<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1996
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
EASTGROUP PROPERTIES
(Exact name of registrant as specified in its charter)
MARYLAND 13-2711135
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
(601) 354-3555
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
DAVID H. HOSTER II, PRESIDENT
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
(601) 354-3555
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
Copies to:
JOSEPH P. KUBAREK, ESQ.
JAECKLE, FLEISCHMANN & MUGEL
800 FLEET BANK BUILDING
12 FOUNTAIN PLAZA
BUFFALO, NEW YORK 14202
(716) 856-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO A DIVIDEND OR INTEREST REINVESTMENT PLAN, PLEASE CHECK THE FOLLOWING
BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), OTHER THAN THE SECURITIES OFFERED ONLY IN
CONNECTION WITH DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING
BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED
MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
-------------------------------------------------- -------------------- ----------------
<S> <C> <C>
SHARES OF BENEFICIAL INTEREST(3)............................................
PREFERRED SHARES(4).........................................................
DEPOSITARY SHARES REPRESENTING PREFERRED SHARES(5).......................... $100,000,000
DEBT SECURITIES(6)..........................................................
TOTAL....................................................................... $100,000,000 $34,482.76(7)
===================================================================================================================================
<FN>
(1) In no event will the aggregate maximum offering price of all securities
registered under this Registration Statement exceed $100,000,000. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) The proposed maximum offering price (a) has been omitted pursuant to
Instruction II.D. of Form S-3 and (b) will be determined, from time to time,
by the Registrant in connection with the issuance by the Registrant of the
securities registered hereunder.
(3) Subject to footnote (1), there is being registered hereunder an
indeterminate number of Shares of Beneficial Interest as may be sold, from
time to time, by EastGroup Properties ("EastGroup"). There is also being
registered hereunder an indeterminate number of Shares of Beneficial
Interest that may be issued upon conversion of Preferred Shares or
Depositary Shares registered hereunder.
(4) Subject to footnote (1), there is being registered hereunder an
indeterminate number of shares of Preferred Shares as may be sold, from time
to time, by EastGroup.
(5) To be represented by Depositary Receipts representing an interest in all or
a specified portion of Preferred Shares.
(6) Subject to footnote (1), there is being registered hereunder an
indeterminate number of Debt Securities as may be sold from time to time by
EastGroup.
(7) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
===================================================================================================================================
</TABLE>
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EXPLANATORY NOTE
This Registration Statement relates to securities which may be
offered from time to time by EastGroup Properties ("EastGroup"). This
Registration Statement contains a form of basic prospectus (the "Basic
Prospectus") relating to EastGroup which will be used in connection with an
offering of securities by EastGroup. The specific terms of the securities to be
offered will be set forth in a prospectus supplement relating to such securities
(the "Prospectus Supplement").
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED ____________________, 1996
PROSPECTUS
$100,000,000
SHARES OF BENEFICIAL INTEREST, PREFERRED SHARES,
DEPOSITARY SHARES AND
DEBT SECURITIES
------------------------------------
EastGroup Properties ("EastGroup") may from time to time offer
in one or more series or classes (i) shares of its beneficial interest, par
value $1.00 per share (the "Shares of Beneficial Interest"); (ii) its preferred
shares (the "Preferred Shares"); (iii) Preferred Shares represented by
Depositary Shares (the "Depositary Shares"); and (iv) unsecured convertible debt
securities ("Debt Securities"), with an aggregate public offering price of up to
$100,000,000 in amounts, at prices and on terms to be determined at the time of
offering. The Shares of Beneficial Interest, Preferred Shares, Depositary Shares
and Debt Securities (collectively, the "Securities") may be offered, separately
or together, in one or more supplements to this Prospectus (each, a "Prospectus
Supplement").
The specific terms of the Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable (i) in the case of Shares of
Beneficial Interest, any public offering price; (ii) in the case of Preferred
Shares, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights, and any public offering price;
(iii) in the case of Depositary Shares, the fractional share of Preferred Shares
represented by each such Depository Share; and (iv) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment
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<PAGE> 5
of interest, terms for redemption at the option of EastGroup or repayment at the
option of the holder, terms for sinking fund payments, covenants and any initial
public offering price. In addition, such specific terms may include limitations
on direct or beneficial ownership and restrictions on transfer of the
Securities, in each case as may be appropriate to preserve the status of
EastGroup as a real estate investment trust ("REIT") for federal income tax
purposes.
The applicable Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Securities covered by such Prospectus Statement.
SEE "RISK FACTORS" ON PAGE 2 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING WHETHER TO MAKE AN INVESTMENT IN
THE SECURITIES DESCRIBED HEREIN.
The Securities may be offered directly, through agents
designated from time to time by EastGroup, or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such series of Securities.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
The date of this Prospectus is _________________, 1996.
ii
<PAGE> 6
AVAILABLE INFORMATION
EastGroup is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information filed by EastGroup may be inspected at, and,
upon payment of the SEC's customary charges, copies obtained from, the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, DC 20549. Such
reports, proxy statements and other information are also available for
inspection and copying at prescribed rates at the SEC's regional offices in New
York, New York (Seven World Trade Center, 13th Floor, New York, New York 10048)
and in Chicago, Illinois (Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661-2511). The SEC maintains a Web site (http://www.sec.gov)
that also contains reports, proxy statements and other information concerning
EastGroup. In addition, the Shares of Beneficial Interest are traded on the New
York Stock Exchange, Inc. ("NYSE") under the symbol "EGP" and can be inspected
and copied at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
EastGroup has filed with the SEC a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations promulgated
thereunder, with respect to the Securities. This Prospectus constitutes the
Prospectus of EastGroup, filed as part of the Registration Statement. As
permitted by the rules and regulations of the SEC, this Prospectus omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits listed therein, which can be
inspected at the public reference facilities of the SEC noted above, and copies
of which can be obtained from the SEC at prescribed rates as indicated above.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE
MATTERS DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EASTGROUP.
NEITHER THE DELIVERY HEREOF NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES OFFERED BY THIS PROSPECTUS IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
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<PAGE> 7
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated into this Prospectus by reference are the
documents listed below filed by EastGroup under the Exchange Act. Copies of any
such documents, other than exhibits to such documents, are available without
charge to each person to whom a copy of this Prospectus has been delivered upon
written or oral request of such person from EastGroup, 300 One Jackson Place,
188 East Capitol Street, Jackson, Mississippi 39201-2195, Attention: Chief
Financial Officer, telephone number (601) 354-3555.
The following documents or portions thereof are hereby
incorporated into this Prospectus by reference:
1. EastGroup's Annual Report on Form 10-K for the year
ended December 31, 1995 (Commission file No. 1-7094).
2. Amendment No. 1 to EastGroup's Form 10-K for the year
ended December 31, 1995 (Commission file No. 1-7094).
3. EastGroup's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
4. EastGroup's Current Report on Form 8-K dated May 14,
1996.
5. EastGroup's Current Report on Form 8-K dated June 19,
1996.
All documents filed by EastGroup pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the respective dates of the filing
thereof. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
THE COMPANY..................................................................................................... 1
RISK FACTORS.................................................................................................... 2
Risks of Real Estate Ownership........................................................................ 2
Tenant Defaults....................................................................................... 2
Americans with Disabilities Act....................................................................... 3
Risk of Catastrophic Loss............................................................................. 3
Possible Environmental Liabilities.................................................................... 4
Continuation of REIT Status........................................................................... 4
Competition........................................................................................... 5
Risks Associated with Rapid Growth.................................................................... 5
Substantial Debt Obligations.......................................................................... 6
RATIO OF EARNINGS TO FIXED CHARGES.............................................................................. 6
USE OF PROCEEDS................................................................................................. 7
DESCRIPTION OF DEBT SECURITIES.................................................................................. 7
General .............................................................................................. 8
Denominations, Interest, Registration and Transfer.................................................... 11
Merger, Consolidation or Sale......................................................................... 13
Certain Covenants..................................................................................... 13
Events of Default, Notice and Waiver.................................................................. 14
Modification of the Indenture......................................................................... 17
Discharge, Defeasance and Covenant Defeasance......................................................... 19
Conversion Rights..................................................................................... 22
Global Securities..................................................................................... 22
DESCRIPTION OF PREFERRED SHARES................................................................................. 22
General............................................................................................... 22
Terms................................................................................................. 23
Rank.................................................................................................. 24
Dividends............................................................................................. 24
Redemption............................................................................................ 26
Liquidation Preference................................................................................ 28
Voting Rights......................................................................................... 28
Conversion Rights..................................................................................... 30
Shareholder Liability................................................................................. 30
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Restrictions on Ownership............................................................................. 30
Registrar and Transfer Agent.......................................................................... 31
DESCRIPTION OF DEPOSITARY SHARES................................................................................ 31
General .............................................................................................. 31
Dividends and Other Distributions..................................................................... 31
Withdrawal of Stock................................................................................... 32
Redemption of Depositary Shares....................................................................... 32
Voting of the Preferred Shares........................................................................ 33
Liquidation Preference................................................................................ 33
Conversion of Preferred Shares........................................................................ 34
Amendment and Termination of a Deposit Agreement...................................................... 34
Charges of a Preferred Shares Depositary.............................................................. 35
Resignation and Removal of Depositary................................................................. 35
Miscellaneous......................................................................................... 36
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST.................................................................... 36
General .............................................................................................. 36
Provisions of EastGroup's Restated Declaration of Trust, as Amended, and
Trustees Regulations.......................................................................... 37
Other Matters......................................................................................... 37
Restrictions on Transfer.............................................................................. 38
FEDERAL INCOME TAX CONSIDERATIONS............................................................................... 40
Introductory Notes.................................................................................... 40
Taxation of the Company............................................................................... 40
Taxation of Stockholders.............................................................................. 45
PLAN OF DISTRIBUTION............................................................................................ 49
EXPERTS ...................................................................................................... 50
LEGAL MATTERS................................................................................................... 50
</TABLE>
ii
<PAGE> 10
THE COMPANY
EastGroup is a real estate investment trust ("REIT") which is
qualified under the Internal Revenue Code of 1986, as amended (the "Code"), and
formed under the laws of the state of Maryland. EastGroup owns a portfolio of
income producing real estate properties, with a primary emphasis on industrial
properties and selected office buildings and garden apartment complexes in the
southeastern and southwestern United States. At June 30, 1996, EastGroup owned
or had an interest in twenty-six industrial facilities, four office buildings
and eight apartment complexes.
Through EastGroup's participation in recent business
combinations (i.e. LNH REIT, Inc. ("LNH") merged with and into a wholly-owned
subsidiary of EastGroup on May 14, 1996 and Copley Properties, Inc. ("Copley")
merged with and into EastGroup on June 19, 1996), EastGroup has expanded its
portfolio of industrial and office properties and enhanced its presence in the
Sunbelt region of the southern United States (primarily in the states of
Arizona, California, Florida and Texas). Pursuant to these business
combinations, EastGroup acquired twelve industrial and office properties
encompassing 2,150,000 square feet of leasable space and which were, at June 30,
1996, 95% leased. As a result of these mergers, EastGroup's portfolio of
industrial and office properties has expanded to 5,034,000 square feet of
leasable space which, at June 30, 1996, was 96% leased. As a result of
EastGroup's business combinations with Copley and LNH, EastGroup believes that
it is one of the larger publicly held owners and operators of industrial and
office properties in the Sunbelt region of the United States.
The mergers have also had the effect of increasing EastGroup's
number of Shares of Beneficial Interest from 4,245,000 to 7,022,000. Assuming a
stock price of $21.375, the closing price on July 29, 1996, the value of
EastGroup's outstanding Shares of Beneficial Interest has increased 65.4% from
$90,737,000 prior to the mergers to $150,095,000 following the mergers.
EastGroup's offices are located at 300 One Jackson Place, 188
East Capitol Street, Jackson, Mississippi 39201-2195. Its telephone number is
(601) 354-3555.
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<PAGE> 11
RISK FACTORS
RISKS OF REAL ESTATE OWNERSHIP
EastGroup's assets primarily consist of equity investments in
various types of real property. Stockholders of EastGroup are subject to the
risks inherent in the ownership and management of real property owned by
EastGroup. These risks include, among others: adverse changes in general or
local economic conditions; adverse changes in interest rates and in the
availability of permanent mortgage funds which may render the acquisition, sale
or refinancing of properties difficult or unattractive; existing law, rules and
regulations and judicial decisions regarding liability for a variety of
potential problems related to real estate generally; adverse changes in real
estate, zoning, environmental or land-use laws; increases in real property taxes
and federal or local economic or rent controls; other governmental rules;
increases in operating costs and the need for additional capital and tenant
improvements; the supply of and demand for properties; possible insolvencies and
other material defaults by tenants; overbuilding in certain markets; ability to
obtain or maintain full occupancy of properties or to provide for adequate
maintenance or insurance; the presence of hazardous waste materials; mechanics
liens resulting from construction; property related claims and litigation;
fiscal policies; and acts of God. The illiquidity of real estate investments
generally impairs the ability of real estate owners to respond quickly to
changed circumstances.
Additionally, a substantial percentage of EastGroup's
properties are located in the Sunbelt region of the United States (particularly
the states of Arizona, California, Florida and Texas) and such properties
consist predominantly of industrial and office properties. EastGroup's
performance therefore will be linked to economic conditions in the Sunbelt and
to the market for industrial and office space generally. To the extent that
these conditions impact the market rents for industrial and office space, they
could result in a reduction of net income, funds from operations ("FFO"), and
cash available for distribution and thus affect the amount of distributions
EastGroup can make to its stockholders.
Certain significant expenditures associated with investments
in real estate (such as mortgage payments, real estate taxes, insurance and
maintenance costs) are generally not reduced when circumstances cause a
reduction in rental revenues from the property. In addition, real estate values
and yields from investments in properties may also be affected by such factors
as conditions in financial markets, environmental conditions and compliance with
laws.
