EASTGROUP PROPERTIES, S-4/A, 1996-03-28

EASTGROUP PROPERTIES
S-4/A, 1996-03-28
REAL ESTATE INVESTMENT TRUSTS

Previous: HOUSEHOLD FINANCE CORP, 10-K405, 1996-03-28

Next: INCOME FUND OF AMERICA INC, NSAR-A, 1996-03-28

<PAGE> 1

As filed with the Securities and Exchange Commission on March 28, 1996

Registration No. 33-65337
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 2

TO
FORM S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
EASTGROUP PROPERTIES
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Maryland 6798 13-2711135
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification No.) Identification No.)
</TABLE>

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)
----------------------------

<TABLE>
<S> <C>
COPIES TO:
JOSEPH P. KUBAREK, Esq. DANIEL G. HISE, Esq.
Jaeckle, Fleischmann & Mugel Butler, Snow, O'Mara, Stevens & Cannada, PLLC
800 Fleet Bank Building 17th Floor, Deposit Guaranty Plaza
Twelve Fountain Plaza 210 East Capitol Street, P.O. Box 22567
Buffalo, New York 14202 Jackson, Mississippi 39225-2567
(716) 856-0600 (601) 948-5711

</TABLE>

Approximate date of commencement of proposed sale to the public: As
promptly as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /

The Registrant 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 the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

<PAGE> 2
CROSS REFERENCE SHEET PURSUANT TO RULE 404(A)
SHOWING THE LOCATION IN THE PROSPECTUS
OF THE INFORMATION REQUIRED BY PART I OF FORM S-4

<TABLE>
<CAPTION>
FORM S-4 ITEM LOCATION IN PROSPECTUS
------------- ----------------------

A. INFORMATION ABOUT THE TRANSACTION
<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page
of Prospectus . . . . . . . . . . . . . . . . . Outside front cover page.

2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . AVAILABLE INFORMATION; INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE; TABLE OF CONTENTS.

3. Summary Information, Risk Factors, Ratio of
Earnings to Fixed Charges and Other Information
PROXY STATEMENT/PROSPECTUS SUMMARY; RISK FACTORS.
4. Terms of the Transaction . . . . . . . . . . . INTRODUCTION--The Merger Agreement; THE MERGER;
DESCRIPTION OF CAPITAL STOCK OF EASTGROUP; DIFFERENCES
IN SHAREHOLDERS' RIGHTS; APPENDIX A.

5. Pro Forma Financial Information . . . . . . . . INDEX TO FINANCIAL STATEMENTS.
6. Material Contacts with the Company Being
Acquired . . . . . . . . . . . . . . . . . . . THE MERGER--Background of the Merger; THE MERGER--LNH
Directors' Reasons for Recommending the Merger.

7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be Underwriters
Not applicable.

8. Interests of Named Experts
and Counsel . . . . . . . . . . . . . . . . . Not applicable.
</TABLE>

ii
<PAGE> 3
<TABLE>
<CAPTION>
FORM S-4 ITEM LOCATION IN PROSPECTUS
------------- ----------------------
<S> <C> <C>
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities
INDEMNIFICATION PROVISIONS.
B. INFORMATION ABOUT THE REGISTRANT

10. Information with Respect to S-3 Registrants .
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
AVAILABLE INFORMATION; INFORMATION CONCERNING
EASTGROUP; MARKET PRICES AND DIVIDENDS.

11. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
INFORMATION CONCERNING EASTGROUP
12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . Not applicable.

13. Incorporation of Certain Documents by Reference
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
14. Information with Respect to Registrants Other
than S-3 or S-2 Registrants . . . . . . . . . . Not applicable.

C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED

15. Information with Respect to S-3 Companies . . .
Not applicable.
</TABLE>

iii
<PAGE> 4
<TABLE>
<CAPTION>
FORM S-4 ITEM LOCATION IN PROSPECTUS
------------- ----------------------
<S> <C> <C>
16. Information with Respect to S-2 or S-3 Companies
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
AVAILABLE INFORMATION; INFORMATION CONCERNING LNH;
MARKET PRICES AND DIVIDENDS.
17. Information with Respect to Companies Other Than
S-3 or S-2 Companies . . . . . . . . . . . . . Not applicable.

D. VOTING AND MANAGEMENT INFORMATION

18. Information if Proxies, Consents or
Authorizations are to be Solicited . . . . . . INTRODUCTION; VOTING AND PROXY INFORMATION; THE MERGER-
-No Dissenters' Rights; THE MERGER--Interest of LNH
Management and EastGroup in the Merger; THE MERGER--
Board of Trustees and Management of EastGroup;
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.

19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer . . . . . . . . . . . . . . . . Not applicable.
</TABLE>

iv
<PAGE> 5
LNH REIT, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195

____________, 1996

Dear Shareholder:

A special meeting of shareholders of LNH REIT, Inc. ("LNH") will be
held on May 10, 1996. The purpose of the meeting is to vote on a merger (the
"Merger") of LNH with and into EastGroup-LNH Corporation ("Sub"), a
wholly-owned subsidiary of EastGroup Properties ("EastGroup"). The proposed
transaction would result in LNH being acquired by EastGroup and the
shareholders of LNH receiving, in exchange for each share of common stock of
LNH, the number of shares of beneficial interest of EastGroup ("EastGroup
Shares"), determined by dividing the value $8.10 by the average closing price
for EastGroup Shares for the 10 trading days immediately preceding the fifth
trading day prior to the closing of the transaction (the "Exchange Ratio"). It
is anticipated that the closing will be held on the date of the special meeting
of LNH shareholders. As a result of the transaction, EastGroup will succeed to
the operations and assets of LNH and LNH will cease to be a reporting company
under the Securities Exchange Act of 1934, as amended.

The proposed Merger has been approved by LNH's Board of Directors,
which believes the transaction to be in the best interest of LNH and its
shareholders and recommends a vote FOR its approval. The reasons for this
belief are set forth in "The Merger--LNH Directors' Reasons for Recommending
the Merger" in the accompanying Proxy Statement/Prospectus. The investment
banking firm of Rauscher Pierce Refsnes, Inc. has issued its opinion to LNH, a
copy of which is attached as Appendix B to this Proxy Statement/Prospectus,
that the consideration to be received by LNH shareholders in the Merger is fair
to the shareholders of LNH from a financial point of view.

The proposed transaction is very important to you as a shareholder.
Therefore, whether or not you plan to attend the meeting, I urge you to give
your immediate attention to the proposal. Please review the enclosed
materials, sign and date the enclosed proxy card and return it promptly in the
enclosed postage-paid envelope.
Very truly yours,

LELAND R. SPEED
Chairman of the Board of Directors
<PAGE> 6
LNH REIT, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 10, 1996

To the Shareholders:

Notice is hereby given that a special meeting of shareholders of LNH
REIT, Inc. ("LNH") will be held at LNH's offices, 300 One Jackson Place, 188
East Capitol Street, Jackson, Mississippi on Friday, May 10, 1996 at 9:00 a.m.,
local time, for the following purpose:

To consider and act on a proposal to approve the Agreement and Plan of
Merger dated as of December 22, 1995 (as amended by the First Amendment to the
Agreement and Plan of Merger dated March 18, 1996) among LNH, EastGroup-LNH
Corporation ("Sub"), and EastGroup Properties ("EastGroup"), pursuant to which,
among other things, (i) LNH will be merged with and into Sub (the "Merger"),
(ii) each outstanding share of common stock of LNH will be converted into the
right to receive the number of shares of beneficial interest of EastGroup
("EastGroup Shares"), determined by dividing the value $8.10 by the average
closing price for EastGroup Shares for the 10 trading days immediately
preceding the fifth trading day prior to the closing of the transaction (the
"Exchange Ratio"), and (iii) LNH will cease to exist as a separate legal
entity.

Any LNH shareholder who would like information with respect to the
Exchange Ratio based upon the closing price of EastGroup Shares during the
prior ten (10) trading days may call EastGroup at 1-800-337-5602 and
representatives of EastGroup will provide the LNH shareholder with such
information. Also, LNH shareholders who wish to wait until the Exchange Ratio
is finally determined before voting may call LNH's proxy solicitor, Beacon Hill
Partners, Inc., at 1-800-755-5001, who will provide the shareholder with
instructions on how to deliver the shareholder's proxy in a timely manner.

Only shareholders of record at the close of business on April 8, 1996
are entitled to notice of and to vote at the meeting and any adjournment
thereof.

LNH shareholders will not have appraisal rights in connection with the
Merger.

By Order of the Board of Directors

N. Keith McKey
Senior Vice-President, Chief Financial
Officer and Secretary
DATE: ____________, 1996

<PAGE> 7
________________________________________________________________________________

THIS IS AN IMPORTANT MEETING. SHAREHOLDERS ARE URGED TO VOTE BY SIGNING,
DATING AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
________________________________________________________________________________

vii
<PAGE> 8
PROXY STATEMENT OF LNH REIT, INC.
AND
PROSPECTUS OF EASTGROUP PROPERTIES

This Proxy Statement/Prospectus is being furnished to the shareholders
of LNH REIT, Inc. ("LNH") in connection with the solicitation of proxies by the
Board of Directors of LNH for use at the special meeting of its shareholders to
be held May 10, 1996, to consider and vote on a proposal to approve and adopt
the Agreement and Plan of Merger dated December 22, 1995 (as amended by the
First Amendment to the Agreement and Plan of Merger dated March 18, 1996) (the
"Merger Agreement"), a copy of which is attached hereto as Appendix A.
Pursuant to the Merger Agreement, LNH will be merged (the "Merger") with and
into EastGroup-LNH Corporation ("Sub"), a wholly-owned subsidiary of EastGroup
Properties ("EastGroup"). In the Merger, each share of common stock, $0.50 par
value per share, of LNH ("LNH Shares"), will be converted into the right to
receive the number of shares of beneficial interest, $1.00 par value per share,
of EastGroup ("EastGroup Shares"), determined by dividing the value $8.10 by
the average closing price for EastGroup Shares for the 10 trading days
immediately preceding the fifth trading day prior to the closing of the Merger
(the "Exchange Ratio"). It is anticipated that the closing will take place on
the date of the special meeting of LNH shareholders. Any LNH shareholder who
would like information with respect to the Exchange Ratio based upon the
closing price of EastGroup Shares during the prior ten (10) trading days may
call EastGroup at 1-800-337-5602 and representatives of EastGroup will provide
the LNH shareholder with such information. Also, LNH shareholders who wish to
wait until the Exchange Ratio is finally determined before voting may call
LNH's proxy solicitor, Beacon Hill Partners, Inc., at 1-800-755-5001, who will
provide the shareholder with instructions on how to deliver the shareholder's
proxy in a timely manner. As a result of the Merger, LNH will cease to be a
reporting company under the Securities Exchange Act of 1934, as amended.

This document also constitutes a Prospectus of EastGroup covering the
EastGroup Shares to be issued upon consummation of the Merger. EastGroup is a
Maryland real estate investment trust ("REIT"), with its principal executive
offices located at 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi 39201-2195, telephone number (601) 354-3555. Sub was formed for
the purpose of effecting the Merger. The principal executive offices of LNH
are also located at 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi 39201-2195, and the telephone number of LNH is (601) 354-3555.

SEE "RISK FACTORS" ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN EVALUATING THE MERGER.
--------------------------
NEITHER THIS TRANSACTION NOR THE SHARES OF BENEFICIAL INTEREST OF
EASTGROUP HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION. THE COMMISSION HAS NOT PASSED UPON THE FAIRNESS OF THIS
TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT/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.
<PAGE> 9
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-----------------------------------

Consummation of the Merger is subject to the affirmative approval of
the holders of at least two-thirds of the LNH Shares outstanding and entitled
to vote, and certain other conditions. EastGroup owns 515,200 of the LNH
Shares entitled to vote (23.42% of the LNH Shares entitled to vote). The
directors and officers of LNH do not own any of the LNH Shares entitled to
vote. EastGroup's trustees and officers have indicated they intend to vote
EastGroup's LNH Shares in favor of the Merger.

The date of this Proxy Statement/Prospectus is _____________, 1996.
This Proxy Statement/Prospectus is first being mailed to shareholders of LNH on
or about _______________, 1996.

ii
<PAGE> 10
AVAILABLE INFORMATION

EastGroup and LNH are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information 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, D.C. 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, 15th Floor, New York, New York 10007), and in Chicago,
Illinois (Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60551-2511). In addition, LNH shares are traded on the New
York Stock Exchange, Inc. (the "NYSE") under the symbol "LHC" and EastGroup
Shares are traded on the NYSE under the symbol "EGP." Similar information
concerning both EastGroup and LNH can be inspected and copied at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.

EastGroup and LNH have filed with the SEC a Registration Statement on
Form S-4 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to shares of EastGroup to be
issued in the Merger. This Proxy Statement/Prospectus constitutes the
Prospectus of EastGroup filed as part of the Registration Statement. As
permitted by the rules and regulations of the SEC, this Proxy
Statement/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 or LNH. 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 Proxy Statement/Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy the
securities offered by this Proxy Statement/Prospectus or a solicitation of a
proxy in any jurisdiction where, or to any person to whom, it is unlawful to
make such an offer or solicitation.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Incorporated into this Proxy Statement/Prospectus by reference are the
documents listed below filed by EastGroup and LNH under the Securities Exchange
Act of 1934, as amended. Copies of any such documents, other than exhibits to
such documents, are available without charge to each person to whom a copy of
this Proxy Statement/Prospectus has been delivered upon written or oral
request of such person from EastGroup, 300 One Jackson Place, 188 East

iii
<PAGE> 11

Capitol Street, Jackson, Mississippi 39201-2195, Attention: Chief Financial
Officer, telephone number (601) 354-3555. In order to insure timely delivery
of the documents, requests should be received by ______________, 1996.
Additionally, LNH's 1995 Annual Report on Form 10-KSB accompanies this Proxy
Statement/Prospectus and is incorporated by reference herein.

The following documents or portions thereof are hereby incorporated
into this Proxy Statement/Prospectus by reference:

1. EastGroup's 1995 Annual Report to Shareholders (Commission file No.
1-7094).

2. EastGroup's Annual Report on Form 10-K for the year ended December
31, 1995 (Commission file No. 1-7094).

3. EastGroup's Proxy Statement, dated April 27, 1995, used in connection
with the 1995 Annual Meeting of Shareholders of EastGroup (Commission
file No. 1-7094).

4. LNH's Annual Report on Form 10-KSB for the year ended December 31,
1995 (Commission file No. 1-8330).

5. LNH's Proxy Statement dated April 27, 1995, used in connection with
the 1995 Annual Meeting of Shareholders (Commission file No. 1-
8330).

6. The Agreement and Plan of Merger dated as of December 22, 1995 (as
amended by the First Amendment to the Agreement and Plan of Merger
dated March 18, 1996) among LNH, Sub and EastGroup (attached hereto
as Appendix A).

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 Proxy Statement/Prospectus
and prior to the date of the meetings 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 Proxy Statement/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 Proxy Statement/Prospectus.

iv
<PAGE> 12
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
PROXY STATEMENT/PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LNH REIT, Inc. and EastGroup Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1
Record Date; Securities Entitled to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certain Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Benefits to LNH Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Required Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Management's Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
LNH Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Federal Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regulatory Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
No Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Differences in Shareholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Unaudited Pro Forma Consolidated Selected Financial Data . . . . . . . . . . . . . . . . . . . 7
Selected Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Benefits to LNH Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Certain Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Risks of Real Estate Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Uncertain Market for and Price of EastGroup Shares . . . . . . . . . . . . . . . . . . . . . . 12
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
No Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Continuation of REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Differences Between Rights of EastGroup Shareholders and LNH Shareholders . . . . . . . . . . 13

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

VOTING AND PROXY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
LNH Directors' Reasons for Recommending the Merger . . . . . . . . . . . . . . . . . . . . . . 26
EastGroup's Reasons for Effecting the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 30
LNH Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Operations Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>

v
<PAGE> 13
<TABLE>
Page
-----
<S> <C>
Expense-Sharing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Taxation of EastGroup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Taxation of the Shareholders of a REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
No Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Restrictions on Resales of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Board of Trustees and Management of EastGroup . . . . . . . . . . . . . . . . . . . . . . . . 45
Other Directors and Trusteeships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Interest of LNH Management and EastGroup in the Merger . . . . . . . . . . . . . . . . . . . . 48
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . 51

INFORMATION CONCERNING LNH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

INFORMATION CONCERNING EASTGROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
EastGroup Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
LNH Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

DIFFERENCES IN SHAREHOLDERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

DESCRIPTION OF CAPITAL STOCK OF EASTGROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

INDEMNIFICATION PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

<FN>

APPENDIX A Agreement and Plan of Merger among EastGroup Properties, EastGroup-LNH Corporation and LNH REIT, Inc. dated as of
December 22, 1995 (as amended by the First Amendment to the Agreement and Plan of Merger among EastGroup
Properties, EastGroup-LNH Corporation and LNH REIT, Inc. dated as of March 18, 1996)

APPENDIX B Opinion of Rauscher Pierce Refsnes, Inc. dated as of December 21, 1995

APPENDIX C Tax Opinion of Jaeckle, Fleischmann & Mugel dated as of February 26, 1996 as to certain tax matters
</TABLE>

vi
<PAGE> 14

PROXY STATEMENT/PROSPECTUS SUMMARY

The following summary is a selective outline of certain information
from this Proxy Statement/Prospectus and is qualified in its entirety by the
more detailed information and financial statements included or incorporated
herein by reference.

LNH REIT, INC. AND EASTGROUP PROPERTIES

LNH. LNH REIT, Inc. ("LNH") (formerly known as L&N Housing Corp.) is
a Maryland corporation qualified as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"). LNH's
primary investments consist of mortgage loans, real estate and shares of a
REIT. The principal executive offices of LNH are located at 300 One Jackson
Place, 188 East Capitol Street, Jackson, Mississippi 39201, and its telephone
number is (601) 354-3555.

EastGroup. EastGroup Properties ("EastGroup") is a Maryland REIT
which is qualified under the Code. EastGroup owns a balanced portfolio of
income producing real estate properties, with a primary emphasis on industrial
buildings, garden apartment complexes and selected office properties in the
southeastern and southwestern United States. At March 15, 1996, EastGroup
owned or had an interest in eight apartment complexes, twenty-one industrial
facilities and three office buildings. EastGroup and Copley Properties, Inc.
("Copley") have also entered into an Agreement and Plan of Merger (the
"EastGroup-Copley Merger"). The Unaudited Pro Forma Financial Statements set
forth in this Proxy Statement/Prospectus also show the effect of the
EastGroup-Copley Merger. For more information regarding EastGroup, see the
1994 Annual Report to Shareholders of EastGroup that accompanies this Proxy
Statement/Prospectus. EastGroup-LNH Corporation ("Sub"), is a wholly-owned
subsidiary of EastGroup formed on September 29, 1995 for the purpose of
effecting the Merger (as defined below). EastGroup s offices are located at
300 One Jackson Place, 188 East Capitol Street, Jackson, Mississippi 39201.
Its telephone number is (601) 354-3555.

DATE, TIME AND PLACE OF SHAREHOLDERS' MEETING

The special meeting of the shareholders of LNH will be held on Friday,
May 10, 1996 at 9:00 a.m., local time, at 300 One Jackson Place, 188 East
Capitol Street, Jackson, Mississippi (the "Meeting"). The purpose of the
Meeting is to consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of December 22, 1995 (as amended by the
First Amendment to the Agreement and Plan of Merger dated March 18, 1996) among
LNH, Sub and EastGroup (the "Merger Agreement").

RECORD DATE; SECURITIES ENTITLED TO VOTE

The record date for the Meeting is April 8, 1996, holders of the
2,200,000 shares of common stock, $0.50 par value per LNH Share, of LNH
outstanding ("LNH Shares"), are entitled to one vote per LNH Share.

1
<PAGE> 15

THE MERGER

Under the terms of the Merger Agreement, LNH will be merged with and
into Sub (the "Merger"), EastGroup will succeed to the operations and assets of
LNH and LNH will cease to exist as a separate legal entity. Upon consummation
of the Merger, each outstanding LNH Share will be converted into the right to
receive a certain amount of shares of beneficial interest, $1.00 par value per
share, of EastGroup ("EastGroup Shares"), based on an exchange ratio (the
"Exchange Ratio"). The Exchange Ratio will be determined by dividing the value
$8.10 by the average closing price for EastGroup Shares for the ten trading
days immediately preceding the fifth trading day prior to the closing of the
Merger (the "Closing Price"). It is anticipated that the closing will be held
on the date of the special meeting of LNH shareholders. No fractional
EastGroup Shares will be issued but, in lieu thereof, each holder of LNH Shares
otherwise entitled to receive a fractional EastGroup Share will be paid cash in
an amount equal to the Closing Price. The currently outstanding EastGroup
Shares will not be exchanged in the Merger. See "Introduction--The Merger
Agreement."

CERTAIN EFFECTS OF THE MERGER

If the Merger is approved, shareholders of LNH will become
shareholders of EastGroup. Other than LNH's officers and directors, the
shareholders of LNH who currently beneficially own 77% of the outstanding LNH
Shares will only own 13% of the EastGroup Shares outstanding after the Merger
and, accordingly, will have less voting power and less of a percentage interest
in the LNH assets which will become assets of EastGroup by reason of the
Merger. See "Risk Factors--Certain Effects of the Merger."

CONFLICTS OF INTEREST

Two members of the four-person Board of Directors of LNH (Messrs.
Speed and Bailey) are also members of the Board of Trustees of EastGroup, and
have abstained from voting on the Merger as members of LNH's Board. Three
officers of LNH were also officers of EastGroup at the time the Merger was
proposed and negotiated. The Special Committee of the LNH Board of Directors
received much of the financial, economic and other data upon which it relied in
its decision making process from management personnel of LNH who are also
management personnel of EastGroup. See "Risk Factors -- Conflicts of
Interest."

EastGroup and LNH, along with four other companies, were parties to
expense-sharing arrangements. As contemplated by the expense- sharing
arrangements, the executive officers of LNH also served as executive officers
of EastGroup and the other participants. These expense- sharing arrangements
terminated on December 31, 1994. See "The Merger -- Expense-Sharing
Arrangements." Pursuant to an Administration Agreement (defined herein),
EastGroup and LNH were parties to certain arrangements concerning the
administration of LNH. The Administration Agreement was terminated effective
March 31, 1995. Additionally, pursuant to a Management Agreement, EastGroup,
through its wholly-owned subsidiary EGP Managers, Inc. ("EGP Managers"),
provides management services to LNH. See "The Merger -- Expense-Sharing
Arrangements."

2
<PAGE> 16

The relationships between LNH and EastGroup described above may have
resulted or may result in the directors and officers of LNH having a conflict
of interest with the shareholders of LNH in the negotiation, proposal,
recommendation and consummation of the Merger. In this regard, the idea of
combining LNH and EastGroup originated with the common management. The
transaction was first proposed, however, by a special committee of EastGroup's
disinterested trustees to a committee of LNH's disinterested directors, and the
structure and terms of the Merger were negotiated by these two committees, with
common management providing to those committees economic analyses and
information regarding the companies' respective assets.

BENEFITS TO LNH AFFILIATES

According to the terms of the Merger Agreement, EastGroup has agreed
to indemnify each of the members of the Board of Directors of LNH against
certain liabilities, including any liability arising under the Merger Agreement
or in connection with the Merger. See "Risk Factors--Benefits to LNH
Affiliates."

REQUIRED VOTES

The proposal to approve and adopt the Merger Agreement must be
approved by the affirmative vote of the holders of at least two-thirds of the
outstanding LNH Shares entitled to vote. As of the date hereof, the directors
and officers of LNH and members of their immediate families do not beneficially
own any of the outstanding LNH Shares. As of the date hereof, EastGroup owns
515,200 of the outstanding LNH Shares (23.42% of the outstanding LNH Shares).
EastGroup's officers and trustees have indicated that they intend to vote all
of the LNH Shares held by them in favor of the Merger. See "Voting and Proxy
Information."

Any LNH shareholder who would like information with respect to the
Exchange Ratio based upon the closing price of EastGroup Shares during the
prior ten (10) trading days may call EastGroup at 1-800-337-5602 and
representatives of EastGroup will provide the LNH shareholder with such
information. Also, LNH shareholders who wish to wait until the Exchange Ratio
is finally determined before voting may call LNH's proxy solicitor, Beacon Hill
Partners, Inc. ("Beacon Hill"), at 1-800-755-5001, who will provide the
shareholder with instructions on how to deliver the shareholder's proxy in a
timely manner.

MANAGEMENT'S RECOMMENDATION

The directors of LNH are of the opinion that the Merger is fair to and
in the best interests of both LNH and its shareholders, and have unanimously
recommended (with Messrs. Speed and Bailey abstaining) to LNH's shareholders
that they vote in favor of the Merger. The Board of Directors believes that
the Merger will: tend to maximize the value of LNH's assets; result in LNH
shareholders owning a portion of the equity interest in a more viable entity
with greater financial resources than LNH; and enable LNH shareholders to
participate in the ownership of a larger and more diversified real estate
investment trust than LNH. See "The Merger--LNH Directors' Reasons for
Recommending the Merger."

3
<PAGE> 17
LNH FAIRNESS OPINION

Rauscher Pierce Refsnes, Inc. ("Rauscher Pierce") has rendered an
opinion to the Board of Directors of LNH that the consideration to be received
by the holders of LNH Shares in the Merger is fair from a financial point of
view to such shareholders. A copy of the opinion is included as Appendix B
hereto. Rauscher Pierce's opinion was based on Rauscher Pierce's review and
analysis of (i) the trading histories of LNH Shares and EastGroup Shares prior
to and after the public announcement of the proposed Merger on September 6,
1995 and the announcement of the revised agreement in principle on December 6,
1995; (ii) LNH's quarterly operating results for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995 plus LNH's operating results for the
years ended December 31, 1992, 1993, and 1994; (iii) EastGroup's quarterly
operating results for the quarters ended March 31, 1995, June 30, 1995 and
September 30, 1995 plus EastGroup's operating results for the years ended
December 31, 1992, 1993 and 1994; (iv) the fact that the Merger would be
submitted to a vote of the shareholders of LNH; (v) the fact that the
transaction is intended to be tax-free; and (vi) certain other matters and
other factors as Rauscher Pierce deemed relevant. See "The Merger--LNH
Fairness Opinion."

FEDERAL TAX CONSEQUENCES

LNH has received an opinion of Jaeckle, Fleischmann & Mugel that no
gain or loss will be recognized by the holders of LNH Shares to the extent they
receive EastGroup Shares in the Merger in exchange for their LNH Shares, and
that such shareholders' basis in the EastGroup Shares received by such LNH
shareholders in the Merger will be the same as their basis in the LNH Shares
exchanged. See "The Merger--Federal Income Tax Consequences."

CONDITIONS TO CLOSING

Consummation of the Merger is subject to a number of conditions,
including the approval of the Merger Agreement by the holders of two-thirds of
the outstanding LNH Shares and the continued accuracy of the representations
and warranties of EastGroup, Sub and LNH as of the effective date of the
Merger. The representations and warranties relate to, among other things, the
absence of any material adverse changes in the business or assets of EastGroup
or LNH. The Merger may also be abandoned at any time prior to its consummation
by the agreement of the Board of Trustees of EastGroup and the Board of
Directors of LNH. See "Introduction--The Merger Agreement."

4
<PAGE> 18

REGULATORY APPROVAL

EastGroup and LNH believe that the Merger may be consummated without
notification being given or certain information being furnished to the Federal
Trade Commission (the "FTC") or the Antitrust Division of the Department of
Justice (the "Antitrust Division") pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and that no waiting
period requirements under the HSR Act are applicable to the Merger. However,
there can be no assurance that the consummation of the Merger will not be
delayed by reason of the HSR Act. At any time before or after consummation of
the Merger, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the consummation of the Merger or seeking
divestiture of substantial assets of EastGroup or LNH. At any time before or
after the effective time of the Merger, any state could take such action under
its own antitrust laws as it deems necessary or desirable. Such action could
include seeking to enjoin the consummation of the Merger or seeking divestiture
of LNH or assets of EastGroup or LNH by EastGroup. Private parties may also
seek to take legal action under antitrust laws under certain circumstances.

NO DISSENTERS' RIGHTS

If the Merger is approved, such approval will bind all the
shareholders of LNH, including those who vote against the Merger or abstain or
fail to return a completed Proxy. No holder of LNH Shares will have any
dissenters' rights in connection with, or as a result of, the matters to be
acted upon relating to the Merger at the Meeting. See "The Merger--No
Dissenters' Rights."

RISK FACTORS

Two members of LNH's four-person Board of Directors are members of
EastGroup's Board of Trustees. Each of the members of the Board of Directors
of LNH will enter into an indemnification agreement with EastGroup pursuant to
which EastGroup will agree to indemnify such persons against certain
liabilities, including any liability arising under the Merger Agreement or in
connection with the Merger. Additionally, three of the officers of LNH also
serve as officers of EastGroup. The Special Committee of the LNH Board of
Directors received much of the financial, economic and other data upon which it
relied in its decision making process from management personnel of LNH who are
also management personnel of EastGroup. The relationships described above may
result in the directors and officers of LNH having a conflict of interest with
the shareholders of LNH in the negotiation, proposal, recommendation and
consummation of the Merger. See "Risk Factors--Benefits to LNH Affiliates and
Conflicts of Interest."

Risks Associated with Real Estate. Shareholders of LNH and EastGroup
should be aware that there are certain risks inherent in the ownership of real
estate and the securities of companies that own real estate, and that
EastGroup's assets and LNH's assets may have particular risks associated with
them. These risks include, among others: adverse changes in

5
<PAGE> 19

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 laws,
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. See "Risk Factors--Risks of Real Estate
Ownership."

MARKET PRICES

EastGroup Shares are traded on the New York Stock Exchange ("NYSE")
under the symbol "EGP." LNH Shares are traded on NYSE under the symbol "LHC."
The following table shows the sales prices of EastGroup Shares and LNH Shares
as reported by NYSE, on the dates indicated.

<TABLE>
<CAPTION>
Closing Price
-------------
<S> <C>
September 5, 1995, the last trading day before LNH and EastGroup issued a joint
press release announcing that they had agreed in principle to the Merger(1):
EastGroup Share $19.875
LNH Share 6.50

March 26, 1996, the most recent trading day prior to the date of this Proxy
Statement/Prospectus with respect to which it is practicable to provide market
price information(1):

EastGroup Share $22.375
LNH Share 7.625

- ---------------
<FN>
(1) Price per share as of a particular day reflects the last reported
transaction in the indicated shares on or before that day.

</TABLE>

EastGroup paid a quarterly dividend of $0.45 per EastGroup Share for
the last quarter of 1994 and the first and second quarter of 1995. EastGroup
increased the quarterly dividend to $0.47 per EastGroup Share for the third
quarter of 1995 and paid $0.47 for the fourth quarter of 1995. EastGroup has
declared a dividend of $0.47 per EastGroup Share for the first quarter of 1996.
LNH paid a quarterly dividend of $0.14 per LNH Share for the first and second
quarter of 1994, $0.09 per LNH Share for the third and last quarter of 1994 and
for the first,

6
<PAGE> 20

second and third quarter of 1995, and $0.15 for the fourth quarter of 1995.
LNH paid a special dividend of $1.50 per LNH Share in the third quarter of 1994
and a special dividend of $0.66 per LNH Share in the first quarter of 1995.
LNH has declared a dividend of $0.15 per LNH Share for the first quarter of
1996. See "Market Prices and Dividends" for more information regarding
historical market prices and dividends.

STOCK CERTIFICATES

Promptly after the Effective Time, EastGroup shall cause its transfer
agent, KeyCorp Shareholder Services, Inc. (the "Exchange Agent"), to mail to
each record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented LNH
Shares (the "Certificate(s)"), a form Letter of Transmittal and instructions
for use in effecting the surrender of the Certificate and for receiving any
payment for fractional shares. Upon surrender to the Exchange Agent of a
Certificate, together with such Letter of Transmittal duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate or certificates representing EastGroup Shares and cash and such
surrendered Certificate shall then be cancelled. Shareholders of LNH who fail
to deliver their LNH Share certificates and Letter of Transmittal to the
Exchange Agent will not receive their EastGroup Share certificates, nor any
dividends with respect to such EastGroup Shares, unless and until such LNH
Share certificates are forwarded to the Exchange Agent. Upon the Exchange
Agent's receipt of the LNH Share certificates and Letter of Transmittal, the
LNH shareholder will receive all unpaid dividends, if any, with respect to such
LNH Shares, without interest. Shareholders who are unable to locate their LNH
Share certificates may contact the Exchange Agent at the address indicated in
the Letter of Transmittal for assistance. Shareholders of EastGroup will not
need to exchange their share certificates. See "Introduction--The Merger
Agreement--Exchange of Shares."

DIFFERENCES IN SHAREHOLDERS' RIGHTS

The laws and charter documents governing the rights of shareholders of
EastGroup differ in certain respects from those governing the rights of
shareholders of LNH. For example, shareholders of EastGroup are limited by
EastGroup's Restated Declaration of Trust, as amended (the "EastGroup
Declaration"), to vote only on the election and removal of trustees, amendment
of the EastGroup Declaration and termination of EastGroup. LNH shareholders,
however, are not restricted by LNH's Articles of Incorporation, as amended (the
"LNH Articles"), as to those matters upon which LNH shareholders may vote.

UNAUDITED PRO FORMA CONSOLIDATED SELECTED FINANCIAL DATA

The selected pro forma financial data that appears below is based on
LNH's and EastGroup's historical financial data as adjusted to give effect to
the Merger and the EastGroup-Copley Merger on the basis described in the notes
to the Pro Forma Consolidated Financial Statements (Unaudited). This
information is not necessarily indicative of the results that actually

7
<PAGE> 21
would have occurred and should be read in conjunction with the Pro Forma
Financial Statements (Unaudited) included elsewhere in this Proxy
Statement/Prospectus.

<TABLE>
<CAPTION>
Year Ended
December 31, 1995 for
EastGroup, LNH and
Copley(1)
--------------------------
(In thousands, except
per share data)
Unaudited Pro Forma Consolidated
Operation Data:

<S> <C>
Net Revenues $47,424
Expenses 42,007
Income before gain on investments 5,417
Net income 5,417
Net income per share 0.77
Weighted average number of shares
of beneficial interest outstanding 7,074

</TABLE>

<TABLE>
<CAPTION>
As of December 31, 1995 for
EastGroup, LNH and Copley(1)
(In thousands)
Unaudited Pro Forma Consolidated
Balance Sheet Data:
<S> <C>
Total assets $281,483
Total liabilities 137,808
Shareholders' equity 143,675
- -------------------------
<FN>
(1) EastGroup, LNH and Copley have a December 31 fiscal year.
</TABLE>

SELECTED COMPARATIVE PER SHARE DATA

The following tables set forth certain information concerning
EastGroup Shares, LNH Shares and shares of common stock, $1.00 par value per
share, of Copley ("Copley Shares"). Entries captioned "EastGroup pro forma
consolidated" is EastGroup's, LNH's and Copley's historical data combined and
adjusted to give effect to the Merger and the EastGroup-Copley Merger on the
basis described in the notes to the Pro Forma Consolidated Financial Statements
(Unaudited). LNH's equivalent pro forma consolidated per share data is
determined by multiplying the EastGroup pro forma consolidated data by 0.3746,
which is the number of EastGroup Shares to be exchanged for one LNH Share in
the Merger (based on EastGroup's

8
<PAGE> 22

market price on December 6, 1995 of $21.625 per share). Copley's
equivalent pro forma consolidated per share data is determined by multiplying
the EastGroup pro forma consolidated data by 0.7256, which is the number of
EastGroup Shares which will be exchanged for one Copley Share in the Merger
(based on EastGroup's market price on February 13, 1996 of $21.50 per share).

The following data should be read in conjunction with the Pro Forma
Consolidated Financial Statements (Unaudited) included elsewhere in this Proxy
Statement/Prospectus, EastGroup's Consolidated Financial Statements
incorporated by reference in this Proxy Statement/Prospectus and LNH's
Financial Statements incorporated by reference in this Proxy
Statement/Prospectus and Copley's Financial Statements included herein.

