios like EastGroup's.
Institutional investors hold more than 102% of EastGroup's outstanding shares, reflecting high conviction in the Sunbellt industrial strategy. The stock's beta of 1.13 indicates slightly higher volatility than the broader market, appropriate for a cyclical real estate sector play.