TENANT DEFAULTS
A substantial part of EastGroup's income is expected to be
derived from rental income from real property. Consequently, EastGroup's ability
to make expected distributions
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<PAGE> 12
to stockholders would be adversely affected if a significant number of tenants
failed to meet their lease obligations. In the event of a default by a lessee,
EastGroup may experience delays in enforcing its rights as lessor and may incur
substantial costs in protecting its investment. At any time, a tenant may also
seek protection under the bankruptcy laws, which could result in rejection and
termination of such tenant's lease and thereby cause a reduction in the cash
available for distribution by EastGroup. If a tenant rejects its lease,
EastGroup's claim for breach of the lease would (absent collateral securing the
claim) be treated as a general unsecured claim. The amount of the claim would be
capped at the amount owed for unpaid pre-petition lease payments unrelated to
the rejection, plus the greater of one year's lease payment or 15% of the
remaining lease payments payable under the lease (but not to exceed the amount
of three years' lease payments).
AMERICANS WITH DISABILITIES ACT
Under the Americans with Disabilities Act of 1990, as amended
(the "ADA"), all public accommodations are required to meet certain federal
requirements related to access and use by disabled persons. Existing industrial
properties generally are not deemed to be public accommodations and, hence, are
exempt from many of the provisions of the ADA. Compliance with the public
accommodations provisions of the ADA could require the removal of access
barriers, and noncompliance could result in the imposition of fines or awards of
damages. Additional legislation may impose further burdens or restrictions on
owners with respect to access by disabled persons. The ultimate amount of the
cost of compliance with the ADA or such legislation is not currently
ascertainable, and, while such costs are not expected to have a material effect
on EastGroup, such costs could be substantial.
RISK OF CATASTROPHIC LOSS
EastGroup has obtained, or has caused tenants to obtain,
comprehensive liability, fire and extended coverage insurance with respect to
its properties, of the types and in the amounts customarily obtained for similar
properties. There are, however, certain types of losses (generally of a
catastrophic nature, such as earthquakes, floods and wars) that may be either
uninsurable or not economically insurable. Should such an uninsured loss occur,
EastGroup could lose both its invested capital and anticipated profits relating
to such property.
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<PAGE> 13
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local laws, ordinances and
regulations, an owner of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances on or in such property.
Such laws often impose such liability without regard to whether the owner knew
of, or was responsible for, the presence of such hazardous or toxic substances.
The presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to use such property as collateral in its borrowings. All of
EastGroup's properties have been subjected to environmental audits by
independent environmental consultants. With the exception of one property,
commonly known and numbered as the Kingsview Industrial Center, 17120 South
Kingsview Avenue, Carson, California ("Kingsview"), a portion of which is used
for purposes of operating an oil and gas well and pipeline, these environmental
audit reports have not revealed any potential significant environmental
liability, nor is management of EastGroup aware of any environmental liability
with respect to the properties that such management believes would have a
material adverse effect on EastGroup's business, assets or results of
operations. Preliminary environmental studies performed at the Kingsview
property indicated that oil and certain hazardous materials have been released
at Kingsview in connection with the oil and gas operations formerly conducted
at Kingsview by a party unrelated to EastGroup who had an oil and gas lease
with respect to the Kingsview property and adjacent parcels. Such preliminary
environmental studies consisted of a preliminary site assessment and a
subsurface investigation undertaken by Applied GeoSciences, Inc. ("AGI"), an
environmental consultant with offices in Tustin, California. Pursuant to the
oil and gas lease, the operator agreed to indemnify and hold EastGroup, as
successor to the lessor, harmless from any claims or demands for injury to
persons or property resulting from or in any way connected with its operations
under such oil and gas lease. The operator engaged its own environmental
consultant, the Reynolds Group of Tustin, California, to undertake an
additional site assessment and subsurface investigation of the property. The
operator has verbally represented to EastGroup that the Reynolds Group concurs
with AGI's assessment that such contamination has affected only surface soil.
Based upon advice from AGI, management of EastGroup believes that the cost of
remediation is between $25,000 and $50,000. No assurance can be given that
existing environmental studies with respect to any of the properties reveal all
environmental liabilities or that any prior owner of any such property did not
create any material environmental condition not known to EastGroup.
CONTINUATION OF REIT STATUS
EastGroup is a REIT. Stockholders of EastGroup will experience
the tax benefits available to REITs. Continuation of these tax benefits will
depend on EastGroup continuing to meet the various REIT qualification rules,
which include: (i) maintaining ownership of specified minimum levels of real
estate related assets; (ii) generating specified minimum levels of real
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<PAGE> 14
estate related income; (iii) maintaining certain ownership restrictions on the
Shares of Beneficial Interest; and (iv) distributing substantially all real
estate investment taxable income on an annual basis. Although management of
EastGroup believes that the consummation of the Offering should not affect
EastGroup's continuing ability to qualify as a REIT, no assurance can be given
that EastGroup will be able to continue to operate in a manner so as to qualify
or remain so qualified.
If EastGroup fails to qualify as a REIT, EastGroup will be
subject to federal income tax (including any applicable alternative minimum tax)
on its taxable income at corporate rates. In addition, unless entitled to relief
under certain statutory provisions, EastGroup will be disqualified from
treatment as a REIT for the four taxable years following the year during which
qualification is lost. This treatment would reduce the net earnings of EastGroup
available for investment or distribution to stockholders because of the
additional tax liability to EastGroup for the year or years involved. In
addition, distributions would no longer be required to be made. To the extent
that distributions to stockholders had been made in anticipation of EastGroup's
qualifying as a REIT, EastGroup might be required to borrow funds or to
liquidate certain of its investments to pay the applicable tax.
The failure to qualify as a REIT would have a material adverse
effect on an investment in EastGroup as the taxable income of EastGroup would be
subject to federal income taxation at corporate rates, and, therefore, the
amount of cash available for distribution to its stockholders would be reduced
or eliminated. See "Taxation of the Company" and "Taxation of the Stockholders."
COMPETITION
Substantially all of the properties owned by EastGroup are
located in developed areas. There are numerous other industrial and office
properties and real estate companies within the market area of each such
property which compete with EastGroup for tenants and development and
acquisition opportunities. The number of competitive industrial and office
properties and real estate companies in such areas could have a material effect
on (i) EastGroup's ability to rent space at the properties and the amount of
rents currently charged and (ii) development and acquisition opportunities.
EastGroup will compete for tenants and acquisitions with others who have greater
resources than EastGroup.
RISKS ASSOCIATED WITH RAPID GROWTH
EastGroup is currently experiencing a period of rapid growth.
As a result of the merger with LNH and the merger with Copley, EastGroup's
industrial and office property portfolio has increased from 18 properties at
March 31, 1996, consisting of approximately
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2,884,000 square feet of leasable space, to 30 properties at June 30, 1996,
consisting of approximately 5,034,000 square feet of leasable space. EastGroup's
ability to manage its growth effectively will require it to integrate
successfully the new properties. The inability of EastGroup to integrate the
properties in a timely and efficient manner could have an adverse effect on
EastGroup's business.
SUBSTANTIAL DEBT OBLIGATIONS
EastGroup's debt obligations as a result of the mergers with
LNH and Copley increased from $69,787,000 as of March 31, 1996 to approximately
$130,668,000 as of June 30, 1996. The ratio of debt to total market
capitalization of EastGroup was 46.1% as of June 30, 1996, as compared to 42.8%
for EastGroup as of March 31, 1996. This increase in EastGroup's leverage and
its ratio of debt to total market capitalization may increase the risk of
default under its indebtedness. Failure to pay debt obligations when due could
result in EastGroup losing its interest in the properties collateralizing such
obligations. Certain of EastGroup's credit agreements provide that a default
with respect to any other indebtedness of the respective company shall cause an
event of default under the credit agreement and accelerate EastGroup's
obligations thereunder.
EastGroup believes that the ratio of debt to total market
capitalization is an important factor to consider in evaluating a REIT's debt
level because this ratio is one indicator of a company's ability to borrow
funds. EastGroup believes that using the ratio of debt to book value of assets
is not as reliable an indicator of a REIT's debt level because the book value of
a REIT's assets indicate only the depreciated value of the REIT's property
without consideration of the market value of such assets at a particular point
in time. The use of the ratio of debt to total market capitalization does have
certain risks because the total market capitalization of a company is more
variable than book value because it is dependent upon the current stock trading
price of a company. For example, a decrease in the value of a company's stock,
for whatever reason, will cause a corresponding increase in the ratio of debt to
total market capitalization. Accordingly, there can be no assurance that the use
of the ratio debt to total market capitalization in evaluating EastGroup's debt
level will adequately protect it from being highly leveraged. The risks
associated with the debt obligations of EastGroup may adversely affect the
market price of Shares of Beneficial Interest.
RATIO OF EARNINGS TO FIXED CHARGES
EastGroup's ratio of earnings to fixed charges for the three
months ended March 31, 1996 was 2.7, for the year ended December 31, 1995 was
2.2, for the year ended
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December 31, 1994 was 2.8, for the year ended December 31, 1993 was 2.9, for the
year ended December 31, 1992 was (0.3) and for the year ended December 31, 1991
was 2.9. There was no preferred stock outstanding for any of the periods shown
above. Accordingly, the ratio of earnings to combined fixed charges and
preferred stock dividends is identical to the ratio of earnings to fixed
charges.
For purposes of computing these ratios, earnings have been
calculated by adding fixed charges, excluding capitalized interest, to pre-tax
income from continuing operations (net income or loss). Fixed charges consist
of interest costs, whether expensed or capitalized, the interest component of
rental expense and amortization of debt issuance costs.
USE OF PROCEEDS
EastGroup intends to use the net proceeds from the Offering
for working capital purposes including, without limitation, the acquisition and
development of real estate properties, whether by acquisition of properties
directly or through potential business combination transactions, and the
repayment of debt. Pending application of the net proceeds, EastGroup will
invest such proceeds in interest-bearing accounts and short-term,
interest-bearing securities, which are consistent with EastGroup's intention to
continue to qualify for taxation as a REIT. Such investments may include, for
example, certificates of deposit, interest-bearing bank deposits and mortgage
loan participations.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture (the
"Indenture"), between EastGroup and a trustee (the "Trustee") chosen by
EastGroup and qualified to act as Trustee under the Trust Indenture Act of 1939,
as amended (the "TIA"). The Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and will be available
for inspection at the corporate trust office of the Trustee or as described
above under "Available Information." The Indenture is subject to, and governed
by, the TIA. The statements made hereunder relating to the Indenture and the
Debt Securities to be issued thereunder are summaries of certain provisions
thereof and do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the Indenture and such Debt
Securities. All section references appearing herein are to sections of the
Indenture, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indenture.
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GENERAL
The Debt Securities will be direct, unsecured obligations of
EastGroup and will rank equally with all other unsecured and unsubordinated
indebtedness of EastGroup. At June 30, 1996, the total outstanding debt of
EastGroup was approximately $131 million, all of which was unsubordinated
indebtedness and secured debt. The Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Trustees of EastGroup or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the holders of the Debt Securities of such
series, for issuance of additional Debt Securities of such series (Section 3.1).
The Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indenture may resign or be removed with respect to one or more
series of Debt Securities, and a successor Trustee may be appointed to act with
respect to such series (Section 6.8). In the event that two or more persons are
acting as Trustee with respect to different series of Debt Securities, each such
Trustee shall be a trustee of a trust under the Indenture separate and apart
from the trust administered by any other Trustee (Section 6.9), and, except as
otherwise indicated herein, any action described herein to be taken by a Trustee
may be taken by each such Trustee with respect to, and only with respect to, the
one or more series of Debt Securities for which it is Trustee under the
Indenture.
Reference is made to the Prospectus Supplement relating to the
series of Debt Securities offered thereby for the specific terms thereof,
including:
(i) the title of such Debt Securities;
(ii) the aggregate principal amount of such Debt
Securities and any limit on such aggregate principal amount;
(iii) the percentage of the principal amount at which
such Debt Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(iv) the date or dates, or the method for determining
such date or dates, on which the principal of such Debt Securities will be
payable;
(v) the rate or rates (which may be fixed or
variable), or the method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
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(vi) the date or dates, or the method for determining
such date or dates, from which any interest will accrue, the dates on which any
such interest will be payable, the record dates for such interest payment dates,
or the method by which any such date shall be determined, the person to whom
such interest shall be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day months;
(vii) the place or places where the principal of (and
premium, if any) and interest, if any, on such Debt Securities will be payable,
such Debt Securities may be surrendered for registration of transfer or exchange
and notices or demands to or upon EastGroup in respect of such Debt Securities
and the Indenture may be served;
(viii) the period or periods within which, the price
or prices at which and the terms and conditions upon which such Debt Securities
may be redeemed, in whole or in part, at the option of EastGroup, if EastGroup
is to have such an option;
(ix) the obligation, if any, of EastGroup to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof, and the period or periods within
which, the price or prices at which and the terms and conditions upon which such
Debt Securities will be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
(x) if other than U.S. dollars, the currency or
currencies in which such Debt Securities are denominated and payable, which may
be a foreign currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(xi) whether the amount of payments of principal of
(and premium, if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method (which index,
formula or method may, but need not be, based on a currency, currencies,
currency unit or units of composite currency or currencies) and the manner in
which such amounts shall be determined;
(xii) the events of default or covenants of such Debt
Securities, to the extent different from or in addition to those described
herein;
(xiii) whether such Debt Securities will be issued in
certificated and/or book-entry form;
(xiv) whether such Debt Securities will be in
registered or bearer form and, if in registered form, the denominations thereof
if other than $1,000 and any integral multiple thereof and, if in bearer form,
the denominations thereof if other than $5,000 and terms and conditions relating
thereto;
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(xv) the applicability, if any, of the defeasance and
covenant defeasance provisions described herein, or any modification thereof;
(xvi) whether and under what circumstances EastGroup
will pay additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether EastGroup will have the
option to redeem such Debt Securities in lieu of making such payment;
(xvii) with respect to any Debt Securities that
provide for optional redemption or prepayment upon the occurrence of certain
events (such as a change of control of EastGroup), (a) the possible effects of
such provisions on the market price of EastGroup's securities or in deterring
certain mergers, tender offers or other takeover attempts, and the intention of
EastGroup to comply with the requirements of Rule 14e-1 under the Exchange Act
and any other applicable securities laws in connection with such provisions; (b)
whether the occurrence of the specified events may give rise to cross-defaults
on other indebtedness such that payment on such Debt Securities may be
effectively subordinated; and (c) the existence of any limitations on
EastGroup's financial or legal ability to repurchase such Debt Securities upon
the occurrence of such an event (including, if true, the lack of assurance that
such a repurchase can be effected) and the impact, if any, under the Indenture
of such a failure, including whether and under what circumstances such a failure
may constitute an Event of Default; and
(xviii) any other terms of such Debt Securities not
inconsistent with the terms of the Indenture.