<TABLE>
<CAPTION>
As of December 31, 1995
for EastGroup, LNH and Copley
-----------------------------
<S> <C>
Book value per share of beneficial interest:
EastGroup historical $19.59
EastGroup pro forma consolidated 20.29

Book value per share of common stock:
LNH historical 10.66
LNH equivalent pro forma consolidated 7.60

Book value per share of common stock:
Copley historical 10.90
Copley equivalent pro forma consolidated 14.72
</TABLE>

<TABLE>
<CAPTION>
Year Ended
December 31, 1995
-----------------
<S> <C>
EastGroup:
Historical net income per share of
beneficial interest $1.82
Pro forma consolidated net income
per share of beneficial interest 0.77
Historical consolidated cash dividends
declared per share of beneficial
interest 1.84
</TABLE>

9
<PAGE> 23

<TABLE>
Year Ended
December 31, 1995
-----------------
<S> <C>
LNH:
Historical net income per share of
common stock $0.47
Equivalent pro forma consolidated net
income per share of common stock 0.29
Historical cash dividends declared per
share of common stock 1.08
Equivalent pro forma consolidated cash
dividends declared per share of
common stock 0.69

COPLEY:
Historical net income per share
of common stock $0.67
Equivalent pro forma consolidated
net income per share of common stock 0.56
Historical cash dividends declared per
share of common stock 1.06
Equivalent pro forma consolidated cash
dividends declared per share of
common stock 1.34
</TABLE>

10
<PAGE> 24
RISK FACTORS

In analyzing the Merger, shareholders of LNH should consider, among
other factors, the following:

CONFLICTS OF INTEREST

Two members of the four-person Board of Directors of LNH (Messrs.
Speed and Bailey) are also members of the Board of Trustees of EastGroup, and
have abstained from voting on the Merger as members of LNH's Board. Three
officers of LNH are also officers of EastGroup. The Special Committee of the
LNH Board of Directors received much of the financial, economic and other data
upon which it relied in its decision making process from management personnel
of LNH who are also management personnel of EastGroup.

EastGroup and LNH, along with four other companies, were parties to
expense-sharing arrangements pursuant to which certain executive officers of
LNH also served as executive officers of EastGroup. These expense-sharing
arrangements were terminated on December 31, 1994. See "The Merger --
Expense-Sharing Arrangements." Pursuant to an Administration Agreement,
EastGroup and LNH were parties to certain arrangements concerning the
administration of LNH. The Administration Agreement was terminated effective
March 31, 1995. Additionally, pursuant to a Management Agreement, EastGroup's
wholly-owned subsidiary, EGP Managers, is currently responsible for the
management of LNH subject to the oversight of LNH's Board of Directors. See
"The Merger -- Expense-Sharing Arrangements."

BENEFITS TO LNH AFFILIATES

Pursuant to the Merger Agreement, EastGroup has agreed to indemnify
each of the members of the Board of Directors of LNH against certain
liabilities, including any liability arising under the Merger Agreement or in
connection with the Merger.

11
<PAGE> 25
CERTAIN EFFECTS OF THE MERGER

If the Merger is approved, shareholders of LNH will become
shareholders of EastGroup. The shareholders of LNH other than EastGroup, who
currently beneficially own 77% of the outstanding LNH Shares, will only own
approximately 13% of EastGroup Shares outstanding after the Merger and,
accordingly, will have less voting power and less of a percentage interest in
LNH assets which will become assets of EastGroup by reason of the Merger.

RISKS OF REAL ESTATE OWNERSHIP

EastGroup's assets primarily consist of equity investments in various
types of real property. If the Merger is consummated, shareholders of LNH will
become shareholders of EastGroup, which will own all of the outstanding stock
of Sub, and Sub, by operation of law, will own all of the assets of LNH. As a
result, shareholders of LNH will be, as shareholders of EastGroup, subject to
the risks inherent in the ownership and management of real property owned by
both LNH and 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.

UNCERTAIN MARKET FOR AND PRICE OF EASTGROUP SHARES

There can be no assurance as to the trading volume or price of
EastGroup Shares after the Merger. Events outside the control of EastGroup and
LNH which would adversely affect the market value of their existing real estate
and other investments, as well as the market value of LNH Shares and EastGroup
Shares, may occur during the period from the date of this Proxy
Statement/Prospectus to the date the Merger is consummated or thereafter.

12
<PAGE> 26
DIVIDENDS

Distributions by EastGroup will be at the discretion of its Board of
Trustees and will depend on EastGroup's actual cash available for distribution,
its financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Code and such other factors as
the Board of Trustees deems relevant. See "Market Prices and Dividends."

NO DISSENTERS' RIGHTS

Shareholders of LNH who vote against the Merger (or do not vote) will
be bound by the results of the vote if LNH's shareholders approve the Merger.
LNH shareholders will not have appraisal rights in connection with, or as a
result of, the matters to be acted upon relating to the Merger at the Meeting.
See "The Merger--No Dissenters' Rights."

CONTINUATION OF REIT STATUS

EastGroup is a REIT. If the Merger is approved, the shareholders of
LNH will become shareholders of EastGroup and, consequently, will continue to
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: (a) maintaining ownership of specified
minimum levels of real estate related assets; (b) maintaining specified minimum
levels of real estate related income; (c) maintaining certain ownership
restrictions on its shares of beneficial interest; and (d) distributing
substantially all real estate investment taxable income on an annual basis.
The consummation of the Merger should not affect EastGroup's continuing ability
to qualify as a REIT. See "The Merger -- Taxation of EastGroup" and "The
Merger -- Taxation of the Shareholders of a REIT."

DIFFERENCES BETWEEN RIGHTS OF EASTGROUP SHAREHOLDERS AND LNH SHAREHOLDERS

If the Merger is consummated, the rights of the holders of LNH Shares
that are converted into EastGroup Shares pursuant to the Merger will be
governed by the Maryland General Corporation Law, the Maryland Real Estate
Investment Trusts Law and the charter documents of EastGroup. Certain
differences between the rights of shareholders of EastGroup and the rights of
shareholders of LNH include the following: (i) the LNH charter documents
authorize LNH to issue up to 15,000,000 LNH Shares, whereas the EastGroup
charter documents authorize EastGroup to issue up to 10,000,000 EastGroup
Shares; however, pursuant to a proposed amendment to the EastGroup Declaration,
EastGroup will be authorized to issue up to 20,000,000 EastGroup Shares, (ii)
shareholders of EastGroup are limited by the EastGroup Declaration to vote only
on the election and removal of trustees, amendment of the EastGroup Declaration
and termination of EastGroup, whereas LNH shareholders are not restricted by the
LNH Articles or by Maryland law as to those matters upon which LNH shareholders
may vote,

13
<PAGE> 27

(iii) the EastGroup Declaration requires the affirmative vote of the
holders of not less than two-thirds of the EastGroup Shares then outstanding to
remove a trustee from office, to amend the EastGroup Declaration and to
terminate EastGroup, whereas LNH requires only the affirmative vote of the
holders of a majority of the LNH Shares outstanding and entitled to vote for
comparable actions involving LNH, and (iv) the LNH charter documents provide
that the Chairman of the Board of Directors, the President or a majority of the
Board of Directors may call a special meeting of LNH shareholders, whereas any
trustee or officer of EastGroup, upon receiving the written request of EastGroup
shareholders holding not less than 25 percent of the outstanding EastGroup
Shares, shall call a special meeting of EastGroup shareholders. See
"Differences in Shareholders' Rights."

14
<PAGE> 28
INTRODUCTION

This Proxy Statement/Prospectus is being furnished to the shareholders
of LNH in connection with the solicitation of proxies by the Board of Directors
of LNH for use at the Meeting, which will be held on Friday, May 10, 1996, at
9:00 a.m., local time, at LNH's offices, 300 One Jackson Place, 188 East
Capitol Street, Jackson, Mississippi, and at all adjournments and postponements
thereof.

As set forth more fully below, at the Meeting, the holders of LNH
Shares will be asked to consider and vote upon a proposal to approve and adopt
the Merger Agreement. A copy of the Merger Agreement is attached as Appendix A
to this Proxy Statement/Prospectus, and is hereby incorporated by this
reference into this Proxy Statement/Prospectus. Upon satisfaction of certain
conditions set forth therein, the Merger Agreement provides for, among other
things, (i) the merger of LNH with and into Sub, (ii) the conversion of each
LNH Share outstanding into the right to receive a certain amount of EastGroup
Shares based upon the Exchange Ratio (as defined below); and (iii) LNH's
ceasing to exist as a separate legal entity.

THE MERGER AGREEMENT

The statements and descriptions contained in this Proxy
Statement/Prospectus with respect to the terms and conditions of the Merger
Agreement are intended only as a summary of the material terms of the Merger
and all descriptions of the transaction and of the Merger Agreement and are
qualified in their entirety by the detailed provisions set forth in the Merger
Agreement reprinted as Appendix A. Each shareholder of LNH is advised to read
the Merger Agreement carefully.

General. The Merger Agreement provides that, subject to the approval
and adoption thereof by the shareholders of LNH and the satisfaction of the
other conditions set forth therein, LNH will be merged with and into Sub and
LNH will cease to exist as a separate legal entity. At the time the Merger
becomes effective, each LNH Share will be converted into the right to receive a
certain number of EastGroup Shares based on the following Exchange Ratio. The
Exchange Ratio is the number of EastGroup Shares determined by dividing $8.10
by the average closing price for EastGroup Shares for the 10 trading days
immediately preceding the fifth trading day prior to the closing of the Merger
(the "Closing Price"). It is the intention of the parties to consummate the
Merger as soon as possible following adoption and approval of the Merger
Agreement by the shareholders of LNH and satisfaction of all conditions (or, to
the extent permitted, waiver thereof) to the parties' respective obligations to
consummate the Merger. The Merger will become effective when Articles of
Merger are filed with the Secretary of State of the State of Maryland and any
other necessary documents are so filed (the "Effective Time"), which will occur
on or about the date of the Meeting.

15
<PAGE> 29
Exchange of Shares. At the Effective Time, each outstanding LNH Share
will be converted into the right to receive a certain amount of EastGroup
Shares based on the Exchange Ratio. No fractional EastGroup Shares will be
issued but, in lieu thereof, each holder of LNH Shares entitled to receive a
fractional EastGroup Share will be paid cash in an amount equal to the value of
such fractional share, which value will be based on the Closing Price. No
interest will be paid or accrued on any cash amounts payable in lieu of
fractional shares.

Each holder of one or more certificates that represent LNH Shares
prior to the Effective Time will be required to surrender such stock
certificate(s), together with a duly executed Letter of Transmittal, to the
Exchange Agent, in order to receive a new certificate representing the number
of whole EastGroup Shares into which such LNH Shares were converted in the
Merger and the cash payable with respect to any fractional shares, as set forth
in the Merger Agreement. From and after the Effective Time of the Merger,
until so surrendered, each certificate that theretofore represented LNH Shares
will be deemed for all purposes to evidence the number of whole shares of
EastGroup into which such LNH Shares were converted in the Merger, except that
dividends, if any, with respect to such LNH Shares will not be paid until the
certificates for LNH Shares are forwarded to the Exchange Agent together with a
properly completed Letter of Transmittal, at which time the shareholder will
receive all unpaid dividends, if any, with respect to such LNH Shares, without
interest. Promptly after the Effective Time, each LNH shareholder will be sent
a form of Letter of Transmittal which sets forth instructions concerning
procedures to be followed for the submission of LNH Share certificates to the
Exchange Agent after the Effective Time.

If a new certificate representing EastGroup Shares is to be issued in
the name of a person other than the one to whom the surrendered LNH Share
certificate is registered on the stock transfer books of LNH immediately prior
to the Effective Time, it will be a condition of such issuance that the
certificate so surrendered be properly endorsed or otherwise be in proper form
for transfer and that the person requesting such issuance either pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance
to a person other than the registered owner of the certificate or establish
that such tax has been paid or is not applicable.

At and after the Effective Time, there will be no transfers of LNH
Shares on the books of LNH.

Conditions to the Merger. The obligations of EastGroup, Sub and LNH
to effect the Merger are subject to the fulfillment or waiver of, among others,
the following conditions: (i) no "stop order" shall be in effect with respect
to the Registration Statement of which this Proxy Statement/Prospectus forms a
part and there shall be no proceeding instituted or threatened by the SEC or
any state to suspend the effectiveness thereof; (ii) the holders of outstanding
LNH Shares shall have approved the Merger Agreement as required by LNH's
organization documents and Maryland law; (iii) all necessary permits,
authorizations, regulatory approvals and consents necessary for the
consummation of the Merger shall have been received; and (iv) the Effective
Time shall have occurred on or before May 15, 1996.

16
<PAGE> 30
The obligations of EastGroup and Sub to effect the Merger are also
subject to the fulfillment or waiver of certain additional conditions,
including the following: (i) the material accuracy of the representations and
warranties made by LNH in the Merger Agreement; (ii) the material compliance by
LNH with all agreements contained in the Merger Agreement required to be
performed by it prior to the Effective Time; (iii) the absence of any action or
proceeding that seeks to restrain, enjoin or otherwise prohibit the Merger;
(iv) the receipt by EastGroup of an opinion of counsel to LNH as to certain
specified matters, including LNH's good standing and existence, and LNH's
authorization, execution and delivery of the Merger Agreement; (v) the receipt
of all permits, authorizations, regulatory approvals and consents from third
parties necessary for consummation of the Merger; and (vi) the absence of any
material adverse developments with respect to the business or assets of LNH.

The obligation of LNH to consummate the Merger is also subject to the
fulfillment or waiver of certain additional conditions, including the
following: (i) the material accuracy of the representations and warranties
made by EastGroup and Sub in the Merger Agreement; (ii) the material compliance
by EastGroup and Sub with all agreements contained in the Merger Agreement
required to be performed by them prior to the Effective Time; (iii) the absence
of any action or proceeding that seeks to restrain, enjoin or otherwise
prohibit the Merger; (iv) the receipt by LNH of an opinion of counsel to
EastGroup and Sub as to certain specified matters, including the good standing
and existence of EastGroup and Sub, and the due authorization, execution and
delivery by EastGroup and Sub of the Merger Agreement; (v) the confirmation by
Rauscher Pierce of its fairness opinion described below as of the day before
the date of the Effective Time; (vi) the receipt of all permits,
authorizations, regulatory approvals and consents from third parties necessary
for consummation of the Merger; and (vii) the absence of any material adverse
development with respect to the business or assets of EastGroup.

Amendment and Termination of the Merger Agreement. The Merger
Agreement may be amended at any time, whether before or after approval of the
Merger Agreement by LNH shareholders, by LNH, EastGroup and Sub; provided,
however, that after any such approval, no amendment shall be made without the
further approval of LNH shareholders if it decreases the number of EastGroup
Shares to be exchanged for LNH Shares or adversely affects the rights of LNH
shareholders.

The Merger Agreement may be terminated by the mutual consent of the
Boards of Trustees and Directors of EastGroup, Sub and LNH at any time prior to
the Effective Time, whether before or after approval of the Merger Agreement by
the shareholders of LNH. In addition, the Merger Agreement may be terminated
(i) by EastGroup or LNH if the Effective Time has not occurred on or before May
15, 1996, (ii) by the Board of Trustees of EastGroup if the conditions to its
closing are not satisfied prior to the Effective Time, or (iii) by the Board of
Directors of LNH if the conditions to its closing are not satisfied prior to
the Effective Time.

In the event either EastGroup or LNH elects to terminate the Merger
Agreement because the other party has breached any covenant in the Merger
Agreement or any representation or warranty by the other party is untrue in any
material respect, the party in breach shall pay to

17
<PAGE> 31
the non-terminating party its out-of-pocket expenses incurred in connection with
the Merger and the non-terminating party will have any other remedy available at
law or in equity.

If the Merger is consummated, EastGroup has agreed to indemnify each
person who becomes an employee, agent, officer or trustee of EastGroup with
respect to claims arising after the Effective Time, and LNH has agreed to
indemnify each person who was an employee, agent, officer or director of LNH
prior to the Effective Time with respect to claims arising in connection with
such person's service. EastGroup has also agreed to assume any liability of
LNH pursuant to such indemnification to the extent of any distributions from
LNH to EastGroup or any affiliate or to the extent of any claim against any
person indemnified by LNH arising under the Merger Agreement or pursuant to the
Merger.

No business will be presented, or be in order for consideration, at
the Meeting other than the proposal described above and such matters as may be
necessary in connection therewith.

EastGroup is not required to submit the Merger to its shareholders for
approval under Maryland law or under the EastGroup Declaration and EastGroup
has elected not to do so.

VOTING AND PROXY INFORMATION

The Board of Directors of LNH has fixed the close of business on
April 8, 1996 as the record date for determining the holders of LNH Shares
entitled to receive notice of and to vote at the Meeting (the "Record Date").
At the close of business on the Record Date, there were outstanding 2,200,000
LNH Shares, the only outstanding securities of LNH entitled to vote at the
Meeting. Approval of the Merger will require the affirmative vote of the
holders of at least two-thirds of the outstanding LNH Shares.

The accompanying proxy is solicited on behalf of the Board of
Directors of LNH and is revocable at any time before it is exercised. A proxy
may be revoked by written notice of revocation or by a later dated proxy, in
either case delivered to the Secretary of LNH. Attendance at the Meeting will
not automatically revoke a proxy, but a shareholder in attendance may request a
ballot and vote in person, thereby revoking a prior granted proxy.

All outstanding LNH Shares represented by properly executed and
unrevoked proxies received in the accompanying form in time for the Meeting
will be voted. Shareholders may (i) vote "FOR" approval of the Merger
Agreement, (ii) vote "AGAINST" approval of the Merger Agreement, or (iii)
"ABSTAIN" from voting on the Merger Agreement. A vote to abstain from voting
on the Merger Agreement (as well as a failure to vote at all) would have the
effect of a vote against the Merger Agreement. LNH Shares will be voted as
instructed in the accompanying proxy. If no instructions are given, the shares
will be voted for approval of the Merger Agreement.

18
<PAGE> 32
A proxy submitted by a shareholder may indicate that all or a portion
of LNH Shares represented by such proxy are not being voted by such
shareholder. This could occur, for example, when a broker is not permitted to
vote shares held in street name in the absence of instructions from the
beneficial owner of the shares (a "broker non-vote"). Broker non-votes will be
counted in determining whether a quorum is present at the Meeting, but such
shares will not be counted as having voted for or against the Merger and will
have the effect of having been voted against the Merger Agreement, as approval
of the Merger Agreement will require the affirmative vote of two-thirds of the
outstanding LNH Shares.

Any LNH shareholder who would like information with respect to the
Exchange Ratio based upon the closing price of EastGroup Shares during the
prior ten (10) trading days may call EastGroup at 1-800-337-5602 and
representatives of EastGroup will provide the LNH shareholder with such
information. Also, LNH shareholders who wish to wait until the Exchange Ratio
is finally determined before voting may call LNH's proxy solicitor, Beacon
Hill, at 1-800-755-5001, who will provide the shareholder with instructions on
how to deliver the shareholder's proxy in a timely manner.

The following table sets forth information concerning ownership of LNH
Shares by each person known to LNH to be the beneficial owner of more than five
percent of the outstanding LNH Shares based on public filings with the SEC as
of the Record Date.

Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class
--------------------------------------------------- ------------------------------ --------------
<S> <C> <C>
EastGroup . . . . . . . . . . . . . . . . . . . . . . . . . . 515,200(1) 23.42%
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201

Dimensional Fund Advisors Inc. . . . . . . . . . . . . . . . . 139,100(2) 6.32%
1299 Ocean Avenue
Suite 650
Santa Monica, California 90401

Spiritas, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 110,800(1) 5.04%
5219 Second Avenue
Dallas, Texas 75210

- -------------------------

<FN>
(1) Based upon an amended Schedule 13D filed with the SEC.

</TABLE>

19
<PAGE> 33

(2) As disclosed in a filing with the SEC dated February 11, 1992, on
Schedule 13G by Dimensional Fund Advisors Inc. ("Dimensional"), as
registered investment advisor, Dimensional is deemed to have
beneficial ownership of 139,100 LNH Shares, all of which LNH Shares
are held in portfolios of DFA Investment Dimensions Group, Inc., a
registered open end investment company, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, for all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such LNH
Shares.

20
<PAGE> 34
THE MERGER

BACKGROUND OF THE MERGER

In 1992, EastGroup and Walker Investments, L.P. and affiliated
entities including Walker Investments, L.P., whose general partner is Billco,
Inc., a Mississippi corporation wholly-owned by the William E. Walker, Jr.
Revocable Trust, a grantor trust of which the late William E. Walker, Jr. was
settlor, and the W. E. Walker Foundation, a Mississippi charitable foundation,
(collectively the "Walker Interests") began to purchase LNH Shares in open
market transactions. At the time of these purchases Lomas Financial
Corporation ("LFC") was under court protection from its creditors under Chapter
11 of the United States Bankruptcy Code. LFC owned 16% of the outstanding LNH
Shares. In early 1992, EastGroup and the Walker Interests entered into an
agreement with LFC pursuant to which the Walker Interests and EastGroup jointly
purchased the LNH Shares owned by LFC (75% by the Walker Interests, 25% by
EastGroup), and a partnership affiliated with EastGroup and Walker became the
manager for LNH under the Management Agreement as part of the purchase. As a
result of the purchase of LNH Shares from LFC, EastGroup and the Walker
Interests jointly owned 23.12% of the outstanding LNH Shares.

In March 1995, EastGroup announced that it had agreed to purchase the
383,775 LNH Shares owned by the Walker Interests for $7.50 per LNH Share in
cash. At the same time, EastGroup also agreed to purchase the Walker
Interests' share of the partnership that was the manager under the Management
Agreement for $183,738 in cash. As a result of these transactions, which were
consummated in April 1995, EastGroup became the beneficial owner of a total of
515,200 LNH Shares (23.42%). At the time that management proposed that
EastGroup purchase the LNH Shares from the Walker Interests, management also
suggested that a future business combination transaction between LNH and
EastGroup might be appropriate. When it announced the agreements with the
Walker Interests, EastGroup also announced that it had formed a Special
Committee comprised of independent trustees (Alexander G. Anagnos and Harold B.
Judell), trustees who were and are not officers or directors of, or otherwise
affiliated with, LNH to consider EastGroup's future strategy for its investment
in LNH. EastGroup also disclosed at that time that its future strategy with
respect to LNH could include a business combination transaction in which
EastGroup would be the surviving entity. LNH formed a similar committee,
comprised entirely of disinterested directors (Robert Ted Enloe and George R.
Farish), directors who were and are not officers or trustees of, or otherwise
affiliated with, EastGroup.

During early April 1995, both Special Committees requested that
management provide them with information with respect to LNH, EastGroup, their
assets and the historic prices of LNH Shares and EastGroup Shares. EastGroup's
Special Committee held a meeting by telephone on April 13, 1995, in which
Messrs. Anagnos and Judell participated along with counsel and N. Keith McKey,
Chief Financial Officer of both LNH and EastGroup. Mr. McKey answered the
EastGroup Special Committee's questions about the financial position and

21
<PAGE> 35
results of operations of both LNH and EastGroup. The EastGroup Special
Committee requested that management provide it with additional information with
respect to LNH's assets.

On May 1, 1995, the EastGroup Special Committee held another meeting
by telephone, in which Messrs. Anagnos and Judell participated. Also present
were counsel, Mr. McKey and David H. Hoster II, President of EastGroup and
Executive Vice President of LNH. The Special Committee conducted a detailed
review of LNH's assets, and asked questions of the members of management
present. In particular, the Special Committee looked into the situation with
respect to the Cowesett Corners investment, which is a mortgage loan made by
LNH secured by a shopping center in Rhode Island. The borrower with respect to
this loan had sought protection under the United States Bankruptcy Code, and
the Special Committee was concerned as to the value of LNH's investment.

Later on May 1, 1995, the full EastGroup Board of Trustees held a
meeting at which the EastGroup Special Committee discussed its findings with
respect to LNH and recommended that EastGroup propose a business combination
transaction to LNH if acceptable terms could be negotiated. The Board decided
that EastGroup should hold off making such a proposal to LNH until legal
decisions with respect to Cowesett were rendered and the status of certain
other business combination transactions that EastGroup was studying became
clearer. With respect to Cowesett, the borrower pursuant to a mortgage secured
by the Cowesett Corners Shopping Center had filed for relief under Chapter 11
of the United States Bankruptcy Code on February 11, 1995. Following the
filing of various motions concerning issues of foreclosure, an agreement was
reached whereby the property would be sold to an unrelated third party and the
lien held by LNH and its co-investor would be released. The potential
purchaser decided not to proceed with the transaction and, following the
proposed sale deadline of November 30, 1995, LNH and its co-investor
foreclosed their lien and took title to the property on December 1, 1995.
With respect to other potential business combinations, EastGroup was
considering whether to engage in a business combination transaction with
Copley. EastGroup began acquiring shares of the capital stock of Copley in
April 1995 and made a proposal to merge with Copley in May 1995. In the late
summer of 1995 Copley advised EastGroup that it had determined that it was in
the best interest of Copley's shareholders to gauge the market's interest in
acquiring Copley by soliciting the interest of third parties in merging with
Copley or acquiring Copley's stock or assets. Following an extended process
during which Copley received a number of preliminary proposals to merge with
Copley or acquire Copley's stock or assets, including a proposal submitted by
EastGroup, Copley and EastGroup entered into an Agreement and Plan of Merger
dated February 12, 1996 (the "Copley Merger Agreement").

In mid-August 1995, common management suggested that it might be
appropriate for EastGroup to consider whether to propose a business combination
to LNH. The EastGroup Special Committee requested further information with
respect to LNH and also directed management to prepare financial analyses with
respect to a merger between LNH and EastGroup. The EastGroup Special Committee
met by telephone on August 28, 1995. Messrs. Anagnos and Judell, counsel, and
Messrs. McKey and Hoster participated in the meeting. After a discussion of the
present situation with respect to Cowesett Corners and the financial analysis,

22
<PAGE> 36
the EastGroup Special Committee decided that it would like to meet with the LNH
Special Committee. Counsel to EastGroup communicated to counsel for LNH the
EastGroup Special Committee's desire to meet LNH's Special Committee.

The LNH Special Committee met by teleconference on August 31, 1995.
Messrs. Farish and Enloe participated at the meeting, and also present was LNH
Counsel. Counsel reported that EastGroup management had requested the LNH
Special Committee to give preliminary consideration to a merger of LNH into
EastGroup based upon a ratio that would assume a value of LNH in the $7.50 per
share range and the value of EastGroup in the $20.00 per share range. After a
discussion of the assumed ratio, the Committee concluded that they were not
presently discouraged by the values of the assumed ratio, and that they saw
merit in the idea of a possible combination with EastGroup.

On September 6, 1995, the LNH Special Committee met again in Jackson,
Mississippi. Present at the meeting were Messrs. Farish, Enloe (via telephone)
and LNH counsel. Also present (via telephone) for a portion of the meeting was
Mr. G. Clyde Buck of Rauscher Pierce. Although Rauscher Pierce was not
formally engaged to deliver a fairness opinion until October 19, 1995, there
was a sufficient possibility of such an engagement that the Special Committee
believed it to be desirable to include Mr. Buck in this significant meeting.
No reports, oral or written, were provided by Mr. Buck at the September 6, 1995
meeting. The Committee discussed at length specific assets of LNH. Mr. Farish
gave a summary of the report on the Cowesett Corners property that had been
given to the full LNH Board of Directors at its regular meeting earlier in the
day. According to that report, a third party had made a preliminary offer to
purchase the property, but consummation of the purchase was subject to many
contingencies.

Simultaneously, the EastGroup Special Committee was also meeting in
Jackson, Mississippi. Present at the meeting were Messrs. Anagnos and Judell
and EastGroup counsel. Following discussion, the EastGroup Special Committee
proposed that there be a merger of LNH into EastGroup in which each LNH Share
would be valued at $7.50. Assuming a value per EastGroup Share of $20.00, the
shares of LNH would be exchanged for EastGroup Shares in the merger at a ratio
of one LNH Share for each .375 EastGroup Shares. This proposal was
communicated to the LNH Special Committee.

Following the discussion of the proposal of the EastGroup Special
Committee, the LNH Special Committee offered a counter-proposal whereby each
LNH Share would be converted into EastGroup Shares at a value of $8.40 per LNH
Share. The EastGroup Special Committee met separately to consider the
proposal, and decided that they could not recommend a transaction at that
exchange ratio because it would be dilutive to EastGroup's shareholders on a
funds from operations per share basis. Counsel for EastGroup met with the LNH
Special Committee and its counsel to explain EastGroup's position.

The LNH Special Committee once again met separately. With the
participation of Mr. Buck, the LNH Special Committee discussed a number of
factors, and sought additional information from LNH's Chief Financial Officer
and from EastGroup Counsel. After that

23
<PAGE> 37
meeting, counsel to EastGroup again met with the LNH Special Committee and LNH's
counsel, at which time the LNH Special Committee proposed that there be a merger
of LNH into EastGroup in which each LNH Share would be valued at $7.75. The
EastGroup Special Committee decided it could recommend a merger of LNH into an
EastGroup wholly-owned subsidiary in which each LNH Share was converted into
EastGroup Shares with a value of $7.75; PROVIDED, HOWEVER, that the exchange
ratio would not be greater than four tenths of one (0.4) EastGroup Share or less
than three hundred seventy five thousandths of one (0.375) EastGroup Share. On
September 6, 1995, the agreement in principle between the Special Committees was
publicly announced.

The LNH Special Committee met again on October 27, 1995 by
teleconference. Present were Messrs. Farish and Enloe, and also present was
LNH Counsel. Following a discussion of the possible sale of the Cowesett
Corners property, and related issues, the LNH Special Committee decided to make
alternative proposals to the EastGroup Special Committee regarding the terms of
the merger, as follows: (1) assuming a sale of the Cowesett Corners property
prior to the merger with EastGroup, there would be an exchange of shares at the
previously agreed values, and the shareholders of LNH would also receive cash
equal to the amount realized from the sale of Cowesett Corners in excess of its
current net asset value; or (2) if no sale occurred, the exchange ratio in the
merger would be based upon a value of $8.00 per LNH Share.

The EastGroup Special Committee met by telephone on October 30, 1995
to consider the desire of the LNH Special Committee to revise the terms of the
Merger. Messrs. Anagnos, Judell and McKey and EastGroup counsel were present
at the meeting. The EastGroup Special Committee discussed the LNH Special
Committee's proposal and asked questions about the Cowesett Corners situation,
the complicated nature of the proposal made by the LNH Special Committee, and
the probability that the sale of Cowesett Corners would actually take place.
The EastGroup Special Committee decided that it would not agree to a
transaction in which consideration other than EastGroup Shares would be paid by
EastGroup. The EastGroup Special Committee decided to propose to LNH a
transaction in which each LNH Share would be converted into EastGroup Shares
with a value of $8.00, with floor and ceiling ratios of .368 and .393.

On November 3, 1995, the LNH Special Committee met to consider the
response of the EastGroup Special Committee to its October 27 proposal.
Present by teleconference were Messrs. Farish and Enloe, and also present was
LNH Counsel. Present for a portion of the meeting (via telephone) was Mr. Buck
of Rauscher Pierce, in connection with efforts by Rauscher Pierce to inform
itself in preparation for rendering its fairness opinion. No reports, oral or
written, were provided by Mr. Buck at the November 3, 1995 meeting. Following
discussion, Mr. Enloe suggested that it would be valuable for the LNH Special
Committee to be furnished with an analysis by the Chief Financial Officer of
LNH as to what LNH might reasonably expect to realize if all of its assets were
liquidated within the next several months. The LNH Special Committee
determined to request such an analysis prior to making any additional proposals
to the EastGroup Special Committee.

24
<PAGE> 38

The LNH Special Committee met again on November 30, 1995, by
teleconference. Present were Messrs. Farish and Enloe, and also present was
Mr. McKey, Chief Financial Officer of LNH. Mr. Farish reported that LNH was in
the process of foreclosure on the Cowesett Corners property, and would take
title to it. Mr. Farish also reported that a potential buyer was still
interested in the property, but that any sale of the property in the near
future was not certain. There followed a discussion of the liquidation
analysis furnished to the LNH Special Committee by Mr. McKey. The Committee
determined that for a number of reasons it would be preferable for LNH to
combine with EastGroup rather than undertake other strategic alternatives.
(See "LNH Directors' Reasons for Recommending the Merger.") The LNH Special
Committee determined to propose that LNH merge into EastGroup based upon a
valuation of $8.10 per LNH Share and $21.00 per EastGroup Share, with floor and
ceiling ratios of .375 and .40.

The EastGroup Special Committee met by telephone on December 4, 1995
to consider the proposal of the LNH Special Committee. Present at the meeting
were Messrs. Anagnos and Judell and EastGroup counsel. The EastGroup Special
Committee once again analyzed the Cowesett Corners situation, the present price
of EastGroup Shares and the other assets of LNH. The EastGroup Special
Committee decided to request that management do an analysis of the effect that
the proposed merger as revised would have on EastGroup's funds from operations
per share. If that analysis showed that the proposed merger would not be
dilutive to EastGroup's funds from operations per share, the EastGroup Special
Committee would accept the proposal by the LNH Special Committee.

On December 6, 1995, the LNH Special Committee met in Atlanta,
Georgia. The LNH Special Committee determined that the shareholders should be
offered a specific dollar value of EastGroup Shares for their LNH Shares and
that the final exchange ratio should not be subject to a collar. They also
requested the 30 day trading period be reduced to 10 days. Later on December
6, 1995, the LNH Special Committee met with the EastGroup Special Committee,
and the two special committees reached the revised agreement in principle on
the Merger. The revised agreement in principle was announced on December 6,
1995. On December 22, 1995, the Merger Agreement was executed by the parties.

On March 18, 1996, the Merger Agreement was amended to provide that
the Exchange Ratio would be determined by the average closing price for
EastGroup Shares for the 10 trading days immediately preceding the fifth
trading day prior to the closing of the Merger. The Boards of both EastGroup
and LNH believed that this would give LNH shareholders time to determine the
exact Exchange Ratio prior to the Meeting. The Merger Agreement was also
amended to provide, as a condition to the obligations of EastGroup, Sub and LNH
to effect the Merger, that the Effective Time shall have occurred on or before
May 15, 1996.

25
<PAGE> 39
LNH DIRECTORS' REASONS FOR RECOMMENDING THE MERGER

At a Special Meeting of the LNH Board of Directors on December 22,
1995, the independent members of the Board of Directors voted unanimously, with
Messrs. Bailey and Speed abstaining, to approve the Merger Agreement and the
transactions contemplated thereby. The vote was based upon the Board's
determination that the proposed Merger was in the best interests of and fair to
the shareholders of LNH.

In making its determination, the Board considered the following
factors to be material to its decision:

(i) Limited Opportunities for Growth. Due to a number of factors,
principally the real estate recession of the late 1980's and several poorly
performing investments, LNH has not experienced any growth in assets in the
last five years. Approximately 5% of LNH's assets were non-earning. Although
the real estate investment trust industry as a whole was experiencing a
recovery, the LNH Board believed that recovery was based substantially upon the
growth of real estate investment trusts that were focused on a single type of
property or a single geographic area, or both. The assets of LNH were located
in a number of different geographic areas and consisted of a number of
different types of properties, with no core group upon which LNH could base an
effort to generate new growth. At the time LNH commenced serious merger
discussions with EastGroup, in August 1995, the LNH Board believed that any
opportunities for short-term growth were negligible, and that there was no
clear assurance that a long-term growth strategy would result in a significant
improvement in shareholder value above that of the EastGroup offer.

(ii) Premium over Walker Purchase. On March 24, 1995, EastGroup
entered into an agreement with the Walker Interests pursuant to which EastGroup
agreed to purchase 383,775 shares of LNH for $2,878,312.50, or $7.50 per share,
from the Walker Interests. This substantial transaction was negotiated at
arm's length by a willing buyer and a willing seller with each having
reasonably full knowledge of all relevant facts and neither being under any
compulsion to act. The Board believed that the $7.50 per share price in March
1995 provided a clear indication that an $8.10 per share price in December 1995
(with few material changes in the asset value of LNH during the interim) was
fair to and in the best interests of the shareholders of LNH.

(iii) Premium over Market Value. During July 1995, immediately
prior to the time when serious merger discussions between LNH and EastGroup
commenced, the average market price for LNH stock was $6.375 per share. During
the first eight months of 1995, prior to the public announcement on September
6, 1995 that the two companies had reached an agreement in principle with
respect to a merger, the average market price of LNH stock was $6.27 per share.
The $8.10 value per share to be received by the LNH shareholders represented a
27% premium over the average market price of LNH stock during July 1995, and a
29% premium over the average market price of LNH stock during the first eight
months of 1995. In addition, the $8.10 value represented a premium of 8% over
a per share value of $7.50, which was the

26
<PAGE> 40
highest price of LNH Shares during the 12 months prior to the execution of the
Merger Agreement on December 22, 1995.

(iv) Absence of Other Offers. On March 24, 1995, EastGroup filed a
Schedule 13D relating to the purchase of the Walker Interests in LNH Shares.
In describing the purpose of the transaction, EastGroup indicated that it had
formed a special committee of the EastGroup Board of Trustees to consider a
future strategy for its LNH investment, and that such a strategy might include
a business combination between LNH and EastGroup in which EastGroup would be
the surviving company. On September 6, 1995, the two companies announced
publicly that an agreement in principle on the exchange ratio of a
stock-for-stock merger had been reached between special committees of the
respective Boards. Between March 24, 1995, when the possibility that LNH might
be a merger candidate was first made public, and December 22, 1995, when LNH
and EastGroup entered into the Merger Agreement, a period of nearly nine
months, no offers to enter into a merger or other business combination were
received by LNH from any company other than EastGroup, nor did LNH receive
during that period any other indications of interest in such a transaction.

(v) Merger Preferable to Liquidation. The Board considered
whether an orderly liquidation of the assets of LNH might provide more value to
the shareholders of LNH than a merger with EastGroup under the terms proposed.
On November 3, 1995, the LNH Special Committee requested from LNH management a
liquidation analysis which would show the amount of cash available for
distribution if all of LNH's assets were liquidated in a 12-month period. The
liquidation analysis was furnished to members of the LNH Special Committee on
November 8, 1995. The analysis, which consisted of estimates prepared by LNH
management and which was not based upon an independent valuation, concluded
that the estimated 12-month cash liquidation value of LNH's assets was
$19,835,671, or $9.02 per share. Assuming net operating income during the 12-
month period of $1,039,516, the analysis estimated a total value of
$20,875,187, or $9.49 per share. After factoring in a discount of 9%,
representing the time value of money, the analysis concluded that the estimated
per share value of an LNH Share in such a liquidation process would be $8.68,
or an estimated $0.58 per share higher than the $8.10 offer from EastGroup.
Given this analysis, the LNH Board concluded that the difference in values was
insufficient for it to reject the EastGroup offer in favor of liquidation
because (a) the EastGroup offer was certain, while there could be no assurance
that the estimated liquidation values could be achieved in one year, (b) a
merger with EastGroup could be accomplished in a relatively short period of
time, while a liquidation process might continue indefinitely and (c) during
the liquidation process, LNH would continue to incur substantial fixed costs in
connection with the management of its residual assets and costs associated
with maintaining the status of LNH as a public company (such costs having been
approximately $598,000 in fiscal 1993, $565,000 in fiscal 1994, and $589,000 in
fiscal 1995).

(vi) Increase in Dividend Income. Based upon the dividend declared
for the fourth quarter of 1995, LNH was paying an annual cash dividend of $0.60
per share, or $0.15 per quarter (up from $0.09 per quarter during the first
three quarters of 1995). Given a market

27
<PAGE> 41
price of $7.50 per share in December of 1995, at the time the Merger Agreement
was entered into, the current dividend yield per LNH Share was 8%
($0.60/$7.50). During the same period, EastGroup was paying an annual
cash dividend of $1.88 per share, representing a current yield of 8.7% based
upon a market price for EastGroup Shares during December 1995 of $21.625
($1.88/$21.625). Assuming an exchange based upon values of $8.10 per LNH Share
and $21.625 per EastGroup Share, the dividend value per LNH Share would rise
from $0.60 per share on an annual basis to approximately $0.70 per share,
representing an increase of approximately 16.7%.

(vii) Improved Liquidity. The Board believed that exchanging LNH
stock for EastGroup stock would provide greater liquidity for LNH shareholders,
based upon the following: (a) the market capitalization of EastGroup was
4,227,000 shares compared to 2,200,000 for LNH; (b) the average daily trading
volume during the first nine months of 1995 was 5,618 for EastGroup compared to
1,854 for LNH; and (c) EastGroup Shares were followed by four research analysts
compared to none for LNH.

(viii) Tax Considerations. The Board of Directors viewed as
favorable to its determination the fact that the transaction is structured as a
tax free reorganization, thus providing its shareholders the opportunity to
share as equity participants in EastGroup's on-going activities without payment
of any federal income tax, while preserving the ability of those LNH
shareholders who wish to obtain cash the continued ability to do so by sale of
the EastGroup shares received in the Merger on the open market.

(ix) Fairness Opinion. In making its determinations, the Board
took into consideration the opinion of Rauscher Pierce that, as of the date of
such opinion, the consideration to be received by the shareholders of LNH
pursuant to the proposed Merger was fair to the shareholders of LNH from a
financial point of view. While the Board did not explicitly adopt Rauscher
Pierce's financial analyses, the Board placed special emphasis on such analyses
in its overall evaluation of the Merger and viewed such analyses as favorable
to its determination. The Board viewed Rauscher Pierce's opinion as favorable
to its determination because Rauscher Pierce is a nationally recognized
investment banking firm with experience in evaluation of businesses and their
securities in connection with mergers and other business combinations, and with
experience in providing services to real estate investment trusts in
particular. The opinion of Rauscher Pierce as to the fairness of the exchange
ratio was confirmed in writing on December 21, 1995.

(x) No Break-Up Fee. The LNH Board took into consideration that
the terms of the Merger Agreement did not impose a termination fee or
obligation to reimburse EastGroup's expenses in the event that LNH should
terminate the Merger Agreement and accept a competing offer from another
company.

The LNH Board also considered the following potentially negative
factors in its deliberations concerning the Merger:

28
<PAGE> 42

(i) Discount to Book Value. As of September 30, 1995, the book
value of LNH's assets was $23,877,000, or $10.85 per share. At a value per LNH
Share of $8.10, the EastGroup offer represented a discount of approximately 25%
from LNH's book value per share. However, based upon the November 8, 1995
liquidation analysis discussed above, the Board believed that a one year
liquidation of assets resulted in a liquidation value lower than their book
value. The LNH Board did not seek an independent appraisal of the liquidation
value of LNH's assets, primarily because the Board believed that such an
appraisal would substantially confirm the valuations provided by LNH Management
and that the expense of such an appraisal would be unjustified.

(ii) No Auction Process. The Board considered the advisability of
engaging a financial advisor to conduct an auction process for the sale of
LNH's stock or assets, but elected not to do so. Had such an advisor been
retained, merger candidates or bidders other than EastGroup may have been
identified, and other offers may have been obtained based upon a valuation of
LNH stock higher than $8.10 per share. The Board believed, however, that the
expense to LNH of such a bidding process was likely to equal or exceed any
increase in valuation. Moreover, given the fact that LNH and EastGroup were
both listed on the NYSE and the public announcement of merger discussions had
not elicited any indications of interest from other potential bidders (as
discussed above), the Board believed that an auction process was unlikely to
identify other bidders willing to make competing offers significantly higher in
value than the offer of EastGroup.

(iii) Uncertain Market and Price. The Board considered that there
could be no assurance as to the trading volume or price of EastGroup Shares
after Merger. See "Risk Factors--Uncertain Market for and Price of EastGroup
Shares."

(iv) Diluted Voting Power. The Board considered that the
shareholders of LNH, other than EastGroup, who currently beneficially own 77%
of the outstanding LNH stock will only own 13% of EastGroup stock outstanding
after the Merger and, accordingly, will have less voting power and less of a
percentage interest in LNH assets which will become assets of EastGroup by
reason of the Merger. See "Risk Factors--Certain Effects of the Merger."

In view of the wide variety of factors considered by the LNH Board of
Directors, the LNH Board did not quantify or otherwise attempt to assign
relative weights to the specific factors considered in making its
determination. However, the LNH Board concluded that the potentially negative
factors considered by it were not sufficient, either individually or
collectively, to outweigh the positive factors considered by the Board in its
deliberations relating to the Merger.

In the event the Merger is not consummated for any reason, LNH will
continue to pursue its business objectives of maximizing the value of its
assets and reducing overhead and fixed costs to increase its net cash flow.
LNH may also seek other financial or strategic business combinations. The LNH
Board of Directors believes that there are no feasible alternatives to

29
<PAGE> 43
the Merger available to LNH at the present time that are likely to
significantly improve the profitability of LNH's existing operations or result
in greater shareholder value.

EASTGROUP'S REASONS FOR EFFECTING THE MERGER

The Board of Trustees of EastGroup believes that the Merger is fair to
and in the best interest of EastGroup and its shareholders. In reaching this
determination, the EastGroup Special Committee and Board of Trustees of
EastGroup consulted with EastGroup management, legal counsel and accountants
and considered a number of factors. The material factors considered by
EastGroup's Board of Trustees in reaching the foregoing conclusions are
described below.

In making its determination with respect to the Merger and the
consideration to be paid to LNH shareholders in the Merger, the EastGroup
Special Committee and Board of Trustees considered the following factors, all
of which the Board of Trustees deemed favorable, in approving the Merger and
the Merger Agreement:

(i) The Merger would increase the total market capitalization of
EastGroup. Based upon the analysis provided to the EastGroup Board of Trustees
by EastGroup management, the Merger would increase the number of outstanding
EastGroup Shares by approximately 13%. This is in furtherance of the Board of
Trustees' goal of increasing EastGroup's market capitalization. The Board had
examined other methods of increasing EastGroup's market capitalization, such as
a public or private offering of EastGroup Shares, but believed that such a sale
of securities was not in the best interests of EastGroup's shareholders at that
time. Based in part on discussions with advisors, investment banking firms and
lenders, the Board of Trustees believed that this increased total market
capitalization would provide EastGroup shareholders with enhanced liquidity and
would make EastGroup Shares a more attractive investment for institutional
investors, thereby enhancing EastGroup's ability to raise additional equity in
the future. Therefore, the Board of Trustees viewed the increase in the total
market capitalization of EastGroup as favorable.

(ii) The Board reviewed information relating to the financial
performance, business operations and prospects of LNH and EastGroup and current
industry, economic and market conditions. In this regard, the EastGroup Board
placed special emphasis on and viewed as favorable to its determination the
analysis prepared by EastGroup management which indicated that the Merger would
be not dilutive to EastGroup's FFO per share and cash available for
distribution per share.

(iii) The Merger would reduce the ratio of EastGroup's total debt
to total market capitalization from 43% to 39% as of December 31, 1995 because
LNH has no indebtedness. The EastGroup Board believed that this would increase
EastGroup's liquidity by increasing the value of the outstanding EastGroup
Shares by approximately $13,645,000, which would give EastGroup $5,000,000 to
$6,000,000 in increased borrowing capacity.

30
<PAGE> 44
(iv) The Board considered the effect that the Merger would have on
other business combination transactions that EastGroup was considering. The
Board believed that each would be beneficial to the existing shareholders of
EastGroup and that the increase in EastGroup's market capitalization and the
decrease in the ratio of EastGroup's total debt to total market capitalization
would make EastGroup Shares more attractive as consideration for other business
combination transactions and increase the likelihood that such other business
combination transactions would be completed.

(v) The Merger would result in ongoing cost savings, such as
legal, audit, shareholder relations and directors' fees, initially estimated to
be approximately $400,000 per year, approximately 25% of which would have been
borne by EastGroup shareholders through EastGroup's ownership of LNH.

(vi) The Merger could be effected through the issuance of EastGroup
Shares, which the Board viewed as favorable and in accordance with its goal of
increasing EastGroup's market capitalization.

The Board also considered the following factors, all of which the
Board considered negative in its deliberations concerning the Merger:

(i) The uncertainty with respect to the Cowesett Corners Shopping
Plaza, and the legal proceedings in connection therewith. As the status of
Cowesett Corners became more certain, the EastGroup Board became willing to
increase the amount of consideration per LNH shareholders. See "Background of
Merger."

(ii) The fact that certain of LNH's assets consisted of
non-recourse loans secured by undeveloped real property in Houston, Texas.

(iii) The transaction costs to be incurred in connection with
consummating the Merger (approximately $300,000) and the substantial management
time and effort required to effectuate Merger.

(iv) The risk that the anticipated benefits of the Merger might not
be fully realized.

In the opinion of the EastGroup Special Committee and Board, the
factors listed above represent the material potential risks and adverse
consequences to EastGroup's existing shareholders which could occur as a result
of the Merger. Considering the Merger, the Special Committee and Board
considered the impact of these risks and consequences on EastGroup's existing
shareholders. In the opinion of the EastGroup Board, however, these potential
risks and consequences were outweighed by the potential favorable factors
considered by the Board which are described above. Accordingly, the EastGroup
Board voted to approve the Merger and the Merger Agreement as recommended by
the EastGroup Special Committee. In view of the wide variety of factors
considered by the EastGroup Board and Special Committee in determining whether
to enter into the Merger and the consideration to be paid to LNH shareholders,
the

31
<PAGE> 45

EastGroup Board did not quantify or otherwise attempt to assign relative
weight to the specific factors considered in making this determination. In
making a determination that it was in EastGroup's best interests to pay LNH
shareholders $8.10 in EastGroup Shares in the Merger, the EastGroup Board
placed particular reliance on the fact that (i) the transaction would not be
dilutive to EastGroup's FFO per share at $8.10 based upon the then prevailing
market price of EastGroup Shares, and (ii) $8.10 was a discount to LNH's book
value per share.

LNH FAIRNESS OPINION

LNH engaged Rauscher Pierce on October 19, 1995 to evaluate the
fairness from a financial point of view of the consideration to be received in
the Merger by the shareholders of LNH. Rauscher Pierce has not performed
investment banking services for LNH or EastGroup during the past five years,
but it has performed investment banking services for The Parkway Company, First
Continental Real Estate Investment Trust and Eastover Corporation. The Parkway
Company is and Eastover Corporation was affiliated with EastGroup and were
parties to the Expense-Sharing Agreement described below, and First
Continental Real Estate Investment Trust was merged into The Parkway Company.
Within the past two years, Rauscher Pierce received the following fees (plus
expenses) for fairness opinions delivered in connection with the transactions
indicated: merger of First Continental Real Estate Investment Trust into The
Parkway Company ($50,000); merger of EB, Inc. into The Parkway Company
($45,000); merger of Eastover Corporation into EastGroup ($30,000); and The
Parkway Company's shareholder rights plan ($15,000). See "--Expense-Sharing
Arrangements." LNH agreed to pay Rauscher Pierce a fee of $50,000 plus
reasonable out-of-pocket expenses for its services. LNH agreed to pay Rauscher
Pierce 50% of such amount when it engaged Rauscher Pierce and the remaining 50%
upon the delivery of Rauscher Pierce's opinion or termination of the
transaction.

LNH interviewed three investment banking firms with which it was
familiar with a view to selecting one firm to opine on the fairness of the
Merger, and selected Rauscher Pierce on the basis of Rauscher Pierce's general
reputation as a nationally recognized investment banking firm with experience
in evaluation of businesses and their securities in connection with mergers and
other business combinations, and with experience in providing services to real
estate investment trusts in particular. As part of Rauscher Pierce's
investment banking business, Rauscher Pierce is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.

On December 21, 1995, Rauscher Pierce delivered to the Board of
Directors of LNH its written opinion dated December 21, 1995 setting forth its
opinion that, based on its review and on the information provided to it by
LNH and EastGroup, the consideration to be received by shareholders of LNH in
the Merger is fair to LNH and its shareholders from a financial point of view.
THE FULL TEXT OF RAUSCHER PIERCE'S OPINION IS ATTACHED AS APPENDIX B TO THIS
PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF
LNH SHARES ARE

32
<PAGE> 46

URGED TO, AND SHOULD, READ THE RAUSCHER PIERCE OPINION CAREFULLY AND IN ITS
ENTIRETY. ALTHOUGH THE RAUSCHER PIERCE OPINION IS DIRECTED TO LNH, RAUSCHER
PIERCE HAS CONFIRMED THAT LNH SHAREHOLDERS MAY RELY UPON IT. THE RAUSCHER
PIERCE OPINION ADDRESSES ONLY THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE
CONSIDERATION TO BE RECEIVED BY THE SHAREHOLDERS OF LNH PURSUANT TO THE MERGER
AGREEMENT, AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER NOR DOES IT
CONSTITUTE A RECOMMENDATION TO ANY LNH SHAREHOLDER AS TO HOW TO VOTE AT THE
MEETING. THE SUMMARY OF THE RAUSCHER PIERCE OPINION SET FORTH IN THIS PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.

Rauscher Pierce's opinion was based on Rauscher Pierce's review and
analysis of: (i) the trading histories of LNH Shares and EastGroup Shares prior
to and after the public announcement of the proposed Merger; (ii) LNH's
quarterly operating results for the quarters ended March 31, 1995, June 30,
1995, September 30, 1995 and yearly operating results for the years ended
December 31, 1992, 1993 and 1994; (iii) EastGroup's quarterly operating results
for the quarters ended March 31, 1995, June 30, 1995 and September 30, 1995 plus
EastGroup's operating results for the years ended December 31, 1992, 1993 and
1994; (iv) the purchase of LNH Shares by EastGroup and its subsidiary from
Walker Investments, L.P.; (v) the value of EastGroup's and LNH's properties;
(vi) the possible increase in dividends; (vii) the fact that the transaction is
intended to be tax-free; (viii) the lack of indications of interest in LNH's
assets from any third party; and (ix) certain other matters and other factors as
Rauscher Pierce deemed relevant.

As part of its review, Rauscher Pierce reviewed: (i) drafts of the
Agreement and Plan of Merger subsequently dated December 22, 1995 and entered
into by EastGroup, Sub and LNH; (ii) an analysis dated November 8, 1995,
prepared by LNH, of the values of assets and liabilities of LNH and EastGroup
with adjustments for the estimated fair market value of certain assets; (iii)
EastGroup's recent annual and quarterly reports filed pursuant to the Exchange
Act; (iv) LNH's recent annual and quarterly reports filed pursuant to the
Exchange Act; (v) EastGroup's Notice of Annual Meeting and Proxy Statement
dated April 27, 1995; (vi) LNH's Notice of Annual Meeting and Proxy Statement
dated April 27, 1995; (vii) pro forma financial statements; (viii) LNH Board of
Directors' meeting file dated September 6, 1995, May 31, 1995, and March 21,
1995; (ix) EastGroup Board of Directors meeting file dated September 6, 1995,
June 1, 1995, and March 16, 1995; and (x) a draft of this Registration
Statement on Form S-4. In addition, representatives of Rauscher Pierce
discussed with management of EastGroup and LNH the respective outlooks for
future operating results, the assets and liabilities of both companies, various
matters disclosed in the documents Rauscher Pierce reviewed as described above,
and other matters Rauscher Pierce considered relevant to its review.

Stock Trading Histories. As noted above, Rauscher Pierce reviewed the
trading histories of LNH Shares and EastGroup Shares prior to and after the
September 6, 1995 public announcement that EastGroup and LNH had agreed in
principal to the proposed Merger. Based on such review, Rauscher Pierce
observed that the $8.10 per LNH Share in market value of EastGroup Shares to be
issued represented a 27% premium to LNH shareholders over the $6.375 average
price during July 1995 of LNH Shares and an 8% premium over the highest price of

33
<PAGE> 47

LNH Shares during the past 12 months of $7.50 per LNH Share. Rauscher Pierce
believed that this premium supported its fairness opinion.

Purchase of Walker Shares. Rauscher Pierce noted that on March 24,
1995, EastGroup and its wholly-owned subsidiary, EGP Managers, Inc., entered
into an agreement with Walker Investments, L.P. ("Walker"), pursuant to which
EastGroup agreed to purchase 383,775 LNH Shares for $2,878,312.50 or $7.50 per
share from Walker. Because this substantial transaction was negotiated at
arm's length by a willing buyer and a willing seller, with each having
reasonably full knowledge of all relevant facts and neither being under any
compulsion to act, Rauscher Pierce deemed the $7.50 price in March of 1995 to
be a clear and important indicator that an $8.10 price in December of 1995
(with few material changes in the fair market asset value per LNH Share in the
interim) was fair to the shareholders of LNH.

Asset Valuation Analysis. Rauscher Pierce undertook an analysis of
the value of LNH's and EastGroup's properties. Rauscher Pierce requested, and
received, LNH management's estimates of the fair market value of LNH
properties, which estimates were supported by discussions with the LNH Special
Committee. Having been informed that no such values for EastGroup's assets
were available, Rauscher Pierce endeavored to develop its own preliminary rough
estimates, recognizing that formal independent appraisals of all major assets
would be expensive and time-consuming. Rauscher Pierce first examined current
outstanding offers to purchase selected properties of LNH and EastGroup for
sale. For the remaining assets of the two companies, Rauscher Pierce generally
applied an 11% capitalization rate (which Rauscher Pierce deemed to be
conservative for certain properties) to each property's estimated 1995 net
operating income. This capitalization rate analysis indicated a value of
approximately $22.95 per share for EastGroup Shares and $8.68 per share for LNH
Shares (discounted from $9.02 per share to account for the time value of money
in a liquidation process). Rauscher Pierce then noted that recent market
prices (as of December 6, 1995) of $21.625 for EastGroup Shares and $7.50 for
LNH Shares were in both cases less than the amounts indicated in its
theoretical "break-up value" analysis. Rauscher Pierce also noted that
indications that the market prices of both EastGroup and LNH Shares were less
than estimated market values per share was a factor that was carefully
considered by the LNH Special Committee and was partly responsible for
improving initial lower offers by EastGroup for LNH Shares to a final level of
$8.10 per share. Rauscher Pierce concluded that the offer of $8.10 per LNH
Share would be fair from a financial point of view to the shareholders of LNH
because the shareholders would gain the potential advantage of receiving
EastGroup Shares which Rauscher Pierce valued in excess of the prevailing
market price.

No Other Bidders. Rauscher Pierce noted that it was not aware of any
logical buyers that would be likely to offer more per LNH Share than the
EastGroup proposal, and that there had been no other offers or expressions of
serious interest in acquiring or merging with LNH, even following a public
announcement in September of 1995 of the proposed merger. In that regard,
Rauscher Pierce also noted that even after entering into a Merger Agreement,
LNH would still be allowed to consider any other offer to purchase LNH which
might be made. Rauscher Pierce concluded that the absence of other offers was
an indication of the fairness of the EastGroup

<PAGE> 48

offer from a financial point of view, since an offer that was unreasonably below
actual value would invite competing offers.

Possible Increase in Dividends. Rauscher Pierce noted that holders of
LNH Shares would receive comparable or perhaps slightly greater cash dividends
from their pro forma shares after the Merger. At the time of Rauscher Pierce's
analysis, LNH was paying an annual cash dividend of $0.60 per share ($0.15 per
quarter); therefore, a holder of 100 LNH Shares would expect to receive $60.00
per year in cash dividends. Following the Merger, the holder of 100 LNH Shares
would own 37 EastGroup Shares ($8.10/$21.625 times 100, based upon the market
price for EastGroup Shares at December 6, 1995), with an annual EastGroup
dividend of $1.88 per share, based upon actual dividends for 1995. The holder
of the original 100 LNH Shares would thus receive cash dividends from EastGroup
of $69.56 per year (37 shares times $1.88), assuming no change in the EastGroup
quarterly cash dividend. Rauscher Pierce concluded that the increase in the
cash dividend was a significant indication that the exchange ratio for the
conversion of LNH Shares into EastGroup Shares was fair from a financial point
of view.

Submission to a Vote of LNH's Shareholders. Rauscher Pierce noted
that the Merger will be submitted to a vote of LNH's Shareholders, and that a
two-thirds majority of the LNH Shares outstanding and entitled to vote must be
voted in favor of the transaction for the Merger to be consummated. If holders
of one-third plus one of the LNH Shares believe that they should receive more
value than is offered, they can avoid being forced into what they believe to be
an unfair transaction by voting against it. Rauscher Pierce did not, however,
deem the supermajority approval requirement to be material to its fairness
analysis. In addition, Rauscher Pierce considered the fact that LNH
shareholders would not be entitled to exercise dissenters' rights in connection
with the Merger vote, but did not deem the absence of such rights to be
material to its fairness analysis.

Tax-Free Reorganization. In analyzing the benefits of a tax free
reorganization, Rauscher Pierce took into account the tax consequences that
would apply in the event there was no tax free reorganization and LNH sold its
assets and liquidated, with all proceeds distributed to the LNH shareholders.
The LNH shareholders would treat the receipt of these liquidating distribution
amounts as amounts received from the sale of their LNH stock. Accordingly, if
they have held the stock for more than one year, and as a capital asset, they
would recognize long term capital gain to the extent they receive amounts in
excess of their tax basis in the shares, and long term capital loss to the
extent the amount received was less than the basis in their shares. LNH would
not be subject to tax on the sale of its assets, since it would receive a
dividends paid deduction as long as it distributed amounts to its shareholders
in excess of the capital gain realized on the sale of the underlying assets.
Since the LNH shareholders have acquired their shares under various
circumstances and for various prices, Rauscher Pierce could not quantify the tax
costs associated with a liquidation of LNH in comparison to a tax free
reorganization. Rauscher Pierce did ascribe some value, however, to a tax free
reorganization that would not be available in a taxable liquidation, since those
shareholders who desire to obtain tax free reorganization status would do so and
those who desire a taxable transaction could obtain the

35
<PAGE> 49

same by sale of their LNH Shares (prior to the Merger) or sale of their
EastGroup Shares (subsequent to the Merger).

No Comparable Public Companies. In the course of preparing to render
its fairness opinion, Rauscher Pierce undertook research to determine whether
there were other public companies comparable to LNH, in order to compare
selected historical and projected financial, operating and stock market
performance data. However, no such comparable companies could be identified.
The absence of comparable companies was deemed by Rauscher Pierce to be
immaterial to the issue of fairness.

No Unrecognized Value. Based upon discussions with LNH management,
Rauscher Pierce noted that there is no potential source of substantial "hidden"
or "unrecognized value" in LNH that would suddenly make the assets of LNH much
more valuable in the future. For example, among the LNH properties are three
parcels of undeveloped land in Houston, Texas, but there are no significant
indications of oil, gas or other mineral deposits associated with those
properties. Given the unlikelihood of a sudden rise in the value of any LNH
assets, Rauscher Pierce deemed the issue of unrecognized value to be immaterial
to its fairness analysis.

Earnings Dilution. Rauscher Pierce considered certain specific
information regarding the potential dilution per EastGroup Share from such
items as outstanding options, stock appreciation rights and incentive
compensation units. Assuming the exercise of all such items, the resulting
dilution of approximately 0.19% was considered by Rauscher Pierce to be
immaterial to the analysis of the fairness of the Merger.

Voting Dilution. Rauscher Pierce considered the dilutive effects of
the Merger on LNH shareholders discussed above at "Risk Factors--Certain
Effects of the Merger." Although LNH shareholders possessing approximately 77%
of the voting power of LNH prior to the Merger would possess approximately 13%
of the voting power of EastGroup after the Merger, Rauscher Pierce noted that
such a dilution of voting power would not be material to a fairness analysis
from a financial point of view because it would not significantly affect the
market value of EastGroup Shares in the hands of former LNH shareholders.
Rauscher Pierce also noted that no individual LNH shareholders owned more than
an insubstantial minority of LNH Shares, and that such shareholders would
effectively occupy the same minority positions if they became shareholders of
EastGroup after the Merger; therefore, the issue of dilution was deemed by
Rauscher Pierce to be immaterial to a fairness analysis.

Potential Cost Savings and Other Benefits. Rauscher Pierce considered
that the shareholders of both LNH and EastGroup might realize benefits from
potential cost savings after the Merger, including (i) annual savings in
management, professional fees, trustee fees and shareholder-related costs of
approximately $379,000, (ii) savings of $294,000 for management fees and (iii)
savings of $98,000 for professional fees, less a net gain of $13,000 in general
and administrative costs ($250,000 less $237,000). Rauscher Pierce also noted
that other mutual benefits might be realized after the Merger, such as an
increased number of shares on the public market (which would enhance liquidity)
and a simplified ownership structure. Rauscher Pierce

36
<PAGE> 50

concluded that such cost-saving and other benefits would increase the likelihood
that the Merger would be fair from a financial point of view to LNH, as well as
to EastGroup.

No Material Changes. Prior to delivering its fairness opinion,
Rauscher Pierce discussed with LNH management the status of the Cowesett
Corners Shopping Center, the Liberty Corners Shopping Center and other matters
with respect to the question of whether there had been material changes in the
assets of LNH since the public announcement in September 1995 of the proposed
merger. LNH management indicated that there had been no material changes in
such assets, a factor which Rauscher Pierce deemed to be immaterial to its
fairness analysis.

Rauscher Pierce indicated that based upon its review and analysis and
considering the lack of other interested buyers of LNH, the consideration to be
received in the Merger by the shareholders of LNH was fair to LNH's shareholders
from a financial point of view.

Neither LNH, EastGroup nor any other person imposed any limitation of
any nature on the scope or any other aspect of Rauscher Pierce's review.
Rauscher Pierce performed no audit work and did not independently verify the
accuracy of any of the information provided to it by EastGroup or LNH, and did
not make an independent evaluation or appraisal of specific real estate
holdings or other assets of EastGroup or LNH. The consideration to be paid to
LNH shareholders upon consummation of the Merger was determined by negotiations
between directors and officers of LNH and trustees and officers of EastGroup;
Rauscher Pierce did not recommend the amount.

OPERATIONS FOLLOWING THE MERGER

If the Merger Agreement is approved by the shareholders of LNH,
EastGroup will survive as the parent corporation, and LNH will merge with and
into Sub, which will succeed to all of the assets and liabilities of LNH.
EastGroup, both directly and through its subsidiaries, will continue to
actively seek new investment properties to add to its portfolio of real estate
properties.

EXPENSE-SHARING ARRANGEMENTS

Description of Arrangements. Until December 31, 1994, EastGroup had
an expense-sharing agreement with Congress Street Properties, Inc. ("Congress
Street"), The Parkway Company ("Parkway"), and Eastover Corporation
("Eastover") pursuant to which the participants shared administrative offices
at the same location in Jackson, Mississippi and common officers and other
personnel, subject to the authority of the board of each member company to
elect or appoint and remove its officers in accordance with its certificate of
incorporation, declaration of trust or other charter documents and applicable
law. EB, Inc. ("EB") had a separate administrative agreement with Congress
Street which allowed EB to participate in the expense-sharing arrangement on the
same basis as the companies which were

37
<PAGE> 51
parties to the expense-sharing agreement. LNH had a separate administration
agreement with Congress Street (and later EastGroup) which terminated effective
March 31, 1995. See "--Administration Agreement." Under this arrangement, the
participants shared the cost of the common officers and other employees and of
shared facilities and activities. These common costs were initially paid by
Congress Street, which served as the administrator of the arrangement, and the
other participants paid Congress Street an annual fee (on a monthly basis) of
one-half of one percent of their assets which were publicly-traded securities,
and Congress Street was paid a fixed annual fee in equal monthly installments by
LNH. After these fees and any profits of Eastover Realty Corporation, a real
estate company that was a subsidiary of Congress Street, were subtracted from
total common costs, the remaining common costs were allocated on a monthly
basis among EastGroup, Parkway, Congress Street, Eastover and EB (collectively,
the "Expense-Sharing Participants") in proportion to their assets other than
publicly-traded securities, based on their balance sheets as contained in their
most recent SEC filings. Certain costs which the common officers believed to be
particularly attributable to each member company were not shared. These
non-allocable costs included but were not limited to directors' and trustees'
fees, legal, audit and stock transfer expenses, stationery and items of similar
nature. Since the allocation formula was not based upon actual costs incurred
by each member company, the allocation may have, from time to time, resulted in
a greater or lesser charge to each member company than would have resulted if
actual costs to each member company were allocated.

In connection with the business combinations involving the
Expense-Sharing Participants (i.e., Congress Street merged with a wholly- owned
subsidiary of Parkway on November 29, 1994, Eastover combined with EastGroup on
December 22, 1994 and EB combined with Parkway on April 27, 1995), the above
described expense-sharing arrangements terminated on December 31, 1994, except
that EastGroup had the responsibility for managing LNH under the prior
administration agreement between LNH and Congress Street. See
"--Administration Agreement." Since that date, Parkway and EastGroup each have
their own respective officers and employees, who do not serve as officers or
employees of the other company, except for Leland R. Speed, who continues to
serve as the Chief Executive Officer of both companies, and a small number of
clerical and support staff employees. The officers of EastGroup also continue
to serve as officers of LNH; in addition, the President of Parkway--Steven G.
Rogers--continues to serve as an officer of LNH. David H. Hoster II and N.
Keith McKey, who formerly served as officers of all the Expense-Sharing
Participants, now serve as officers of EastGroup and LNH and not Parkway.
EastGroup, LNH and Parkway continue to share the same leased office space at
One Jackson Place in Jackson, Mississippi and share the services of Mr. Speed
and certain clerical and support staff employees and expenses related thereto
are shared among Parkway and EastGroup (except for certain costs which can be
attributed to either company based on its actual use of the services involved).
LNH's costs are paid as provided in the Management Agreement (described below).

LNH Management Agreement. LNH has no salaried employees; its officers
are elected by the Board of Directors solely to facilitate the execution of
commitments and other obligations on behalf of LNH. Except for certain
benefits received pursuant to the Incentive Compensation

38
<PAGE> 52
Plan effective October 1, 1993, none of the officers of LNH receives any
remuneration from LNH in his or her capacity as an officer of LNH. EGP Managers
provides all executive and administrative personnel, office space and general
services required by LNH.

Management services for LNH are rendered by EGP Managers under a
Management Agreement. Until April 3, 1995, the manager, pursuant to the
Management Agreement, was LNH REIT Managers, a Mississippi general partnership
in which Walker Managers, L.P. ("Walker") and EGP Managers were equal partners.
In connection with EastGroup's purchase of 383,775 LNH Shares for $7.50 in cash
per LNH Share from affiliates of Walker, EGP Managers purchased Walker's
one-half interest in LNH REIT Managers, and EGP Managers replaced LNH REIT
Managers as manager under the Management Agreement. EGP Managers is entitled to
receive a basic annual fee (the "Basic Fee"), payable in monthly installments,
equal to the sum of 1.25% of the first $100,000,000 or portion thereof of LNH's
Invested Assets (as defined in the Management Agreement), 1.125% of the second
$100,000,000 or portion thereof, 1.00% of the third $100,000,000 or portion
thereof, 0.875% of the fourth $100,000,000 or portion thereof and 0.75% of the
portion (if any) of Invested Assets exceeding $400,000,000.

EGP Managers may also receive incentive compensation equal to the
excess, if any, of (x) the Average Annual Incentive Fee (as defined below) for
the period from May 26, 1981 (the date on which LNH received the net proceeds
of the public offering of LNH Shares), to the end of any fiscal year,
multiplied by the number of 12-month fiscal years and fractions thereof in such
period, over (y) the aggregate amount of incentive fee, if any, earned by the
manager in prior years. The "Average Annual Incentive Fee" at the end of any
fiscal year will be equal to the sum of:

(i) 10% of the amount by which the Average Annual Net Profit (as
defined in the Management Agreement) from May 26, 1981, to such time exceeds
12% of the Average Net Worth (as defined in the Management Agreement) for such
period; and

(ii) 5% of the amount by which the Average Annual Net Profit from
May 26, 1981, to such time exceeds 17% of the Average Net Worth for such
period; and

(iii) 5% of the amount by which the Average Annual Net Profit from
May 26, 1981, to such time exceeds 22% of the Average Net Worth for such
period.

During the year ended December 31, 1994, LNH paid Management Fees of
$338,000. EGP Managers did not receive incentive compensation in the fiscal
year ended December 31, 1994, and is not expected to receive incentive
compensation in the current fiscal year. Effective July 1, 1994, EGP Managers
agreed to amend the Management Agreement to provide that the Management Fee
paid by LNH will not exceed $29,167 per month. The Management Agreement will
be terminated on the Effective Date.

Administration Agreement. Effective April 22, 1992, LNH REIT Managers
entered into an administration agreement (the "Administration Agreement"), with
Congress Street. Under

39
<PAGE> 53
the Administration Agreement, Congress Street (and later EastGroup) administered
the day-to-day business of LNH in return for a $125,000 annual fee, payable by
LNH's manager. In connection with the termination of the expense-sharing
arrangements described above, EastGroup assumed Congress Street's duties under
the Administration Agreement. The Administration Agreement was terminated
effective March 31, 1995.

FEDERAL INCOME TAX CONSEQUENCES

The following summary addresses the material United States federal
income tax consequences of the Merger. However, the summary does not address
all aspects of federal income taxation that may be relevant to LNH shareholders
in light of their particular circumstances or to certain types of shareholders
subject to special treatment under the federal income tax laws (such as dealers
in securities, tax-exempt organizations, life insurance companies, other
financial institutions, partnership or other pass-through entities, regulated
investment companies and foreign taxpayers).

No foreign, state or local income tax considerations, or federal,
state, local or foreign estate or gift tax considerations are addressed herein.
This discussion is based upon an opinion rendered by Jaeckle, Fleischmann &
Mugel, counsel to EastGroup, a copy of which is attached as Appendix C. The
opinion is based upon certain assumptions and subject to certain limitations
and qualifications as noted in the opinion.

LNH SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER.

The following summary is based upon Jaeckle, Fleischmann & Mugel's
interpretation of the Code, applicable Treasury Regulations, judicial authority
and administrative rulings and practice, as in effect on the date hereof. The
opinions of counsel are not binding on the Internal Revenue Service ("IRS"),
and the IRS is not precluded from adopting a contrary position. No ruling has
been or will be sought from the IRS concerning the federal tax consequences of
the Merger. In addition, there can be no assurance that future legislation,
judicial or administrative changes or interpretations will not adversely affect
the accuracy of the statements and conclusions set forth herein. Any such
changes or interpretations could be applied retroactively and could affect the
tax consequences of the Merger to EastGroup, LNH and/or the LNH shareholders.