The Debt Securities may provide for less than the entire
principal amount thereof to be payable upon declaration of acceleration of the
maturity thereof ("Original Issue Discount Securities"). If material or
applicable, special U.S. federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable Prospectus Supplement.
Except as described under "Merger, Consolidation or Sale"
below or as may be set forth in any Prospectus Supplement, the Indenture does
not contain any other provisions that would limit the ability of EastGroup to
incur indebtedness or that would afford holders of the Debt Securities
protection in the event of (i) a highly leveraged or similar transaction
involving EastGroup or any affiliate of EastGroup; (ii) a change of control; or
(iii) a reorganization, restructuring, merger or similar transaction involving
EastGroup that may adversely affect the holders of the Debt Securities. In
addition, subject to the limitations set forth under "Merger, Consolidation or
Sale" below, EastGroup may, in the future, enter into certain transactions, such
as the sale of all or substantially all of its assets or the merger or
consolidation of EastGroup, that would increase the amount of EastGroup's
indebtedness or substantially reduce or eliminate EastGroup's assets, which may
have an adverse effect on EastGroup's ability to service its indebtedness,
including the Debt Securities. In addition, restrictions on ownership and
transfers
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of Shares of Beneficial Interest and Preferred Shares are designed to preserve
its status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Shares of Beneficial Interest--Restrictions on
Transfer" and "Description of Preferred Shares-Restrictions on Ownership."
Reference is made to the applicable Prospectus Supplement for information with
respect to any deletions from, modifications of or additions to the events of
default or covenants that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.
Reference is made to "--Certain Covenants" below and to the
description of any additional covenants with respect to a series of Debt
Securities in the applicable Prospectus Supplement. Except as otherwise
described in the applicable Prospectus Supplement, compliance with such
covenants generally may not be waived with respect to a series of Debt
Securities by the Board of Trustees of EastGroup or by the Trustee unless the
Holders of at least a majority in principal amount of all outstanding Debt
Securities of such series consent to such waiver, except to the extent that the
defeasance and covenant defeasance provisions of the Indenture described under
"--Discharge, Defeasance and Covenant Defeasance" below apply to such series of
Debt Securities. See "--Modification of the Indenture."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus
Supplement, the Debt Securities of any series which are registered securities,
other than registered securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Debt Securities which are bearer securities, other than
bearer securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $5,000 (Section 3.2).
Unless otherwise specified in the applicable Prospectus
Supplement, the principal of (and premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the Trustee,
provided that, at the option of EastGroup, payment of interest may be made by
check mailed to the address of the Person entitled thereto as it appears in the
applicable Security Register or by wire transfer of funds to such Person at an
account maintained within the United States (Sections 3.1, 3.7 and 10.2).
Any interest not punctually paid or duly provided for on any
Interest Payment Date with respect to a Debt Security ("Defaulted Interest")
will forthwith cease to be payable to the Holder on the applicable Regular
Record Date and may either be paid to the Person in whose name such Debt
Security is registered at the close of business on a special record date (the
"Special Record Date") for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to the Holder of such Debt Security
not less than 10 days
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prior to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities
issued in book entry form, the Debt Securities of any series will be
exchangeable for other Debt Securities of the same series and of a like
aggregate principal amount and tenor of different authorized denominations upon
surrender of such Debt Securities at the corporate trust office of the Trustee.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the Trustee.
Every Debt Security surrendered for registration of transfer or exchange shall
be duly endorsed or accompanied by a written instrument of transfer. No service
charge will be made for any registration of transfer or exchange of any Debt
Securities, but the Trustee or EastGroup may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith
(Section 3.5). If the applicable Prospectus Supplement refers to any transfer
agent (in addition to the Trustee) initially designated by EastGroup with
respect to any series of Debt Securities, EastGroup may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that EastGroup will be
required to maintain a transfer agent in each place of payment for such series.
EastGroup may at any time designate additional transfer agents with respect to
any series of Debt Securities (Section 10.2).
Neither EastGroup nor the Trustee shall be required (i) to
issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed and ending at the close of business on (a) if such Debt Securities are
issuable only as Registered Securities, the day of the mailing of the relevant
notice of redemption and (b) if such Debt Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Debt Securities are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption; or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except, in the case of
any Registered Security to be redeemed in part, the portion thereof not to be
redeemed; or (iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a Registered Security of
that series and like tenor, provided that such Registered Security shall be
simultaneously surrendered for redemption; or (iv) to issue, register the
transfer of or exchange any Debt Security which has been surrendered for
repayment at the option of the Holder, except the portion, if any, of such Debt
Security not to be so repaid (Section 3.5).
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<PAGE> 22
MERGER, CONSOLIDATION OR SALE
EastGroup may consolidate with, or sell, lease or convey all
or substantially all of its assets to, or merge with or into, any other entity,
provided that (i) EastGroup shall be the continuing entity, or the successor
entity (if other than EastGroup) formed by or resulting from any such
consolidation or merger or which shall have received the transfer of such assets
shall expressly assume payment of the principal of (and premium, if any) and
interest on all the Debt Securities and the due and punctual performance and
observance of all of the covenants and conditions contained in the Indenture;
(ii) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of EastGroup or any Subsidiary as a
result thereof as having been incurred by EastGroup or such Subsidiary at the
time of such transaction, no Event of Default under the Indenture, and no event
which, after notice of the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing; and (iii) an officer's
certificate and legal opinion covering such conditions shall be delivered to the
Trustee (Sections 8.1, 8.2 and 8.3).
CERTAIN COVENANTS
Existence. Except as permitted under "Merger, Consolidation or
Sale" above, EastGroup is required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; provided, however, that EastGroup shall not be required to
preserve any right or franchise if it determines that the preservation thereof
is no longer desirable in the conduct of its business and that the loss thereof
is not disadvantageous in any material respect to the Holders of the Debt
Securities (Section 10.6).
Maintenance of Properties. EastGroup is required to cause all
of its material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and to cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of EastGroup may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that EastGroup and its Subsidiaries
shall not be prevented from selling or otherwise disposing for value their
respective properties in the ordinary course of business (Section 10.7).
Insurance. EastGroup is required to, and is required to cause
each of its Subsidiaries to, keep all of its insurable properties insured
against loss or damage at least equal to their then full insurable value with
financially sound and reputable insurance companies (Section 10.8).
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<PAGE> 23
Payment of Taxes and Other Claims. EastGroup is required to
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon its income, profits or property or
that of any Subsidiary; and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of
EastGroup or any Subsidiary; provided, however, that EastGroup shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings (Section 10.9).
Provision of Financial Information. The Holders of Debt
Securities will be provided with copies of the annual reports and quarterly
reports of EastGroup. Whether or not EastGroup is subject to Sections 13 or
15(d) of the Exchange Act and for so long as any Debt Securities are
outstanding, EastGroup will, to the extent permitted under the Exchange Act, be
required to file with the SEC the annual reports, quarterly reports and other
documents which EastGroup would have been required to file with the SEC pursuant
to such Sections 13 or 15(d) (the "Financial Statements") if EastGroup were so
subject, such documents to be filed with the SEC on or prior to the respective
dates (the "Required Filing Dates") by which EastGroup would have been required
so to file such documents if EastGroup were so subject. EastGroup will also in
any event (i) within 15 days of each Required Filing Date (a) transmit by mail
to all Holders of Debt Securities, as their names and addresses appear in the
Security Register, without cost to such Holders, copies of the annual reports
and quarterly reports which EastGroup would have been required to file with the
SEC pursuant to Sections 13 or 15(d) of the Exchange Act if EastGroup were
subject to such Sections and (b) file with the Trustee copies of the annual
reports, quarterly reports and other documents which EastGroup would have been
required to file with the SEC pursuant to Sections 13 or 15(d) of the Exchange
Act if EastGroup were subject to such sections and (ii) if filing such documents
by EastGroup with the SEC is not permitted under the Exchange Act, promptly upon
written request and payment of the reasonable cost of duplication and delivery,
supply copies of such documents to any prospective Holder (Section 10.10).
Additional Covenants. Any additional or different covenants of
EastGroup with respect to any series of Debt Securities will be set forth in the
Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events
of Default" with respect to any series of Debt Securities issued thereunder: (i)
default for 30 days in the payment of any installment of interest on any Debt
Security of such series; (ii) default in the payment of the principal of (or
premium, if any, on) any Debt Security of such series at its maturity; (iii)
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<PAGE> 24
default in making any sinking fund payment as required for any Debt Security of
such series; (iv) default in the performance of any other covenant of EastGroup
contained in the Indenture (other than a covenant added to the Indenture solely
for the benefit of a series of Debt Securities issued thereunder other than such
series), such default having continued for 60 days after written notice as
provided in the Indenture; (v) default in the payment of an aggregate principal
amount exceeding $1,000,000 of any evidence of recourse indebtedness of
EastGroup or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and having
resulted in the acceleration of the maturity of such indebtedness, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled; (vi) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of EastGroup or any
Significant Subsidiary, as defined below, or any of their respective property;
and (vii) any other Event of Default provided with respect to a particular
series of Debt Securities. The term "Significant Subsidiary" means each
significant subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of EastGroup.
If an Event of Default under the Indenture with respect to
Debt Securities of any series at the time outstanding occurs and is continuing,
then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms thereof) of all of the Debt Securities
of that series to be due and payable immediately by written notice thereof to
EastGroup (and to the Trustee if given by the Holders). However, at any time
after such a declaration of acceleration with respect to Debt Securities of such
series (or of all Debt Securities then outstanding under the Indenture, as the
case may be) has been made, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of not less than a
majority in principal amount of Outstanding Debt Securities of such series (or
of all Debt Securities then outstanding under the Indenture, as the case may be)
may rescind and annul such declaration and its consequences if (i) EastGroup
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium, if any) and interest on the Debt Securities of such
series (or of all Debt Securities then outstanding under the Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances of the
Trustee and (ii) all Events of Default, other than the nonpayment of accelerated
principal of (or specified portion thereof), or premium (if any) or interest on
the Debt Securities of such series (or of all Debt Securities then outstanding
under the Indenture, as the case may be) have been cured or waived as provided
in the Indenture (Section 5.2). The Indenture also provides that the Holders of
not less than a majority in principal amount of the Outstanding Debt Securities
of any series (or of all Debt Securities then outstanding under the Indenture,
as the case may be) may waive any past default with respect to such series and
its consequences, except a default (a) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (b) in
respect of a covenant
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<PAGE> 25
or provision contained in the Indenture that cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security affected
thereby (Section 5.8).
The Trustee will be required to give notice to the Holders of
Debt Securities within 90 days of a default under the Indenture unless such
default has been cured or waived; provided, however, that the Trustee may
withhold notice to the Holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal of
(or premium, if any) or interest on any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if specified Responsible Officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 6.1).
The Indenture provides that no Holders of Debt Securities of
any series may institute any proceedings, judicial or otherwise, with respect to
the Indenture or for any remedy thereunder, except in the case of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of not
less than 25% in principal amount of the Outstanding Debt Securities of such
series, as well as an offer of indemnity reasonably satisfactory to it (Section
5.7). This provision will not prevent, however, any holder of Debt Securities
from instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 5.8).
Subject to provisions in the Indenture relating to its duties
in case of default, the Trustee is under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any Holders
of any series of Debt Securities then outstanding under the Indenture, unless
such Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 6.2). The Holders of not less than a majority in principal
amount of the Outstanding Debt securities of any series (or of all Debt
Securities then outstanding under the Indenture, as the case may be) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or of exercising any trust or power
conferred upon the Trustee. However, the Trustee may refuse to follow any
direction which is in conflict with any law or the Indenture, which may involve
the Trustee in personal liability or which may be unduly prejudicial to the
holders of Debt Securities of such series not joining therein (Section 5.12).
Within 120 days after the close of each fiscal year, EastGroup
must deliver to the Trustee a certificate, signed by one of several specified
officers of EastGroup, stating whether or not such officer has knowledge of any
default under the Indenture and, if so, specifying each such default and the
nature and status thereof.
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MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be
permitted to be made only with the consent of the Holders of not less than a
majority in principal amount of all Outstanding Debt Securities or series of
Outstanding Debt Securities which are affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the Holders of each such Debt Security affected thereby,
(i) change the Stated Maturity of the principal of, or premium (if any) or any
installment of interest on, any such Debt Security; (ii) reduce the principal
amount of, or the rate or amount of interest on, or any premium payable on
redemption of, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon declaration
of acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt Security;
(iii) change the place of payment, or the coin or currency, for payment of
principal of, premium, if any, or interest on any such Debt Security; (iv)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (v) reduce the above stated percentage of
outstanding Debt Securities of any series necessary to modify or amend the
Indenture, to waive compliance with certain provisions thereof or certain
defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in the Indenture; or (vi) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holders of such Debt Security
(Section 9.2).
The Indenture provides that the Holders of not less than a
majority in principal amount of a series of Outstanding Debt Securities have the
right to waive compliance by EastGroup with certain covenants relating to such
series of Debt Securities in the Indenture (Section 10.13).
Modifications and amendments of the Indenture will be
permitted to be made by EastGroup and the Trustee without the consent of any
Holder of Debt Securities for any of the following purposes: (i) to evidence the
succession of another Person to EastGroup as obligor under the Indenture; (ii)
to add to the covenants of EastGroup for the benefit of the Holders of all or
any series of Debt Securities or to surrender any right or power conferred upon
EastGroup in the Indenture; (iii) to add Events of Default for the benefit of
the Holders of all or any series of Debt Securities; (iv) to add or change any
provisions of the Indenture to facilitate the issuance of, or to liberalize
certain terms of, Debt Securities in bearer form, or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided, that such action
shall not adversely affect the interests of the Holders of the Debt Securities
of any series in any material respect; (v) to change or eliminate any provisions
of the Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision; (vi)
to secure the
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Debt Securities; (vii) to establish the form or terms of Debt Securities of any
series; (viii) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the Indenture by
more than one Trustee; (ix) to cure any ambiguity, defect or inconsistency in
the Indenture, provided that such action shall not adversely affect the
interests of Holders of Debt Securities of any series in any material respect;
or (x) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of such
Debt Securities, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 9.1).