Effect of the Merger. LNH has received an opinion from Jaeckle,
Fleischmann & Mugel, based on the terms of the Merger Agreement and certain
related factual representations and assumptions that:

40
<PAGE> 54
(i) The Merger will constitute a reorganization within the meaning
of section 368(a) of the Code, and EastGroup, LNH and Sub will
each be a party to the reorganization within the meaning of
section 368(b) of the Code.

(ii) No gain or loss will be recognized by EastGroup, LNH or Sub in
the Merger.

(iii) No gain or loss will be recognized by the holders of LNH
Shares upon their receipt of EastGroup Shares in exchange for
their LNH Shares, except that holders of LNH Shares who
receive cash proceeds from the sale of fractional interests in
EastGroup Shares will recognize gain or loss equal to the
difference between such proceeds and the tax basis allocated
to their fractional share interests and such gain or loss will
constitute capital gain or loss if their LNH Shares are held
as a capital asset at the Effective Time.

(iv) The aggregate tax basis of the EastGroup Shares (including
fractional share interests treated as received) received by
the holders of LNH Shares will be the same as the aggregate
tax basis of their LNH Shares.

(v) The holding period of the EastGroup Shares in the hands of the
holders of LNH Shares will include the holding period of their
LNH Shares, provided such LNH Shares are held as a capital
asset at the Effective Time.

In rendering the foregoing opinions, counsel has relied upon
information contained in this document and the Merger Agreement, and upon the
representations by EastGroup, Sub and LNH set forth in their respective
officers' certificates dated the date of such opinion.

THE DISCUSSION SET FORTH BELOW UNDER THE HEADINGS "TAXATION OF
EASTGROUP" AND "TAXATION OF THE SHAREHOLDERS OF A REIT" IS INCLUDED FOR GENERAL
INFORMATION ONLY. IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS
OF REIT OPERATIONS. THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS
OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT
ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT
TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING ACCURACY OF THIS
DISCUSSION. ANY SUCH CHANGE MAY OR MAY NOT BE RETROACTIVE AND COULD AFFECT THE
QUALIFICATION AND TAXATION OF EASTGROUP AS A REIT. EACH HOLDER OF LNH SHARES
IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE OWNERSHIP OF
EASTGROUP SHARES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND
FOREIGN TAX LAWS.

41
<PAGE> 55

TAXATION OF EASTGROUP

Since its inception, EastGroup has elected to be taxed as a REIT under
the Code. To qualify as a REIT for a taxable year, EastGroup must meet certain
requirements. Generally, at the end of each calendar quarter at least 75% of
the value of its total assets must consist of real estate assets, cash or
governmental securities and not more than 25% of the value of its total
assets may consist of securities that are not counted as good assets under the
foregoing 75% test. EastGroup may not own more than 10% of the outstanding
voting securities of any corporation and may not own securities of any one
issuer comprising more than 5% of the total value of its assets; shares of
qualified REITs and of certain wholly-owned subsidiaries, such as the Sub, are
exempt from these prohibitions.

The Code also places restrictions on a REIT's sources of income. It
requires that in each taxable year at least 95% of EastGroup's gross income be
derived from certain real estate activities, plus dividends, interest or gains
from disposition of stock or securities. Additionally, gross income from the
sale or other disposition of stock and securities held for less than one year
and of real property held for less than four years must comprise less than 30%
of the gross income for each taxable year of EastGroup. For each taxable year,
at least 75% of a REIT's gross income must be derived from specified real
estate sources. Real estate income for purposes of those requirements includes
gains from the sale of real property not held primarily for sale to customers
in the ordinary course of business, dividends on REIT shares, interest on loans
secured by mortgages on real property, certain rents from real property and
income from foreclosure property. For rents to qualify, they may not be based
on the income or profits of any person, except that they may be based on a
fixed percentage or percentages of gross income or receipts, and the REIT may
not manage the property or furnish services to tenants except (i) through an
independent contractor which is paid an arm's-length fee and from which the
REIT derives no income, or (ii) for any services performed which are of a type
customarily rendered in connection with the rental of space for occupancy only
and are not otherwise considered rendered to the occupant. The requirements
that must be satisfied for income to be within the 75% class of gross income
are highly technical and not always consistent with normal real estate
practice.

EastGroup must satisfy certain ownership restrictions that limit (i)
concentration of ownership of shares by a few individuals and (ii) ownership by
or common ownership of EastGroup of its tenants. The shares of EastGroup must
be held by at least 100 shareholders. No more than 50% in value of the
outstanding shares may be owned actually or constructively by five or fewer
individuals or certain other entities at any time during the last half of
EastGroup's taxable year. Accordingly, EastGroup's Declaration of Trust, as
amended, authorizes EastGroup to redeem its shares if directors are of the good
faith opinion that the beneficial ownership of EastGroup has become
concentrated to such an extent as to jeopardize its REIT classification.
However, because the Code imposes broad attribution rules in determining
constructive ownership, no assurances can be given that the restrictions of the
Declaration of Trust, as amended, will be effective in maintaining EastGroup's
REIT status.

42
<PAGE> 56
So long as EastGroup qualifies for taxation as a REIT and distributes
at least 95% of its real estate investment trust taxable income (computed
without respect to net capital gains or the dividends received deduction) for
its taxable year to its shareholders annually, EastGroup will not be subject to
federal income tax on that portion of such income distributed to shareholders.
Any undistributed taxable income or gain, however, will be taxed to EastGroup
at regular corporate rates. In addition, EastGroup may be subject to other
special income and excise taxes in certain circumstances.

If EastGroup fails to qualify as a REIT for any taxable year and
certain relief provisions do not apply, EastGroup will be subject to federal
income tax (including the alternative minimum tax) on its taxable income at
regular corporate rates and it will not receive a deduction for dividends paid
to its shareholders. Distributions to shareholders will be taxable as ordinary
income to the extent of current and accumulated earnings and profits and,
subject to certain limitations, will be eligible for the corporate dividends
received deduction, but there can be no assurance that any such distributions
would be made. Failure to qualify as a REIT could result in EastGroup
significantly reducing its distributions and incurring substantial indebtedness
or liquidating substantial investments in order to pay the resulting taxes. In
addition, EastGroup would not be eligible to elect REIT status for the four
subsequent taxable years, unless its failure to qualify was due to reasonable
cause, and not to willful neglect, and certain other requirements were
satisfied. In order to renew its REIT qualification, EastGroup would be
required to distribute all of its current and accumulated earnings and profits,
which distributions would be taxable as ordinary income to its shareholders,
and EastGroup might be subject to taxation on any unrealized gain inherent in
its assets.

TAXATION OF THE SHAREHOLDERS OF A REIT

Distributions made to its shareholders out of current or accumulated
earnings and profits of EastGroup (including earnings and profits from LNH)
will generally be taxed to them as ordinary income. A distribution by
EastGroup of net capital gains will generally be treated as a capital gain to
shareholders to the extent properly designated by EastGroup as a capital gain
dividend. Capital gains of corporations are generally taxed in the same manner
as ordinary income except that capital losses are deductible only to the extent
of capital gains. Under Section 291 of the Code, however, corporate
shareholders may be required to treat up to 20% of any such capital gain as
ordinary income. For noncorporate taxpayers, net capital gains are taxed at a
maximum rate of 28%, while short-term capital gains and ordinary income are
taxed at a maximum rate of 39.6%. However, because of certain limitations on
itemized deductions and personal exemptions, the effective rate may be higher
in certain circumstances. Except to a very limited extent, capital losses of
noncorporate taxpayers are deductible only to the extent of capital gains.
Neither distributions of earnings and profits nor capital gains dividends are
eligible for the dividends-received deduction for corporations. Any loss on a
sale of shares of a REIT which were held for six months or less and with
respect to which a capital gain dividend was received will be treated as a
long-term capital loss, up to the amount of the capital gain dividend received
with respect to such shares. A distribution in excess of current or

43
<PAGE> 57
accumulated earnings and profits will constitute a nontaxable return of
capital, to the extent of the shareholder's basis in his shares of the REIT,
and is applied to reduce the shareholder's basis in such shares. To the
extent such a distribution is greater than such basis, it will be treated as
capital gain to those shareholders holding their shares as capital assets.
EastGroup will notify each shareholder as to the portions of each distribution
which, in its judgment, constitute ordinary income, capital gain or return of
capital. Should EastGroup incur ordinary or capital losses, shareholders will
not be entitled to include such losses in their own income tax returns.

ACCOUNTING TREATMENT

EastGroup will account for the Merger as a "purchase" transaction in
accordance with Accounting Principles Board Opinion No. 16. Purchase
accounting for a combination is similar to the accounting treatment used in the
acquisition of any asset group. The fair value of the consideration (cash,
stock, debt securities, etc.) given by the acquiring firm is used as the
valuation basis for the combination. The assets and liabilities of the
acquired firm are revalued to their respective fair values at the combination
date. The financial statements of the acquiring company reflect the combined
operations from the date of combination.

NO DISSENTERS' RIGHTS

Shareholders of LNH who vote against the Merger (or abstain or fail to
vote at all) will nevertheless be bound by the results of the vote if LNH's
shareholders approve the Merger. LNH shareholders do not have appraisal rights
in connection with the Merger.

RESTRICTIONS ON RESALES OF SECURITIES

The EastGroup Shares to be issued pursuant to the Merger Agreement have
been registered under the Securities Act. Under present law, any public
reoffering or sale of such shares by any person who is not an "affiliate" of
LNH at the time the Merger Agreement is submitted to a vote of LNH's
shareholders will not have restrictions thereon. Also, under present law, any
public reoffering or sale of such shares by any person who is an "affiliate" of
LNH at the time the Merger Agreement is submitted to a vote of LNH's
shareholders ("LNH Affiliate") will require either (i) the further registration
of such shares under the Securities Act, (ii) compliance with Rule 145
promulgated under the Securities Act, which permits sales under certain
conditions, as discussed below, or (iii) the availability of another exemption
from such further registration. In very general terms, under Rule 145,
assuming that the LNH Affiliate is not, at any time, an affiliate of EastGroup,
the LNH Affiliate may publicly sell such EastGroup Shares if the LNH Affiliate:
(1) (a) sells during any three-month period no more than the number of
EastGroup Shares permitted under Rule 144(e) (which is generally the greater of
(i) 1% of the total number of EastGroup Shares outstanding, or (ii) the average
weekly volume of trading of EastGroup Shares for the four calendar weeks prior
to the sale);

44
<PAGE> 58
(b) sells in a "brokers' transaction" (which means, generally, that the broker
can do no more than execute the order as agent for the seller, can receive no
more than the usual broker's commission, cannot solicit orders to buy in
connection with the transaction, and does not believe that the seller is an
underwriter of the securities being sold); (c) does not solicit orders to buy in
connection with the transaction and does not make any payment in connection with
such sale to anyone other than the selling broker; and (d) sells at a time when
there is adequate current public information about EastGroup (which will be
satisfied so long as EastGroup Shares remain registered under the Exchange Act
and EastGroup continues to file the necessary reports under the Exchange Act);
or (2) (a) holds the EastGroup Shares for at least two years and (b) sells at a
time where there is adequate public information about EastGroup (as in 1(d)
above); or (3) holds the EastGroup Shares for at least three years.

BOARD OF TRUSTEES AND MANAGEMENT OF EASTGROUP

The following table describes the present trustees and executive
officers of EastGroup:

David H. Hoster II 50 Executive Vice President of EB until 1995, Parkway,
President and Trustee since 1993 Congress Street, Rockwood National Corporation and
Eastover until 1994; President of EastGroup since
1993 and Executive Vice President of EastGroup from
1988 to 1993; Executive Vice President of LNH until
1995 and President of LNH since 1995.(2)(3)(4)

</TABLE>

45
<PAGE> 59

Principal Occupation and Business
Name, Position and Tenure with EastGroup Age Experience for the Past Five Years (1)
- ------------------------------------------ --- --------------------------------------------------
<S> <C> <C>
N. Keith McKey 44 Executive Vice President since 1993 and Chief
Executive Vice President, Chief Financial Officer of EastGroup since 1992; Senior
Financial Officer and Secretary Vice President of LNH since 1992; Executive Vice
since 1993 President of Parkway from 1993 to 1994 and Chief
Financial Officer of Parkway from 1992 to 1994;
Senior Vice President of Congress Street and Eastover
until 1994; Chief Financial Officer and Secretary of
Congress Street and Eastover from 1992 to 1994;
Senior Vice President until 1994 and Chief Financial
Officer and Secretary from 1992 to 1994 of Rockwood
National Corporation.(2)(3)(4)

Alexander G. Anagnos 69 Financial Advisor with WR Family Associates.
Trustee since 1994

H.C. Bailey, Jr. 56 President of H.C. Bailey Company (real estate
Trustee since 1980 development and investment); President of Bailey
Mortgage Company (mortgage banking) until 1992;
Chairman of the Board and Chief Executive Officer and
President of Security Savings & Loan Association
until 1992; Director of EB until 1995; Director of
LNH since 1992.(5)

Harold B. Judell 81 Senior partner in the law firm of Foley & Judell LLP
Trustee since 1981 (municipal bond attorneys).

64 Partner in the law firm of Arent, Fox, Kintner,
David M. Osnos Plotkin & Kahn.
Trustee since 1993

John N. Palmer 61 Chairman of Mobile Telecommunication Technologies
Trustee since 1994 Corp. since 1989.

- -----------------------

<FN>
(1) Unless otherwise stated, each nominee has held the positions indicated for at least the past five years.

(2) Each of these companies was or is primarily engaged in the real estate business.

</TABLE>

<PAGE> 60

(3) The Expense-Sharing Participants are the companies that formerly
participated in the expense-sharing arrangements described above under
"Expense-Sharing Arrangements." The date indicated in the table as the
date an executive officer began serving as such for the Expense-Sharing
Participants indicates generally that the officer began serving as such
for the companies that were participants at that time. Service as an
executive officer for a company that became an Expense-Sharing
Participant after that date began generally at the time the company
became a participant.

(4) Rockwood National Corporation, through its subsidiaries, is engaged in
the real estate business in New Orleans, Louisiana. Rockwood National
Corporation ceased participating in the expense sharing arrangements
described above under "Expense-Sharing Arrangements" on June 28, 1994
and no longer shares common management with EastGroup and LNH.

(5) Security Savings & Loan Association was seized by the Resolution Trust
Company in 1992.

OTHER DIRECTORS AND TRUSTEESHIPS

Members of EastGroup's Board of Trustees serve on the Boards of
Directors or the Boards of Trustees of the following publicly-held companies:

<TABLE>
<CAPTION>
Name Company
- ---- -------
<S> <C>
H.C. Bailey, Jr. LNH
The Parkway Company

Harold B. Judell Sizeler Property Investors, Inc.

David M. Osnos VSE Corporation
Washington Real Estate Investment Trust

John N. Palmer Entergy Corporation
Mobile Telecommunication Technologies Corp.
Deposit Guaranty National Bank

Leland R. Speed Farm Fish, Inc.
First Mississippi Corporation
KLLM Transport Services, Inc.
LNH
The Parkway Company
</TABLE>

<PAGE> 61

INTEREST OF LNH MANAGEMENT AND EASTGROUP IN THE MERGER

If the Merger is approved and consummated, LNH will be merged with and
into Sub, which is a wholly-owned subsidiary of EastGroup. As a result,
EastGroup will own all of the assets of LNH.

EXECUTIVE COMPENSATION

The following table summarizes, for the fiscal years ended
December 31, 1995, 1994 and 1993 the amount of the compensation paid by
EastGroup to its Chief Executive Officer and all other executive officers whose
cash compensation during 1995 exceeded $100,000 (the "Named Officers").

<TABLE>
<CAPTION>
----------------------------------
Long Term
Compensation Awards
Annual Compensation (1)(2) -------------------
-------------------------- ----------------------------------
LTIP
Other Annual Payouts All Other
Name and Principal Position Year Salary Bonus Compensation Options/SARs(5) $(6) Compensation( 7)
- --------------------------- ---- ------ ----- ------------ ---------------- --------- ----------------

<S> <C> <C> <C> <C> <C> <C> <C>
1995 $129,863 (3) $139,014(4) -0- -0- -0- $7,500
Leland R. Speed 1994 $139,423 $58,715 -0- 50,000 $23,047 $5,145
Chief Executive Officer 1993 $113,367 -0- -0- -0- $13,608 $6,664

David H. Hoster II 1995 $174,745 $140,351(4) -0- -0- -0- $7,500
President 1994 $89,977 $42,314 -0- 40,000 $21,203 $5,145
1993 $72,240 $12,230 -0- -0- $12,519 $4,991

N. Keith McKey 1995 $127,212 $102,256(4) -0- -0- -0- $7,500
Executive Vice President, 1994 $63,911 $30,103 -0- 25,000 $13,828 $4,397
Chief Financial Officer 1993 $51,900 $3,669 -0- -0- $8,165 $2,878
and Secretary

____________________________

<FN>
(1) Until December 31, 1994, the executive officers of EastGroup
also served as executive officers of all the Expense-Sharing
Participants. See "The Merger -- Expense-Sharing
Arrangements." Their salaries were paid by Congress Street
and then allocated among the Expense-Sharing Participants in
accordance with the allocation formula set forth in the
agreement.

</TABLE>

<PAGE> 62

(2) For 1993 and 1994, all amounts are EastGroup's share of the
particular Named Officer's compensation as allocated under the
Expense-Sharing Agreement.

(3) Mr. Speed's salary is paid one-half by EastGroup and one-half
by The Parkway Company, of which he is also Chief Executive
Officer. See "The Merger--Expense Sharing Arrangements."
This amount is EastGroup's share of Mr. Speed's compensation.

(4) This is the amount of incentive compensation payable to the
Named Officer under EastGroup's 1994 Management Incentive Plan
(the "1994 Incentive Plan").

(5) These options were granted under EastGroup's 1994 Incentive
Plan and become exercisable with respect to one-half the
shares on the first anniversary date of grant and one-half the
shares on the second anniversary date of grant.

(6) These payments were made under Incentive Compensation Units
granted under EastGroup's 1989 Incentive Plan (the "1989
Plan"). The amount for 1994 includes a payment made in
December 1994 in consideration of the officer agreeing to
cancel the remaining term of the Incentive Compensation Units,
which payment was made in EastGroup Shares. An Incentive
Compensation Unit was a right to receive an amount equal to
the dividend paid on a specified number of EastGroup Shares
during a five year period beginning on the date of the grant
of the unit. The amount that was payable with respect to an
Incentive Compensation Unit was credited to an account for the
holder of such unit. The grantee of the Incentive
Compensation Unit shall be entitled to a cash payment of 20%
of the amount in the account on the first anniversary date of
its grant, 40% on the second anniversary date, 60% on the
third anniversary date, 80% on the fourth anniversary date and
100% on the fifth anniversary date.

(7) For 1995, this is EastGroup's discretionary contribution to
its 401(K) Plan for the Named Officer's benefit and for 1993
and 1994 this amount is EastGroup's share of Congress Street's
discretionary contribution to a 401(K) plan for the respective
Named Officer's benefit.

Option Grants. No options were granted to the Named Officers
during the year ended December 31, 1995.

Option Exercises and Year End Values. No options were
exercised by the Named Officers during 1995. The following table shows the
year end value of unexercised in-the-money options held by the Named Officers.
Year end values are based upon the closing price of EastGroup Shares on the
NYSE on December 29, 1995 ($21.375).

<PAGE> 63
Aggregated Options/SAR Exercises with Last Fiscal Year
and FY-End Option/SAR Values

<TABLE>
<CAPTION>
Value of
Number of Unexercised Unexercised In-The-Money
Name Options at FY-End (#) Options at FY-End($)
---- --------------------- --------------------

Exercisable/Unexercisable(1) Exercisable/Unexercisable
---------------------------- -------------------------
<S> <C> <C>
Leland R. Speed 25,000/25,000 $59,375/$59,375
Chief Executive Officer

David H. Hoster II 20,000/20,000 $47,500/$47,500
President

N. Keith McKey 12,500/12,500 $29,687.50/$29,687.50
Executive Vice President,
Chief Financial Officer
and Secretary

__________________________
<FN>

(1) The options, both exercisable and unexercisable, represent
options granted to the Named Officer on September 22, 1994
under the 1994 Incentive Plan.

</TABLE>

Trustees' Fees. Under EastGroup's standard compensation
arrangements with trustees (except Mr. Speed and Mr. Hoster, who are salaried
officers), trustees are paid a monthly stipend of $500, plus $1,000 and
reimbursement of actual expenses for attendance at each meeting of the Board of
Trustees and $750 and reimbursement of expenses for each meeting of a committee
established by the Board of Trustees. Only one fee is paid in the event more
than one meeting is held on a single day.

Trustees Stock Option Plan. At the 1991 annual meeting, the
shareholders of EastGroup approved the EastGroup Properties 1991 Trustees Stock
Option Plan (the "Trustees Plan"). The Trustees Plan authorizes the issuance
of options for up to 100,000 EastGroup Shares to trustees of EastGroup who are
not, and have not been for at least one year prior to the date of
determination, employees of EastGroup ("Non-Employee Trustees"). Under the
Trustees Plan, each Non-Employee Trustee of EastGroup on March 15, 1991 was
automatically granted an option to purchase 5,000 EastGroup Shares. Each
person who first becomes a Non-Employee Trustee after March 15, 1991 will
automatically be granted an option to purchase 5,000 EastGroup Shares on the
date the person becomes a Non-Employee Trustee, if such EastGroup Shares are
available. Each Non-Employee Trustee will also be granted an option to
purchase 1,500 additional EastGroup Shares on the date of any annual meeting at
which such Non-Employee Trustee is reelected to the Board of Trustees. The
option exercise price is the closing

<PAGE> 64
price of an EastGroup Share if EastGroup Shares are listed on an exchange or
the average between the bid and the asked price for the date if the EastGroup
Shares are traded over-the-counter (or, if no EastGroup Shares were publicly
traded on that date, the next preceding date that such EastGroup Shares were so
traded). Such options are exercisable in full on the date of grant and expire
ten years after the date of grant, or, if earlier, six months after the
termination of the optionee's service as a Non-Employee Trustee, unless such
service is terminated by reason of death, in which case the optionee's legal
representative shall have one year in which to exercise the option.

No options were exercised by trustees under the Trustees Plan
during 1995. On June 1, 1995, Messrs. Palmer, Bailey, Judell, Anagnos and Osnos
were each granted options to purchase 1,500 EastGroup Shares at an exercise
price of $19.00 per EastGroup Share.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For a description of certain relationships among EastGroup,
LNH and The Parkway Company, see "Expense-Sharing Arrangements."

51
<PAGE> 65
INFORMATION CONCERNING LNH

Detailed information concerning LNH is set forth in LNH's
Annual Report on Form 10-KSB for the year ended December 31, 1995 which
accompanies this Proxy Statement/Prospectus and is incorporated herein by
reference. Shareholders should refer to the Annual Report on Form 10-KSB for
financial statements regarding LNH and Management's Discussion and Analysis of
Financial Condition and Results of Operations with respect to LNH.

52
<PAGE> 66
INFORMATION CONCERNING EASTGROUP

Detailed information concerning EastGroup is set forth in EastGroup's
Annual Report on Form 10-K and Annual Report to Shareholders for the year ended
December 31, 1995 which are incorporated herein by reference.

53
<PAGE> 67
MARKET PRICES AND DIVIDENDS

EASTGROUP SHARES

On May 3, 1994 EastGroup Shares became listed on the NYSE under the
symbol "EGP." Prior to this date EastGroup Shares were listed on the American
Stock Exchange under the symbol "EGP." As of March 26, 1996, there were
4,245,083 EastGroup Shares outstanding held of record by approximately 785
shareholders.

The following table sets forth the high and low sales prices during
and the cash distributions paid by EastGroup for the calendar quarters
specified:

<TABLE>
<CAPTION>
Distribution
Declared Per
Quarter Ended High Low Share
- ----------------------------------------------------- ------ ------ ------------
<S> <C> <C> <C>
March 31, 1993 . . . . . . . . . . . . . . . . . . . $20 1/4 $16 1/2 $0.38
June 30, 1993 . . . . . . . . . . . . . . . . . . . . 19 1/8 17 0.38
September 30, 1993 . . . . . . . . . . . . . . . . . 23 5/8 18 1/4 0.38
December 31, 1993 . . . . . . . . . . . . . . . . . . 24 1/4 20 1/8 0.41
March 31, 1994 . . . . . . . . . . . . . . . . . . . 21 1/8 19 0.43
June 30, 1994 . . . . . . . . . . . . . . . . . . . . 20 7/8 18 1/4 0.43
September 30, 1994 . . . . . . . . . . . . . . . . . 19 7/8 18 3/8 0.43
December 31, 1994 . . . . . . . . . . . . . . . . . . 19 3/4 16 1/2 0.45
March 31, 1995 . . . . . . . . . . . . . . . . . . . 19 5/8 17 1/4 0.45
June 30, 1995 . . . . . . . . . . . . . . . . . . . . 20 18 3/8 0.45
September 30, 1995 . . . . . . . . . . . . . . . . . 20 3/4 19 0.47
December 31, 1995 . . . . . . . . . . . . . . . . . . 22 3/8 20 1/4 0.47
March 31, 1996 . . . . . . . . . . . . . . . . . . . 23 3/8 20 3/4 0.47
(through March 26, 1996)
</TABLE>

On September 5, 1995, the most recent trading day on which EastGroup
Shares traded prior to the public announcement as to the agreement in principle
between EastGroup and LNH regarding the Merger (which occurred on September 6,
1995), the closing price for EastGroup Shares on NYSE was $19.875. On December
4, 1995, the most recent trading day on which EastGroup Shares traded prior to
the public announcement as to the revised agreement in principle between
EastGroup and LNH regarding the Merger (which occurred on December 6, 1995),
the closing price for EastGroup Shares on NYSE was $21.00. As of March 26, the
most recent trading day as to which it is practicable to provide market price
information, the closing price for EastGroup Shares on NYSE was $22.375 per
share.

54
<PAGE> 68
LNH SHARES

LNH Shares are traded on the NYSE under the symbol "LHC." As of March
26, 1996 there were 2,200,000 LNH Shares outstanding held of record by
approximately 501 shareholders.

The following table sets forth, for the periods indicated, the high
and low sales prices for LNH Shares and the cash distributions paid by LNH for
the calendar quarters specified:

<TABLE>
<CAPTION>
Distribution
Declared Per
Quarter Ended High Low Share
- ----------------------------------------------------- ------ ------ ------------
<S> <C> <C> <C>
March 31, 1993 . . . . . . . . . . . . . . . . . . . $10 3/4 $8 $2.14
June 30, 1993 . . . . . . . . . . . . . . . . . . . . 8 3/4 7 7/8 0.14
September 30, 1993 . . . . . . . . . . . . . . . . . 9 5/8 7 3/4 0.14
December 31, 1993 . . . . . . . . . . . . . . . . . . 9 1/4 8 1/8 0.14
March 31, 1994 . . . . . . . . . . . . . . . . . . . 8 7/8 7 7/8 0.14
June 30, 1994 . . . . . . . . . . . . . . . . . . . . 8 7/8 7 3/4 0.14
September 30, 1994 . . . . . . . . . . . . . . . . . 9 1/4 6 1/2 1.59
December 31, 1994 . . . . . . . . . . . . . . . . . . 7 6 1/8 0.09
March 31, 1995 . . . . . . . . . . . . . . . . . . . 6 5/8 5 3/4 0.75
June 30, 1995 . . . . . . . . . . . . . . . . . . . . 6 3/4 6 0.09
September 30, 1995 . . . . . . . . . . . . . . . . . 7 3/8 6 1/4 0.09
December 31, 1995 . . . . . . . . . . . . . . . . . . 7 3/4 7 1/8 0.15
March 31, 1996 . . . . . . . . . . . . . . . . . . . 8 7 1/2 0.15
(through March 26, 1996)
</TABLE>

On September 5, 1995, the most recent trading day on which LNH Shares
were traded prior to the public announcement that EastGroup and LNH had reached
an agreement in principle with respect to the Merger (which occurred on
September 6, 1995), the closing price for LNH Shares was $6.50. On December 5,
1995, the most recent trading day on which LNH Shares traded prior to the
public announcement as to the revised agreement in principle between LNH and
EastGroup regarding the Merger (which occurred on December 6, 1995), the
closing price for LNH Shares on NYSE was $7.125. On March 26, 1996, the most
recent trading day as to which it is practicable to provide market price
information, the closing price for LNH Shares was $7.625.

55
<PAGE> 69
DIFFERENCES IN SHAREHOLDERS' RIGHTS

The rights of holders of LNH Shares are governed by the provisions of
the LNH Articles originally filed December 23, 1980, and by the Bylaws of LNH,
as amended (the "Bylaws"), as well as by the Maryland General Corporation Law
and other Maryland law. If the Merger is consummated, shareholders of LNH
(other than those holding fewer than three shares on the Record Date) will
become shareholders of EastGroup, and their rights as such will be governed by
the EastGroup Declaration, and Trustees' Regulations, as amended (the
"EastGroup Regulations"), as well as by the Maryland General Corporation Law,
the Maryland Real Estate Investment Trusts Law and other Maryland law.

The rights of LNH shareholders differ in certain respects from the
rights they will have if they become shareholders of EastGroup pursuant to the
Merger. A summary of some of these differences is set forth below. This
summary is not intended in any way to be a complete description of all such
differences.

Capital Stock. The LNH Articles authorize LNH to issue 15,000,000 LNH
Shares. As of March 26, 1996, 2,200,000 LNH Shares were issued and
outstanding. EastGroup is presently authorized to issue up to 10,000,000
EastGroup Shares, of which 4,245,083 were issued and outstanding as of March
26, 1996. Pursuant to a proposed amendment to the EastGroup Declaration,
EastGroup will be authorized to issue up to 20,000,000 EastGroup Shares.

Voting. Under the LNH Bylaws, the presence, in person or by proxy, of
the holders of a majority of the outstanding LNH Shares constitutes a quorum at
any shareholders' meeting. The LNH Articles and LNH Bylaws do not restrict the
matters on which shareholders of LNH may vote. The LNH Articles further
provide that, notwithstanding any other provision of the Maryland General
Corporation Law, an action shall be valid and effective if authorized by the
affirmative vote of the holders of a majority of the LNH Shares outstanding and
entitled to vote.

In all elections for directors of LNH, shareholders of LNH are
entitled to cumulate their votes. Each LNH Share may be voted for as many
individuals as there are directors to be elected and for whose election the LNH
Share is entitled to vote.

Under the EastGroup Declaration, a majority of the outstanding
EastGroup Shares represented in person or by proxy shall constitute a quorum at
any meeting. The EastGroup Declaration authorizes shareholders to vote on the
election and removal of trustees, amendment of the EastGroup Declaration and
termination of EastGroup, but no other matters. The affirmative vote of the
holders of not less than two-thirds of the EastGroup Shares then outstanding
shall be necessary to remove a trustee, amend the EastGroup Declaration and
terminate EastGroup.

In the case of the election of trustees, shareholders of EastGroup are
also entitled to cumulate their votes. Each shareholder of EastGroup is
entitled to as many votes as shall equal

56
<PAGE> 70
the number of EastGroup Shares owned by him or her multiplied by the number of
trustees to be elected, and each such shareholder may cast all of such votes for
a single candidate for trustee or may distribute them among any two or more of
the candidates as such shareholder may determine in his or her discretion. The
candidates receiving the highest number of votes, up to the number of
trusteeships to be filled in the election, shall be elected.

Special Meetings of Shareholders. Pursuant to the LNH Bylaws, special
meetings of the LNH shareholders may be called at any time in the interval
between annual meetings by the Chairman of the Board of Directors or the
President or by a majority of the Board of Directors by vote at a meeting
thereof or in writing. The written request must be addressed to the Secretary
of LNH. The EastGroup Declaration provides that special meetings of
shareholders may be called by any trustee or officer upon the written request
of shareholders holding not less than 25 percent of the outstanding EastGroup
Shares. Additionally, the Maryland General Corporation Law provides that a
special meeting may be called by the President, the Board of Directors or
Trustees or on the written request of stockholders entitled to cast at least 25
percent of all the votes entitled to be cast at the special meeting.

Term of Office. Directors of LNH and trustees of EastGroup are each
elected for one year terms and must stand for reelection annually. As of the
date of this Proxy Statement/Prospectus, LNH had four directors and EastGroup
had seven trustees.

DESCRIPTION OF CAPITAL STOCK OF EASTGROUP

EastGroup is authorized to issue up to 10,000,000 EastGroup Shares
and, if the proposal to increase the number of authorized EastGroup Shares is
adopted, EastGroup will be authorized to issue 20,000,000 EastGroup Shares.
Holders of EastGroup Shares will be 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 EastGroup Shares are fully paid
and non-assessable and have equal voting, distribution and liquidation rights.
EastGroup Shares shall not be subject to call or redemption; PROVIDED, HOWEVER,
if the EastGroup trustees determine that the direct or indirect ownership of
EastGroup Shares has or may become concentrated to an extent which threatens
EastGroup's status as a REIT, the trustees may call for the redemption of a
number of EastGroup Shares.

Each EastGroup Share is entitled to one vote on matters put to a vote
of the shareholders, except that in the election of trustees, shareholders
shall have cumulative voting rights. This means an EastGroup shareholder is
entitled to as many votes as equal the number of EastGroup Shares owned by him
or her multiplied by the number of trustees to be elected. Shareholders may
cast all their votes for one trustee candidate or distribute the votes as they
so determine.

57
<PAGE> 71
INDEMNIFICATION PROVISIONS

Under the EastGroup Declaration, EastGroup is required to indemnify
its trustees and officers to the fullest extent permitted by Maryland law as
currently existing or later amended (but in the case of such amendment, only to
the extent that it permits broader indemnification rights than permitted prior
to such amendment). Each trustee and officer of EastGroup has a written
agreement with EastGroup which requires, among other things, that EastGroup
shall indemnify the trustee or officer to the fullest extent permitted under
Maryland law. The EastGroup Declaration provides that its trustees shall not
be personally liable to EastGroup or its shareholders except for acts,
omissions or errors constituting bad faith, willful misfeasance, gross
negligence or reckless disregard of a trustee's duties. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to trustees, officers and controlling persons of EastGroup pursuant
to the foregoing provisions or otherwise, EastGroup 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.

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 Proxy
Statement/Prospectus and the 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 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 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.

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 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.

58
<PAGE> 72
LEGAL OPINIONS

The validity of the EastGroup Shares being offered hereby has been
passed upon for EastGroup by Jaeckle, Fleischmann & Mugel. Jaeckle,
Fleischmann & Mugel has also passed upon the significant federal income tax
consequences of the Merger to the holders of LNH Shares.

REPORTS TO SHAREHOLDERS

EastGroup will provide shareholders with annual reports containing
financial statements reported upon by independent auditors, and also unaudited
quarterly statements of operations.

OTHER MATTERS

The management of the LNH does not know of any other matters to come
before the Meeting. However, if any other matters come before the Meeting, it
is the intention of the persons designated as proxies to vote in accordance
with their judgment on such matters.

A portion of the expense of preparing, printing and mailing the form
of proxy and the material used in the solicitation thereof initially will be
borne by LNH, but ultimately will be borne, directly or indirectly, by
EastGroup if the Merger is consummated. If the Merger is not consummated, LNH
would bear all expenses it incurred relating to this Proxy
Statement/Prospectus.

In addition to solicitation by mail, members of the Board of
Directors, officers and regular employees of LNH may solicit the return of
proxies by telephone, telegram and personal interview.

LNH may require brokers, custodians, nominees and other record holders
to forward copies of this Proxy Statement/Prospectus to persons for whom they
hold LNH Shares and to seek authority for the execution of proxies; in such
cases, LNH will reimburse such holders for their charges and expenses. LNH has
retained Beacon Hill to assist with the solicitation of proxies and will pay
Beacon Hill a fee of $3,000 (subject to increase for additional services such
as telephone solicitation) plus reimbursement for out of pocket expenses for
its services.

59
<PAGE> 73

<TABLE>
<CAPTION>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Pages
----
<S> <C>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF EASTGROUP PROPERTIES
Pro Forma Consolidated Balance Sheet as of December 31, 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . F-2
Notes to Pro Forma Consolidated Balance Sheet as of
December 31, 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Notes to Pro Forma Consolidated Statement of Operations (unaudited) . . . . . . . . . . . . . . . . . . . . . . . F-6

CONSOLIDATED FINANCIAL STATEMENTS OF COPLEY PROPERTIES, INC.
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Consolidated Balance Sheets--December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Consolidated Statements of Operations and Cumulative Deficit--Years
ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11
Consolidated Statements of Cash Flows--Years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13
</TABLE>

F-1
<PAGE> 74
<TABLE>

EASTGROUP PROPERTIES

PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF DECEMBER 31, 1995

The following unaudited pro form a consolidated balance sheet sets forth the effect of the EastGroup Properties proposed
merger with LNH REIT, Inc. and with Copley Properties, Inc. as if the mergers had been consummated on December 31, 1995. The pro
forma consolidated balance sheet has been prepared by management of EastGroup based upon the historical financial statements of
EastGroup, LNH REIT and Copley. This pro forma consolidated balance sheet may not be indicative of the financial position had
the merger been in effect on the dates indicated or which may occur in the future. The pro forma consolidated balance sheet
should be read in conjunction with the other financial statements and the notes to the financial statements of EastGroup
incorporated by reference herein and Copley and LNH REIT enclosed herein.
<CAPTION>
EASTGROUP LNH COPLEY
DECEMBER 31, DECEMBER 31, MERGER PRO FORMA DECEMBER 31, MERGER
1995 1995 PRO FORMA CONSOLIDATED 1995 COPLEY PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS BEFORE COPLEY (HISTORICAL) EXCHANGES ADJUSTMENTS CONSOLIDATED
------------ ------------ ----------- ------------- ------------ ------------ ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate
properties (net
of accumulated
depreciation).. $136,398 $10,611 $(2,761)(1) $144,248 $ 72,397 $ 22,918(4) $14,793(3) $254,356
Investments
in tenancies-
in-common...... -- -- -- -- 2,311 (2,311)(4) -- --
Investment
in joint venture -- 6,011 (1,469)(1) 4,542 -- -- -- 4,542
Mortgage loans
(net of
allowance for
losses)........ 6,008 6,860 (1,645)(1) 11,223 896 -- -- 12,119
Land and land
purchase-
leasebacks..... 1,327 -- -- 1,327 -- -- -- 1,327
Investment
securities..... 6,811 675 -- 7,486 -- -- (6,811)(3) 675
Equity method
investments.... 3,976 -- (3,976)(1) -- -- -- -- --
Cash and cash
equivalents.... 26 1,016 -- 1,042 1,116 92(4) -- 2,250
Short term
investments.... -- -- -- -- 4,600 -- (2,445)(5) 2,155
Other assets.... 3,409 502 (49)(2) 3,862 197 -- -- 4,059
-------- ------- -------- ------ -------- ------- ------- --------
$157,955 $25,675 $(9,900) $173,730 $81,517 $20,699 $ 5,537 $281,483
======== ======= ======== ======== ======== ======= ======= ========
LIABILITIES
Mortgage notes
payable........ $67,203 $ -- $ -- $67,203 $39,333 $20,699(4) $ -- $127,235
Notes
payable to banks 4,359 -- -- 4,359 -- -- -- 4,359
Accounts
payable, accrued
expenses and other
liabilities.... 2,584 750 (49)(2) 3,285 3,118 -- (2,574)(5) 3,829
Minority
interest....... 909 1,476 -- 2,385 -- -- -- 2,385
-------- ------- -------- -------- -------- ------- -------- --------
75,055 2,226 (49) 77,232 42,451 20,699 -- 137,808
-------- ------- -------- -------- -------- ------ -------- --------
SHAREHOLDERS'
EQUITY
Shares of
beneficial
interest....... 4,232 1,100 (1,100)(1) 4,863 4,008 -- (4,008)(3) 7,080
631(1) 2,217 (3)
Additional
paid-in-capital 68,344 24,839 (24,839)(1) 81,361 69,625 -- (69,625)(3) 126,809
13,017(1) 45,448 (3)
Undistributed
earnings (deficit) 9,657 (2,996) 2,996(1) 9,657 (29,671) -- 29,671(3) 9,786
129(5)
Unrealized
gain (loss) on
securities..... 667 506 (506)(1) 617 -- -- (617)(3) --
(50)(1)
Treasury stock -- -- -- -- (4,896) -- 4,896(3) --
-------- ------- -------- -------- -------- ------- -------- --------
82,900 23,449 (9,851) 96,498 39,066 -- 8,111 143,675
-------- ------- -------- -------- -------- ------- -------- --------
$157,955 $ 25,675 $(9,900) $173,730 $81,517 $20,699 $5,537 $281,483
======== ======= ======== ======== ======== ======= ======== ========
Book
value per share $19.59 $10.66 $19.84 $10.90 $ 20.29
======== ======= ======== ======= =======
Shares
outstanding
(In thousands) 4,232 2,200 4,863 3,584 7,080
======== ======= ======== ======= =======
</TABLE>
F-2
<PAGE> 75

EASTGROUP PROPERTIES

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF DECEMBER 31, 1995

1. EastGroup issues 631,126 shares to all LNH REIT shareholders (except for
EastGroup) in exchange for all LNH REIT shares outstanding. The 515,200 LNH REIT
shares owned by EastGroup (representing 23.42% of the total shares outstanding)
are retired. The merger with LNH REIT is accounted for under the purchase method
of accounting.

<TABLE>
<S> <C>
LNH REIT shares outstanding................................... 2,200,000
Less LNH REIT shares owned by EastGroup....................... (515,200)
-----------
1,684,800
Exchange ratio ($8.10/$21.625) Closing price of EastGroup on
December 6, 1995, date merger was announced................. .3746
-----------
New EastGroup shares issued................................... 631,126
Market value per EastGroup share.............................. $ 21.625
-----------
$13,648,000
EastGroup's investment in LNH at December 31, 1995............ 3,976,000
Eliminate unrealized gain -- investment in LNH................ (50,000)
-----------
EastGroup's cost of LNH REIT's net assets..................... $17,574,000
===========
</TABLE>

The difference between LNH's book value and EastGroup's cost is allocated
to LNH's noncurrent assets (real estate, joint venture and mortgage loans) based
upon relative fair values.

<TABLE>
<S> <C>
Cost.......................................................... $17,574,000
Book value.................................................... 23,449,000
------------
Difference.................................................... $(5,875,000)
============
</TABLE>

Difference is allocated as follows:

<TABLE>
<S> <C>
Real estate................................................... $(2,761,000)
Joint venture................................................. (1,469,000)
Mortgage loans................................................ (1,645,000)
-----------
$(5,875,000)
==========
</TABLE>

2. Eliminate LNH's management fee payable to EastGroup against EastGroup's
management fee receivable.

3. EastGroup issues 2,216,962 shares to all Copley stockholders (except for
EastGroup) in exchange for all Copley shares outstanding. The 529,000 Copley
shares owned by EastGroup (representing 14.76% of the total shares outstanding)
are retired. The merger with Copley is accounted for under the purchase method
of accounting.

F-3
<PAGE> 76

EASTGROUP PROPERTIES

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET -- (CONTINUED)

<TABLE>
<S> <C>
Copley shares outstanding, net of treasury stock................ 3,584,350
Less Copley shares owned by EastGroup........................... (529,000)
-----------
3,055,350
Exchange ratio ($15.60/$21.50) closing price of EastGroup on
February 13, 1996, date merger was announced.................. .7256
-----------
New EastGroup shares issued..................................... 2,216,962
Market value per EastGroup share................................ $ 21.50
-----------
$47,665,000
EastGroup's investment in Copley at December 31, 1995........... 6,811,000
Eliminate unrealized gain -- investment in Copley............... (617,000)
-----------
EastGroup's cost of Copley's net assets......................... $53,859,000
===========
</TABLE>

The difference between Copley's book value and EastGroup's cost is
allocated to Copley's noncurrent assets (real estate) based upon relative fair
values.

<TABLE>
<S> <C>
Cost............................................................ $53,859,000
Book value...................................................... 39,066,000
-----------
Difference...................................................... $14,793,000
===========
</TABLE>

4. Copley's exchanges:

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------------------------------------------
INVESTMENTS IN
REAL ESTATE TENANCIES-IN- CASH AND CASH MORTGAGE
PROPERTIES, NET COMMON EQUIVALENTS NOTES PAYABLE
--------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Columbia Place(A).......................... $11,684 (1,650) 230 10,264
Metro Business Park & East Dominguez(A).... 11,234 (661) (138) 10,435
------- ------- ----- ------
Total............................ $22,918 (2,311) 92 20,699
======= ======= ===== ======
</TABLE>

- ---------------
(A) In February 1996, Copley effected two exchange transactions. In the first
exchange transaction, Copley exchanged its tenancy-in-common interest in 270
Technology Park to obtain 100% ownership of Columbia Place, subject to a
mortgage note payable of $10,264,000. In addition, Copley received $230,000
of monetary consideration. In the second exchange transaction, Copley
exchanged its tenancy-in-common interest in West Side Business Park, Central
Distribution Center, Carson Industrial Center and the three El Presidio
buildings (comprising a portion of the Dominguez Properties) to obtain 100%
ownership of Metro Business Park and the remaining building in the Dominguez
Properties tenancy-in-common, subject to mortgage notes payable of
$10,435,000. In addition, Copley was required to make a $138,000 cash
payment. These transactions were accounted for at the book value of the
assets exchanged.

For purposes of determining pro forma adjustments, it was assumed that the
exchange transaction occurred at December 31, 1995. As a result, all investments
in tenancies-in-common have been eliminated from the pro forma balance sheet and
the real estate properties which are eventually 100% owned by Copley have been
reflected as such, with associated debt separately stated.

5. Upon the Merger, Copley Advisors has agreed (i) to the termination of
the Advisory Agreement in consideration of the payment of 95% of the amount of
the unpaid incentive advisory fees and (ii) to relinquish its rights to and
interest in the Class A Share for one dollar ($1.00). These transactions have
been reflected on the pro forma balance sheet. The impact of the forgiveness of
the five percent of the unpaid incentive management fees is also reflected
therein. Funds for the payment of the accrued advisory fees is assumed to be
provided by the liquidation of short-term investments.

F-4
<PAGE> 77
<TABLE>
EASTGROUP PROPERTIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995

The following unaudited pro forma consolidated statement of operations for the year ended December 31, 1995 sets forth
the effect of EastGroup's proposed merger with LNH REIT and Copley as if these transactions had been consummated on January 1,
1995. The pro forma consolidated statement of operations has been prepared by management of EastGroup based upon historical
statements of operations of EastGroup, LNH REIT and Copley. The pro forma statement of operations may not be indicative of the
results that actually would have occurred if the transactions had been in effect on the dates indicated or which may be obtained
in the future. The pro forma statement of operations should be read in conjunction with their notes and the other financial
statements and notes to the financial statements of EastGroup incorporated by reference herein and Copley and LNH REIT enclosed
herein.
<CAPTION>
EASTGROUP LNH COPLEY COPLEY'S
DECEMBER 31, DECEMBER 31, MERGER PRO FORMA DECEMBER 31, ACQUISITIONS/ MERGER
1995 1995 PRO FORMA CONSOLIDATED 1995 DISPOSITIONS/ PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS BEFORE COPLEY (HISTORICAL) EXCHANGES ADJUSTMENTS CONSOLIDATED
------------ ------------ ----------- ------------- ------------ ------------ ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Income from
real estate
operations... $28,386 $1,451 $ -- $29,837 $12,679 $ 2,566 (9) $ -- $45,082
Share of
real estate
investment
operations... -- -- -- -- 748 (748)(9) -- --
Land rents.... 217 -- -- 217 -- -- -- 217
Equity in
earnings of
real estate
investment
trust........ 203 -- (203)(2) -- -- -- -- --
Interest:
Mortgage loans 1,036 889 -- 1,925 39 -- -- 1,964
Other........ -- 52 -- 52 -- -- -- 52
Other........ 422 87 (146)(3) 363 -- -- (254)(10) 109
-------- ------- -------- -------- -------- ------- -------- --------
30,264 2,479 (349) 32,394 13,466 1,818 (254) 47,424
-------- ------- -------- -------- -------- ------- -------- --------
EXPENSES
Management
fees......... -- 294 (294)(4) -- 452 -- -- 452
Operating
expenses
from real
estate
operations.. 11,575 521 -- 12,096 3,030 51(9) 15,177
Interest
expense...... 6,287 -- 67(5) 6,354 4,533 1,204(9) 40(11) 12,131
Depreciation
and
amortization 5,613 369 -- 5,982 3,736 488(9) 240(12) 10,446
Minority
interest
in joint
ventures.... 220 98 -- 318 119 -- -- 437
Provision
for losses.. -- 189 -- 189 -- -- -- 189
General and
administrative
expenses.... 2,180 499 125(6) 2,804 1,270 -- (899)(13) 3,175
Write-off
of deferred
financing
costs... -- -- -- -- 501 -- (501)(14) --
-------- ------- -------- -------- -------- ------- -------- --------
25,875 1,970 (102) 27,743 13,641 1,743 (1,120) 42,007
-------- ------- -------- -------- -------- ------- -------- --------
Income before
gain on
investments. 4,389 509 (247) 4,651 (175) 75 866 5,417
-------- ------- -------- -------- -------- ------- -------- --------
GAIN ON
INVESTMENTS
Real estate
and mortgage
loans....... 3,322 535 (3,857)(1) -- 2,564 (2,564)(9) -- --
-------- ------- -------- -------- -------- ------- -------- --------
NET INCOME.... $ 7,711 $ 1,044 $(4,104) $ 4,651 $ 2,389 $(2,489) $ 866 $ 5,417
======== ======= ======== ======== ======== ======= ======== ========
Net income
per share... $ 1.82 $ .47 $ .96 $ 0.67 $ .77
======== ======= ======== ======== ========
WEIGHTED
AVERAGE SHARES
OUTSTANDING(8) 4,226 2,200 4,857 3,584 7,074
======== ======= ======== ======== ========
</TABLE>
F-5
<PAGE> 78

EASTGROUP PROPERTIES

NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(1) EastGroup and LNH dispositions have been accounted for as follows:

The operating revenues and expenses associated with EastGroup's
acquisitions and dispositions in 1995 are immaterial. Gain on dispositions
of $3,322,000 in 1995 has been removed in determining pro forma net income.

The operating revenues and expenses associated with the LNH
acquisitions and dispositions in 1995 are immaterial. Gain on dispositions
of $535,000 in 1995 has been removed in determining pro forma net income.

(2) Eliminate equity in earnings of LNH REIT, Inc.

(3) Eliminate equity in earnings of EastGroup Managers, Inc.

(4) Eliminate LNH management fee expense to LNH REIT Managers.

(5) Increase interest expense for borrowings to purchase LNH Shares from
the Walker Interests. The borrowings to purchase these shares was $3,070,000 at
an average rate of 8.5% for one quarter in 1995.

(6) Eliminate management fee income received from LNH REIT Managers.

(7) A $1.00 change in the per share price of EastGroup will result in a
corresponding change ( increase or decrease) in the number of shares issued to
LNH shareholders and pro forma net income per share as follows:

<TABLE>
<CAPTION>
CHANGE IN EASTGROUP
MARKET PRICE PER SHARE
-----------------------------------
$1.00 INCREASE $1.00 DECREASE
---------------- ----------------
<S> <C> <C>
Shares issued.......................... 27,968 decrease 30,495 increase
Pro forma net income
before Copley..................... No effect $.01 decrease
Pro forma book value
12-31-95 before Copley............... $.11 increase $.12 decrease
</TABLE>

(8) Weighted average EastGroup Shares outstanding were computed as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
(IN THOUSANDS)
<S> <C>
Historical weighted average EastGroup Shares
outstanding........................................... 4,226
EastGroup Shares issued in merger with LNH REIT......... 631
-----
Pro forma weighted average EastGroup Shares outstanding
before Copley......................................... 4,857
EastGroup Shares issued in merger with Copley........... 2,217
-----
Pro Forma weighted average EastGroup Shares
outstanding........................................... 7,074
=====
</TABLE>

F-6
<PAGE> 79

EASTGROUP PROPERTIES

NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS -- (CONTINUED)

(9) Copley's acquisitions/dispositions/exchanges:

<TABLE>
<CAPTION>
SALE, PURCHASE INCOME SHARE OF
OR EXCHANGE FROM REAL R.E. R.E.
--------------------------- ESTATE OPERATING DEPRECIATION INTEREST INVESTMENT GAIN (LOSS) ON
PROPERTY DESCRIPTION DATE OPERATIONS EXPENSE EXPENSE EXPENSE OPERATIONS INVESTMENTS TOTAL
- ----------- ----------- --------- --------- --------- ------------ ------- ---------- -------------- -------
AMOUNTS (000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Peachtree
Corners
Dist
Center.... Sale Nov. 1995 $(1,134) $ 312 $ 396 $ 198 $ -- $ (1,806) $(2,034)
University
Business
Center.... (A) (64) -- -- 57 -- -- (7)
Park North
Business
Center.... Sale June 1995 (806) 229 411 251 -- (758) (673)
Kingsview
Industrial
Center.... Purchase July 1995 231 -- (45) -- -- -- 186
Columbia
Place..... Exchange(B) Feb. 1996 1,838 (32) (237) (921 ) (599) -- 49
Metro
Business
Park...... Exchange(B) Feb. 1996 1,391 (366) (658) (500 ) 47 -- (86)
Dominiguez
Properties... Exchange(B) Feb. 1996 1,110 (194) (355) (474 ) (155) -- (68)
270
Technology
Park...... Exchange(B) Feb. 1996 -- -- -- -- (111) -- (111)
West Side
Business
Park...... Exchange(B) Feb. 1996 -- -- -- -- 106 -- 106
Central
Distribution
Center.... Exchange(B) Feb. 1996 -- -- -- -- (3) -- (3)
Carson
Industrial
Center.... Exchange(B) Feb. 1996 -- -- -- -- (33) -- (33)
Line of
Credit.... (A) -- -- -- -- 185 -- -- 185
------- ----- ----- ----- ----- ------- -------
Total... $ 2,566 $ (51) $ (488) $(1,204) $ (748) $ (2,564) $(2,489)
======= ===== ===== ===== ===== ======= =======
</TABLE>

- ---------------
(A) For purposes of determining pro forma adjustments, it was assumed that the
principal due under certain debt agreements was repaid with available cash
and net proceeds available from dispositions which were assumed to occur on
January 1, 1995. Principal on notes payable at University Business Center
was assumed to be repaid on January 1, 1995. As the $3.5 million pay down on
the University Business Center note actually occurred in February 1995, the
pro forma adjustment reduces the interest expense by the interest accrued
for that portion of the note ($57,000 in 1995). As discussed above, on a pro
forma basis, Copley had sufficient cash available throughout the pro forma
period to mitigate any need to draw on the line of credit. In addition, the
line of credit balance was substantially repaid from the proceeds received
as a result of the sale of the Park North Business Center. Therefore, the
pro forma adjustments eliminate the effect of interest charges incurred
related to amounts drawn under the line of credit during the pro forma
period.

(B) As discussed in footnote 4(A) to the pro forma balance sheet, in February
1996 Copley effected two exchange transactions swapping tenancy-in-common
interests to gain 100% ownership of certain wholly owned properties. For
purposes of the pro forma statement of operations, share of real estate
investment operations for all investments involved in the exchange has been
eliminated and the separate components of income from operations for the
100% owned real estate properties have been reflected for the pro forma
periods.

(10) Eliminate dividend income from Copley's shares.

(11) Increase interest expense for borrowings to purchase Copley shares.
The borrowings to purchase these shares were $1,992,000 for six months and
$4,201,000 for three months of 1995 at an average rate 8.42%.

(12) Depreciation on step up in basis from allocation of the purchase price
over an estimated life of forty years.

(13) Eliminate professional expenses associated with the assessment of the
strategic alternatives available to Copley in order to maximize shareholder
value, including elimination of fees and expenses payable to Morgan Stanley as
financial advisor. This effort resulted in the solicitation from EastGroup to
enter into the pending merger transaction.

F-7
<PAGE> 80

EASTGROUP PROPERTIES

NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS -- (CONTINUED)

(14) In 1994, Copley attempted to raise additional equity through a private
placement offering. Although the offering was unsuccessful in raising additional
equity from private investors, it became the first in a series of steps
undertaken by Copley to maximize stockholder value which resulted in the Merger.
In 1995, Copley wrote-off the costs incurred in conjunction with the private
placement offering. For pro forma purposes, the charge related to the write-off
of certain costs incurred in connection with the unsuccessful private placement
has been eliminated.

(15) A $1.00 change in the per share price of EastGroup (subject to a
collar of $20.25 to $23.00) will result in a corresponding change (increase or
decrease) in the number of shares issued to Copley stockholders and pro forma
net income per share as follows:

<TABLE>
<CAPTION>
CHANGE IN EASTGROUP
MARKET PRICE PER SHARE
-------------------------------------
$1.00 INCREASE $1.00 DECREASE
---------------- -----------------
<S> <C> <C>
Shares issued........................ 98,688 decrease 108,159 increase
Pro forma net income................. $ .01 increase $ .02 decrease
Pro forma book value 12-31-95........ .29 increase .30 decrease
</TABLE>

F-8
<PAGE> 81

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
Copley Properties, Inc.:

We have audited the accompanying consolidated balance sheets of Copley
Properties, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1995 and 1994, and the related statements of operations and cumulative deficit
and cash flows for each of the three years in the period ended December 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Copley Properties,
Inc. and subsidiaries as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

Arthur Andersen LLP

Boston, Massachusetts
March 15, 1996

F-9
<PAGE> 82

COPLEY PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Real estate investments (Notes 3 and 4):
Property, net................................................. $ 72,396,765 $ 88,640,489
Joint ventures................................................ -- 1,037,178
Investment in tenancies-in-common............................. 2,310,781 --
Loans to joint ventures....................................... -- 4,859,903
Ground lease.................................................. -- 1,187,000
Notes receivable.............................................. 895,963 1,000,966
Other......................................................... -- 681,356
------------ ------------
Total real estate investments......................... 75,603,509 97,406,892
Cash and cash equivalents....................................... 5,716,300 1,491,554
Deferred financing costs (Note 10).............................. -- 486,366
Other assets.................................................... 197,448 --
------------ ------------
Total assets.......................................... $ 81,517,257 $ 99,384,812
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Losses of joint ventures in excess of investment.............. $ -- $ 3,261,463
Accounts payable and other liabilities........................ 544,045 436,478
Accrued management advisory fees (Notes 9 and 14)............. 2,573,917 2,491,445
Line of credit borrowings..................................... -- 3,500,000
Mortgage notes payable (Notes 2 and 5)........................ 39,333,349 49,219,448
------------ ------------
Total liabilities..................................... 42,451,311 58,908,834
------------ ------------
Commitments (Note 3)
SHAREHOLDERS' EQUITY (Note 8):
Common stock, $1.00 par value; authorized 20,000,000 shares;
issued 4,007,500 shares.................................... 4,007,500 4,007,500
Additional paid-in capital.................................... 69,625,444 69,625,444
Treasury stock; 423,150 shares of common stock, at cost....... (4,895,726) (4,895,726)
Cumulative deficit............................................ (29,671,273) (28,261,241)
Class A common stock.......................................... 1 1
------------ ------------
Total shareholders' equity............................ 39,065,946 40,475,978
------------ ------------
Total liabilities and shareholders' equity............ $ 81,517,257 $ 99,384,812
============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-10
<PAGE> 83

COPLEY PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND CUMULATIVE DEFICIT

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY (Notes 2, 3 and 6):
Property operations, net....................... $ 1,445,701 $ 1,452,003 $ 1,128,334
Share of real estate investment earnings
Operations.................................. 748,067 415,742 191,333
Lease termination charges (Note 6).......... -- (1,770,471) --
Investment valuation allowance.............. -- -- (900,000)
------------ ------------ ------------
Total real estate operations........... 2,193,768 97,274 419,667
Gain on sales of Properties.................... 2,564,478 626,931 --
------------ ------------ ------------
Total real estate activity............. 4,758,246 724,205 419,667
Interest on short-term investments and cash
equivalents................................. 39,255 79,975 195,885
------------ ------------ ------------
Total investment activity.............. 4,797,501 804,180 615,552
------------ ------------ ------------
PORTFOLIO EXPENSES:
Management advisory fee........................ 451,863 714,761 601,535
General and administrative..................... 371,941 273,974 227,758
Professional fees (Note 13).................... 898,608 142,149 97,241
Interest expense............................... 184,562 210,241 --
Write-off of deferred financing costs (Note
10)......................................... 501,227 -- --
------------ ------------ ------------
2,408,201 1,341,125 926,534
------------ ------------ ------------
NET INCOME (LOSS)................................ 2,389,300 (536,945) (310,982)
Common stock dividends........................... (3,799,332) (3,369,229) (2,867,442)
CUMULATIVE DEFICIT:
Beginning of year.............................. (28,261,241) (24,355,067) (21,176,643)
------------ ------------ ------------
End of year.................................... $(29,671,273) $(28,261,241) $(24,355,067)
============ ============ ============
PER SHARE DATA:
Net Income (Loss).............................. $ .67 $ (.15) $ (.09)
============ ============ ============
Dividends...................................... $ 1.06 $ .94 $ .80
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-11
<PAGE> 84

COPLEY PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................ $ 2,389,300 $ (536,945) $ (310,982)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Joint venture and tenancy-in-common
operations.................................. (673,799) (352,606) 16,832
Lease termination charges..................... -- 1,770,471 --
Cash distributions from joint ventures and
tenancies-in-common......................... 807,255 1,632,460 3,136,357
Property depreciation and amortization........ 3,735,914 3,999,341 810,305
Write-off of deferred financing costs......... 501,227 -- --
Gain on sales of Property..................... (2,564,478) (626,931) --
Investment valuation allowance................ -- -- 900,000
Increase in investment income receivable...... -- (30,365) (211,559)
Increase in deferred leasing commissions...... (404,330) (519,173) (33,153)
(Increase) decrease in property working
capital..................................... (374,311) (358,974) 133,263
Increase in accounts payable and accrued
management advisory fees.................... 109,795 318,478 228,202
Other, net.................................... (76,137) (72,683) --
----------- ---------- ----------
Net cash provided by operating
activities............................. 3,450,436 5,295,756 4,596,582
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in loans to joint ventures.............. (6,436) (191,037) (42,290)
Reduction of loans to joint ventures............. -- -- 551,895
Investment in joint ventures..................... (31,346) (143,494) (3,336,120)
Return of capital from joint ventures............ -- -- 25,119
Investment in Property........................... (4,553,172) (3,928,552) (2,291,721)
Proceeds from sale of Property................... 22,864,250 1,082,925 --
Decrease (increase) in short-term investments,
net........................................... -- 1,967,451 (979,408)
Increase in other assets......................... (280,570) -- --
Decrease in notes receivable..................... 109,426 2,444,619 --
----------- ---------- ----------
Net cash provided by (used in) investing
activities............................. 18,102,152 1,231,912 (6,072,525)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in line of credit borrowings,
net........................................... (3,500,000) 3,500,000 --
Proceeds from third-party mortgage note.......... 3,250,000 -- --
Principal payments on mortgage notes............. (13,136,099) (6,801,089) --
Dividends paid................................... (3,799,332) (3,369,229) (2,867,442)
Financing costs.................................. (142,411) (267,586) --
----------- ---------- ----------
Net cash used in financing activities.... (17,327,842) (6,937,904) (2,867,442)
----------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents................................... 4,224,746 (410,236) (4,343,385)
CASH AND CASH EQUIVALENTS:
Beginning of year............................. 1,491,554 1,901,790 6,245,175
----------- ---------- ----------
End of year................................... $ 5,716,300 $ 1,491,554 $ 1,901,790
----------- ---------- ----------
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest........ $ 4,827,630 $ 4,784,473 $ 358,177
=========== ========== ==========
NONCASH INVESTING AND FINANCING ACTIVITIES (NOTES 3 AND 12)
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-12
<PAGE> 85

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 ORGANIZATION AND BUSINESS

Copley Properties, Inc. (the Company), a Delaware corporation, was
incorporated in May 1985 and operates as a qualified real estate investment
trust under applicable provisions of the Internal Revenue Code of 1986, as
amended. The Company acquires, develops, operates and owns industrial real
estate. The Company currently owns and operates, either directly or through
tenancy-in-common arrangements, 15 properties totaling over 2.5 million square
feet of net rentable area. Copley Real Estate Advisors, Inc. (the Advisor)
provides investment management and administrative services to the Company. The
Advisor is an indirect wholly owned subsidiary of New England Investment
Companies, L.P. (NEIC), a publicly traded limited partnership. New England
Mutual Life Insurance Company is the principal unitholder of NEIC.

As described in Note 14, in February 1996, the Company entered into an
Agreement and Plan of Merger, under which the Company will be merged into
EastGroup Properties.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
the Company and its consolidated joint ventures as of and subsequent to the date
on which the Company acquired a controlling ownership interest therein. The
Company has several tenancies-in-common, and previously had several other joint
ventures, which are presented in these financial statements using the equity
method, since control of the business is shared with the respective co-tenant.
All interentity balances and transactions have been eliminated.

Under circumstances arising from the inability of certain of its venture
partners to perform under joint venture agreements, the Company assumed control
over the respective businesses. Upon restructuring, these investments have been
classified as Properties in the consolidated balance sheets and any third-party
mortgage financing is separately presented, and operating revenues and expenses
are separately classified in property operations. Prior to restructuring, the
real estate assets and third-party mortgage loans of joint ventures are
considered in the investment balances and operating results are reported as
share of investment earnings. The restructuring transactions do not affect the
Company's net income (loss) or shareholders' equity.

Property

Property includes land and buildings wholly owned by the Company or owned
by consolidated joint ventures. These investments are referred to herein as
"Properties" and are stated at cost less accumulated depreciation. The Company's
cost of a Property previously owned by a joint venture equals the Company's
carrying value of the prior investment on the conversion date. It is the
Company's policy to estimate the remaining useful life of real estate assets at
the conversion date. This balance sheet caption also includes deferred leasing
costs, incidental working capital items related to Properties, and the minority
interest related to a consolidated joint venture.

Tenancies-in-Common, Joint Ventures and Secured Loans

The Company accounts for its investments in unconsolidated
tenancies-in-common using the equity method, under which the cost of the
investment is adjusted by the Company's share of the respective tenancy-
in-common's results of operations and reduced by certain cash distributions
received.

The Company has had investments in unconsolidated joint ventures which were
also accounted for using the equity method as described above. In addition, the
Company made loans to joint ventures in which the Company had an ownership
interest.

F-13
<PAGE> 86

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Share of real estate investment earnings (losses) in the accompanying
consolidated statements of operations includes tenancy-in-common and joint
venture earnings (losses) allocated to the Company. Allocations of
tenancy-in-common earnings (losses) are made in accordance with the ownership
interests of the respective co-tenants. Allocations of joint venture earnings
(losses) were made to the Company's joint venture partners in accordance with
the terms of the respective joint venture agreements as long as they had
economic equity in the project. A joint venture partner is determined to have
economic equity if the appraised value of the property exceeds the Company's
total cash investment plus accrued preferential returns and interest thereon, or
if the venture partner is entitled to current operating cash distributions.

Depreciation and Capitalization

Maintenance and repair costs are charged to operations as incurred.
Significant improvements and renewals are capitalized. Depreciation is computed
using the straight-line method based on the estimated useful lives of the
buildings and improvements. Leasing and financing costs are also capitalized and
amortized over the related agreement terms.

Rental Revenues

Rental revenues from certain operating leases with fixed rent increases or
rent credits are recognized on a straight-line basis over the terms of the
leases. The difference between straight-line rental revenues and cash rents
received in accordance with the terms of the leases is recorded as accounts
receivable.

Realizability of Real Estate Investments

The carrying value of the Company's real estate investments is reduced to
net realizable value, if lower. Since the Company's intention is to hold
properties for long-term investment, net realizable value is measured by the
recoverability of the investment carrying value through expected undiscounted
future cash flows, net of the cost of third-party financing associated with the
investment. As of December 31, 1995 and 1994, the estimated net realizable value
of each real estate investment either exceeded or approximated its carrying
value.

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to Be Disposed Of" (SFAS 121), which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. As required, the Company will adopt SFAS
121 in the first quarter of 1996. Based upon current circumstances, management
believes adoption will not have any effect on the financial position of the
Company.

Cash Equivalents and Short-term Investments

Cash equivalents and short-term investments are stated at cost, plus
accrued interest, which approximates market. Such investments consist primarily
of certificates of deposit and commercial paper. The Company considers all
highly liquid debt instruments purchased with a maturity of 90 days or less to
be cash equivalents; otherwise, they are classified as short-term investments.

Financial Instruments

Mortgage notes payable and notes receivable are considered the Company's
most significant financial instruments at December 31, 1995. Based on the
interest rates on these notes, some of which are variable and

F-14
<PAGE> 87

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

several of which have recently been negotiated, the fair value of these
instruments approximates their carrying values.

Per Share Computations

Net income (loss) per share is computed by dividing net income (loss),
after deducting any Class A dividends, by the weighted average number of shares
outstanding during each year (3,584,350 in 1995, 1994 and 1993).

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform
with the 1995 presentation. There is no effect on net income (loss) or cash flow
from operations.

3 REAL ESTATE INVESTMENTS

The Company's real estate investments are either owned in their entirety or
jointly through tenancies-in-common or joint ventures. Wholly owned property
operations are under the oversight of local management companies. For jointly
owned property, the Company's co-tenants or venture partners are responsible for
day-to-day operating activities under separate property management agreements,
and they are entitled to fees for such services. The joint venture agreements
provide for the funding of cash flow deficits by the venture partners in
proportion to ownership interests, and for the dilution of ownership interest in
cases where a partner does not so contribute. Under the tenancy-in-common
agreements, each co-tenant is responsible for funding its proportionate share of
cash flow deficits.

The Company's cash investments in joint ventures are in two forms: a
capital contribution generally subject to preferential cash distributions at a
specified rate and to priority distributions with respect to sale or refinancing
proceeds; and secured, interest-bearing loans to certain ventures. When
converted to tenancy-in-common ownership, these loans and the corresponding
accrued interest were classified as part of the Company's contribution to the
capital of the new entity.

Acquisitions

In July 1995, the Company purchased the Kingsview Industrial Center, an
83,000 square foot industrial building located in Carson, California. The total
purchase price was approximately $3,000,000.

The Company purchased an industrial building located in Tempe, Arizona, on
March 31, 1994, which is referred to as Broadway Industrial Center. The total
purchase price was approximately $2,350,000.

Sales

In November 1995, the Company sold its interest in the Peachtree Corners
Distribution Center investment for a purchase price of approximately
$10,000,000. After payment of selling expenses and the outstanding mortgage
loan, the Company received net cash proceeds of approximately $7,626,000,
including deposits of $125,000 and $1,165,000 received in March 1995 and June
1995. The outstanding principal

F-15
<PAGE> 88

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

balance of $2,250,000 on a $3,250,000 mortgage note payable which the buyer
issued to the Company in February 1995 was retired as part of the closing. The
loan had been secured by a first mortgage on the Peachtree Corners Distribution
Center and bore interest at the rate of 10% per annum. In July 1995, the Company
made a payment to reduce the outstanding principal by $1,000,000. The Company
recognized a gain on the sale of approximately $1,806,000.

In June 1995, the Company sold all of its interests and rights, including
its ground lease position, related to the Park North Business Center investment
for approximately $18,500,000. Proceeds from the sale of approximately
$12,900,000, net of the assumption of debt associated with the ground lease
property, were used to pay off the mortgage notes payable to Wells Fargo Realty
Advisors and the revenue bonds, which were owed by the ground lessee and
guaranteed by the Company (Note 5). After settlement of the debt and payment of
selling expenses, the Company received net cash proceeds of approximately
$6,825,000, including a deposit of $125,000 received in March 1995. The Company
recognized a gain of approximately $758,000.

During 1994, the Company sold two buildings at the Baygreen Industrial
Park. Proceeds from the sales totaled $1,782,925, including a $700,000 purchase
money mortgage note. Under the terms of this note, interest only is due monthly
at the rate of 9% per annum, and the note matures January 1, 1997. The note is
included in Notes Receivable in the accompanying consolidated balance sheet at
December 31, 1995 and 1994. The Company recognized a gain on these sales of
approximately $627,000 in 1994.

Restructurings

In September 1995, the Company paid approximately $100,000 to terminate an
incentive property management agreement related to Broadway Industrial Center
and paid approximately $200,000 in October 1995 to terminate an incentive
property management agreement related to Baygreen Industrial Park. The incentive
property management agreements represented a contingent equity interest in the
properties granted at the date of acquisition, payable upon sale, refinancing,
or termination. Therefore, the termination fees paid have been recorded as
acquisition costs and added to the Company's carrying value of the investments.