The Indenture provides that in determining whether the Holders
of the requisite principal amount of Outstanding Debt Securities of a series
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof; (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above); (iii) the
principal amount of an Indexed Security that shall be deemed outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to the
Indenture; and (iv) Debt Securities owned by EastGroup or any other obligor upon
the Debt Securities or any affiliate to EastGroup or of such other obligor shall
be disregarded.
The Indenture contains provisions for convening meetings of
the Holders of Debt Securities of a series (Section 15.1). A meeting will be
permitted to be called at any time by the Trustee, and also, upon request, by
EastGroup or the holders of at least 25% in principal amount of the Outstanding
Debt Securities of such series, in any such case upon notice given as provided
in the Indenture (Section 15.2). Except for any consent that must be given by
the Holder of each Debt Security affected by certain modifications and
amendments of the Indenture, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present will be permitted to be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series; provided, however, that,
except as referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Debt Securities of that
series. Any resolution
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passed or decision taken at any meeting of Holders of Debt Securities of any
series duly held in accordance with the Indenture will be binding on all Holders
of Debt Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be Persons holding or
representing a majority in principal amount of the Outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or wavier which may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum (Section 15.4).
Notwithstanding the foregoing provisions, if any action is to
be taken at a meeting of Holders of Debt Securities of any series with respect
to any request, demand, authorization, direction, notice, consent, waiver or
other action that the Indenture expressly provides may be made, given or taken
by the Holders of a specified percentage in principal amount of all Outstanding
Debt Securities affected thereby, or of the Holders of such series and one or
more additional series: (i) there shall be no minimum quorum requirement for
such meeting and (ii) the principal amount of the Outstanding Debt Securities of
such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into account
in determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture (Section 15.4).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
EastGroup may discharge certain obligations to Holders of any
series of Debt Securities that have not already been delivered to the Trustee
for cancellation and that either have become due and payable or will become due
and payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in which
such Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal (and premium, if
any) and interest to the date of such deposit (if such Debt Securities have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be (Sections 14.1 and 14.4).
The Indenture provides that, if the provisions of Article
Fourteen are made applicable to the Debt Securities of or within any series
pursuant to Section 3.1 of the Indenture, EastGroup may elect either (i) to
defease and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to
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maintain an office or agency in respect of such Debt Securities and to hold
moneys for payment in trust) ("defeasance") (Section 14.2) or (ii) to be
released from its obligations with respect to such Debt Securities under
Sections 10.4 to 10.10, inclusive, of the Indenture (including the restrictions
described under "Certain Covenants" above) and its obligations with respect to
any other covenant, and any omission to comply with such obligations shall not
constitute a default or an Event of Default with respect to such Debt Securities
("covenant defeasance") (Section 14.3), in either case upon the irrevocable
deposit by EastGroup with the Trustee, in trust, of an amount, in such currency
or currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are payable at Stated Maturity, or Government
Obligations (as defined below), or both, applicable to such Debt Securities
which through the scheduled payment of principal and interest in accordance with
their terms will provide money in an amount sufficient to pay the principal of
(and premium, if any) and interest on such Debt Securities, and any mandatory
sinking fund or analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if,
among other things, EastGroup has delivered to the Trustee an Opinion of Counsel
(as specified in the Indenture) to the effect that the Holders of such Debt
Securities will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States Federal income tax law occurring
after the date of the Indenture (Section 14.4).
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligations held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the Government Obligation or
the specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt.
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Unless otherwise provided in the applicable Prospectus
Supplement, if after EastGroup has deposited funds and/or Government Obligations
to effect defeasance or covenant defeasance with respect to Debt Securities of
any series: (i) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security; or
(ii) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
Conversion Event based on the applicable market exchange rate. "Conversion
Event" means the cessation of use of (i) a currency, currency unit or composite
currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community; (ii) the European
Currency Unit as defined and revised from time to time by the Council of the
European Community ("ECU"), both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Community; or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established.
Unless otherwise provided in the applicable Prospectus
Supplement, all payments of principal of (and premium, if any) and interest on
any Debt Security that is payable in a foreign currency that ceases to be used
by its government of issuance shall be made in U.S. dollars.
In the event EastGroup effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (iv) under "Events of Default, Notice and Waiver"
with respect to Sections 10.4 to 10.10, inclusive, of the Indenture (which
sections would no longer be applicable to such Debt Securities) or described in
clause (vii) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such event of Default.
However, EastGroup would remain liable to make payment of such amounts due at
the time of acceleration.
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The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modification to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any of the Debt
Securities are convertible into capital stock of or equity interest in EastGroup
will be set forth in the applicable Prospectus Supplement relating thereto. Such
terms will include the amount of capital stock of or equity interest in
EastGroup into which the Debt Securities are convertible, the conversion price
(or manner of calculation thereof), the conversion period, provisions as to
whether conversions will be at the option of the holders of the Debt Securities
or EastGroup, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in
part in the form of one or more global securities (the "Global Securities") that
will be deposited with, or on behalf of, a depositary (the "Depositary")
identified in the applicable Prospectus Supplement relating to such series.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. The specific terms of the depositary
arrangement with respect to a series of Debt Securities will be described in the
applicable Prospectus Supplement relating to such series.
DESCRIPTION OF PREFERRED SHARES
GENERAL
The Board of Trustees of EastGroup may classify or reclassify
any unissued shares of its capital stock from time to time by setting or
changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or distributions, qualifications, or
terms or conditions of redemption of such shares. There were no Preferred Shares
outstanding at July 23, 1996.
The following description of the Preferred Shares sets forth
certain general terms and provisions of the Preferred Shares to which any
Prospectus Supplement may relate. The statements below describing the Preferred
Shares are in all respects subject to and qualified in
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their entirety by reference to the applicable provisions of the Declaration of
Trust and Trustees Regulations and any applicable articles supplementing the
Declaration of Trust designating terms of a series of Preferred Shares (a
"Designating Amendment").
TERMS
Subject to the limitations prescribed by the Declaration of
Trust, the Board of Trustees is authorized to fix the number of shares
constituting each series of Preferred Shares and the preference, conversion or
other rights, voting powers, restrictions, limitation as to dividends,
qualifications, or terms or conditions of redemption of the Preferred Shares.
The Preferred Shares will, when issued, be fully paid and nonassessable by
EastGroup (except as described under "--Shareholder Liability" below) and will
have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the
Preferred Shares offered thereby for specific terms thereof, including:
(i) The title and stated value of such Preferred Shares;
(ii) The number of shares of such Preferred Shares offered,
the liquidation preference per share and the offering price of such Preferred
Shares;
(iii) The dividend rate(s), period(s) and/or payment date(s)
or method(s) of calculation thereof applicable to such Preferred Shares;
(iv) The date from which dividends on such Preferred Shares
shall accumulate, if applicable;
(v) The procedures for any auction or remarketing, if any,
for such Preferred Shares;
(vi) The provision for a sinking fund, if any, for such
Preferred Shares;
(vii) The provision for redemption, if applicable, of such
Preferred Shares;
(viii) Any listing of such Preferred Shares on any securities
exchange;
(ix) The terms and conditions, if applicable, upon which
such Preferred Shares will be convertible into Shares of Beneficial Interest,
including the conversion price (or manner of calculation thereof);
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(x) Whether interests in such Preferred Shares will be
represented by Depositary Shares;
(xi) Any other specific terms, preferences, rights,
limitations or restrictions of such Preferred Shares;
(xii) A discussion of U.S. federal income tax considerations
applicable to such Preferred Shares;
(xiii) The relative ranking of preferences of such Preferred
Shares as to dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of EastGroup;
(xiv) Any limitations on issuance of any series of Preferred
Shares ranking senior to or on a parity with such series of Preferred Shares as
to dividend rights and rights upon liquidation, dissolution or winding up of the
affairs of EastGroup; and
(xv) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to preserve the
status of EastGroup as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the
Preferred Shares, will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of EastGroup, rank (i) senior to all
classes or series of Shares of Beneficial Interest of EastGroup, and to all
equity securities ranking junior to such Preferred Shares; (ii) on a parity with
all equity securities issued by EastGroup the terms of which specifically
provide that such equity securities rank on a parity with the Preferred Shares;
and (iii) junior to all equity securities issued by EastGroup the terms of which
specifically provide that such equity securities rank senior to the Preferred
Shares.
DIVIDENDS
Holders of the Preferred Shares of each series will be
entitled to receive, when, as and if declared by the Board of Trustees of
EastGroup, out of assets of EastGroup legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the share transfer books of EastGroup on such record dates as
shall be fixed by the Board of Trustees of EastGroup.
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Dividends on any series of the Preferred Shares may be
cumulative or non-cumulative, as provided in the applicable Prospectus
Supplement. Dividends, if cumulative, will be cumulative from and after the date
set forth in the applicable Prospectus Supplement. If the Board of Trustees of
EastGroup fails to declare a dividend payable on a dividend payment date on any
series of the Preferred Shares for which dividends are non-cumulative, then the
holders of such series of the Preferred Shares will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment date,
and EastGroup will have no obligation to pay the dividend accrued for such
period, whether or not dividends on such series are declared payable on any
future dividend payment date.
If Preferred Shares of any series is outstanding, no dividends
will be declared or paid or set apart for payment on any capital stock of
EastGroup of any other series ranking, as to dividends, on a parity with or
junior to the Preferred Shares of such series for any period unless (i) if such
series of Preferred Shares has a cumulative dividend, full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Shares of such series for all past dividend periods and the then current
dividend period or (ii) if such series of Preferred Shares does not have a
cumulative dividend, full dividends for the then current dividend period have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Preferred Shares of
such series. When dividends are not paid in full (or a sum sufficient for such
full payment is not so set apart) upon Preferred Shares of any series and the
shares of any other series of Preferred Shares ranking on a parity as to
dividends with the Preferred Shares of such series, all dividends declared upon
Preferred Shares of such series and any other series of Preferred Shares ranking
on a parity as to dividends with such Preferred Shares shall be declared pro
rata so that the amount of dividends declared per share of Preferred Shares of
such series and such other series of Preferred Shares shall in all cases bear to
each other the same ratio that accrued dividends per share on the Preferred
Shares of such series (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such Preferred Shares does not
have a cumulative dividend) and such other series of Preferred Shares bear to
each other. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on Preferred Shares of such
series which may be in arrears.
Except as provided in the immediately preceding paragraph,
unless (i) if such series of Preferred Shares has a cumulative dividend, full
cumulative dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past dividend periods and the then
current dividend period; and (ii) if such series of Preferred Shares does not
have a cumulative dividend, full dividends on the Preferred Shares of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for the then
current dividend period, no dividends (other than in Shares of Beneficial
Interest or other capital shares ranking junior to the Preferred Shares of
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such series as to dividends and upon liquidation) shall be declared or paid or
set aside for payment or other distribution shall be declared or made upon the
Shares of Beneficial Interest, or any other capital shares of EastGroup ranking
junior to or on a parity with the Preferred Shares of such series as to
dividends or upon liquidation, nor shall any Shares of Beneficial Interest, or
any other capital shares of EastGroup ranking junior to or on a parity with the
Preferred Shares of such series as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such shares) by
EastGroup (except by conversion into or exchange for other capital shares of
EastGroup ranking junior to the Preferred Shares of such series as to dividends
and upon liquidation).
REDEMPTION
If so provided in the applicable Prospectus Supplement, the
Preferred Shares will be subject to mandatory redemption or redemption at the
option of EastGroup, as a whole or in part, in each case upon the terms, at the
times and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred
Shares that is subject to mandatory redemption will specify the number of shares
of such Preferred Shares that shall be redeemed by EastGroup in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid dividends
thereon (which shall not, if such Preferred Shares does not have a cumulative
dividend, included any accumulation in respect of unpaid dividends for prior
dividend periods) to the date of redemption. The redemption price may be payable
in cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Shares of any series is payable only from
the net proceeds of the issuance of capital shares of EastGroup, the terms of
such Preferred Shares may provide that, if no such capital shares shall have
been issued or to the extent the net proceeds from any issuance are insufficient
to pay in full the aggregate redemption price then due, such Preferred Shares
shall automatically and mandatorily be converted into the applicable capital
shares of EastGroup pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of
Preferred Shares has a cumulative dividend, full cumulative dividends on all
shares of any series of Preferred Shares shall have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period; and (ii) if such series of Preferred Shares does not have a
cumulative dividend, full dividends of the Preferred Shares of any series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no shares of any series of Preferred Shares shall be redeemed
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unless all outstanding Preferred Shares of such series is simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Preferred Shares of such series to preserve the REIT status of
EastGroup or pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Preferred Shares of such series. In addition, unless
(i) if such series of Preferred Shares has a cumulative dividend, full
cumulative dividends on all outstanding shares of any series of Preferred Shares
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past dividend
periods and the then current dividend period; and (ii) if such series of
Preferred Shares does not have a cumulative dividend, full dividends on the
Preferred Shares of any series have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, EastGroup shall not purchase or
otherwise acquire directly or indirectly any shares of Preferred Shares of such
series (except by conversion into or exchange for capital shares of EastGroup
ranking junior to the Preferred Shares of such series as to dividends and upon
liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of Preferred Shares of such series to preserve the REIT
status of EastGroup or pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding Preferred Shares of such series.