In August 1995, the Company entered into agreements with certain of its
co-venture partners to restructure the ownership of their joint venture
investments as tenancies-in-common between the Company and the respective
co-venturers. Certain amounts previously recorded by the Company as loans to the
joint ventures and corresponding accrued interest have been reclassified at book
value, as part of the Company's capital contribution to its ownership interest
in the tenancies-in-common. These transactions did not generate a gain or loss
or have an impact on shareholders' equity. Subsequent to the establishment of
the tenancies-in-common, the respective ownership interests of the Company and
its co-tenants-in-common are substantially as follows:

<TABLE>
<CAPTION>
COMPANY CO-TENANT
------- ---------
<S> <C> <C>
Central Distribution Center............................. 57.38% 42.62%
West Side Business Park................................. 75.49% 24.51%
Metro Business Park..................................... 69.03% 30.97%
Dominguez Properties.................................... 55.00% 45.00%
Columbia Place.......................................... 78.00% 22.00%
270 Technology Park..................................... 61.00% 39.00%
</TABLE>

As discussed further in Note 14, subsequent to December 31, 1995, the
Company entered into agreements with its various co-tenants to exchange
ownership interests such that the Company would have a 100% ownership interest
in certain of the properties owned by the tenancies-in-common and no ownership
interest in the others.

F-16
<PAGE> 89

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of January 1, 1994, the ownership of three partnerships that were formed
to own a portion of the Park North Business Center investment (the "Parknorth
Partnerships") was restructured whereby the Company became the controlling
venturer and increased its legal ownership percentage. On March 30, 1995, 100%
ownership of the property owned by the Parknorth Partnerships was transferred to
the Company. In addition, on March 30, 1995, the Company restructured its
long-term ground lease arrangement within the Park North Business Center. As
discussed under "Sales," the entire Park North Business Center investment was
sold on June 30, 1995.

The following is a summary of the real estate investment structures at
December 31, 1995:

<TABLE>
<CAPTION>
DATE
CONSOLIDATED DATE
LEGAL OR CONVERTED CONVERTED
OWNERSHIP FROM JOINT TO TENANCY-
INVESTMENT SHARE VENTURE IN-COMMON
------------------------------------------------- --------- ------------ -----------
<S> <C> <C> <C>
Broadway Industrial Center....................... 100.00% 03/31/94 --
Central Distribution Center...................... 57.38% -- 8/16/95
West Side Business Park.......................... 75.49% -- 8/16/95
Metro Business Park.............................. 69.03% -- 8/16/95
Carson Industrial Center(1)...................... 50.00% -- 3/29/90
Dominguez Properties............................. 55.00% -- 8/16/95
Los Angeles Corporate Center..................... 100.00% 12/18/90 --
University Business Center....................... 80.00% 11/01/93 --
Huntwood Associates.............................. 100.00% 12/31/93 --
Wiegman Associates(2)............................ 80.00% 12/31/93 --
Baygreen Industrial Park......................... 100.00% 10/26/93 --
Columbia Place................................... 78.00% -- 8/16/95
270 Technology Park.............................. 61.00% -- 8/16/95
Sample/I-95 Business Park........................ 100.00% 12/31/93 --
Kingsview Industrial Center...................... 100.00% 07/14/95 --
</TABLE>

- ---------------
(1) The Company has a note receivable of approximately $177,000 from its
co-tenant which bears interest at 10% and is secured by the co-tenant's
interest in the property.

(2) The Company has a preferred capital investment which bears interest at 12%.

F-17
<PAGE> 90

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4 REAL ESTATE ASSETS AND LIABILITIES

The following is a summary of the assets and liabilities underlying the
Company's real estate investments:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1994
------------ ------------
<S> <C> <C>
PROPERTY
Land.................................................... $ 21,655,181 $ 24,018,575
Buildings and improvements.............................. 52,400,189 66,402,879
Accumulated depreciation................................ (5,752,574) (5,079,353)
Deferred leasing costs and other assets, net............ 1,162,722 1,332,458
Minority interest....................................... 1,509,970 1,471,483
--------- ---------
Total real estate assets........................... 70,975,488 88,146,042
Accounts receivable..................................... 2,048,357 2,254,603
Accounts payable and other liabilities.................. (627,080) (1,760,156)
--------- ---------
$ 72,396,765 $ 88,640,489
========= =========
Mortgage notes payable to third-parties (Note 5)........ $ 39,333,349 $ 49,219,448
========= =========
INVESTMENTS IN TENANCIES-IN-COMMON AND JOINT VENTURES
Land.................................................... $ 8,246,048 $ 8,246,048
Buildings and improvements.............................. 33,965,653 35,542,264
Accumulated depreciation................................ (11,791,003) (12,370,021)
Cash.................................................... 511,717 346,176
Other, net.............................................. 2,921,034 3,521,924
--------- ---------
Total assets....................................... 33,853,449 35,286,391
--------- ---------
Mortgage notes payable to third-parties (Note 5)........ 31,601,919 32,127,307
Other................................................... 632,950 1,913,431
--------- ---------
Total liabilities.................................. 32,234,869 34,040,738
--------- ---------
Net assets.............................................. $ 1,618,580 $ 1,245,653
========= =========
Company's share:
Loans to joint ventures............................... $ -- $ 4,859,903
Capital............................................... 2,310,781 (2,224,285)
--------- ---------
$ 2,310,781 $ 2,635,618
========= =========
</TABLE>

As of December 31, 1994 assets of joint ventures exclude capitalized
interest or preferred returns to the Company and liabilities of joint ventures
exclude amounts owed to the Company in connection with secured loans, accrued
interest thereon, or accrued preferred returns. As part of the conversion to
tenancies-in-common as discussed in Note 3, these items were converted at book
value to the Company's ownership interest.

F-18
<PAGE> 91

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5 MORTGAGE NOTES PAYABLE

Mortgage notes payable on Properties are summarized below. They are
collateralized by real estate and, in certain cases, the assignment of rents.
The mortgage notes are generally non-recourse to the other assets of the
Company.

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
----------- -----------
<S> <C> <C>
UNIVERSITY BUSINESS CENTER
CIGNA; interest at 9.06%, payable monthly; principal payments
based on a 20-year amortization schedule; remainder due April 1,
2000............................................................ $ 9,353,947 $13,000,000
CIGNA; interest at 9.37%, payable monthly; principal due January
1, 1997......................................................... 10,000,000 10,000,000
HUNTWOOD ASSOCIATES
Wells Fargo Bank; interest is a fixed rate option with interest
based on LIBOR plus 3.25% and a variable rate option with
interest based on the prime rate plus 1% (the effective interest
rate was 9.5% at December 31, 1995); principal due January 15,
1997............................................................ 2,292,993 2,350,292
Massachusetts Mutual Life Insurance Company; interest at 9.875%,
payable monthly; principal due June 1, 1996..................... 10,000,000 10,000,000
WIEGMAN ASSOCIATES
Massachusetts Mutual Life Insurance Company; interest at 9.875%,
payable monthly; principal due June 1, 1996..................... 6,700,000 6,700,000
Allstate Insurance Company; interest at 8.75%, payable monthly;
principal due October 1, 1997................................... 986,409 1,011,311
PARK NORTH BUSINESS CENTER
Wells Fargo Realty Advisors; interest at .65% over the prime rate
or 1.75% over LIBOR, payable monthly. Principal balance was paid
at maturity on June 30, 1995.................................... -- 3,362,692
Wells Fargo Realty Advisors; interest at .65% over the prime rate
or 1.75% over LIBOR, payable monthly. Principal balance was paid
at maturity on June 30, 1995.................................... -- 2,795,153
----------- -----------
$39,333,349 $49,219,448
=========== ===========
</TABLE>

Mortgage notes payable to third-parties, based on contractual terms in
existence as of December 31, 1995, mature as follows:

<TABLE>
<CAPTION>
TENANCIES-IN-
YEAR ENDED DECEMBER 31, PROPERTIES(1) COMMON(2)
------------------------------------------------------ ------------- -------------
<S> <C> <C>
1996.................................................. $ 16,974,870 $ 4,280,310
1997.................................................. 13,403,318 10,997,500
1998.................................................. 228,070 5,203,115
1999.................................................. 249,613 1,854,579
2000.................................................. 8,477,478 309,903
Thereafter............................................ -- 8,956,512
------------ ------------
$ 39,333,349 $ 31,601,919
============ ============
</TABLE>

- ---------------
(1) Includes 100% of the joint venture debt.

(2) Amounts represent 100% of the tenancies-in-common debt. The Company's share
of notes payable is consistent with its respective ownership interest (Note
3) except at West Side Business Park where the Company's share of the
obligation under the notes payable is 57.38%.

F-19
<PAGE> 92

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Mortgage notes payable at December 31, 1994 do not include revenue bonds at
Park North Business Center owed by the ground lessee, repayment of which was
guaranteed by the Company. The ground lease arrangement resulted from a
transaction in which the Company purchased land in a portion of Park North
Business Center for lease back to the seller for a term of 60 years. Contractual
rent was $142,440 per annum. The Company's guarantee of the revenue bonds was
extinguished in connection with the sale of the property in June 1995.

The Company guaranteed 50% of the outstanding obligation of the revenue
bonds at 270 Technology Park up to a maximum of $2,000,000. The outstanding
principal balance of the bonds at December 31, 1995 and 1994 was $3,713,011. As
discussed in Note 14, subsequent to December 31, 1995, the Company exchanged its
ownership interest in the 270 Technology Park property, and its guarantee of the
revenue bonds was extinguished.

6 RESULTS OF REAL ESTATE INVESTMENTS

Operations

The following is a summary of the operating results of the properties
underlying the Company's real estate investments:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
PROPERTY
Rentals..................................... $12,679,060 $13,338,097 $ 3,128,332
Operating expenses.......................... (3,030,306) (3,072,560) (821,215)
Interest expense............................ (4,348,126) (4,696,303) (358,177)
Depreciation and amortization............... (3,735,914) (3,999,341) (810,305)
Minority interest........................... (119,013) (117,890) $ (10,301)
----------- ----------- -----------
$ 1,445,701 $ 1,452,003 $ 1,128,334
=========== =========== ===========
INVESTMENTS IN TENANCIES-IN-COMMON AND
JOINT VENTURES
Rentals..................................... $ 6,856,262 $ 7,442,165 $14,850,192
Operating expenses.......................... (1,223,767) (1,136,267) (2,749,486)
Interest expense............................ (2,857,655) (2,931,718) (7,615,524)
Depreciation and amortization............... (1,921,274) (4,551,781) (4,551,489)
----------- ----------- -----------
$ 853,566 $(1,177,601) $ (66,307)
=========== =========== ===========
Company share:
Interest on loans to joint ventures....... $ 74,268 $ 63,136 $ 208,165
Equity in net income (losses)............. 673,799 (1,417,865) (16,832)
----------- ----------- -----------
$ 748,067 $(1,354,729) $ 191,333
=========== =========== ===========
</TABLE>

F-20
<PAGE> 93

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum rentals under non-cancelable operating leases are as
follows:

<TABLE>
<CAPTION>
YEAR ENDED TENANCIES-IN-
DECEMBER 31, PROPERTIES COMMON
---------------------------------------------------- ----------- -------------------
<S> <C> <C>
1996........................................... $ 9,051,444 $ 4,551,838
1997........................................... 8,702,558 2,833,264
1998........................................... 7,728,819 2,526,885
1999........................................... 6,890,149 2,389,048
2000........................................... 6,022,828 2,265,552
Thereafter.......................................... 16,546,140 9,180,224
----------- -----------
$54,941,938 $23,746,811
=========== ===========
</TABLE>

Investment Valuation Allowance

The estimated net realizable value of the undeveloped land at Sample/I-95
Business Park declined significantly in 1993. In accordance with the Company's
policy, the carrying value was reduced to approximate estimated net realizable
value, resulting in an investment valuation allowance of $900,000 in 1993.

Significant Lease Transactions

In September 1994, M.O.R. XXXVI Associates Limited Partnership, a
partnership in which the Company is a general partner (the "Partnership") and
the owner of Columbia Place, modified the existing terms of its sole lease and
mortgage loan agreements. BDM Federal, Inc. ("BDM"), the original tenant with a
lease expiring in March 1998, desired to vacate the building and Ceridian
Corporation ("Ceridian"), a new tenant, desired to occupy the building. BDM,
Ceridian, and the Partnership entered into a series of agreements (the
"Agreements") under which BDM is obligated for certain payments to the
Partnership through March 1998. The payments are contingent on future events and
are being recognized as income when the contingencies expire. In 1994,
approximately $864,000 was recognized as additional income from BDM as a result
of the transaction.

Ceridian entered into a lease with the Partnership which commenced
September 1994 and expires December 2009, subject to earlier termination options
in December 2004 and December 2006.

Ceridian was responsible for the cost of all of its tenant improvements and
chose to substantially re-fit this space. This resulted in the write-off by the
Partnership of approximately $2,635,000 of tenant improvements and other capital
costs in 1994.

In conjunction with the leasing transaction, the mortgage note payable to a
third-party lender of approximately $10,490,000 was restructured. The interest
rate was reduced from 10.125% to 8.875% per annum, effective December 1, 1994,
and the maturity date was extended from May 1998 to December 2009. The maturity
date may be accelerated if Ceridian exercises its termination options. The
revised mortgage note requires monthly payments of principal and interest based
on a 20-year amortization schedule.

The Partnership's costs of these transactions have been capitalized and are
being amortized over the life of the lease or loan as applicable.

In January 1996, the Company executed a lease agreement which increased the
occupancy of the Los Angeles Corporate Center property from 50% to 100%.

F-21
<PAGE> 94

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7 LINE-OF-CREDIT

At December 31, 1995, the Company had an unsecured line-of-credit agreement
with a bank which was due to expire on January 31, 1996. Under its terms, the
Company could borrow up to $5,000,000 at the prime rate of interest or LIBOR
plus 1.5%. The average outstanding balance on the line-of-credit during 1995 and
1994 was $2,091,644 and $3,402,000, respectively, and the weighted average
interest rate was 7.85% and 6.18%, respectively. There were no borrowings in
1993.

Subsequent to December 31, 1995, the bank agreed to extend the
line-of-credit agreement to July 31, 1996. All other terms and conditions are
unchanged.

8 SHAREHOLDERS' EQUITY

Increase in Authorized Shares

The total number of authorized shares of the Company was increased from
8,000,000 to 20,000,000 effective June 14, 1994.

Class A Common Stock

On June 3, 1985, the Company sold one share of Class A Common Stock (par
value of one dollar) to the Advisor for $50,000. As the holder of such share,
the Advisor is entitled to receive 10% of the Company's net gain (as defined)
from the disposition of properties, reduced by any accumulated net losses. Upon
termination of the Advisory Agreement, the Company will have an option to
purchase the share of Class A Common Stock for an amount equal to 10% of the net
gain which would be realized by the Company had all of the real estate owned by
the Company as of the date of termination been sold at its fair market value. If
the Company does not elect to purchase the Class A Common Stock, such share will
automatically convert to shares of common stock of the Company. See Note 14 for
further discussion of the Class A Common Stock.

Shareholders' Rights Plan

The Company's Board of Directors unanimously adopted a shareholders' rights
plan on June 28, 1990 applicable to shareholders of record on July 19, 1990. The
plan, as amended on September 20, 1995, provides for the dividend of a right to
buy one share of common stock for a stated amount determined in accordance with
the provisions of the plan for each share of common stock outstanding. Rights
would initially become exercisable on the earlier of (1) the tenth day after the
date on which a person has acquired beneficial ownership of 15% or more of the
Company's common stock or (2) the tenth business day after a person commences a
tender or exchange offer, the consummation of which would result in such person
owning 30% or more of the Company's common stock.

9 MANAGEMENT ADVISORY FEES

The Company has an agreement with the Advisor, pursuant to which the
Advisor provides investment management and administrative services to the
Company. Fees for these services totaled $451,863, $714,761 and $601,535 for
1995, 1994 and 1993, respectively, and are determined as:

a. A base fee of 7.5% of net cash flow (as defined in the Advisory
Agreement) from sources other than short-term assets, as defined.

b. An incentive fee of 5% of net cash flow (as defined in the Advisory
Agreement) from sources other than short-term assets, as defined.

c. A short-term investment fee of 0.25% of average annual short-term
assets, as defined.

F-22
<PAGE> 95

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1995 and 1994, payments of the incentive fees totaling
$2,573,917 and $2,473,054, respectively, have been deferred and become payable
only after the Company has achieved a specified return to shareholders, or
refinancing or sale proceeds are distributed to shareholders. Payment of the
deferred fee would also become payable upon termination or resignation of the
Advisor. See Note 14 for further discussion of the management advisory fee.

10 DEFERRED FINANCING COSTS

In 1994, the Company commenced the marketing of additional equity on a
private placement basis and incurred $501,227 in Deferred Financing Costs in
connection with pursuing the private placement and arranging for an increased
line of credit, which was contingent on additional equity. Discussions with
potential investors did not produce an agreement on the terms of an equity
investment and the Company wrote off the Deferred Financing Costs in 1995.

11 INCOME TAXES

The Company believes that it continues to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended. The
Company has distributed all of its taxable income for 1995, 1994 and 1993.
Accordingly, no provision for income taxes has been made in the accompanying
consolidated financial statements. For federal income tax purposes, the amounts
distributed as dividends were ordinary income, except for $1.06 per share, $.17
per share and $.06 per share in 1995, 1994 and 1993, respectively, which relate
to capital gains. No portion of the dividend in any of the years presented
relates to a return of capital.

12 NONCASH INVESTING AND FINANCING ACTIVITIES

The restructuring of certain joint ventures, as more fully described in
Note 3, resulted in the following noncash investing and financing activities:

<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Conversion of loans to joint ventures and
accrued interest to Property and
tenancies-in-common........................ $4,999,071 $ 4,109,037 $ 265,694
Conversion of investments in joint ventures
to Property................................ -- -- 14,424,483
Conversion of losses of joint ventures in
excess of investment to Property........... -- (2,095,608) --
Recording of third party mortgage notes...... -- 9,310,914 46,864,843
---------- ----------- -----------
Total converted assets............. $4,999,071 $11,324,343 $61,555,020
========== =========== ===========
</TABLE>

13 PROFESSIONAL FEES

Certain professional fees are costs incurred by the Company related to its
consideration of various strategic alternatives aimed at maximizing shareholder
value and subsequent solicitation of proposals to acquire the Company. Included
in professional fees for the year ended December 31, 1995 is approximately
$352,000 of investment advisory fees earned by Morgan Stanley and Co.
Incorporated (Morgan Stanley) and legal fees of $324,000 associated with this
process.

14 SUBSEQUENT EVENTS

Merger Agreement

In February 1996, the Company entered into an Agreement and Plan of Merger
under which the Company will be merged into EastGroup Properties (EastGroup). In
the merger, each share of the

F-23
<PAGE> 96

COPLEY PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company's common stock will be converted into EastGroup shares of beneficial
interest with a value of $15.60, subject to the limitations described below.

The value of EastGroup shares for purposes of calculating the ratio at
which the Company's shares will be converted into EastGroup shares in the merger
will be the average of the closing price of EastGroup shares on the New York
Stock Exchange on the 20 trading days immediately preceding the fifth trading
day prior to the effective date of the merger (the "EastGroup Stock Price");
however, the EastGroup Stock Price will be deemed to equal $20.25 if the average
price of EastGroup shares calculated above is less than or equal to $20.25, and
$23.00 if the average price of EastGroup shares is greater than or equal to
$23.00. The Company has the right, waivable by it, to terminate the merger
agreement without liability if the average closing price of EastGroup shares on
the New York Stock Exchange on the 20 trading days immediately preceding the
fifth trading day prior to (i) the date on which the Securities and Exchange
Commission declares EastGroup's Registration Statement with respect to the
merger effective or (ii) the date on which the Company's stockholders' meeting
with respect to the merger is held, is equal to or less than $18.25.

The merger is subject to several conditions including approval by the
shareholders of both the Company and EastGroup and registration of the shares to
be issued in the merger with the Securities and Exchange Commission. Upon the
consummation of the merger, the Company has committed to pay Morgan Stanley a
transaction fee equal to $1.5 million, against which approximately $350,000 of
other fees and expenses previously paid to Morgan Stanley will be credited.

Upon the event of merger, the Advisor agrees to the termination of the
Advisory Agreement and relinquishment of its right to, and interest in, the
Class A share in consideration of payment by the Company of 95% of the amount of
the unpaid incentive advisory fees.

February Exchange of Interests

Effective February 1, 1996, the Company exchanged its co-tenant interest in
the 270 Technology Park property to obtain 100% ownership of the Columbia Place
property. In addition, the Company received $50,000 in cash and a secured
promissory note of $180,000 bearing interest at 9.56% and maturing on February
1, 2000, with annual interest and principal payments of $56,250. The note is
secured by a second deed of trust on the 270 Technology Park property.

Effective February 2, 1996, the Company exchanged its co-tenant interests
in the Carson Industrial Center, Central Distribution Center, West Side Business
Park and the three El Presidio buildings (comprising a portion of the Dominguez
Properties) to obtain 100% ownership of the Metro Business Park tenancy-in-
common and the remaining building in the Dominguez Properties tenancy-in-common.
As part of the exchange, the Company paid $138,000 in cash and forgave its note
receivable from its co-tenant in the Carson Industrial Center property of
approximately $177,000.

F-24
<PAGE> 97

APPENDIX A

AGREEMENT AND PLAN OF MERGER, AS AMENDED

AMONG

EASTGROUP PROPERTIES,
EASTGROUP-LNH CORPORATION
AND
LNH REIT, INC.

DATED: MARCH 18, 1996

<PAGE> 98
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.6 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II. DISSENTING SHARES; EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.1 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF LNH . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.3 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.4 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.5 Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.6 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.7 Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.8 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.9 Property and Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.10 ERISA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.11 REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.12 Taxes, Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.13 Tax Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.14 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.15 No Default; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.16 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.17 Compliance with Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.18 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.20 Control Share Provisions Inapplicable . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.21 Representations and Warranties Continuing . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EASTGROUP AND SUB . . . . . . . . . . . . . . . . . . . . 13
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.2 Capitalization; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.3 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.4 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.5 Proxy Statements/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.6 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.7 Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.8 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.9 Property and Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 99
<TABLE>
<S> <C>
Section 4.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.11 REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.12 Taxes, Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.13 Tax Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.14 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.15 No Default; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.16 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.17 Compliance with Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.18 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.20 Shares of Beneficial Interest of EastGroup . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.21 Representations and Warranties Continuing . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.1 Conduct of Business of LNH and EastGroup . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.3 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.5 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.7 Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.8 Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Certificates, Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE VII. TERMINATION; AMENDMENTS; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.5 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.2 Brokerage Fees; Commissions and Expenses . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.3 Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.7 Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.8 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>

ii
<PAGE> 100
<TABLE>
<S> <C>
Section 8.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.11 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.12 Performance by Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.13 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.14 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

iii
<PAGE> 101
AGREEMENT AND PLAN OF MERGER, AS AMENDED
----------------------------------------

AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
December 22, 1995, by and among LNH REIT, INC., a Maryland corporation engaged
in the real estate business ("LNH"), EASTGROUP-LNH CORPORATION, a Maryland
corporation and a wholly-owned subsidiary of EastGroup Properties ("Sub"), and
EASTGROUP PROPERTIES, a Maryland real estate investment trust ("EastGroup"),
as amended by the First Amendment to the Merger Agreement dated March 18, 1996.

WHEREAS, the respective Boards of Trustees and Directors of
EastGroup, Sub and LNH have duly approved the acquisition of LNH by EastGroup
by means of a merger of LNH with and into Sub pursuant to the terms of this
Agreement, it is therefore agreed as follows:

ARTICLE I.
THE MERGER

Section 1.1 THE MERGER. Upon the terms and subject to
the conditions hereof, and in accordance with the relevant provisions of the
Maryland General Corporation Law (the "Maryland Law"), including, without
limitation, any required vote of shareholders of LNH as described in Section
5.7 of this Agreement, LNH shall be merged with and into Sub (the "Merger") as
soon as practicable following the satisfaction or waiver, if permissible, of
the conditions set forth in Article VI hereof. Following the Merger, Sub shall
continue as the surviving corporation (the "Surviving Corporation") under the
laws of the State of Maryland and the separate corporate existence of LNH shall
cease.

Section 1.2 EFFECTIVE TIME. The Merger shall be
consummated by filing with the Maryland Secretary of State the Articles of
Merger in the form attached hereto as Exhibit A (the "Articles of Merger") (the
time of such filing being the "Effective Time").

Section 1.3 EFFECTS OF THE MERGER. The Merger shall
have the effects set forth in Section 3-114 of the Maryland Law. As of the
Effective Time, LNH shall merge with and into Sub.

Section 1.4 ARTICLES OF INCORPORATION AND BYLAWS. The
Articles of Incorporation and Bylaws of Sub, both as in effect at the Effective
Time, shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation.

Section 1.5 DIRECTORS. As of the Effective Time,
directors of Sub in office on the date of execution hereof shall be directors
of the Surviving Corporation until their respective successors are duly elected
and qualified.

Section 1.6 CONVERSION OF SHARES.

(a) Each share of common stock, $.50 par value
per share ("Shares"), of LNH issued and outstanding immediately prior to the
Effective Time (other than Shares held by LNH as treasury stock or held by
EastGroup, which shall be cancelled) shall, by virtue of the Merger and without
any action on the part of any holder thereof, be
<PAGE> 102

converted into the right to receive a certain amount of newly issued, fully
paid and non-assessable shares of beneficial interest of EastGroup based on an
exchange ratio (the "Exchange Ratio") as determined and set forth below. Such
shares shall be issuable upon surrender of the certificates formerly
representing Shares of LNH. The Exchange Ratio will be determined by dividing
the value $8.10 by the average closing price for shares of beneficial interest
of EastGroup for the 10 trading days immediately preceding the fifth trading
day prior to the date of Closing (as defined in Section 1.7) (the "Closing
Price"). No fractional shares of beneficial interest of EastGroup shall be
issued. Instead shareholders of LNH will be entitled to receive cash in lieu
of fractional shares in an amount based upon the Closing Price, multiplied by
the fraction of a share of beneficial interest of EastGroup to which the
shareholder would have otherwise been entitled. The shares of beneficial
interest of EastGroup issuable in exchange for the Shares of LNH and the cash
payment in lieu of fractional shares are referred to herein as the "Merger
Consideration." All shares issued to the shareholders of LNH representing the
Merger Consideration shall be registered under the Securities Act of 1933, as
amended (the "Securities Act"), on a Form S-4 Registration Statement being
filed by EastGroup with the Securities and Exchange Commission (the "SEC").
Any shares representing the Merger Consideration held by persons who are
affiliates (as that term is defined in SEC Rule 405) of LNH shall bear a legend
restricting the transferability of shares pursuant to SEC Rule 145. EastGroup
shall have no obligation to keep the Form S-4 Registration Statement effective
and it shall expire by its terms on the earlier of (i) ninety (90) days after
the Effective Time or (ii) the date that any event occurs which would cause
EastGroup to be required to file a post-effective amendment under the
Securities Act in order to update the Proxy Statement/Prospectus (as defined in
Section 8.10) pursuant to Section 10 of the Securities Act.

(b) Each Share held in the treasury of LNH and
each Share held by EastGroup immediately prior to the Effective Time shall, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holder thereof, be cancelled and retired and cease to exist and no
payment shall be made with respect thereto.

Section 1.7 CLOSING. Upon the terms and subject to
the conditions hereof, as soon as practicable after the satisfaction of all
conditions described in Article VI, LNH and Sub shall execute in the manner
required by the Maryland Law and deliver to the Maryland Secretary of State the
duly executed Articles of Merger, and the parties shall take such other and
further actions as may be required by law to make the Merger effective.
Contemporaneous with the filing referred to in this Section, a closing (the
"Closing") will be held at the offices of EastGroup in Jackson, Mississippi (or
such other place as the parties may agree), for the purpose of implementing all
transactions described in this Agreement.

ARTICLE II.
DISSENTING SHARES; EXCHANGE OF SHARES

Section 2.1 DISSENTING SHARES. Shareholders of LNH
who do not vote for the Merger will not have appraisal rights.

2
<PAGE> 103
Section 2.2 EXCHANGE OF SHARES.

(a) Promptly after the Effective Time, Sub
shall cause EastGroup's transfer agent (the "Agent") to mail to each record
holder, as of the Effective Time, of an outstanding certificate or certificates
which immediately prior to the Effective Time represented Shares of LNH (the
"Certificate(s)") a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss of and title to the Certificate
shall pass to Sub upon physical delivery to the Agent) and instructions for use
in effecting the surrender of the Certificate and for receiving any payment for
fractional shares. Upon surrender to the Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate or certificates and
cash representing the Merger Consideration and such surrendered Certificate
shall then be cancelled. If issuance is to be made to a person other than the
person in whose name the Certificate surrendered is registered, it shall be a
condition of issuance that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such issuance shall pay transfer or other taxes required by reason
of the payment to a person other than the registered holder of the Certificate
or Certificates surrendered or established to the satisfaction of EastGroup
that such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this Section 2.2, each Certificate shall
represent for all purposes the right to receive the Merger Consideration.

(b) At and after the Effective Time there
shall be no transfers of Shares which were outstanding immediately prior to the
Effective Time on the stock transfer books of LNH. If, after the Effective
Time, Certificates are presented to Sub, they shall be cancelled and exchanged
for the Merger Consideration provided in this Article II. At the close of
business on the day prior to the Effective Time the stock ledger of LNH shall
be closed.

(c) From and after the Effective Time, holders
of Certificates formerly evidencing Shares shall cease to have any rights as
shareholders of LNH, except as provided herein or by law.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF LNH

LNH represents and warrants to EastGroup as follows:

Section 3.1 ORGANIZATION AND QUALIFICATION. LNH is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland. All Subsidiaries of LNH are legal entities that
are duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation. Each of LNH and its
Subsidiaries has all requisite power and authority to own or operate its
properties and conduct its business as it is now being conducted. LNH and each
of its Subsidiaries is duly qualified and in good standing as a foreign
corporation or entity authorized to do business in each of the jurisdictions in
which the character of the properties owned or held under lease by it or the
nature of the business transacted by it makes such qualification necessary,
except

3
<PAGE> 104
where the failure to be so qualified and in good standing would not have a
Material Adverse Effect (as defined in Section 8.10) on LNH or such Subsidiary.

Section 3.2 CAPITALIZATION.

(a) The authorized capital stock of LNH
consists of 15,000,000 Shares. As of the date hereof, 2,200,000 Shares were
issued and outstanding and no Shares were held in treasury. Neither LNH nor
any Subsidiary has any shares of its capital stock reserved for issuance. All
issued and outstanding Shares are validly issued, fully paid, non-assessable
and free of preemptive rights.

(b) The Disclosure Schedule sets forth the
name, the number of shares of authorized capital stock and the number of issued
and outstanding shares of capital stock or other indicia of ownership of each
direct or indirect Subsidiary of LNH. Except as set forth in such schedule,
all of the outstanding shares of capital stock of each of such Subsidiaries are
owned, directly or indirectly, by LNH, beneficially and of record. All of such
shares of capital stock of the Subsidiaries are owned free and clear of all
liens, charges, encumbrances, rights of others, mortgages, pledges or security
interests, and are not subject to any agreements or understandings among any
persons with respect to the voting or transfer of such shares. There are no
outstanding subscriptions, options, convertible securities, warrants or claims
of any kind issued or granted by or binding on LNH to purchase or otherwise
acquire any security of or equity interest in any of such Subsidiaries. All of
the outstanding shares of capital stock of each such Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable, and none
has been issued in violation of the preemptive rights of any stockholder.

Section 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. LNH
has all requisite power and authority to execute and deliver this Agreement and
(other than approval of the Merger and this Agreement by the holders of
two-thirds of all the votes entitled to be cast) to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been authorized by
the Board of Directors of LNH, and no other corporate proceedings on the part
of LNH are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than approval of the Merger and this
Agreement by the holders of two-thirds of the Shares entitled to vote). This
Agreement has been duly and validly executed and delivered by LNH and
constitutes a valid and binding agreement of LNH, enforceable against LNH in
accordance with its terms.

Section 3.4 SEC REPORTS. To the best of its
knowledge, LNH has filed all required forms, reports and documents with the SEC
("LNH SEC Reports") required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, all of which have
complied in all material respects with all applicable requirements of the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and interpretive releases promulgated
thereunder. None of such LNH SEC Reports, including without limitation any
financial statements, notes, or schedules included therein, at the time filed,
contained nor contains, or if to be filed in the future, will contain, any
untrue statement of a material fact, or omitted, omits or will omit to

4
<PAGE> 105
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.

Each of the financial statements in or incorporated by
reference into the LNH SEC Reports is fairly stated as of its date (subject, in
the case of unaudited interim statements, to normal year-end audit adjustments)
and is presented in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as may be noted
therein; and independent certified public accountants for LNH have rendered or
will render an unqualified opinion with respect to each audited financial
statement included in the LNH SEC Reports or, if qualified, such qualification
is or will be reasonably satisfactory to EastGroup. The financial statements
included or to be included in the LNH SEC Reports are hereinafter sometimes
collectively referred to as the "LNH Financial Statements."

Section 3.5 PROXY STATEMENT/PROSPECTUS. The Proxy
Statement/Prospectus required for the consummation of the Merger will comply in
all material respects with the Securities Act and the Exchange Act, except that
no representation will be made by LNH with respect to information supplied in
writing by EastGroup or any affiliate of EastGroup specifically for inclusion
in the Proxy Statement/Prospectus. None of the information relating to LNH and
its Subsidiaries supplied in writing by LNH specifically for inclusion in the
Proxy Statement/Prospectus shall, at the time the Proxy Statement/Prospectus is
mailed or at the time of the Special Meeting (as defined in Section 8.10),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

Section 3.6 CONSENTS AND APPROVALS; NO VIOLATION.
Except as described in the Disclosure Schedule delivered herewith, neither the
execution and delivery of this Agreement by LNH nor the consummation of the
transactions contemplated hereby nor compliance by LNH with any of the
provisions hereof will (a) conflict with or result in any breach of any
provision of the Articles of Incorporation, as amended, Bylaws, as amended, or
other organization documents of LNH or the Articles of Incorporation and Bylaws
of any Subsidiary, (b) require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority (as defined
in Section 8.10), except (i) pursuant to the Securities Act and the Exchange
Act, (ii) the filing of the Articles of Merger pursuant to the Maryland Law,
(iii) such filings and approvals as may be required under the "blue sky,"
takeover or securities laws of various states, or (iv) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not in the aggregate have a Material Adverse Effect, (c)
result in a default (with or without due notice or lapse of time or both) (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
Contract (as defined in Section 3.16), license, agreement or other instrument
or obligation to which LNH or any of its Subsidiaries is a party or by which
LNH, any of its Subsidiaries or any of their respective assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a Material Adverse Effect, (d) result
in the creation or imposition of any lien, charge or other encumbrance on the
assets

5
<PAGE> 106
of LNH or any of its Subsidiaries which would have a Material Adverse Effect on
LNH or any of its Subsidiaries, or (e) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to LNH, any of its Subsidiaries
or any of their respective assets, except for violations which would not in the
aggregate have a Material Adverse Effect.

Section 3.7 LITIGATION, ETC. Except as described in
the Disclosure Schedule, (a) there is no action, claim, or proceeding pending
or, to the knowledge of LNH, threatened, to which LNH or any of its
Subsidiaries is or would be a party before any court or Governmental Authority
acting in an adjudicative capacity or any arbitrator or arbitration tribunal
with respect to which there is a reasonable likelihood of a determination
having, or which, insofar as reasonably can be foreseen, in the future would
have a Material Adverse Effect on LNH, (b) neither LNH nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
having, or which, insofar as reasonably can be foreseen, in the future would
have a Material Adverse Effect on LNH and (c) there are no claims asserted or
actions or proceedings pending against any officer or director of LNH arising
out of or pertaining to any action or omission within the scope of his or her
employment or position with LNH, which claim, action or proceeding would
involve a Material Adverse Effect on LNH. All litigation and other
administrative, judicial or quasi-judicial proceedings to which LNH is a party
or to which it has been threatened, to LNH's knowledge, to be made a party, are
described in the Disclosure Schedule.

Section 3.8 CHANGES. Except as expressly contemplated
by this Agreement or as reflected in the Disclosure Schedule or in LNH SEC
Reports, since December 31, 1994, LNH and its Subsidiaries has conducted its
business only in the ordinary and usual course, and, except as set forth in the
Disclosure Schedule or in LNH SEC Reports, none of the following has occurred:

(a) any material adverse change in the
condition (financial or other), results of operations, business, assets and
employee relations of LNH and its Subsidiaries, taken as a whole;

(b) any change in accounting methods,
principles or practices by LNH materially affecting its assets, liabilities or
business, except insofar as may have been required by a change in generally
accepted accounting principles;

(c) any damage, destruction or loss, whether
or not covered by insurance, materially adversely affecting the condition
(financial or other), business or operations of LNH and its Subsidiaries, taken
as a whole;

(d) any declaration, setting aside or payment
of dividends or distributions in respect of the Shares (other than those
dividends publicly announced, declared and paid by LNH), or any redemption,
purchase or other acquisition of any of LNH's securities;

(e) any issuance by LNH of, or commitment of
LNH to issue, any shares of capital stock or securities convertible into or
exchangeable or exercisable for shares of capital stock;

6
<PAGE> 107
(f) any entry by LNH or any of LNH's
Subsidiaries into any commitment or transaction material to the condition
(financial or other), business or operations of LNH and its Subsidiaries, taken
as a whole, which is not in the ordinary course of business and consistent with
past practice;

(g) any revaluation by LNH or any of LNH's
Subsidiaries of any of its assets, including, without limitation, writing down
the value of assets or writing off notes or accounts receivables other than in
the ordinary course of business and consistent with past practice;

(h) any action taken by LNH or any of LNH's
Subsidiaries of the type referred to in Section 5.1;

(i) any agreement by LNH to do any of the
things described in the preceding clauses (a) through (h) other than as
expressly contemplated or provided for herein; and

(j) any waiver by LNH or any of its
Subsidiaries of any rights that, singularly or in the aggregate, are material
to the business, assets, financial condition or results of operation of LNH and
its Subsidiaries, taken as a whole.

Section 3.9 PROPERTY AND ENVIRONMENTAL MATTERS.

(a) Except as disclosed in the Disclosure
Schedule, to the best knowledge of LNH, the location, construction, occupancy,
operation, condition and use of the real property now or previously owned,
leased by or in the possession of LNH or its Subsidiaries (the "Real
Property"), the facilities or improvements located thereon and the operations
and practices of LNH and its Subsidiaries are or at the time of ownership,
lease or possession were in substantial compliance with all Environmental Laws
(as defined in Section 8.10) and any restrictive covenant or deed restriction
(recorded or otherwise) affecting the Real Property, including, without
limitation, all applicable zoning ordinances and building codes in effect at
the time of improvement of such Real Property, flood disaster and occupational
health and safety laws.

(b) Neither LNH nor any of its Subsidiaries is
subject to any material liability or obligation, including investigatory or
remedial obligations under any Environmental Law or the common law with respect
to Hazardous Materials (as defined in Section 8.10), relating to (i) the
environmental conditions on, under or about the Real Property, including,
without limitation, the air, soil, surface water and groundwater conditions at
the Real Property, or (ii) the use, management, handling, transport, treatment,
generation, storage, disposal, release or discharge of any Hazardous Materials.

(c) With the exception of those Hazardous
Materials and activities described in the Disclosure Schedule, to the best
knowledge of LNH, no portion of the Real Property is being used, nor has been
used by LNH or its Subsidiaries at any previous time, for the generation,
storage, treatment, processing, disposal or other handling of any Hazardous
Materials.

7
<PAGE> 108
(d) Neither LNH nor any of its Subsidiaries
has received any notice and is not aware of any existing condition (including
the condition of the Real Property, whether or not caused by LNH or any
Subsidiary) or the practice of the business conducted by LNH or its
Subsidiaries which forms or could form the basis of any claim, action, suit,
proceeding, administrative consent or agreement, litigation or settlement,
hearing or investigation, arising out of the manufacture, processing,
distribution, use, treatment, storage, spill, disposal, transport or handling
of, or the emission, discharge, release or threatened release into the
environment of, any Hazardous Materials which, if decided against LNH or any of
its Subsidiaries, would have a Material Adverse Effect on LNH and its
Subsidiaries.

(e) LNH and its Subsidiaries have listed and
described on the Disclosure Schedule or made available to EastGroup, as
appropriate (i) all treatment, storage and disposal facilities, as defined in
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et
seq., as amended, or under similar Environmental Laws, and all underground
storage tanks, whether empty, filled, or partially filled with any substance,
that are located on the Real Property; (ii) the current and past Hazardous
Material disposal practices of LNH and its Subsidiaries; and (iii) any
environmental assessment or environmental audit reports delivered to LNH or its
Subsidiaries.

(f) To the best of its knowledge, LNH and its
Subsidiaries are not required to obtain or apply for any permit, license,
registration, notification or similar authorization under any Environmental Law
for the conduct of LNH's or its Subsidiaries' business or relating to the Real
Property, the facilities, improvements or equipment located thereon.

(g) No portion of the Real Property has been
designated as a covered facility under CERCLA (as defined in Section 8.10(a))
or included on any similar "superfund" list or registry or has been made
subject to any environmental lien pursuant to any Environmental Law or by any
Governmental Authority.

Section 3.10 ERISA MATTERS. LNH and each of its
Subsidiaries have no "Employee Benefit Plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
cover any of its employees. LNH has never contributed to a "multiemployer
plan" as defined in Section 3(37) of ERISA.

Section 3.11 REIT STATUS. For all years in which it
has been in existence, LNH has continuously been organized and operated in
conformity with the requirements for qualification as a real estate investment
trust under the Internal Revenue Code of 1986, as amended (the "Code"). LNH
has no intention of changing its operations or engaging in activities which
adversely affect its ability to qualify, or make economically undesirable its
continued qualification as, a real estate investment trust.

Section 3.12 TAXES, TAX RETURNS.

(a) LNH has delivered to EastGroup copies of
the federal income tax returns of LNH for each of the last three fiscal years
and all schedules and exhibits

8
<PAGE> 109
thereto. Except as set forth on the Disclosure Schedule, each of LNH and its
Subsidiaries has duly and timely filed in correct form all federal, state and
local information returns and tax returns ("Returns") required to be filed by
it and its Subsidiaries on or prior to the date hereof (all such Returns, to
the best knowledge of LNH, being accurate and complete in all material
respects) and, to the best knowledge of LNH, has duly paid or made provision
for the payment of all taxes and other governmental charges which have been
incurred or are due or claimed to be due from them by any governmental
authority (including, without limitation, those due in respect of LNH's
properties, income, business, capital stock, franchises, licenses, sales and
payrolls) other than taxes or other charges (i) which are not yet delinquent or
are being contested in good faith, and set forth in the Disclosure Schedule and
(ii) have not been finally determined. The liabilities and reserves for taxes
in the LNH Financial Statements are sufficient in the aggregate for the payment
of all unpaid federal, state and local taxes (including any interest or
penalties thereon), whether or not disputed or accrued, for the period ended
December 31, 1994 or for any year or period prior thereto, and for which LNH or
any of its Subsidiaries may be liable in its own right or as transferee of the
assets of, or successor to, any corporation, person, association, partnership,
joint venture or other entity.

(b) To the best knowledge of LNH, (i) proper
and accurate amounts have been withheld by LNH and its Subsidiaries from its
employees and others for all prior periods in compliance in all material
respects with the tax withholding provisions of applicable federal, state and
local laws and regulations, and proper due diligence steps have been taken in
connection with back-up withholding, (ii) Returns which are accurate and
complete in all material respects have been filed by LNH and its Subsidiaries
for all periods for which Returns were due with respect to income tax
withholding, Social Security and unemployment taxes, and (iii) the amounts
shown on such Returns to be due and payable have been paid in full or adequate
provision therefor has been included by LNH in the most recent LNH Financial
Statements.

Section 3.13 TAX AUDITS. Except as disclosed in LNH
SEC Reports or in the Disclosure Schedule, (a) no audit of any material Return
of LNH or any Subsidiary is currently in progress nor has LNH or any Subsidiary
been notified that such an audit is contemplated by any taxing authority, (b)
neither LNH nor any Subsidiary has extended any statute of limitations with
respect to the period for assessment of any federal, state or local tax, (c)
neither LNH nor any Subsidiary contemplates the filing of an amendment to any
Return, which amendment would have a Material Adverse Effect on LNH and its
Subsidiaries, and (d) neither LNH nor any Subsidiary has any actual or
potential material liability for any tax obligation of any taxpayer (including,
without limitation, any affiliated group of corporations or other entities
which included LNH or any Subsidiary during a prior period) other than LNH or
its Subsidiaries. Except as disclosed in the LNH SEC Reports or the Disclosure
Schedule, there are no material tax claims pending against LNH or any
Subsidiary, there are no material tax claims threatened to be asserted against
LNH or any Subsidiary, and there are no material issues which have been raised
in prior periods or audits which by application of similar principles are
expected to result in a material tax claim for any other period. For purposes
of this Section 3.12, "tax" and "taxes" shall include all income, gross
receipt, franchise, excise, real and personal property, sales, ad valorem,

9
<PAGE> 110
employment, withholding and other taxes imposed by any foreign, federal, state,
municipal, local or other Governmental Authority, including assessments in the
nature of taxes.

Section 3.14 UNDISCLOSED LIABILITIES. LNH and its
Subsidiaries are not liable for or subject to any material Liabilities (as
hereinafter defined), except (a) Liabilities adequately disclosed or reserved
for in the most recent LNH Financial Statements and not heretofore paid or
discharged, (b) Liabilities under any contract, commitment or agreement
specifically disclosed on the Disclosure Schedule, none of which Liabilities
under any such contract, commitment or agreement was required under generally
accepted accounting principles consistently applied to have been adequately and
specifically disclosed or reserved for in the most recent LNH Financial
Statements, or (c) Liabilities incurred, consistent with past practice, in or
as a result of the ordinary course of business of LNH, and in accordance with
this Agreement, since the date of the most recent LNH Financial Statements. As
used in this Agreement, the term "Liability" shall include any direct or
indirect liability, indebtedness, obligation, guarantee or endorsement (other
than endorsements of notes, bills and checks presented to banks for collection
or deposit in the ordinary course of business), whether known or unknown,
accrued, absolute, contingent or otherwise.

Section 3.15 NO DEFAULT; COMPLIANCE.

(a) Except as set forth in the Disclosure
Schedule, neither LNH nor any of its Subsidiaries is in default under, and no
condition exists that with notice or lapse of time or both would constitute a
default under, (i) any mortgage, loan agreement, indenture, evidence of
indebtedness or other instrument evidencing borrowed money to which LNH or any
of its Subsidiaries is a party or by which either LNH or any of its
Subsidiaries or any of its properties is bound, (ii) any judgment, order or
injunction of any court, arbitrator or governmental agency or (iii) any other
agreement, contract, lease, license or other instrument, which default or
potential default might reasonably be expected to have a Material Adverse
Effect.

(b) Except as set forth in the Disclosure
Schedule, LNH and each of its Subsidiaries has complied with all laws,
regulations, orders, judgments or decrees of any federal or state court or
governmental authority applicable to its business and operations, the
non-compliance with which might reasonably be expected to have a Material
Adverse Effect.

Section 3.16 CONTRACTS AND COMMITMENTS. Except as
listed and described in the Disclosure Schedule, to the best of its knowledge,
neither LNH nor any of its Subsidiaries is a party to, nor is it or any of its
assets bound by, any written or oral:

(a) contract with any present
or former shareholder, director, officer, employee or
consultants;

(b) contract with any labor
union or other representative of employees;

10
<PAGE> 111
(c) contract for the future
purchase of, or payment for, supplies or products, or for the
performance of services by a third party, involving payment or
potential payment by LNH of $25,000 or more under any one
contract or series of related contracts;

(d) any contract, including,
without limitation, any outstanding quotations, bids or
proposals, to sell goods or to perform services in an
aggregate amount in excess of $25,000;

(e) distributorship,
representative or sales agency agreement, contract or
commitment;

(f) conditional sale agreement
or lease under which LNH is either the seller or purchaser,
lessor or lessee, involving annualized payments or potential
payments by or to LNH that are in excess of $25,000;

(g) contract (including, without
limitation, any note, debenture, bond, conditional sale or
equipment trust agreement, letter of credit agreement or loan
agreement) for the borrowing or lending of money (including,
without limitation, those to or from officers, directors or
shareholders of LNH, or any affiliates or members of their
immediate families, for a line of credit, or for a guarantee,
security, indemnitee, pledge or undertaking of the
indebtedness or obligations of any other person);

(h) contract for any charitable
or political contribution;

(i) contract for any capital
expenditure involving future payments, which, together with
future payments under all other existing contracts for the
same capital project, are in excess of $25,000;

(j) contract limiting or
restraining LNH from engaging or competing in any lines of
business with any person, nor is any officer or employee of
LNH subject to any such agreement, contract or commitment;

(k) license, franchise,
distributorship or other contract relating in whole or in part
to any ideas, technical assistance or other know-how of or
used by LNH;

(l) contract which is expected
to continue for more than six months from the date hereof;

(m) contract not made in the
ordinary course of business; or

11
<PAGE> 112
(n) any guaranty, direct or
indirect, of any contract, lease or agreement entered into by
LNH, any of its Subsidiaries, their officers or directors.

(Each of the foregoing is referred to herein as a "Contract".) Except as may
be disclosed on the Disclosure Schedule, each of the Contracts listed on the
Disclosure Schedule is valid and enforceable in accordance with its terms; LNH
and, to the best of LNH's knowledge, the other parties thereto are in
substantial compliance with the provisions thereof; except as may be disclosed
on the Disclosure Schedule, neither LNH nor any other party is (or, by reason
of the consummation of the transactions contemplated by this Agreement, will
be) in default in the performance, observance or fulfillment of any obligation,
covenant or condition contained therein and no event has occurred or is
anticipated to occur (including the consummation of the transactions
contemplated by this Agreement) which with or without the giving of notice or
lapse of time, or both, would constitute a default or give the right of
termination thereunder; furthermore, except as may be disclosed on the
Disclosure Schedule, no such Contract contains any contractual requirement with
which there is a reasonable likelihood that either (i) LNH or any other party
thereto will be unable to comply or (ii) compliance therewith by LNH will have
a Material Adverse Effect on LNH and its Subsidiaries, taken as a whole.
Except as set forth in the Disclosure Schedule, neither LNH nor any of its
officers has made any oral commitments or has any oral understandings which may
be material to LNH.

Section 3.17 COMPLIANCE WITH PERMITS. To the best of
LNH's knowledge, all necessary governmental certificates, consents, permits,
licenses or other authorizations with regard to the ownership or operation by
LNH or its Subsidiaries of its properties and assets have been obtained and no
violation exists in respect of such licenses, permits or authorizations, except
where the failure to obtain and hold such permits, or any violation thereof by
LNH or its Subsidiaries, would not reasonably be expected to have a Material
Adverse Effect. None of the documents and materials filed with or furnished to
any Governmental Authority with respect to the properties, assets or business
of LNH or its Subsidiaries contains any untrue statement of a material fact or
fails to state a material fact necessary to make the statements therein not
misleading.

Section 3.18 TITLE TO PROPERTY. Except as disclosed on
the Disclosure Schedule, LNH and each of its Subsidiaries has good and
marketable title, free and clear (except as indicated in the most recent LNH
Financial Statements and liens for current taxes not yet due and payable), of
all security interests, liens, encumbrances and encroachments of a material
nature, to its property and assets that are material to LNH's business.

Section 3.19 INSURANCE. The Disclosure Schedule sets
forth a complete and accurate list and description of all insurance policies in
force naming LNH, any of its Subsidiaries or any employees of any of them as an
insured or beneficiary or as a loss payable payee or for which LNH or any of
its Subsidiaries has paid or is obligated to pay all or part of the premiums.
Neither LNH nor any of its Subsidiaries has received notice of any pending or
threatened termination or retroactive premium increase with respect thereto,
and LNH and its Subsidiaries are in compliance with all conditions contained
therein, the noncompliance with which could result in the termination of
insurance coverage or increased

12
<PAGE> 113
premiums for prior or future periods. There are no pending material claims
against such insurance by LNH or any of its Subsidiaries as to which insurers
have denied liability, no defenses provided by insurers under reservations of
rights, and no material claim under such insurance that has not been properly
filed by LNH or any of its Subsidiaries.

Section 3.20 CONTROL SHARE PROVISIONS INAPPLICABLE.
The Merger will not be subject to Sections 3-601 et. seq. of the Maryland Law
concerning special voting requirements for transactions with interested
stockholders and Sections 3-701 et. seq. of the Maryland Law concerning the
voting rights of certain control shares.

Section 3.21 REPRESENTATIONS AND WARRANTIES CONTINUING.
The representations and warranties set forth herein shall be true and correct
on the date hereof and at all times prior to the Effective Time as if made from
time to time, including, without limitation, at the Effective Time.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF EASTGROUP AND SUB

EastGroup and Sub, jointly and severally, represent and
warrant to LNH as follows:

Section 4.1 ORGANIZATION AND QUALIFICATION. EastGroup
is a real estate investment trust duly organized, validly existing and in good
standing under the laws of the State of Maryland and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland. All Subsidiaries of EastGroup are legal entities that are duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation. Each of EastGroup and its
Subsidiaries has all requisite power and authority to own or operate its
properties and conduct its business as it is now being conducted. EastGroup
and each of its Subsidiaries is duly qualified and in good standing as a
foreign corporation or entity authorized to do business in each of the
jurisdictions in which the character of the properties owned or held under
lease by it or the nature of the business transacted by it makes such
qualification necessary, except where the failure to be so qualified and in
good standing would not have a Material Adverse Effect on EastGroup or such
Subsidiary.

Section 4.2 CAPITALIZATION; SUBSIDIARIES.

(a) The authorized capital stock of EastGroup
consists of 10,000,000 shares of beneficial interest, par value $1.00 per
share. As of December 19, 1995, 4,231,656 shares of beneficial interest were
issued are outstanding and no shares held in treasury. Neither EastGroup nor
any Subsidiary has any shares of its capital stock reserved for issuance,
except for 300,000 shares of beneficial interest of EastGroup issuable pursuant
to employee and director stock options. No other options, warrants or other
securities convertible into capital stock of EastGroup are outstanding. All
issued and outstanding shares of beneficial interest of EastGroup are validly
issued, fully paid, non-assessable and free of preemptive rights.

13
<PAGE> 114
(b) The Disclosure Schedule sets forth the
name, the number of shares of authorized capital stock and the number of issued
and outstanding shares of capital stock or other indicia of ownership of each
direct or indirect Subsidiary of EastGroup. Except as set forth in such
schedule, all of the outstanding shares of capital stock of each of such
Subsidiaries are owned, directly or indirectly, by EastGroup, beneficially and
of record. All of such shares of capital stock of the Subsidiaries are owned
free and clear of all liens, charges, encumbrances, rights of others,
mortgages, pledges or security interests, and are not subject to any agreements
or understandings among any persons with respect to the voting or transfer of
such shares. There are no outstanding subscriptions, options, convertible
securities, warrants or claims of any kind issued or granted by or binding on
EastGroup and Sub to purchase or otherwise acquire any security of or equity
interest in any of such Subsidiaries. All of the outstanding shares of capital
stock of each such Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable, and none has been issued in violation of the
preemptive rights of any stockholder.

Section 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
EastGroup and Sub have all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Trustees of EastGroup and the Board of Directors of Sub and by
EastGroup as sole shareholder of Sub, and no other corporate proceedings on the
part of EastGroup and Sub are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by EastGroup and Sub and constitutes a valid and
binding agreement of EastGroup and Sub, enforceable against EastGroup and Sub
in accordance with its terms.

Section 4.4 SEC REPORTS. To the best of its
knowledge, EastGroup has filed all required forms, reports and documents with
the SEC ("EastGroup SEC Reports") required to be filed by it pursuant to the
federal securities laws and the SEC rules and regulations thereunder, all of
which have complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, and the rules and interpretive
releases promulgated thereunder. None of such EastGroup SEC Reports, including
without limitation any financial statements, notes, or schedules included
therein, at the time filed, contained or contains, or, if to be filed in the
future will contain, any untrue statement of a material fact, or omitted, omits
or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

Each of the consolidated financial statements in or
incorporated by reference into the EastGroup SEC Reports is fairly stated as of
its date (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments), and is presented in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as may be noted therein; and independent certified public
accountants for EastGroup have rendered or will render an unqualified opinion
with respect to each audited financial statement included in the EastGroup SEC
Reports or, if qualified, such qualification is reasonably satisfactory to LNH.
The consolidated financial statements

14
<PAGE> 115
included or to be included in the EastGroup SEC Reports are hereinafter
sometimes collectively referred to as the "EastGroup Financial Statements."

Section 4.5 PROXY STATEMENTS/PROSPECTUS. The Proxy
Statement/Prospectus required for the consummation of the Merger will comply in
all material respects with the Securities Act and the Exchange Act, except that
no representation will be made by EastGroup with respect to information
supplied in writing by LNH or any affiliate of LNH specifically for inclusion
in the Proxy Statement/Prospectus. None of the information relating to
EastGroup and its Subsidiaries supplied in writing by EastGroup specifically
for inclusion in the Proxy Statement/Prospectus shall, at the time the Proxy
Statement/Prospectus is mailed or at the time of the Special Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

Section 4.6 CONSENTS AND APPROVALS; NO VIOLATION.
Except as described in the Disclosure Schedule, neither the execution and
delivery of this Agreement by EastGroup and Sub nor the consummation of the
transactions contemplated hereby nor compliance by EastGroup and Sub with any
of the provisions hereof will (a) conflict with or result in any breach of any
provision of the Declaration of Trust, as amended or Trustees Regulations of
EastGroup or the Articles of Incorporation and Bylaws of any Subsidiary, (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except (i) pursuant to the
Securities Act and the Exchange Act, (ii) the filing of the Articles of Merger
pursuant to the Maryland Law, (iii) such filings and approvals as may be
required under the "blue sky," takeover or securities laws of various states,
or (iv) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the aggregate have
a Material Adverse Effect, (c) result in a default (with or without due notice
or lapse of time or both) (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, EastGroup Contract (as defined in
Section 4.16), license, agreement or other instrument or obligation to which
EastGroup or any of its Subsidiaries is a party or by which EastGroup, any of
its Subsidiaries or any of their respective assets may be bound, except for
such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which, in the
aggregate, would not have a Material Adverse Effect, (d) result in the creation
or imposition of any lien, charge or other encumbrance on the assets of
EastGroup or any of its Subsidiaries, which would have a material Adverse
Effect on EastGroup or any of its Subsidiaries or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to EastGroup, any of
its Subsidiaries or any of their respective assets, except for violations which
would not in the aggregate have a Material Adverse Effect.

Section 4.7 LITIGATION, ETC. Except as described in
the Disclosure Schedule, (a) there is no action, claim, or proceeding pending
or, to the knowledge of EastGroup and Sub, threatened, to which EastGroup or
any of its Subsidiaries is or would be a party before any court or Governmental
Authority acting in an adjudicative capacity or any arbitrator or arbitration
tribunal with respect to which there is a reasonable likelihood of a

15
<PAGE> 116
determination having, or which, insofar as reasonably can be foreseen, in the
future would have a Material Adverse Effect on EastGroup and Sub, (b) neither
EastGroup nor any of its Subsidiaries is subject to any outstanding order,
writ, injunction or decree having, or which, insofar as reasonably can be
foreseen, in the future would have a Material Adverse Effect on EastGroup and
Sub, and (c) there have been no claims made or actions or proceedings brought
against any officer, trustee or director of EastGroup and Sub arising out of or
pertaining to any action or omission within the scope of his or her employment
or position with EastGroup and Sub, which claim, action or proceeding would
involve a Material Adverse Effect on EastGroup and Sub taken as a whole. All
litigation and other administrative, judicial or quasi-judicial proceedings to
which EastGroup or Sub is a party or to which it has been threatened to
EastGroup's knowledge to be made a party, are described in the Disclosure
Schedule.

Section 4.8 CHANGES. Except as expressly contemplated
by this Agreement or as reflected in the Disclosure Schedule or in the
EastGroup SEC Reports, since December 31, 1994, EastGroup and the Subsidiaries
have conducted their business only in the ordinary and usual course, and,
except as set forth in the Disclosure Schedule or in the EastGroup SEC Reports,
none of the following has occurred:

(a) any material adverse change in the
condition (financial or other), results of operations, business, assets and
employee relations of EastGroup and its Subsidiaries, taken as a whole;

(b) any change in accounting methods,
principles or practices by EastGroup materially affecting its assets,
liabilities or business, except insofar as may have been required by a change
in generally accepted accounting principles;

(c) any damage, destruction or loss, whether
or not covered by insurance, materially adversely affecting the condition
(financial or other), business or operations of EastGroup and its Subsidiaries,
taken as a whole;

(d) any declaration, setting aside or payment
of dividends or distributions in respect of the shares of beneficial interest
of EastGroup (other than those dividends publicly announced, declared and paid
by EastGroup), or any redemption, purchase or other acquisition of any of its
securities;

(e) any issuance by EastGroup and Sub of, or
commitment of EastGroup and Sub to issue, any shares of capital stock or
securities convertible into or exchangeable or exercisable for shares of
capital stock;

(f) any entry by EastGroup and Sub or any of
EastGroup's Subsidiaries into any commitment or transaction material to the
condition (financial or other), business or operations of EastGroup and its
Subsidiaries, taken as a whole, which is not in the ordinary course of business
and consistent with past practice;

(g) any revaluation by EastGroup or any of its
Subsidiaries of any of their respective assets, including without limitation,
writing down the value of assets

16
<PAGE> 117
or writing off notes or accounts receivables other than in the ordinary course
of business and consistent with past practice;

(h) any action taken by EastGroup or any of
its Subsidiaries of the type referred to in Section 5.1;

(i) any agreement by EastGroup and Sub to do
any of the things described in the preceding clauses (a) through (h) other than
as expressly contemplated or provided for herein; and

(j) any waiver by EastGroup or any of its
Subsidiaries of any rights that, singularly or in the aggregate, are material
to the business, assets, financial condition or results of operation of
EastGroup and its Subsidiaries, taken as a whole.

Section 4.9 PROPERTY AND ENVIRONMENTAL MATTERS.

(a) Except as disclosed in the Disclosure
Schedule, to the best knowledge of EastGroup and Sub, the location,
construction, occupancy, operation, condition and use of the real property now
or previously owned, leased by or in the possession of EastGroup or its
Subsidiaries (the "EastGroup Real Property"), the facilities or improvements
located thereon and the operations and practices of EastGroup and its
Subsidiaries are or at the time of ownership, lease or possession were in
substantial compliance with all Environmental Laws and any restrictive covenant
or deed restriction (recorded or otherwise) affecting EastGroup Real Property,
including, without limitation, all applicable zoning ordinances and building
codes in effect at the time of improvements to such EastGroup Real Property,
flood disaster and occupational health and safety laws.

(b) Neither EastGroup nor any of its
Subsidiaries is subject to any material liability or obligation, including
investigatory or remedial obligations under any Environmental Law or the common
law with respect to Hazardous Materials relating to (i) the environmental
conditions on, under or about EastGroup Real Property, including, without
limitation, the air, soil, surface water and groundwater conditions at the
EastGroup Real Property, or (ii) the use, management, handling, transport,
treatment, generation, storage, disposal, release or discharge of any Hazardous
Materials.

(c) With the exception of those Hazardous
Materials and activities described in the Disclosure Schedule, to the best
knowledge of EastGroup and Sub, no portion of the EastGroup Real Property is
being used, nor has been used by EastGroup or its Subsidiaries at any previous
time, for the generation, storage, treatment, processing, disposal or other
handling of any Hazardous Materials.

(d) Neither EastGroup nor any of its
Subsidiaries has received any notice or is aware of any existing condition
(including the condition of the EastGroup Real Property, whether or not caused
by EastGroup or any Subsidiary) or the practice of the businesses conducted by
EastGroup or its Subsidiaries which forms or could form the basis of any claim,
action, suit, proceeding, administrative consent or agreement, litigation or
settlement, hearing or investigation, arising out of the manufacture,
processing, distribution,

17
<PAGE> 118
use, treatment, storage, spill, disposal, transport, or handling of, or the
emission, discharge, release or threatened release into the environment of, any
Hazardous Material which, if decided against EastGroup or any of its
Subsidiaries, would have a Material Adverse Effect on EastGroup and its
Subsidiaries.

(e) EastGroup and its Subsidiaries have listed
and described on the Disclosure Schedule (i) all treatment, storage and
disposal facilities, as defined in the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Section 6901, et seq., as amended, or under similar
Environmental Laws, and all underground storage tanks, whether empty, filled,
or partially filled with any substance, that are located on the EastGroup Real
Property; (ii) the current and past Hazardous Material disposal practices of
EastGroup and its Subsidiaries; and (iii) any environmental assessment or
environmental audit reports delivered to EastGroup or its Subsidiaries.

(f) To the best of their knowledge, EastGroup
and its Subsidiaries have obtained or applied for all permits, licenses,
registrations, notifications and similar authorizations required under
Environmental Laws for the conduct of EastGroup's or its Subsidiaries' business
or relating to EastGroup's Real Property, the facilities, improvements or
equipment located thereon. The Disclosure Schedule includes a list of the
Environmental Permits.

(g) Except as identified in the Disclosure
Schedule, EastGroup and its Subsidiaries are in substantial compliance with all
terms and conditions of the Environmental Permits and no proceeding is pending
for the revocation of any Environmental Permit.

(h) No portion of the EastGroup Real Property
has been designated as a covered facility under CERCLA or included on any
similar "superfund" list or registry or has been made subject to any
environmental lien pursuant to any Environmental Law or by any Governmental
Authority.

Section 4.10 COMPLIANCE WITH ERISA. EastGroup, each of
its Subsidiaries and all EastGroup Employee Benefit Plans, that cover any of
its or their employees (which EastGroup Employee Benefit Plans are listed on
the Disclosure Schedule), comply with all laws, requirements and orders under
ERISA and the Code, the breach or violation of which would have a Material
Adverse Effect on EastGroup and its Subsidiaries, taken as a whole; the present
value of all of the assets of each of its EastGroup Employee Benefit Plans that
is subject to Title VI of ERISA equals or exceeds the present value of all of
the benefits accrued under each such EastGroup Employee Benefit Plan as of the
end of the most recent plan year with respect to such plan ending prior to the
date hereof, calculated on the basis of the actuarial assumptions used in the
last actuarial evaluation for each such plan; none of the employees of
EastGroup or any of its Subsidiaries is covered by a collective bargaining
agreement; neither EastGroup nor any of its Subsidiaries has ever contributed
to a "multiemployer plan" as defined in Section 3(37) of ERISA; neither the
EastGroup Employee Benefit Plans nor any fiduciary or administrator thereof has
engaged in a "prohibited transaction" as defined in Section 406 of ERISA or,
where applicable, Section 4975 of the Code for which no exemption is
applicable, that may have any Material Adverse Effect on

18
<PAGE> 119
EastGroup and its Subsidiaries, taken as a whole, nor have there been any
"reportable events" as defined in Section 4043 of ERISA for which the
thirty-day notice has not been waived.

Section 4.11 REIT STATUS. For all years in which it
has been in existence, EastGroup has continuously been organized and operated
in conformity with the requirements for qualification as a real estate
investment trust under the Code. EastGroup has no intention of changing its
operations or engaging in activities which adversely affect its continued
qualification as, a real estate investment trust.

Section 4.12 TAXES, TAX RETURNS.

(a) EastGroup will deliver to LNH copies of
the federal income tax returns of EastGroup for each of the last three fiscal
years and all schedules and exhibits thereto. Except as set forth on the
Disclosure Schedule, each of EastGroup and its Subsidiaries has duly and timely
filed in correct form all Returns required to be filed by it and its
Subsidiaries on or prior to the date hereof (all such Returns to the best
knowledge of EastGroup being accurate and complete in all material respects)
and, to the best knowledge of EastGroup, has duly paid or made provision for
the payment of all taxes and other governmental charges which have been
incurred or are due or claimed to be due from them by any governmental
authority (including, without limitation, those due in respect of their
properties, income, business, capital stock, franchises, licenses, sales and
payrolls) other than taxes or other charges (i) which are not yet delinquent or
are being contested in good faith and set forth in the Disclosure Schedule and
(ii) have not been finally determined. The liabilities and reserves for taxes
in the EastGroup Financial Statements are sufficient in the aggregate for the
payment of all unpaid federal, state and local taxes (including any interest or
penalties thereon), whether or not disputed or accrued, for the period ended
December 31, 1995 or for any year or period prior thereto, and for which
EastGroup or any of its Subsidiaries may be liable in its own right or as
transferee of the assets of, or successor to, any corporation, person,
association, partnership, joint venture or other entity.

(b) To the best knowledge of EastGroup, (i)
proper and accurate amounts have been withheld by EastGroup and its
Subsidiaries from their employees and others for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable federal, state or local laws and regulations, and proper due
diligence steps have been taken in connection with back-up withholding, (ii)
Returns which are accurate and complete in all material respects have been
filed by EastGroup and each of its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social Security and
unemployment taxes, and (iii) the amounts shown on such returns to be due and
payable have been paid in full, or adequate provision therefore has been
included by EastGroup in the EastGroup Financial Statements.

Section 4.13 TAX AUDITS. Except as disclosed in the
EastGroup SEC Reports or in the Disclosure Schedule, (a) no audit of any
material Return of EastGroup or any Subsidiary is currently in progress, nor
has EastGroup or any Subsidiary been notified that such an audit is
contemplated by any taxing authority, (b) neither EastGroup nor any Subsidiary
has extended any statute of limitations with respect to the period for
assessment of

19
<PAGE> 120
any federal, state or local tax, (c) neither EastGroup nor any Subsidiary
contemplates the filing of an amendment to any Return, which amendment would
have a Material Adverse Effect on EastGroup and its Subsidiaries, taken as a
whole, and (d) neither EastGroup nor any Subsidiary has any actual or potential
material liability for any tax obligation of any taxpayer (including, without
limitation, any affiliated group of corporations or other entities which
included EastGroup or any Subsidiary during a prior period) other than
EastGroup or its Subsidiaries. Except as disclosed in the EastGroup SEC
Reports or the Disclosure Schedule, there are no material tax claims pending
against EastGroup or any Subsidiary, there are no material tax claims
threatened to be asserted against EastGroup or any Subsidiary, and there are no
material issues which have been raised in prior periods or audits which by
application of similar principles are expected to result in a material tax
claim for any other period. For purposes of this Section 4.12, "tax" and
"taxes" shall include all income, gross receipt, franchise, excise, real and
personal property, sales, ad valorem, employment, withholding and other taxes
imposed by any foreign, federal, state, municipal, local or other Governmental
Authority, including assessments in the nature of taxes.

Section 4.14 UNDISCLOSED LIABILITIES. EastGroup and
its Subsidiaries are not liable for or subject to any material Liabilities
except (a) Liabilities adequately disclosed or reserved for in the most recent
EastGroup Financial Statements and not heretofore paid or discharged, (b)
Liabilities under any contract, commitment or agreement specifically disclosed
on the Disclosure Schedule, none of which Liabilities under any such contract,
commitment or agreement were required under generally accepted accounting
principles consistently applied to have been adequately and specifically
disclosed or reserved for in the most recent EastGroup Financial Statements, or
(c) Liabilities incurred, consistent with past practice, in or as a result of
the ordinary course of business of EastGroup, and in accordance with this
Agreement, since the date of the most recent EastGroup Financial Statements.

Section 4.15 NO DEFAULT; COMPLIANCE.

(a) Except as set forth in the Disclosure
Schedule, neither EastGroup nor any of its Subsidiaries is in default under,
and no condition exists that with notice or lapse of time or both would
constitute a default under, (i) any mortgage, loan agreement, indenture,
evidence of indebtedness or other instrument evidencing borrowed money to which
either EastGroup or any of its Subsidiaries is a party or by which either
EastGroup or any of its Subsidiaries or its properties is bound, (ii) any
judgment, order or injunction of any court, arbitrator or governmental agency
or (iii) any other agreement, contract, lease, license or other instrument,
which default or potential default might reasonably be expected to have a
Material Adverse Effect.

(b) Except as set forth in the Disclosure
Schedule, EastGroup and each of its Subsidiaries have complied with all laws,
regulations, orders, judgments or decrees of any federal or state court or
governmental authority applicable to their respective businesses and
operations, the non-compliance with which might reasonably be expected to have
a Material Adverse Effect.