If fewer than all of the outstanding shares of Preferred
Shares of any series are to be redeemed, the number of shares to be redeemed
will be determined by EastGroup and such shares may be redeemed pro rata from
the holders of record of such shares in proportion to the number of such shares
held or for which redemption is requested by such holder (with adjustments to
avoid redemption of fractional shares) or by lot in a manner determined by
EastGroup.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of record of
Preferred Shares of any series to be redeemed at the address shown on the share
transfer books of EastGroup. Each notice shall state: (i) the redemption date;
(ii) the number of shares and series of the Preferred Shares to be redeemed;
(iii) the redemption price; (iv) the place or places where certificates for such
Preferred Shares are to be surrendered for payment of the redemption price; (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the date upon which the holder's conversion rights, if
any, as to such shares shall terminate. If fewer than all the shares of
Preferred Shares of any series are to be redeemed, the notice mailed to each
such holder thereof shall also specify the number of shares of Preferred Shares
to be redeemed from each such holder. If notice of redemption of any Preferred
Shares has been given and if the funds necessary for such redemption have been
set aside by EastGroup in trust for the benefit of the holders of any Preferred
Shares so called for redemption, then from and after the redemption date
dividends will cease to accrue on such Preferred Shares, and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price.
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LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of EastGroup, then, before any distribution or payment
shall be made to the holders of any Shares of Beneficial Interest or any other
class or series of capital shares of EastGroup ranking junior to the Preferred
Shares in the distribution of assets upon any liquidation, dissolution or
winding up of EastGroup, the holders of each series of Preferred Shares shall be
entitled to receive out of assets of EastGroup legally available for
distribution to stockholders liquidating distributions in the amount of the
liquidation preference per share (set forth in the applicable Prospectus
Supplement), plus an amount equal to all dividends accrued and unpaid thereon
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such Preferred Shares does not have a cumulative
dividend). After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Shares will have no right or
claim to any of the remaining assets of EastGroup. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding up, the
available assets of EastGroup are insufficient to pay the amount of the
liquidating distributions on all outstanding Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of
capital shares of EastGroup ranking on a parity with the Preferred Shares in the
distribution of assets, then the holders of the Preferred Shares and all other
such classes or series of capital shares shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to
all holders of Preferred Shares, the remaining assets of EastGroup shall be
distributed among the holders of any other classes or series of capital shares
ranking junior to the Preferred Shares upon liquidation, dissolution or winding
up, according to their respective rights and preferences and in each case
according to their respective number of shares. For such purposes, the
consolidation or merger of EastGroup with or into any other corporation, trust
or entity, or the sale, lease or conveyance of all or substantially all of the
property or business of EastGroup, shall not be deemed to constitute a
liquidation, dissolution or winding up of EastGroup.
VOTING RIGHTS
Holders of the Preferred Shares will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable Prospectus Supplement.
Whenever dividends on any shares of Preferred Shares shall be
in arrears for six or more consecutive quarterly periods, the holders of such
shares of Preferred Shares (voting separately as a class with all other series
of Preferred Shares upon which like voting rights have
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been conferred and are exercisable) will be entitled to vote for the election of
two additional trustees of EastGroup at a special meeting called by the holders
of record of at least ten percent (10%) of any series of Preferred Shares so in
arrears (unless such request is received less than 90 days before the date fixed
for the next annual or special meeting of the stockholders) or at the next
annual meeting of stockholders, and at each subsequent annual meeting until (i)
if such series of Preferred Shares has a cumulative dividend, all dividends
accumulated on such shares of Preferred Shares for the past dividend periods and
the then current dividend period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment or (ii) if such
series of Preferred Shares does not have a cumulative dividend, four consecutive
quarterly dividends shall have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment. In such case, the entire Board of
Trustees of EastGroup will be increased by two directors.
Unless provided otherwise for any series of Preferred Shares,
so long as any shares of Preferred Shares remain outstanding, EastGroup will
not, without the affirmative vote or consent of the holders of at least
two-thirds of the shares of each series of Preferred Shares outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Shares with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized capital stock of EastGroup into such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or repeal
the provisions of the Declaration of Trust or the Designating Amendment for such
series of Preferred Shares, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Shares or the holder
thereof; provided, however, to the occurrence of any of the Events set forth in
(ii) above, so long as the Preferred Shares remains outstanding with the terms
thereof materially unchanged, taking into account that upon the occurrence of an
Event, EastGroup may not be the surviving entity, the occurrence of any such
Event shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of Preferred Shares and
provided further that (a) any increase in the amount of the authorized Preferred
Shares or the creation or issuance of any other series of Preferred Shares, or
(b) any increase in the amount of authorized shares of such series or any other
series of Preferred Shares, in each case ranking on a parity with or junior to
the Preferred Shares of such series with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would otherwise be
required shall be effected all outstanding shares of such series of Preferred
Shares shall have been redeemed or called for redemption and sufficient funds
shall have been deposited in trust to effect such redemption.
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Under Maryland law, notwithstanding anything to the contrary
set forth above, holders of each series of Preferred Shares will be entitled to
vote upon any proposed amendment to the Declaration of Trust if the amendment
would change the contract rights of such shares as expressly set forth in the
Declaration of Trust.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of
Preferred Shares is convertible into Shares of Beneficial Interest will be set
forth in the applicable Prospectus Supplement relating thereto. Such terms will
include the number of Shares of Beneficial Interest into which the shares of
Preferred Shares are convertible, the conversion price (or manner of calculation
thereof), the conversion period, provisions as to whether conversions will be at
the option of the holders of the Preferred Shares or EastGroup, the events
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such series of Preferred Shares.
SHAREHOLDER LIABILITY
As discussed above under "Description of Shares of Beneficial
Interest--General," applicable Maryland law provides that no stockholder,
including holders of Preferred Shares, will be personally liable for the acts
and obligations of EastGroup and that the funds and property of EastGroup will
be the only recourse for such acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed above under "Description of Shares of Beneficial
Interest--Restrictions on Transfer," for EastGroup to qualify as a REIT under
the Code, not more than 50% in value of its outstanding capital shares may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities) during the last half of a taxable year. To
assist EastGroup in meeting this requirement, EastGroup may take certain actions
to limit the beneficial ownership, directly or indirectly, by a single person of
EastGroup's outstanding equity securities, including any Preferred Shares of
EastGroup. Therefore, the Designating Amendment for each series of Preferred
Shares may contain provisions restricting the ownership and transfer of the
Preferred Shares. The applicable Prospectus Supplement will specify any
additional ownership limitation relating to a series of Preferred Shares.
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REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Shares will
be set forth in the applicable Prospectus Statement.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
EastGroup may issue receipts ("Depositary Receipts") for
Depositary Shares, each of which will represent a fractional interest of a share
of a particular series of Preferred Shares, as specified in the applicable
Prospectus Supplement. Shares of Preferred Shares of each series represented by
Depositary Shares will be deposited under a separate deposit agreement (each, a
"Deposit Agreement") among EastGroup, the depositary named therein (a "Preferred
Shares Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the applicable Deposit Agreement, each owner
of a Depositary Receipt will be entitled, in proportion to the fractional
interest of a share of a particular series of Preferred Shares represented by
the Depositary Shares evidenced by such Depositary Receipt, to all the rights
and preferences of the Preferred Shares represented by such Depositary Shares
(including dividend, voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts
issued pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Shares by EastGroup to a Preferred Shares
Depositary, EastGroup will cause such Preferred Shares Depositary to issue, on
behalf of EastGroup, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from EastGroup upon
request, and the statements made hereunder relating to Deposit Agreements and
the Depositary Receipts to be issued thereunder are summaries of certain
anticipated provisions thereof and do not purport to be complete and are subject
to, and qualified in their entirety by reference to, all of the provisions of
the applicable Deposit Agreement and related Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
A Preferred Shares Depositary will be required to distribute
all cash dividends or other cash distributions received in respect of the
applicable Preferred Shares to the record holders of Depositary Receipts
evidencing the related Depositary Shares in proportion to the number of such
Depositary Receipts owned by such holders, subject to certain obligations of
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holders to file proofs, certificates and other information and to pay certain
charges and expenses to such Preferred Shares Depositary.
In the event of a distribution other than in cash, a Preferred
Shares Depositary will be required to distribute property received by it to the
record holders of Depositary Receipts entitled thereto, subject to certain
obligations of holders to file proofs, certificates and other information and to
pay certain charges and expenses to such Preferred Shares Depositary, unless
such Preferred Shares Depositary determines that it is not feasible to make such
distribution, in which case such Preferred Shares Depositary may, with the
approval of EastGroup, sell such property and distribute the net proceeds from
such sale to such holders.
No distribution will be made in respect of any Depositary
Share to the extent that it represents any Preferred Shares which have been
converted or exchanged.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate
trust office of the applicable Preferred Shares Depositary (unless the related
Depositary Shares have previously been called for redemption or converted), the
holders thereof will be entitled to delivery at such office, to or upon each
such holder's order, of the number of whole or fractional shares of the
applicable Preferred Shares and any money or other property represented by the
Depositary Shares evidenced by such Depositary Receipts. Holders of Depositary
Receipts will be entitled to receive whole or fractional shares of the related
Preferred Shares on the basis of the proportion of Preferred Shares represented
by each Depositary Share as specified in the applicable Prospectus Supplement,
but holders of such shares of Preferred Shares will not thereafter be entitled
to receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of shares of Preferred Shares to be
withdrawn, the applicable Preferred Shares Depositary will be required to
deliver to such holder at the same time a new Depositary Receipt evidencing such
excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever EastGroup redeems shares of Preferred Shares held by
a Preferred Shares Depositary, such Preferred Shares Depositary will be required
to redeem as of the same redemption date the number of Depositary Shares
representing shares of the Preferred Shares so redeemed, provided EastGroup
shall have paid in full to such Preferred Shares Depositary the redemption price
of the Preferred Shares to be redeemed plus an amount equal to any accrued and
unpaid dividends thereon to the date fixed for redemption. The redemption price
per Depositary Share will be equal to the redemption price and any other amounts
per share
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payable with respect to the Preferred Shares. If fewer than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be selected
pro rata (as nearly as may be practicable without creating fractional Depositary
Shares) or by any other equitable method determined by EastGroup that preserves
the REIT status of EastGroup.
From and after the date fixed for redemption, all dividends in
respect of the shares of Preferred Shares so called for redemption will cease to
accrue, the Depositary Shares so called for redemption will no longer be deemed
to be outstanding and all rights of the holders of the Depositary Receipts
evidencing the Depositary Shares so called for redemption will cease, except the
right to receive any moneys payable upon such redemption and any money or other
property to which the holders of such Depositary Receipts were entitled upon
such redemption upon surrender thereof to the applicable Preferred Shares
Depositary.
VOTING OF THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of
the applicable Preferred Shares are entitled to vote, a Preferred Shares
Depositary will be required to mail the information contained in such notice of
meeting to the record holders of the Depositary Receipts evidencing the
Depositary Shares which represent such Preferred Shares. Each record holder of
Depositary Receipts evidencing Depositary Shares on the record date (which will
be the same date as the record date for the Preferred Shares) will be entitled
to instruct such Preferred Shares Depositary as to the exercise of the voting
rights pertaining to the amount of Preferred Shares represented by such holder's
Depositary Shares. Such Preferred Shares Depositary will be required to vote the
amount of Preferred Shares represented by such Depositary Shares in accordance
with such instructions, and EastGroup will agree to take all reasonable action
which may be deemed necessary by such Preferred Shares Depositary in order to
enable such Preferred Shares Depositary to do so. Such Preferred Shares
Depositary will be required to abstain from voting the amount of Preferred
Shares represented by such Depositary Shares to the extent it does not receive
specific instructions from the holders of Depositary Receipts evidencing such
Depositary Shares. A Preferred Shares Depositary will not be responsible for any
failure to carry out any instruction to vote, or for the manner or effect of any
such vote made, as long as any such action or non-action is in good faith and
does not result from negligence or willful misconduct of such Preferred Shares
Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of
EastGroup, whether voluntary or involuntary, the holders of each Depositary
Receipt will be entitled to the fraction of the liquidation preference accorded
each share of Preferred Shares represented by the
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Depositary Share evidenced by such Depositary Receipt, as set forth in the
applicable Prospectus Supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, will not be convertible into
Shares of Beneficial Interest or any other securities or property of EastGroup.
Nevertheless, if so specified in the applicable Prospectus Supplement relating
to an offering of Depositary Shares, the Depositary Receipts may be surrendered
by holders thereof to the applicable Preferred Shares Depositary with written
instructions to such Preferred Shares Depositary to instruct EastGroup to cause
conversion of the Preferred Shares represented by the Depositary Shares
evidenced by such Depositary Receipts into whole Shares of Beneficial Interest,
other shares of Preferred Shares or other shares of stock, and EastGroup will
agree that upon receipt of such instructions and any amounts payable in respect
thereof, it will cause the conversion thereof utilizing the same procedures as
those provided for delivery of Preferred Shares to effect such conversion. If
the Depositary Shares evidenced by a Depositary Receipt are to be converted in
part only, a new Depositary Receipt or Receipts will be issued for any
Depositary Shares not to be converted. No fractional Shares of Beneficial
Interest will be issued upon conversion, and if such conversion will result in a
fractional share being issued, an amount will be paid in cash by EastGroup equal
to the value of the fractional interest based upon the closing price of the
Shares of Beneficial Interest on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
Any form of Depositary Receipt evidencing Depositary Shares
which will represent Preferred Shares and any provision of a Deposit Agreement
will be permitted at any time to be amended by agreement between EastGroup and
the applicable Preferred Shares Depositary. However, any amendment that
materially and adversely alters the rights of the holders of Depositary Receipts
or that would be materially and adversely inconsistent with the rights granted
to the holders of the related Preferred Shares will not be effective unless such
amendment has been approved by the existing holders of at least two-thirds of
the applicable Depositary Shares evidenced by the applicable Depositary Receipts
then outstanding. No amendment shall impair the right, subject to certain
anticipated exceptions in the Deposit Agreements, of any holders of Depositary
Receipts to surrender any Depositary Receipt with instructions to deliver to the
holder the related Preferred Shares and all money and other property, if any,
represented thereby, except in order to comply with law. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Depositary Receipt, to consent and
agree to such amendment and to be bound by the applicable Deposit Agreement as
amended thereby.
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A Deposit Agreement will be permitted to be terminated by
EastGroup upon not less than 30 days' prior written notice to the applicable
Preferred Shares Depositary if (i) such termination is necessary to preserve
EastGroup's status as a REIT or (ii) a majority of each series of Preferred
Shares affected by such termination consents to such termination, whereupon such
Preferred Shares Depositary will be required to deliver or make available to
each holder of Depositary Receipts, upon surrender of the Depositary Receipts
held by such holder, such number of whole or fractional shares of Preferred
Shares as are represented by the Depositary Shares evidenced by such Depositary
Receipts together with any other property held by such Preferred Shares
Depositary with respect to such Depositary Receipts. EastGroup will agree that
if a Deposit Agreement is terminated to preserve EastGroup's status as a REIT,
then EastGroup will use its best efforts to list the Preferred Shares issued
upon surrender of the related Depositary Shares on a national securities
exchange. In addition, a Deposit Agreement will automatically terminate if (i)
all outstanding Depositary Shares thereunder shall have been redeemed; (ii)
there shall have been a final distribution in respect of the related Preferred
Shares in connection with any liquidation, dissolution or winding up of
EastGroup and such distribution shall have been distributed to the holders of
Depositary Receipts evidencing the Depositary Shares representing such Preferred
Shares; or (iii) each share of the related Preferred Shares shall have been
converted into stock of EastGroup not so represented by Depositary Shares.
CHARGES OF A PREFERRED SHARES DEPOSITARY
EastGroup will pay all transfer and other taxes and
governmental charges arising solely from the existence of a Deposit Agreement.
In addition, EastGroup will pay the fees and expenses of a Preferred Shares
Depositary in connection with the performance of its duties under a Deposit
Agreement. However, holders of Depositary Receipts will pay the fees and
expenses of a Preferred Shares Depositary for any duties requested by such
holders to be performed which are outside of those expressly provided for in the
applicable Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
A Preferred Shares Depositary will be permitted to resign at
any time by delivering to EastGroup notice of its election to do so, and
EastGroup will be permitted at any time to remove a Preferred Shares Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Preferred Shares Depositary. A successor Preferred Shares Depositary
will be required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
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MISCELLANEOUS
A Preferred Shares Depositary will be required to forward to
holders of Depositary Receipts any reports and communications from EastGroup
which are received by such Preferred Shares Depositary with respect to the
related Preferred Shares.
Neither a Preferred Shares Depositary nor EastGroup will be
liable if it is prevented from or delayed in, by law or any circumstances beyond
its control, performing its obligations under a Deposit Agreement. The
obligations of EastGroup and a Preferred Shares Depositary under a Deposit
Agreement will be limited to performing their duties thereunder in good faith
and without negligence (in the case of any action or inaction in the voting of
Preferred Shares represented by the applicable Depositary Shares), gross
negligence or willful misconduct, and neither EastGroup nor any applicable
Preferred Shares Depositary will be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Receipts, Depositary Shares or shares of
Preferred Shares represented thereby unless satisfactory indemnity is furnished.
EastGroup and any Preferred Shares Depositary will be permitted to rely on
written advice of counsel or accountants, or information provided by persons
presenting shares of Preferred Shares represented thereby for deposit, holders
of Depositary Receipts or other persons believed in good faith to be competent
to give such information, and on documents believed in good faith to be genuine
and signed by a proper party.
In the event a Preferred Shares Depositary shall receive
conflicting claims, requests or instructions from any holders of Depositary
Receipts, on the one hand, and EastGroup on the other hand, such Preferred
Shares Depositary shall be entitled to act on such claims, requests or
instructions received from EastGroup.
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
GENERAL
EastGroup is authorized to issue up to 20,000,000 Shares of
Beneficial Interest. As of May 13, 1996, EastGroup had issued or reserved for
issuance 7,297,000 Shares of Beneficial Interest. Holders of Shares of
Beneficial Interest are entitled to receive such dividends as may be declared
from time to time by the trustees out of funds legally available therefor. All
of the issued and outstanding Shares of Beneficial Interest are fully paid and
non-assessable and have equal voting, distribution and liquidation rights.
Shares of Beneficial Interest are not subject to call or redemption; provided,
however, if the EastGroup Board of Trustees determines that the direct or
indirect ownership of Shares of Beneficial Interest has or may become
concentrated to an extent which threatens EastGroup's status as a REIT, the
Board of Trustees may call for the redemption of a number of Shares of
Beneficial Interest.
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Each Share of Beneficial Interest is entitled to one vote on
matters put to a vote of the stockholders, except that in the election of
trustees, stockholders have cumulative voting rights. This means an EastGroup
stockholder is entitled to as many votes as equal the number of Shares of
Beneficial Interest owned by him or her multiplied by the number of trustees to
be elected. Stockholders may cast all their votes for one trustee candidate or
distribute the votes as they so determine.
Shares of Beneficial Interest currently outstanding are listed
for trading on the New York Stock Exchange, Inc. (the "NYSE") under the symbol
"EGP." EastGroup will apply to the NYSE to list the additional Shares of
Beneficial Interest to be sold pursuant to any Prospectus Supplement, and
EastGroup anticipates that such shares will be so listed.
Under Maryland law, stockholders are generally not liable for
EastGroup's debts or obligations. If EastGroup is liquidated, subject to the
right of any holders of preferred stock, if any, to receive preferential
distributions, each outstanding Share of Beneficial Interest will be entitled to
participate pro rata in the assets remaining after payment of, or adequate
provision for, all known debts and liabilities of EastGroup.
PROVISIONS OF EASTGROUP'S RESTATED DECLARATION OF TRUST, AS AMENDED, AND
TRUSTEES REGULATIONS
EastGroup's Restated Declaration of Trust, as amended, (the
"Declaration of Trust"), provides that the number of Trustees will not be less
than three nor more than twelve, and that the number of trustees will be set
forth in EastGroup's Trustees Regulations. The Trustees Regulations provide that
EastGroup will have seven trustees. All seven positions on the Board of Trustees
are filled by the vote of the stockholders at the annual meeting. Stockholders
have cumulative voting rights in the election of trustees. This means an
EastGroup stockholder is entitled to as many votes as equal the number of Shares
of Beneficial Interest owned by him or her multiplied by the number of trustees
to be elected. Stockholders may cast all their votes for one trustee candidate
or distribute the votes as they so determine.
OTHER MATTERS
The transfer agent and registrar for the Shares of Beneficial
Interest is KeyCorp Shareholder Services, Inc., Cleveland, Ohio.
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RESTRICTIONS ON TRANSFER
Ownership Limits. For EastGroup to qualify as a REIT under the
Code, no more than 50% in value of its outstanding Shares of Beneficial Interest
may be owned, actually and constructively under the applicable attribution
provisions of the Code, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year (other than the
first year) or during a proportionate part of a shorter taxable year. The Shares
of Beneficial Interest must also be beneficially owned by 100 or more persons
during at least 335 days of a taxable year (other than the first year) or during
a proportionate part of a shorter taxable year. Because EastGroup has elected to
be treated as a REIT, the Declaration of Trust contains restrictions on the
acquisition of Shares of Beneficial Interest intended to ensure compliance with
these requirements.
The Declaration of Trust provides that if the Board of
Trustees shall, at any time and in good faith, be of the opinion that the direct
and indirect ownership of Shares of Beneficial Interest has or may become
concentrated to an extent which threatens EastGroup's REIT status, then the
Board of Trustees may call for the redemption of such Shares of Beneficial
Interest or any number of such Shares of Beneficial Interest. The redemption
price shall be determined in good faith by the Board of Trustees. Any Shares of
Beneficial Interest subject to redemption shall not be entitled to dividends,
voting rights and other benefits excepting the right to the payment of the
redemption price. Redeemed Shares of Beneficial Interest shall be cancelled.
Each stockholder shall, upon request by the Board of Trustees,
furnish such information including, without limitation, information as to the
actual ownership of the Shares of Beneficial Interest by such stockholder, as
the trustees may require in order to determine EastGroup's status as a REIT.
The foregoing ownership limitations may have the effect of
precluding acquisition of control of EastGroup without the consent of the Board
of Trustees.
Special Voting Requirements for Certain Business Combinations.
Pursuant to Maryland law, EastGroup is governed by special procedures that apply
to certain business combinations between a corporation and interested
shareholders. The purpose of such provisions is to protect the corporation and
its shareholders against hostile takeovers by requiring that certain criteria
are satisfied. These criteria include prior approval by the board of trustees,
prior approval by a majority or supermajority vote of disinterested shareholders
and requirements that a "fair price" be paid to the disinterested shareholders.
Maryland law provides that a Maryland corporation may not
engage in any "business combination" with any "interested shareholder." An
"interested shareholder" is defined, in essence, as any person owning
beneficially, directly or indirectly, ten percent or more of the outstanding
voting stock of a Maryland corporation. Unless an exemption applies,
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EastGroup may not engage in any business combination with an interested
shareholder for a period of five years after the interested shareholder became
an interested shareholder, and thereafter may not engage in a business
combination unless it is recommended by the board of trustees and approved by
the affirmative vote of at least (i) eighty percent of the votes entitled to be
cast by the holders of all outstanding voting stock of EastGroup, voting
together as a single voting group and (ii) two-thirds of the votes entitled to
be cast by all holders of outstanding shares of voting stock other than voting
stock held by the interested shareholder. The voting requirements do not apply
at any time to business combinations with an interested shareholder or its
affiliates if approved by the board of trustees of the corporation prior to the
time the interested shareholder first became an interested shareholder.
Additionally, if the business combination involves the receipt of consideration
by the shareholders in exchange for the corporation's stock, the voting
requirements do not apply if certain "fair price" conditions are met.
Control Share Acquisitions. Maryland law provides for the
elimination of the voting rights of shares held by any person who makes a
"control share acquisition" except to the extent that such acquisition is exempt
or is approved by at least two-thirds of all votes entitled to be cast on the
matter, excluding shares of capital stock owned by the acquirer or by officers
or trustees who are employees of the corporation whose shares were acquired. A
"control share acquisition" is the direct or indirect acquisition by any person
of ownership of, or the power to direct the exercise of voting power with
respect to, shares of voting stock ("control shares") that would, if aggregated
with all other voting stock owned by such person, entitle such person to
exercise voting power in electing trustees within one of the following ranges of
voting power: (i) one-fifth or more but less than one-third; (ii) one-third or
more but less than a majority; or (iii) a majority or more of voting power.
A person who has made or proposes to make a control share
acquisition, upon the satisfaction of certain conditions (including an
undertaking to pay expenses), may compel the board of trustees to call a special
meeting of shareholders to be held within 50 days of demand to consider the
voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any shareholders meeting. If
voting rights are not approved at the meeting or if the acquiring person does
not deliver an acquiring person statement as permitted by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to voting rights, as of
the date of the last control share acquisition or as of the date of any meeting
of shareholders at which the voting rights of such shares are considered and not
approved.
If voting rights for control shares are approved at a
shareholders meeting and the acquirer becomes entitled to vote a majority of the
shares entitled to vote, all other shareholders may exercise appraisal rights.
The fair value of the stock as determined for purposes of such appraisal rights
may not be less than the highest price per share paid in the control share
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acquisition, and certain limitations and restrictions otherwise applicable to
the exercise of dissenters' rights do not apply in the context of a control
share acquisition. The control share acquisition statute does not apply to stock
acquired in a merger, consolidation or stock exchange if the corporation is a
party to the transaction.
Supermajority Votes. The Declaration of Trust provides that
the charter may not be amended except upon the affirmative vote of the holders
of not less than two-thirds of the Shares of Beneficial Interest then
outstanding.
FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTORY NOTES
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a prospective holder of securities of
EastGroup. This discussion is based on current law. The discussion is not
exhaustive of all possible tax considerations and does not give a detailed
discussion of any state, local, or foreign tax considerations. It also does not
discuss all of the aspects of Federal income taxation that may be relevant to a
prospective shareholder in light of his particular circumstances or to certain
types of shareholders (including insurance companies, tax-exempt entities,
financial institutions or broker-dealers, foreign corporations and persons who
are not citizens or residents of the United States) who are subject to special
treatment under the Federal income tax laws.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OWN
TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE,
OWNERSHIP AND SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER
TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE, AND ELECTION AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
General. EastGroup has elected to be taxed as a REIT under
Sections 856 through 860 of the Code effective since its inception. EastGroup's
qualification and taxation as a REIT depends upon its ability to meet on a
continuing basis, through actual annual operating results, distribution levels
and diversity of stock ownership, the various qualification tests and
organizational requirements imposed under the Code, as discussed below.
EastGroup believes that it is organized and has operated in such a manner as to
qualify under the Code for taxation
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<PAGE> 50
as a REIT commencing since its inception, and it intends to continue to operate
in such a manner. No assurances, however, can be given that EastGroup will
operate in a manner so as to qualify or remain qualified as a REIT. See "Failure
to Qualify" below.
The following is a general summary of the Code provisions that
govern the Federal income tax treatment of a REIT and its shareholders. These
provisions of the Code are highly technical and complex. This summary is
qualified in its entirety by the applicable Code provisions, the regulations
promulgated thereunder ("Treasury Regulations"), and administrative and judicial
interpretations thereof.
If EastGroup qualifies for taxation as a REIT, it generally
will not be subject to Federal corporate income taxes on net income that it
currently distributes to shareholders. This treatment substantially eliminates
the "double taxation" (at the corporate and shareholder levels) that generally
results from investment in a corporation. Notwithstanding its REIT election,
however, EastGroup will be subject to Federal income tax in the following
circumstances. First, EastGroup will be taxed at regular corporate rates on any
undistributed taxable income, including undistributed net capital gains. Second,
under certain circumstances, the company may be subject to the "alternative
minimum tax" on its items of tax preference. Third, if EastGroup has (i) net
income from the sale or other disposition of "foreclosure property" (which is,
in general, property acquired by foreclosure or otherwise on default of a loan
secured by the property) which is held primarily for sale to customers in the
ordinary course of business or (ii) other non-qualifying income from foreclosure
property, it will be subject to tax at the highest corporate rate on such
income. Fourth, if EastGroup has net income from prohibited transactions (which
are, in general, certain sales or other dispositions of property (other than
foreclosure property) held primarily for sale to customers in the ordinary
course of business), such income will be subject to a 100% tax. Fifth, if
EastGroup should fail to satisfy the 75% gross income test or the 95% gross
income test (as discussed below), and has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on the net income attributable to the greater of
the amount by which it fails the 75% or 95% test, multiplied by a fraction
intended to reflect its profitability. Sixth, if EastGroup should fail to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year; (ii) 95% of its REIT capital gain net income for
such year; and (iii) any undistributed taxable income from prior years,
EastGroup would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if EastGroup
acquires any asset from a C corporation (i.e., a corporation generally subject
to full corporate level tax) in a transaction in which the basis of the asset in
EastGroup's hands is determined by reference to the basis of the asset (or any
other property) in the hands of the C corporation, and EastGroup recognizes gain
on the disposition of such asset during the 10-year period beginning on the date
on which such asset was acquired by it, then, to the extent of such property's
built-in gain (the excess of the fair market value of such property at the time
of acquisition by EastGroup over the adjusted basis of such property at such
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<PAGE> 51
time), such gain will be subject to tax at the highest regular corporate rate
applicable (as provided in IRS regulations that have not yet been promulgated).
Requirements for Qualification. The Code defines a REIT as a
corporation, trust or association (i) which is managed by one or more trustees
or directors; (ii) the beneficial ownership of which is evidenced by
transferable shares or by transferable certificates of beneficial interest;
(iii) which would be taxable as a domestic corporation but for Sections 856
through 860 of the Code; (iv) which is neither a financial institution nor an
insurance company subject to certain provisions of the Code; (v) the beneficial
ownership of which is held by 100 or more persons; (vi) during the last half of
each taxable year not more than 50% in value of the outstanding stock of which
is owned, directly or indirectly, by five or fewer individuals (as defined in
the Code to include certain entities); and (vii) which meets certain other
tests, described below, regarding the nature of its income and assets. The Code
provides that conditions (i) through (iv), inclusive, must be met during the
entire taxable year and that condition (v) must be met during at least 335 days
of a taxable year of 12 months, or during a proportionate part of a taxable year
of less than 12 months. Conditions (v) and (vi) will not apply until after the
first taxable year for which an election is made to be taxed as a REIT.
EastGroup has issued sufficient Shares of Beneficial Interest with sufficient
diversity of ownership to allow it to satisfy requirements (v) and (vi). In
addition, EastGroup's Declaration contains restrictions regarding the transfer
of its shares that are intended to assist it in continuing to satisfy the share
ownership requirements described in (v) and (vi) above. See "Capital Stock of
EastGroup -- Restrictions on Transfer."
In addition, a corporation may not elect to become a REIT
unless its taxable years is the calendar year. EastGroup's taxable year is the
calendar year.
Income Tests. In order to maintain qualification as a REIT,
three gross income requirements must be satisfied annually. First, at least 75%
of the REIT's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the REIT's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments described above, and from
dividends, interest and gain from the sale or disposition of stock or
securities, or from any combination of the foregoing. Third, short-term gain
from the sale or other disposition of stock or securities, gain from prohibited
transactions and gain on the sale or other disposition of real property held for
less than four years (apart from involuntary conversions and sales of
foreclosure property) must represent less than 30% of the REIT's gross income
(including gross income from prohibited transactions) for each taxable year.
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<PAGE> 52
Rents received by EastGroup will qualify as "rents from real
property" in satisfying the above gross income tests only if several conditions
are met. First, the amount of rent must not be based in whole or in part on the
income or profits of any person. However, amounts received or accrued generally
will not be excluded from "rents from real property" solely by reason of being
based on a fixed percentage or percentages of receipts or sales. Second, rents
received from a tenant will not qualify as "rents from real property" if
EastGroup, or an owner of 10% or more of EastGroup, directly or constructively
owns 10% or more of such tenant (a "Related Party Tenant"). Third, if rent
attributable to personal property that is leased in connection with a lease of
real property is greater than 15% of the total rent received under the lease,
then the portion of rent attributable to such personal property will not qualify
as "rents from real property." Finally, for rents received to qualify as "rents
from real property," EastGroup generally must not operate or manage the property
or furnish or render services to tenants, other than through an "independent
contractor" from whom EastGroup derives no revenue. The "independent contractor"
requirement, however, does not apply to the extent the services provided by
EastGroup are "usually or customarily rendered" in connection with the rental of
space for occupancy only and are not otherwise considered "rendered to the
occupant." EastGroup believes that all services that are provided to its tenants
will be considered "usually or customarily" rendered in connection with the
rental of comparable properties. Further, any noncustomary services will be
provided only through qualifying independent contracts.
If EastGroup fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may nevertheless qualify as a REIT
for such year if it is entitled to relief under certain provisions of the Code.
These relief provisions generally will be available if its failure to meet such
tests was due to reasonable cause and not due to willful neglect, EastGroup
attaches a schedule of the sources of its income to its return, and any income
information on the schedules was not due to fraud with intent to evade tax. It
is not possible, however, to state whether in all circumstances EastGroup would
be entitled to the benefit of these relief provisions. As discussed above in
"General," even if these relief provisions were to apply, a tax would be imposed
with respect to the excess net income.
Asset Tests. At the close of each quarter of its taxable year,
EastGroup must also satisfy three tests relating to the nature of its assets.
First, at least 75% of the value of EastGroup's total assets must be represented
by real estate assets (including stock or debt instruments held for not more
than one year purchased with the proceeds of a stock or debt offering of the
company), cash, cash items and government securities. Second, not more than 25%
of EastGroup's total assets may be represented by securities other than those in
the 75% asset class. Third, of the investments included in the 25% asset class,
the value of any one issuer's securities owned by EastGroup may not exceed 5% of
the value of EastGroup's total assets, and EastGroup may not own more than 10%
of any one issuer's outstanding voting securities. The 5% test must generally be
met for any quarter in which a REIT acquires securities of an issuer.
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<PAGE> 53
Annual Distribution Requirements. EastGroup, in order to
qualify as a REIT, is required to distribute dividends (other than capital gain
dividends) to its shareholders in an amount at least equal to (i) the sum of (a)
95% of its "REIT taxable income" (computed without regard to the dividends paid
deduction and the REIT's net capital gain) and (b) 95% of the net income (after
tax), if any, from foreclosure property, minus (ii) the sum of certain items of
noncash income. Such distributions must be paid in the taxable year to which
they relate, or in the following taxable year if declared before EastGroup
timely files its tax return for such year and if paid on or before the first
regular dividend payment after such declaration. To the extent that EastGroup
does not distribute all of its net capital gain or distributes at least 95%, but
less than 100%, of its "REIT taxable income," as adjusted, it will be subject to
tax on the nondistributed amount at regular capital gains and ordinary corporate
tax rates. Furthermore, if EastGroup should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year; (ii) 95% of its REIT capital gain income for such year; and (iii) any
undistributed taxable income from prior periods, it will be subject to a 4%
excise tax on the excess of such required distribution over the amounts actually
distributed.
EastGroup has made and intends to continue to make timely
distributions sufficient to satisfy the annual distribution requirements. It is
possible, however, that the company, from time to time, may not have sufficient
cash or liquid assets to meet the distribution requirements due to timing
differences between the actual receipt of income and actual payment of
deductible expenses and the inclusion of such income and deduction of such
expenses in arriving at EastGroup's taxable income, or if the amount of
nondeductible expenses such as principal amortization or capital expenditures
exceed the amount of noncash deductions. In the event that such timing
differences occur, in order to meet the distribution requirements, EastGroup may
arrange for short-term, or possible long-term, borrowing to permit the payment
of required dividends. If the amount of nondeductible expenses exceeds noncash
deductions, EastGroup may refinance its indebtedness to reduce principal
payments and borrow funds for capital expenditures.
Under certain circumstances, EastGroup may be able to rectify
a failure to meet the distribution requirement for a year by paying "deficiency
dividends" to shareholders in a later year that may be included in EastGroup's
deduction for dividends paid for the earlier year. Thus, EastGroup may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the company will be required to pay interest to the IRS based upon the amount of
any deduction taken for deficiency dividends.
Failure to Qualify. If EastGroup fails to qualify for taxation
as a REIT in any taxable year and no relief provisions apply, EastGroup will be
subject to tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year in
which EastGroup fails to qualify will not be deductible by it, nor will such
distributions be required to be made. In such event, to the extent of current
and accumulated earnings and profits, all distributions to shareholders will be
taxable
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<PAGE> 54
as ordinary income, and, subject to certain limitations in the Code, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, EastGroup also will be
disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It is not possible to state whether in
all circumstances EastGroup would be entitled to such statutory relief.
TAXATION OF STOCKHOLDERS
Taxation of Taxable Domestic Stockholders. As long as
EastGroup qualifies as a REIT, distributions made to its taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income, and corporate shareholders will not be eligible for the
dividends received deduction as to such amounts. Distributions that are
designated as capital gain dividends will be taxed as long-term capital gains
(to the extent they do not exceed EastGroup's actual net capital gain for the
taxable year) without regard to the period for which the shareholder has held
his shares. However, corporate shareholders may be required to treat up to 20%
of certain capital gain dividends as ordinary income. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a
shareholder to the extent that they do not exceed the adjusted basis of the
shareholder's Shares of Beneficial Interest, but rather will reduce the adjusted
basis of such shares. To the extent that such distributions exceed the adjusted
basis of a shareholder's Shares of Beneficial Interest, they will be included in
income as long-term capital gain (or short-term capital gain if the shares have
been held for one year or less), assuming the shares are a capital asset in the
hands of the shareholders. In addition, any dividend declared by the company in
October, November or December of any year payable to a shareholder of record on
a specific date in any such month shall be treated as both paid by EastGroup and
received by the shareholder on December 31 of such year, provided that the
dividend is actually paid by the company during January of the following
calendar year. Shareholders may not include in their individual income tax
returns any net operating losses or capital losses of EastGroup.
In general, any loss upon a sale or exchange of Shares of
Beneficial Interest by a shareholder who has held such shares for six months or
less (after applying certain holding period rules) will be treated as long-term
capital loss to the extent of distributions from EastGroup required to be
treated by such shareholder as long-term capital gain.
Backup Withholding. EastGroup will report to its domestic
shareholders and the IRS the amount of dividends paid during each calendar year,
and the amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a shareholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (ii) provides a taxpayer identification number,
certifies as to no loss
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<PAGE> 55
of exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A shareholder who does not provide
EastGroup with its correct taxpayer identification number may also be subject to
penalties imposed by the IRS. Any amount paid as backup withholding will be
creditable against the shareholder's income tax liability. In addition,
EastGroup may be required to withhold a portion of capital gain distributions
made to any shareholders who fail to certify their non-foreign status to the
company. See "Taxation of Foreign Shareholders" below.
Taxation of Tax-Exempt Shareholders. The IRS has ruled that
amounts distributed by a REIT to a tax-exempt employees' pension trust do not
constitute "unrelated business taxable income" ("UBTI"). Based upon this ruling
and subject to the discussion below regarding qualified pension trust investors,
distributions by EastGroup to a shareholder that is a tax-exempt entity should
not constitute UBTI, provided that the tax-exempt entity has not financed the
acquisition of its shares with "acquisition indebtedness" within the meaning of
the Code and the Shares of Beneficial Interest are not otherwise used in an
unrelated trade or business of the tax-exempt entity. Revenue rulings, however,
are interpretative in nature and subject to revocation or modification by the
IRS.
A "qualified trust" (defined to be any trust described in
section 401(a) of the Code and exempt from tax under section 501(a) of the Code)
that holds more than 10% of the value of the shares of a REIT may be required,
under certain circumstances, to treat a portion of distributions from the REIT
as UBTI. This requirement will apply for a taxable year only if (i) the REIT
satisfies the requirement that not more than 50% of the value of its shares be
held by five or fewer individuals (the "five or fewer requirement") by relying
on a special "look-through" rule under which shares held by qualified trust
shareholders are treated as held by the beneficiaries of such trusts in
proportion to their actuarial interests therein; and (ii) the REIT is
"predominantly held" by qualified trusts. A REIT is "predominantly held" if
either (i) a single qualified trust holds more than 25% of the value of the REIT
shares or (ii) one or more qualified trusts, each owning more than 10% of the
value of the REIT shares, hold in the aggregate more than 50% of the value of
the REIT shares. If the foregoing requirements are met, the percentage of any
REIT dividend treated as UBTI to a qualified trust that owns more than 10% of
the value of the REIT shares is equal to the ratio of (i) the UBTI earned by the
REIT (treating the REIT as if it were a qualified trust and therefore subject to
tax on its UBTI) to (ii) the total gross income (less certain associated
expenses) of the REIT. A de minimis exception applies where the ratio set forth
in the preceding sentence is less than 5% for any year.
The provisions requiring qualified trusts to treat a portion
of REIT distributions as UBTI will not apply if the REIT is able to satisfy the
five or fewer requirement without relying on the "look-through" rule. The
restrictions on ownership of Shares of Beneficial Interest in EastGroup's
Declaration should prevent application of the foregoing provisions to
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qualified trusts purchasing shares pursuant to the Offering, absent a waiver of
the restrictions by the Board of Trustees.
Taxation of Foreign Shareholders. The rules governing U.S.
Federal income taxation of nonresident alien individuals, foreign corporations,
foreign partnerships and other foreign shareholders (collectively, "Non-U.S.
Shareholders") are complex, and no attempt will be made herein to provide more
than a limited summary of such rules. Prospective Non-U.S. Shareholders should
consult with their own tax advisors to determine the impact of U.S. Federal,
state and local income tax laws with regard to an investment in Shares of
Beneficial Interest, including any reporting requirements.
Distributions that are not attributable to gain from sales or
exchanges by EastGroup of U.S. real property interests and not designated by
EastGroup as capital gain dividends will be treated as dividends of ordinary
income to the extent that they are made out of current or accumulated earnings
and profits of EastGroup. Such distributions, ordinarily, will be subject to a
withholding tax equal to 30% of the gross amount of the distribution unless an
applicable tax treaty reduces that tax. However, if income from the investment
in Shares of Beneficial Interest is treated as effectively connected with the
Non-U.S. Shareholder's conduct of a U.S. trade or business, the Non-U.S.
Shareholder generally will be subject to a tax at graduated rates, in the same
manner as U.S. shareholders are taxed with respect to such dividends (and may
also be subject to the 30% branch profits tax if the shareholder is a foreign
corporation). EastGroup expects to withhold U.S. income tax at the rate of 30%
on the gross amount of any dividends paid to a Non-U.S. Shareholder that are not
designated as capital gain dividends unless (i) a lower treaty rate applies and
the required form evidencing eligibility for that reduced rate is filed with
EastGroup or (ii) the Non-U.S. Shareholder files an IRS Form 4224 with EastGroup
claiming that the distribution is "effectively connected" income. Distributions
in excess of current and accumulated earnings and profits of EastGroup will not
be taxable to a shareholder to the extent that they do not exceed the adjusted
basis of the shareholder's Shares of Beneficial Interest, but rather will reduce
the adjusted basis of such shares. To the extent that such distributions exceed
the adjusted basis of a Non-U.S. Shareholder's shares, they will give rise to
tax liability if the Non-U.S. Shareholder would otherwise be subject to tax on
any gain from the sale or disposition of his Shares of Beneficial Interest as
described below. If it cannot be determined at the time a distribution is made
whether or not such distribution will be in excess of current and accumulated
earnings and profits, the distribution will be subject to withholding at the
rate applicable to dividends. However, the Non-U.S. Shareholder may seek a
refund of such amounts from the IRS if it is subsequently determined that such
distribution was, in fact, in excess of current and accumulated earnings and
profits of EastGroup.
For any year in which EastGroup qualifies as a REIT,
distributions that are attributable to gain from sales or exchanges by EastGroup
of U.S. real property interests will be taxed to a Non-U.S. Shareholder under
the provisions of the Foreign Investment in Real
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<PAGE> 57
Property Tax Act of 1980 ("FIRPTA"). Under FIRPTA, these distributions are taxed
to a Non-U.S. Shareholder as if such gain were effectively connected with a U.S.
business. Thus, Non-U.S. Shareholders will be taxed on such distributions at the
normal capital gain rates applicable to U.S. shareholders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). Also, distributions subject to FIRPTA may be
subject to a 30% branch profits tax in the hands of a corporate Non-U.S.
Shareholder not entitled to treaty relief or exemption. EastGroup is required by
applicable Treasury Regulations to withhold 35% of any distribution that could
be designated by the company as a capital gain dividend. This amount is
creditable against the Non-U.S. Shareholder's FIRPTA tax liability.
Gain recognized by a Non-U.S. Shareholder upon a sale of
Shares of Beneficial Interest generally will not be taxed under FIRPTA if
EastGroup is a "domestically controlled REIT," defined generally as a REIT in
which at all times during a specified testing period less than 50% in value of
its shares was held directly or indirectly by foreign persons. EastGroup
believes that it currently qualifies as a "domestically controlled REIT," and
that the sale of Shares of Beneficial Interest will not therefore be subject to
tax under FIRPTA. Because EastGroup is publicly traded, however, no assurance
can be given that the company will continue to be a domestically controlled
REIT. If EastGroup were not a domestically controlled REIT, whether a Non-U.S.
Shareholder's gain would be taxed under FIRPTA would depend on whether the
Shares of Beneficial Interest were regularly traded on an established securities
market and on the size of the selling shareholder's interest in EastGroup. In
addition, gain not subject to FIRPTA will be taxable to a Non-U.S. Shareholder
if (i) the investment in Shares of Beneficial Interests is treated as
effectively connected with the Non-U.S. Shareholder's trade or business, in
which case the Non-U.S. Shareholder will be subject to the same treatment as the
U.S. shareholders with respect to such gain; or (ii) the Non-U.S. Shareholder is
a nonresident alien individual who was present in the United States for 183 days
or more during the taxable year and has a "tax home" in the United States, in
which case the nonresident alien individual will be subject to a 30% tax on the
individual's capital gains. If the gain on the sale of Shares of Beneficial
Interest were to be subject to tax under FIRPTA, the Non-U.S. Shareholder would
be subject to the same treatment as U.S. shareholders with respect to such gain
(subject to applicable alternative minimum tax and a special alterative minimum
tax in the case of nonresident alien individuals).
State and Local Taxes. EastGroup and its shareholders may be
subject to state or local taxation in various state or local jurisdictions,
including those in which it or they transact business or reside (although
shareholders who are individuals generally should not be required to file state
income tax returns outside of their state of residence with respect to
EastGroup's operations and distributions). The state and local tax treatment of
EastGroup and its shareholders may not conform to the Federal income tax
consequences discussed above. Consequently, prospective shareholders should
consult their own tax advisors regarding the effect of state and local tax laws
on an investment in the Securities.
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PLAN OF DISTRIBUTION
EastGroup may sell Securities to or through underwriters, and
also may sell Securities directly to other purchasers or through agents.
The distribution of the Securities may be effected from time
to time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may
receive compensation from EastGroup or for purchasers of Securities, for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers, and agents that participate in the distribution
of Securities may be deemed to be underwriters, and any discounts or commissions
they receive from EastGroup and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from EastGroup will be described, in the Prospectus
Supplement.
Unless otherwise specified in the related Prospectus
Supplement, each series of Securities will be a new issue with no established
trading market, other than the Shares of Beneficial Interest which are listed on
the NYSE. Any Shares of Beneficial Interest sold pursuant to a Prospectus
Supplement will be listed on such exchange, subject to official notice of
issuance. EastGroup may elect to list any series of Debt Securities, Preferred
Shares or Depositary Shares on an exchange, but is not obligated to do so. It is
possible that one or more underwriters may make a market in a series of
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of the trading market for the Securities.
Under agreements EastGroup may enter into, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by EastGroup against certain liabilities, including
liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions
with, or perform services for, or be customers of, EastGroup in the ordinary
course of business.
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<PAGE> 59
If so indicated in the applicable Prospectus Supplement,
EastGroup will authorize underwriters or other persons acting as EastGroup's
agents to solicit offers by certain institutions to purchase Securities from
EastGroup pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by EastGroup. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
EXPERTS
The consolidated financial statements of EastGroup as of
December 31, 1995 and 1994, and for each of the years in the three year period
ended December 31, 1995, have been incorporated by reference in the Prospectus
and Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein in,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Copley as of December
31, 1995 and 1994, and for each of the three years in the period ended December
31, 1995 incorporated by reference in this Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of LNH appearing in
LNH's Annual Report (Form 10-KSB) for the year ended December 31, 1995, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The legality of the Securities will be passed upon for
EastGroup by Jaeckle, Fleischmann & Mugel, Buffalo, New York.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in
connection with the issuance and distribution of the Securities, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the Securities and Exchange Commission ("SEC") registration fee.
<TABLE>
<S> <C>
SEC Registration Fee........................... $34,482.76
Blue Sky fees and expenses..................... *
Printing and engraving expenses................ *
Legal fees and expenses........................ *
Accounting fees and expenses................... *
Miscellaneous.................................. *
-----------
Total................................. $ *
===========
- ---------------
<FN>
* To be filed by amendment.
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
EastGroup's Restated Declaration of Trust, as amended,
contains a provision authorizing EastGroup to indemnify and hold harmless, to
the fullest extent permitted by Maryland law, trustees and officers involved in
an action, suit or proceeding.
Section 2-418 of the Maryland General Corporation Law (the
"Indemnification Statute"), the law of the state in which EastGroup is
organized, empowers a trust, subject to certain limitations, to indemnify its
officers and trustees against expenses, including attorneys' fees, judgments,
penalties, fines, settlements and expenses, actually and reasonably incurred by
them in any suit or proceeding to which they are parties unless the act or
omission of the trustee was material to the matter giving rise to the proceeding
and was committed in bad faith, or was the result of active and deliberate
dishonesty, or the trustee received an improper personal
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<PAGE> 61
benefit or, with respect to a criminal action or proceeding, the trustee had no
reasonable cause to believe their conduct was unlawful.
EastGroup has entered into an indemnification agreement (the
"Indemnification Agreement") with each of its trustees and officers, and the
Board of Trustees has authorized EastGroup to enter into an Indemnification
Agreement with each of the future trustees and officers of EastGroup. The
Indemnification Statute permits a corporation to indemnify its trustees and
officers. However, the protection that is specifically afforded by the
Indemnification Statute authorizes other arrangements for indemnification of
trustees and officers, including insurance. The Board of Trustees has approved
and the stockholders have ratified the Indemnification Agreement, which is
intended to provide indemnification to the maximum extent allowable by, or not
in violation of, or offensive to, any law of the State of Maryland.
The Indemnification Agreement provides that EastGroup shall
indemnify a trustee or officer who is a party to the agreement (the
"Indemnitee") if he or she was or is a party to or otherwise involved in any
proceeding by reason of the fact that he or she was or is a trustee or officer
of EastGroup, or was or is serving at its request in a certain capacity of
another entity, against losses incurred in connection with the defense or
settlement of such proceeding. This indemnification shall be provided to the
fullest extent permitted by settlement of such proceeding. This is similar to
the indemnification provided by the Indemnification Statute except that
indemnification is not available to the Indemnitee who is adjudged liable on the
basis that a personal benefit was improperly received or who pays any amount in
settlement of a proceeding without EastGroup's written consent.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith (or incorporated by
reference):
(4) Form of Indenture, to be filed by amendment.
(5) Opinion of Jaeckle, Fleischmann & Mugel regarding legality of
shares being registered, to be filed by amendment.
(8) Opinion of Jaeckle, Fleischmann & Mugel, as to federal income
tax consequences, to be filed by amendment.
(12) Statement regarding computation of ratios, filed herewith.
(23)(a) Consent of KPMG Peat Marwick LLP, filed herewith.
(b) Consent of Arthur Anderson LLP, filed herewith.
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<PAGE> 62
(c) Consent of Ernst & Young LLP, filed herewith.
(d) Consent of Jaeckle, Fleischmann & Mugel (incorporated by
reference to Exhibit 5).
(24) Powers of Attorney, located on page II-5.
(25) Statement of eligibility of trustee, to be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the Registrant pursuant to Sections 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective amendment shall be
deemed to be a new Registration
II-3
<PAGE> 63
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained in
a form or prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability
under the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 64
SIGNATURES
----------
Pursuant to the requirements of the Securities of the
Securities Act of 1933, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Jackson, State of
Mississippi as of the 6th day of August 1996.
EASTGROUP PROPERTIES
By s/David H. Hoster II
----------------------------------
David H. Hoster II
President and Trustee
POWER OF ATTORNEY
-----------------
Each person whose signature appears below hereby constitutes
and appoints each of David H. Hoster II and N. Keith McKey his or her true and
lawful attorney-in-fact and agent, each with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each attorney-in-fact and
agent, full power and authority to do and perform each such and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as such person might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE> 65
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement and the foregoing Powers of Attorney have been
signed by the following persons in the capacities indicated and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
s/Leland R. Speed Managing Trustee and Chief August 7, 1996
- ----------------------------------------- Executive Officer (Principal
Leland R. Speed Executive Officer)
s/David H. Hoster II President and Trustee August 7, 1996
- ----------------------------------------
David H. Hoster II
s/N. Keith McKey August 7, 1996
- -------------------------------------- Executive Vice President, Chief
N. Keith McKey Financial Officer and Secretary
s/Diane W. Hayman August 7, 1996
- -------------------------------------- Controller (Principal Accounting
Diane W. Hayman Officer)
Trustee August , 1996
- --------------------------------------
Alexander G. Anagnos
Trustee August , 1996
- --------------------------------------
H.C. Bailey, Jr.
s/Harold B. Judell Trustee August 7, 1996
- --------------------------------------
Harold B. Judell
s/David M. Osnos Trustee August 7, 1996
- --------------------------------------
David M. Osnos
s/John N. Palmer Trustee August 7, 1996
- --------------------------------------
John N. Palmer
</TABLE>
II-6
<PAGE> 1
Exhibit 12
EASTGROUP PROPERTIES -- STATEMENT REGARDING COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
3 MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR 31,1996 DEC 31, 1995 DEC 31, 1994 DEC 31, 1993 DEC 31, 1992 DEC 31, 1991
------------ ------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Pretax income from continuing operations 2,528,929.75 7,710,814.49 7,167,825.65 6,414,661.94 (3,672,543.23) 5,700,083.19
(net income (loss))
Add: fixed charges 1,527,443.18 6,286,788.07 3,905,060.22 3,415,318.22 2,832,702.95 3,040,583.42
------------ ------------- ------------- ------------ ------------ ------------
4,056,372.93 13,997,602.56 11,072,885.87 9,829,980.16 (839,840.28) 8,740,666.61
1,527,443.18 6,286,788.07 3,905,060.22 3,415,318.22 2,832,702.95 3,040,583.42
------------ ------------- ------------- ------------ ------------ ------------
Ratio of earnings to fixed charges 2.655662 2.226511 2.835522 2.878203 (0.296480) 2.874668
============ ============= ============= ============ ============ ============
Fixed charges:
Interest expense per original financials 5,975,348.70 3,746,867.98 3,112,526.97 2,749,349.04 2,969,976.56
Add: amortization of loan costs 311,439.37 158,192.24 302,791.25 83,353.91 70,606.86
------------- ------------- ------------ ------------ ------------
Interest per adjusted 10-K 6,286,788.07 3,905,060.22 3,415,318.22 2,832,702.95 3,040,583.42
============= ============= ============ ============ ============
Fixed charges consist of interest costs and
amortization of debt issuance costs.
</TABLE>
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Trustees and Shareholders
EastGroup Properties:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Jackson, Mississippi
August 6, 1996
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference in the Form S-3 filed by EastGroup Properties of our
report to the Board of Directors of Copley Properties, Inc. dated March 15,
1996 included in EastGroup's current report on Form 8-K dated June 19, 1996 and
to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
August 7, 1996
Boston, Massachusetts
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference of our report dated March 15, 1996, with respect to
the consolidated financial statements of LNH REIT, Inc. included in its Annual
Report (Form 10-KSB) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission, in the Registration Statement (Form S-3) and
related Prospectus of EastGroup Properties for the registration of an aggregate
of shares of beneficial interest, preferred shares, depositary shares and debt
securities up to $100,000,000.
ERNST & YOUNG LLP
Jackson, Mississippi
August 7, 1996