20
<PAGE> 121
Section 4.16 CONTRACTS AND COMMITMENTS. Except as
listed and described in the Disclosure Schedule, to the best of EastGroup's
knowledge, neither EastGroup nor any of its Subsidiaries is a party to, nor are
they or their assets bound by any written or oral:

(a) contract with any present or
former stockholder, trustee, director, officer, employee or
consultants;

(b) contract with any labor
union or other representative of employees;

(c) contract for the future
purchase of, or payment for, supplies or products, or for the
performance of services by a third party, involving payment or
potential payment by EastGroup of $25,000 or more under any
one contract or series of related contracts;

(d) any contract, including,
without limitation, any outstanding quotations, bids or
proposals, to sell goods or to perform services in an
aggregate amount in excess of $25,000;

(e) distributorship,
representative or sales agency agreement, contract or
commitment;

(f) conditional sale agreement
or lease under which EastGroup is either the seller or
purchaser, lessor or lessee, involving annualized payments or
potential payments by or to EastGroup that are in excess of
$25,000;

(g) contract (including, without
limitation, any note, debenture, bond, conditional sale or
equipment trust agreement, letter of credit agreement or loan
agreement) for the borrowing or lending of money (including,
without limitation, those to or from officers, trustees or
shareholders of EastGroup, or any affiliates or members of
their immediate families, for a line of credit, or for a
guarantee, security, indemnitee, pledge or undertaking of the
indebtedness or obligations of any other person);

(h) contract for any charitable
or political contribution;

(i) contract for any capital
expenditure involving future payments, which, together with
future payments under all other existing contracts for the
same capital project, are in excess of $25,000;

(j) contract limiting or
restraining EastGroup from engaging or competing in any lines
of business with any person, nor is any officer or employee of
EastGroup subject to any such agreement, contract or
commitment;

21
<PAGE> 122
(k) license, franchise,
distributorship or other contract relating in whole or in part
to any ideas, technical assistance or other know-how of or
used by EastGroup;

(l) contract which is expected
to continue for more than six months from the date hereof;

(m) contract not made in the
ordinary course of business; or

(n) any guaranty, direct or
indirect, of any person of any contract, lease or agreement
entered into by EastGroup, any of its Subsidiaries or any of
their officers, trustees or directors.

(Each of the foregoing is referred to herein as a "EastGroup Contract.")
Except as may be disclosed on the Disclosure Schedule, each of the EastGroup
Contracts listed on the Disclosure Schedule is valid and enforceable in
accordance with its terms; EastGroup and, to the best of EastGroup's knowledge,
the other parties thereto are in substantial compliance with the provisions
thereof; except as may be disclosed on the Disclosure Schedule, neither
EastGroup nor any other party is (or by reason of the consummation of the
transactions contemplated by this Agreement, will be) in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained therein and no event has occurred or is anticipated to occur
(including the consummation of the transactions contemplated by this Agreement)
which with or without the giving of notice or lapse of time, or both, would
constitute a default or give the right of termination thereunder; furthermore,
except as may be disclosed on the Disclosure Schedule, no such contract
contains any contractual requirement with which there is a reasonable
likelihood that either (i) EastGroup or any other party thereto will be unable
to comply or (ii) compliance therewith by EastGroup will have a Material
Adverse Effect on EastGroup and its Subsidiaries taken as a whole. Except as
set forth in the Disclosure Schedule, neither EastGroup nor any of its officers
has made any oral commitments or has any oral understandings which may be
material to EastGroup.

Section 4.17 COMPLIANCE WITH PERMITS. To the best of
EastGroup's knowledge, all necessary governmental certificates, consents,
permits, licenses or other authorizations with regard to the ownership or
operation by EastGroup or its Subsidiaries of their respective properties and
assets have been obtained and no violation exists in respect of such licenses,
permits or authorizations, except where the failure to obtain and hold such
permits, or any violation thereby by EastGroup or its Subsidiaries, would not
reasonably be expected to have a Material Adverse Effect. None of the
documents and materials filed with or furnished to any Governmental Authority
with respect to the properties, assets or businesses of EastGroup or its
Subsidiaries contains any untrue statement of a material fact or fails to state
a material fact necessary to make the statements therein not misleading.

Section 4.18 TITLE TO PROPERTY. Except as disclosed on
the Disclosure Schedule, EastGroup and each of its Subsidiaries has good and
marketable title, free and clear (except as indicated in the most recent
EastGroup Financial Statements and liens for

22
<PAGE> 123
current taxes not yet due and payable), of all security interests, liens,
encumbrances and encroachments of a material nature, to its property and assets
that are material to EastGroup's businesses on a consolidated basis.

Section 4.19 INSURANCE. The Disclosure Schedule sets
forth a complete and accurate list and description of all insurance policies in
force naming EastGroup, any of its Subsidiaries or any employees of any of them
as an insured or beneficiary or as a loss payable payee or for which EastGroup
or any of its Subsidiaries has been paid or is obligated to pay all or part of
the premiums. Neither EastGroup nor its Subsidiaries has received notice of
any pending or threatened termination or retroactive premium increase with
respect thereto, and EastGroup and its Subsidiaries are in compliance with all
conditions contained therein, the noncompliance with which could result in the
termination of insurance coverage or increased premiums for prior or future
periods. There are no pending material claims against such insurance by
EastGroup or any of its Subsidiaries as to which insurers have denied
liability, no defenses provided by insurers under reservations of rights, and
no material claim under such insurance that has not been properly filed by
EastGroup or any of its Subsidiaries.

Section 4.20 SHARES OF BENEFICIAL INTEREST OF
EASTGROUP. The shares of beneficial interest of EastGroup to be issued in the
Merger will have been duly authorized and, when issued in accordance with the
terms of the Articles of Merger and this Agreement, will be validly issued and
fully paid and nonassessable, and no shareholder of EastGroup will have any
preemptive rights with respect thereto.

Section 4.21 REPRESENTATIONS AND WARRANTIES CONTINUING.
The representations and warranties set forth herein shall be true and correct
on the date hereof and at all times prior to the Effective Time as if made from
time to time, including, without limitation, at the Effective Time.

ARTICLE V.
COVENANTS

Section 5.1 CONDUCT OF BUSINESS OF LNH AND EASTGROUP.
Except as contemplated by this Agreement or disclosed in the Disclosure
Schedule, during the period from the date of this Agreement to the Effective
Time, LNH, LNH's Subsidiaries, EastGroup and EastGroup's Subsidiaries will each
conduct their operations according to their ordinary and usual course of
business and consistent with past practice. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement or
disclosed in the Disclosure Schedule, neither LNH or any of LNH's Subsidiaries
nor EastGroup or any of EastGroup's Subsidiaries will, prior to the Effective
Time, without the prior written consent of EastGroup and LNH (a) issue, sell or
pledge, or authorize or propose the issuance, sale or pledge of (i) additional
shares of capital stock of any class, or securities convertible into any such
shares, or any rights, warrants or options to acquire any such shares or other
convertible securities, other than pursuant to commitments outstanding at the
date hereof and referred to in Section 3.2 or 4.2, or (ii) any other securities
in respect of, in lieu of or in substitution for, capital stock outstanding on
the date hereof, (b) purchase or otherwise acquire, or propose to purchase or
otherwise acquire, any of its outstanding

23
<PAGE> 124
securities, (c) declare or pay any dividend or distribution on any shares of
its capital stock (except, in the case of EastGroup and LNH, EastGroup's and
LNH's regular quarterly dividend with respect to their shares ), (d) authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into an agreement in principle or an agreement with respect to, any
merger, consolidation or business combination (other than the Merger), any
acquisition of a material amount of assets or securities, any disposition of a
material amount of assets or securities or any material change in its
capitalization, or any entry into a material contract or any release or
relinquishment of any material contract rights, not in the ordinary course of
business, (e) propose or adopt any amendments to its charter or bylaws, (f)
enter into, assign or terminate, or amend in any material respect, any Contract
or EastGroup Contract, (g) acquire, dispose of, encumber or relinquish any
material asset (other than the sale of real properties with the consent of the
other parties, which consent shall not be unreasonably withheld), (h) waive,
compromise or settle any right or claim that would adversely affect the
ownership, operation or value of any asset, (i) make any material capital
expenditures other than pursuant to existing capital expenditure programs that
are disclosed in the Disclosure Schedule, (j) allow or permit the expiration,
termination or cancellation at any time prior to the Effective Time of any of
the insurance policies or coverages or surety bonds currently maintained by or
on behalf of EastGroup or LNH unless replaced with a policy, coverage or bond
having substantially the same coverage and similar terms and conditions, (k)
waive, settle or compromise any material litigation or other claim on a basis
materially adverse to LNH, LNH's Subsidiaries, EastGroup or EastGroup's
Subsidiaries, (l) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement untrue or incorrect, or (m) incur any indebtedness for borrowed money
(other than indebtedness in place at the date of this Agreement).

Section 5.2 ACCESS TO INFORMATION.

(a) Between the date of this Agreement and the
Effective Time, the parties will afford to each other and their authorized
representatives reasonable access (subject to tenants' rights) to the real
estate, offices, warehouses or other facilities and to the books and records of
such party and LNH's Subsidiaries and EastGroup's Subsidiaries, will permit the
parties and their representatives to make such reasonable inspections as they
may require and will cause their officers and those of LNH's Subsidiaries and
EastGroup's Subsidiaries to furnish the parties and their representatives with
such financial and operating data, environmental assessments and other
information with respect to the business and real property of the parties,
LNH's Subsidiaries and EastGroup's Subsidiaries as they and their
representatives may from time to time reasonably request. No inspection or
examination by either party will constitute a waiver of any claim against the
other party for misrepresentation or breach of this Agreement.

(b) The parties will hold and will cause their
representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process, or, in the opinion of counsel, by other
requirements of law, all documents and information concerning the parties
furnished to them and their representatives in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (i) in the public domain through no fault of the parties
or their

24
<PAGE> 125
representatives, or (ii) later lawfully acquired by the parties or their
representatives from other sources unless they or their representatives know
that such other sources are not entitled to disclose such information) and will
not release or disclose such information to any other person, except their
auditors, attorneys, financial advisors and other consultants and advisors in
connection with this Agreement, provided that such person shall have first been
advised of the confidentiality provision of this Section 5.2. If the
transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained except to the extent such information can be
shown to have been (iii) in the public domain through no fault of EastGroup,
Sub or LNH, as the case may be, or their respective representatives, or (ii)
later lawfully acquired by the parties or representatives from other sources,
and, if requested, either party will, and will cause its agents, auditors,
consultants, representatives and advisors to return to the other, or destroy,
all copies of written information furnished.

(c) Each of EastGroup and LNH agrees to
furnish the other at the time of filing with copies of all reports and filings
(including exhibits and schedules) filed by either party with the SEC between
the date hereof and the Closing.

Section 5.3 BEST EFFORTS. Subject to the terms and
conditions herein provided, and to the fiduciary duties of the Boards of
Trustees and Directors of the parties under applicable law, each of the parties
hereto agrees to use its best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and trustees and
directors of each party to this Agreement shall take all such necessary action.

Section 5.4 CONSENTS. EastGroup and LNH each will use
its best efforts to obtain such consents of third parties to agreements which
would otherwise be violated by any provisions hereof, to take all actions
necessary to effect the transactions contemplated hereby, and to make such
filings with Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement including, without limitation, (a) the vigorous
defense of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transaction contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or Governmental Authority
vacated or reviewed, and (b) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement.

Section 5.5 PUBLIC ANNOUNCEMENTS. Except as required
by law, neither party shall make any news releases or other public announcement
pertaining to the existence of this Agreement or the Merger without the prior
consent of the other party hereto. To the extent such a release or
announcement is required by law, the party making the same shall give the other
party advance notice of, and an opportunity to comment on, the proposed release
or announcement.

25
<PAGE> 126
Section 5.6 INDEMNIFICATION. If the Merger occurs,
then from and after its Effective Time EastGroup shall indemnify each person
who becomes an employee, agent, officer or trustee of EastGroup to the full
extent permitted by the Declaration of Trust, as amended, and Trustees
Regulations of EastGroup and permitted by law in respect of any claim arising
after the Effective Time in connection with such person's service as such. In
addition, LNH shall indemnify to the full extent of its assets and to the
fullest extent permitted by its Articles of Incorporation, as amended, and
Bylaws, as amended, and permitted by law, each person who held positions with
LNH prior to the Effective Time as an employee, agent, officer or director in
respect of any claim arising in connection with such person's service as such.
Any obligation of LNH hereunder shall be assumed by EastGroup to the extent of
(a) any distribution of assets from LNH to EastGroup or any affiliate of
EastGroup following the Merger and (b) any liability or obligation of such
person arising under this Agreement or in connection with the Merger. All
persons indemnified herewith are referred to as "Indemnified Parties." All
such indemnification provided for herein shall be to the fullest extent
authorized by law as now in effect or as hereafter amended (but, in the case of
any amendment, only to the extent that such amendment permits greater
indemnification rights than prior to such amendment) against any losses,
claims, damages, liabilities, costs, expenses (including legal fees and
disbursements of counsel), penalties, judgments and amounts paid in settlement
("Damages"), including but not limited to those based in contract, tort,
negligence, strict liability, or any theory of recovery, arising out of or
relating to any act, omission, transaction, cause of action, liability, debt or
obligation pertaining to (a) the fact that the Indemnified Party was an
officer, trustee, director, employee or agent of LNH or a Subsidiary of LNH or
EastGroup or a Subsidiary of EastGroup or (b) this Agreement or any of the
transactions contemplated hereby; provided, however, that (a) EastGroup and LNH
as appropriate will be entitled to participate in and, to the extent that they
may wish, to assume the defense of any action, with counsel reasonably
satisfactory to the Indemnified Party but if any Indemnified Party (or group
thereof) believes that, by reason of an actual or potential conflict of
interest, it is advisable for such Indemnified Party (or group thereof) to be
represented by separate counsel, such Indemnified Party (or group thereof) may
retain counsel reasonably satisfactory to EastGroup who will represent such
Indemnified Party (or group thereof) and EastGroup and Sub as appropriate shall
pay all reasonable fees and disbursements of such counsel promptly as
statements therefor are received, (b) the Indemnified Party, EastGroup and Sub
will cooperate with each other, and use their respective best efforts to
assist, in the vigorous defense of any such matter, and (c) EastGroup and Sub
shall not be liable for any settlement effected without its written consent,
which consent, however, shall not be unreasonably withheld.

Section 5.7 MEETINGS OF SHAREHOLDERS. LNH shall
promptly take all action necessary in accordance with applicable law and its
Articles of Incorporation, as amended, and Bylaws, as amended, to convene the
Special Meeting to consider and vote on the Merger and this Agreement. LNH and
EastGroup shall prepare the Form S-4 Registration Statement, file it with the
SEC under the Securities Act as promptly as practicable after execution hereof,
and use all reasonable efforts to have the Form S-4 Registration Statement
declared effective by the SEC. As promptly as practicable after the Proxy
Statement/Prospectus has been cleared by the SEC, LNH shall mail the Proxy
Statement/Prospectus forming a part of the Form S-4 Registration Statement to
the shareholders of LNH as of the record date for the Special Meeting.

26
<PAGE> 127
Section 5.8 BLUE SKY. EastGroup shall use its best
efforts to obtain, prior to the SEC effective date of the Form S-4 Registration
Statement, all necessary state law or "blue sky" permits and approvals required
to carry out the transactions contemplated by this Agreement, provided that
EastGroup shall not be required by virtue thereof to submit to general
jurisdiction in any state.

ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE MERGER

Section 6.1 CERTIFICATES, OPINION OF COUNSEL.
Immediately prior to the Effective Time, LNH and EastGroup shall cause to be
delivered to each other or to have received the following:

(a) A certificate, dated the date of the
Effective Time, as the case may be, of the chief executive and chief financial
officer certifying that all representations and warranties made herein are true
and correct as of the date made and as of the Effective Time and that all
agreements or other actions required to be performed prior to the Effective
Time as a condition to consummating the Merger have been performed or taken and
such conditions satisfied in accordance with the terms of this Agreement.

(b) An opinion of counsel to LNH dated the
date of the Effective Time in form and substance satisfactory to each as to the
matters set forth in Sections 3.1 and 3.3 (except as to the Subsidiaries of
LNH, for which no opinion need be given), and such other matters as EastGroup
shall request, which opinion may contain customary exceptions and
qualifications.

(c) An opinion of counsel to EastGroup and Sub
dated the date of the Effective Time as to each of the matters set forth in
Sections 4.1 and 4.3 (except as to the Subsidiaries of EastGroup, for which no
opinion need be given), and such other matters as LNH may request, which
opinion may contain customary exceptions and qualifications.

(d) Jaeckle, Fleischmann & Mugel shall have
rendered an opinion, dated the Effective Time, in form and substance
satisfactory to LNH, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger will for federal income
tax purposes constitute a reorganization within the meaning of Section 368, or
any successor thereto, of the Code and that (except with respect to cash in
lieu of fractional share interests), (i) no gain or loss will be recognized by
a holder of Shares upon conversation in the Merger into shares of beneficial
interest of EastGroup, (ii) the basis of shares of beneficial interest of
EastGroup to be received in the Merger by a holder of Shares of LNH will be the
same as such holder's basis in the Shares of LNH exchanged therefore, and (iii)
the holding period of the Shares of beneficial interest of EastGroup to be
received in the Merger by a holder of such LNH Shares will include the period
during which such holder of such Shares held the Shares exchanged therefore,
provided that such Shares were held as a capital asset immediately prior to the
consummation of the Merger; in rendering such opinion, such tax advisor may
rely upon certificates of officers of EastGroup and LNH as to factual matters.

27
<PAGE> 128
(e) LNH shall have received an opinion of
Rauscher Pierce Refsnes, Inc. updated to the Effective Time to the effect that
the Merger and the transactions provided for herein are fair to the
shareholders of LNH from a financial point of view.

Section 6.2 OTHER CONDITIONS. The respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, where permissible, prior to the Effective Time of the following
conditions:

(a) This Agreement and the transactions
contemplated hereby shall have been approved by the affirmative vote of the
shareholders of LNH by the requisite vote.

(b) No statute, rule, regulation, executive
order, decree, or injunction shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction in the United States or
domestic governmental authority which prohibits or restricts the consummation
of the Merger.

(d) There shall have been no Material Adverse
Change in the business, properties or financial condition of EastGroup or LNH.

(e) All parties shall have delivered all
documents and taken all other actions required by this Agreement.

(f) The Form S-4 Registration Statement shall
have become effective and no stop order suspending the effectiveness of the
Form S-4 Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC or any state.

(g) EastGroup shall have received all state
securities laws and "blue sky" permits and other authorizations necessary to
consummate the transactions contemplated hereby and no stop order suspending
the effectiveness thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by any state.

(h) All representations and warranties of any
party shall be true and effective as of the Closing.

(i) Sub shall have incurred no material
indebtedness between its date of formation and the Closing except as
specifically contemplated by this Agreement.

28
<PAGE> 129
ARTICLE VII.
TERMINATION; AMENDMENTS; WAIVER

Section 7.1 TERMINATION. This Agreement may be
terminated and the Merger contemplated hereby may be abandoned at any time,
notwithstanding approval thereof by the shareholders of LNH, prior to the
Effective Time:

(a) by mutual written consent duly authorized
by the Boards of Trustees and Directors of LNH, EastGroup and Sub;

(b) by EastGroup or LNH if the Effective Time
shall not have occurred on or before May 15, 1996;

(c) by EastGroup or LNH if any court of
competent jurisdiction or other Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger or if litigation or proceedings shall be
pending that are reasonably likely to result in any of the foregoing;

(d) by LNH, if EastGroup or Sub shall not have
performed all obligations required to be performed by them under this
Agreement, except where any failures to perform would, in the aggregate, not
materially impair or delay the ability of LNH to effect the Merger;

(e) by EastGroup or Sub, if LNH shall not have
performed all obligations required to be performed by it under this Agreement,
except where any failures to perform would, in the aggregate, not materially
impair or delay the ability of EastGroup and Sub to effect the Merger;

(f) by LNH, if there shall have been a breach
by EastGroup or Sub of any of the covenants contained herein or if any
representation or warranty made by EastGroup or Sub is untrue in any material
respect; and

(g) by EastGroup or Sub, if there shall have
been a breach by LNH of any of the covenants contained herein or if any
representation or warranty made by LNH is untrue in any material respect.

Section 7.2 EFFECT OF TERMINATION. In the event of
the termination and abandonment of this Agreement pursuant to Section 7.1
subsections (a), (b) or (c) this Agreement shall forthwith become void and have
no effect, without any liability on the part of any party or its trustees,
directors, officers or shareholders, other than the provisions of Section
5.2(b), 7.5 and 8.9.

Section 7.3 AMENDMENT. This Agreement may be amended
by action taken by or on behalf of the Boards of Trustees and Directors of LNH,
EastGroup and Sub at any time before or after any adoption of this Agreement by
the shareholders of LNH but, after any such approval, no amendment shall be
made which decreases the Merger

29
<PAGE> 130
Consideration per Share or which adversely affects the rights of LNH's
shareholders hereunder without the approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of EastGroup, LNH and Sub.

Section 7.4 EXTENSION; WAIVER. At any time prior to
the Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Trustees and Directors of LNH, EastGroup and Sub, may (a)
extend the time for the performance of any of the obligations or other acts of
any other applicable party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein by any other applicable party
or in any document, certificate or writing delivered pursuant hereto by any
other applicable party, or (c) subject to the proviso contained in Section 7.3,
waive compliance with any of the agreements of any other applicable party or
with any conditions to its own obligations. Any agreement on the part of any
other applicable party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.

Section 7.5 REIMBURSEMENT OF EXPENSES. In the event
that either EastGroup or LNH terminates this Agreement and the Merger pursuant
to the provision of Section 7.1(d) or (e) hereof, (the party receiving notice
that it has failed to perform under Section 7.1(d) or (e) being referred to in
this section as the "Terminating Party"), the Terminating Party shall pay the
other party (for purposes of this Section 7.5, the "Non-Terminating Party") the
Non-Terminating Party's out-of-pocket expenses incurred in connection with this
transaction, including without limitation professional fees and travel
expenses, which shall be paid by wire transfer not later than three (3)
business days after the Non-Terminating Party notifies the Terminating Party of
the amount of such expenses. Payment of such expenses shall not preclude the
Non-Terminating Party from asserting any other claim it may have in law or in
equity against the Terminating Party. If the Terminating Party fails to pay
such expenses on the date provided herein, the Terminating Party shall pay
interest thereon from the due date thereof until the date paid at the rate of
ten percent per annum and shall reimburse the Non-Terminating Party all
reasonable attorneys' fees and other costs and expenses incurred in collecting
such expenses from the Terminating Party.

ARTICLE VIII.
MISCELLANEOUS

Section 8.1 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties made in this Agreement shall
not survive beyond the Effective Time. This Section 8.1, however, shall not
limit any covenant or agreement of the parties hereto, which by its terms
contemplates performance after the Effective Time.

Section 8.2 BROKERAGE FEES; COMMISSIONS AND EXPENSES.
LNH hereby represents and warrants to EastGroup with respect to LNH, and
EastGroup hereby represents and warrants to LNH with respect to EastGroup, that
no person or entity is entitled to receive from LNH or EastGroup, respectively,
any investment banking, brokerage or finder's fee or fees for financial
consulting or advisory services (except the fee for the fairness opinions) in
connection with this Agreement or the transactions contemplated hereby. Other

30
<PAGE> 131
costs, expenses and liabilities which may be incurred in connection with the
consummation of this Agreement or the Merger, such as, for example and without
limitation, the cost of professional fees shall be paid by the party incurring
the cost, except as contemplated by Section 7.5.

Section 8.3 ENTIRE AGREEMENT; ASSIGNMENT. This
Agreement (a) constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise.

Section 8.4 VALIDITY. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, each of
which shall remain in full force and effect.

Section 8.5 NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given when (i) delivered in person or (ii) on the
fifth business day following the day duly sent by facsimile telegram, telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:

If to LNH:

LNH REIT, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201-2195
Attention: Leland R. Speed,
Chief Executive Officer

with a copy (which shall not affect the validity of
notice hereunder) to:

Butler, Snow, O'Mara, Stevens & Cannada
17th Floor, Deposit Guaranty Plaza
210 East Capitol Street, P.O. Box 22567
Jackson, MS 39225-2567
Attention: Daniel G. Hise, Esq.

If to EastGroup or Sub:

EastGroup Properties
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201-2195
Attention: David H. Hoster II, President

31
<PAGE> 132
with a copy (which shall not affect the validity of
notice hereunder) to:

Jaeckle, Fleischmann & Mugel
800 Fleet Bank Building
Twelve Fountain Plaza
Buffalo, New York 14202
Attention: Joseph P. Kubarek, Esq.

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).

Section 8.6 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.

Section 8.7 JURISDICTION AND VENUE. The parties agree
that the courts of the State of Mississippi shall have personal jurisdiction
over all parties to this Agreement and any action involving a dispute under
this Agreement shall have as its venue a court located in the State of
Mississippi.

Section 8.8 DESCRIPTIVE HEADINGS. The descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.

Section 8.9 COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.

Section 8.10 EXPENSES. Except as otherwise provided
herein, each of the parties shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial or other
consultants, investment bankers, accountants and counsel.

Section 8.11 CERTAIN DEFINITIONS.

(a) "Environmental Laws" shall mean any and
all laws, subsequent enactments, modifications and amendments, including,
without limitation, any foreign, federal, state and local laws, statutes,
ordinances, rules, regulations, permits, licenses, approvals, administrative
consent orders or agreements, interpretations, orders and decrees of courts or
Governmental Authorities relating to the protection of human health or the
environment, including, but not limited to, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Materials. Environmental Laws include, for example
and without limitation, the Resource Conservation and Recovery Act of 1976; the
Comprehensive Environmental Response, Cleanup and Liability Act of 1980
("CERCLA"); the Hazardous Materials Transportation Act; the Clean Water Act
(the Federal

32
<PAGE> 133
Water Pollution Control Act); the Toxic Substances Control Act; the Safe
Drinking Water Act; the Emergency Planning and Community Right-to-Know Act; the
United States Environmental Protection Agency's Underground Storage Tank
Regulations; all as amended and modified; and occupational health and safety,
flood control and sanitation laws.

(b) "Governmental Authority" shall mean the
United States, any foreign country, state, county, city or other political
subdivision, agency or instrumentality exercising executive, legislative,
judicial, regulatory or administration jurisdiction, over EastGroup, Sub, LNH,
LNH's Subsidiaries and EastGroup's Subsidiaries.

(c) "Hazardous Material" shall mean any
substance or material (i) which is or becomes defined as a hazardous waste,
hazardous substance, pollutant, contaminant or toxic substance or water under
any Environmental Law; (ii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, mutagenic or otherwise hazardous and is or becomes
regulated by any Governmental Authority; (iii) the presence of which requires
investigation or remediation under any Environmental Law or common law; or
(iv)the presence of which is deemed to constitute a nuisance, trespass or pose
a health or safety hazard to persons or neighboring properties.

(d) "Material Adverse Effect" shall mean any
adverse change in the financial condition, assets, business or operations of
any party which is material to such party taken as a whole.

(e) "Proxy Statement/Prospectus" shall mean
the document forming Part I of the Registration Statement on Form S-4 filed
with the SEC pursuant to the requirements of the Securities Act and the
Exchange Act.

(f) "Special Meeting" shall mean the special
meeting of the shareholders of LNH called pursuant to the Proxy
Statement/Prospectus to consider approval of the Merger.

(g) "Subsidiary" shall mean, when used with
reference to an entity, any corporation, a majority of the outstanding voting
securities of which are owned directly or indirectly by such entity. Such term
shall also refer to any other partnership, limited partnership, joint venture,
trust, or other business entity in which a party hereto owns a majority
interest.

Section 8.12 PERFORMANCE BY SUB. EastGroup agrees to
cause Sub to comply with its obligations hereunder and to cause Sub to
consummate the Merger as contemplated herein.

Section 8.13 DISCLOSURE SCHEDULE. If the Disclosure
Schedule becomes misleading in any respect, LNH and EastGroup shall notify the
other, in writing, of any facts making the Disclosure Schedule misleading;
provided, however, that no such notice shall be deemed to amend or modify the
representations and warranties herein.

33
<PAGE> 134
Section 8.14 PARTIES IN INTEREST. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person or persons any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.

34
<PAGE> 135
Appendix B
[logo]
RAUSCHER PIERCE REFSNES, INC.

G. CLYDE BUCK
Managing Director

December 21, 1995

LNH REIT, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201

Attention: Mr. N. Keith McKey
Senior Vice President, Chief Financial Officer and Secretary

Dear Mr. McKey:

You have asked us for our opinion as to the fairness from a financial
point of view to the shareholders of LNH REIT, Inc. ("LNH") of the consideration
to be received pursuant to the terms of a merger agreement between LNH and
EastGroup Properties ("EastGroup") whereby the shareholders of LNH would
receive a value of $8.10 for each share of LNH stock in the form of EastGroup
common stock (the "Exchange") based on the average of EastGroup's closing
market price for the 10 trading days prior to the Effective Date (as defined in
the Merger Agreement).

Rauscher Pierce Refsnes, Inc., as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquistions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements, and valuations for estate, corporate and other purposes.

1001 Fannin, Suite 700 - Houston, Texas 77002 - (713) 651-3354
Member New York Stock Exchange, Inc.
<PAGE> 136

LNH REIT, Inc.
December 21, 1995

Page 2

In arriving at our opinion, we have, among other things:

1. Reviewed a draft dated December 13, 1995 of an "Agreement and
Plan of Merger" between LNH and EastGroup;

2. Reviewed a draft dated December 13, 1995 of a Form S-4
registration statement for the merger of LNH into EastGroup;

3. Reviewed an analysis dated August 23, 1995 prepared by LNH, of
the values of assets and liabilties indicating a ratio of 0.375
for the Exchange;

4. Reviewed EastGroup's annual report and Form 10-K for the years
ended December 31, 1994 plus quarterly earnings reports on Form
10-Q for the quarters ended March 31, 1994; June 30, 1994;
September 30, 1994; March 31, 1995; June 30, 1995 and
September 30, 1995;

5. Reviewed quarterly earnings reports on Form 10-Q for LNH for
the quarters ended March 31, 1994; June 30, 1994; September
30, 1994; March 31, 1995; June 30, 1995 and September 30, 1995
plus LNH's annual report and Form 10-K for the year ended
December 31, 1994;

6. Reviewed LNH's Notice of Annual Meeting and Proxy Statement
dated April 27, 1995;

7. Reviewed EastGroup's Notice of Annual Meeting and Proxy
Statement dated April 27, 1995;

8. Reviewed LNH Board of Directors' Meeting file dated September
6, 1995, May 31, 1995 and March 21, 1995;

9. Reviewed EastGroup Properties Board of Trustees meeting file
dated September 6, 1995, June 1, 1995 and March 16, 1995;

10. Reviewed proforma financial statements for Form S-4;
<PAGE> 137
LNH REIT, Inc.
December 21, 1995
Page 3

11. Reviewed a liquidation value estimate for LNH in a memo
prepared by LNH management on November 8, 1995;

12. Discussed with management of LNH and EastGroup the outlook for
future operating results, the assets and liabilities of
both companies, material in the foregoing documents, and other
matters we considered relevant to our inquiry.

In our review and in arriving at our opinion, we have, with your
permission, (i) not independently verified any of the foregoing information
and have relied upon its being complete and accurate in all material respects,
and (ii) not made an independent evaluation or appraisal of specific real
estate holdings or other assets of LNH and EastGroup. Our opinion is provided
solely for your benefit in connection with the proposed transaction, according
to the terms of our engagement letter dated October 19, 1995.

Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the consideration to be received by the shareholders of LNH
pursuant to the proposed Exchange is fair to the shareholders of LNH from a
financial point of view.

RAUSCHER PIERCE REFSNES, INC.

By: /s/ Clyde Buck
------------------------------
G. Clyde Buck
Managing Director
<PAGE> 138
APPENDIX C

JAECKLE, FLEISCHMANN & MUGEL
ATTORNEYS AT LAW

FLEET BANK BUILDING TWELVE FOUNTAIN PLAZA BUFFALO, NEW YORK 14202-2292
TEL (716) 856-0600 FAX (716) 856-0432

TAX OPINION OF JAECKLE, FLEISCHMANN & MUGEL

February 26, 1996

LNH REIT, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201-2195

Ladies and Gentlemen:

We have acted as counsel to EastGroup Properties, a Maryland
real estate investment trust ("EastGroup"), in connection with the transactions
contemplated by the Agreement and Plan of Merger dated December 22, 1995 among
EastGroup, LNH REIT, Inc., a Maryland corporation ("LNH"), and EastGroup-LNH
Corporation, a Maryland corporation and wholly-owned subsidiary of EastGroup
("Sub"), (the "Agreement").

We have examined executed counterparts of the Agreement and
have examined such other documents and records as we have deemed necessary and
relevant for purposes hereof. We have relied on certificates of officers of
EastGroup and Sub and on certificates of officers of LNH as well as upon
information set forth in the Registration Statement on Form S-4 relating to the
transactions contemplated by the Agreement and on representations of the
parties set forth in the Agreement. We have assumed the genuineness of all
signatures, the authenticity of all documents and records submitted to us as
originals, the conformity to authentic original documents and records of all
documents and records submitted to us as copies, and the truthfulness of all
statements of fact contained therein.

In rendering our opinion, we have considered the applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations, pertinent judicial authorities, interpretive rulings of
the Internal Revenue Service and such other authorities as we have considered
necessary and relevant. Based on the foregoing and subject to the limitations
and assumptions set forth herein, and having due regard for such legal
considerations as we deem relevant, we are of the opinion that:

1. The merger of LNH with and into Sub (the "Merger"),
will constitute a reorganization within the meaning
of section 368(a) of the Code, and
<PAGE> 139
LNH REIT, Inc.
February 26, 1996
Page 2

EastGroup, LNH and Sub will each be a party to the
reorganization within the meaning of section 368(b)
of the Code.

2. No gain or loss will be recognized by EastGroup, LNH
or Sub in the Merger.

3. No gain or loss will be recognized by the holders of
shares of common stock, $0.50 par value per share, of
LNH ("LNH Shares"), upon their receipt of shares of
beneficial interest, $1.00 par value per share, of
EastGroup ("EastGroup Shares"), in exchange for their
LNH Shares, except that holders of LNH Shares who
receive cash proceeds from the sale of fractional
interests in EastGroup Shares will recognize gain or
loss equal to the difference between such proceeds
and the tax basis allocated to their fractional share
interests and such gain or loss will constitute
capital gain or loss if their LNH Shares are held as
a capital asset at the effective time of the Merger.

4. The aggregate tax basis of the EastGroup Shares
(including fractional share interests treated as
received) received by the holders of LNH Shares will
be the same as the aggregate tax basis of their LNH
Shares.

5. The holding period of the EastGroup Shares in the
hands of the holders of LNH Shares will include the
holding period of their LNH Shares, provided such LNH
Shares are held as a capital asset at the effective
time of the Merger.

Except as set forth above, we express no opinion as to the tax
consequences, whether federal, state, local, or foreign, to any party of the
Merger or of any transactions related to the Merger or contemplated by the
Agreement. This opinion is being furnished to you in connection with the
Merger and may not be used or relied upon for any other purpose. We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement and to its attachment as an exhibit to the Proxy Statement/Prospectus
contained therein, as well as to the reference to this opinion therein.

Very truly yours,

JAECKLE, FLEISCHMANN & MUGEL
<PAGE> 140
PART II
-------

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. 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 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 shareholders 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 Maryland law. 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.

II-1
<PAGE> 141
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed herewith (or incorporated by reference):

(2)(a) Agreement and Plan of Merger among EastGroup, Sub and LNH dated as of
December 22, 1995, attached to the Proxy Statement/Prospectus as
Appendix A. EastGroup agrees to furnish supplementally to the SEC upon
request a copy of any omitted schedule or exhibit to the Merger
Agreement.

(b) EastGroup's Annual Report on Form 10-K for the year ended December 31,
1995 (incorporated by reference).

(c) Amendment No. 2 to EastGroup's Registration Statement on Form S-2 (No.
33-70574) filed January 20, 1994 (incorporated by reference).

(3)(a) EastGroup's Restated Declaration of Trust (incorporated by reference to
Exhibit 3(a) to Amendment No. 1 to EastGroup's Registration Statement
on Form S-4 (No. 33-65337) filed on February 27, 1996).

(b) EastGroup's Trustees Regulations (incorporated by reference to Exhibit
3 of EastGroup's 1980 Annual Report on Form 10-K).

(c) Amendment to EastGroup's Trustees Regulations (incorporated by
reference to Exhibit 3 of EastGroup's 1980 Annual Report on Form 10-K).

(d) Amendment to EastGroup's Trustees Regulations (incorporated by
reference to Exhibit 3(d) of EastGroup's 1983 Annual Report on Form
10-K).

(5) Opinion of Jaeckle, Fleischmann & Mugel regarding legality of shares
being registered, filed herewith.

(8) Opinion of Jaeckle, Fleischmann & Mugel, as to federal income tax
consequences of the Merger, attached to the Proxy Statement/Prospectus
as Appendix C.

(10)(a) Amendment and Restatement of the Expense-Sharing Agreement among
Congress Street Properties, Inc., Eastover Corporation, EastGroup
Properties and The Parkway Company dated as of September 1, 1990
(incorporated by reference to Exhibit 10(a) of EastGroup's 1991 Annual
Report on Form 10-K).

(b) First Amendment to Amendment and Restatement of Expense-Sharing
Agreement among Congress Street Properties, Inc., Eastover Corporation,
EastGroup Properties and The Parkway Company dated as of October 1,
1993 (incorporated by reference to Exhibit 10B of EastGroup's
Registration Statement on Form S-2 (No. 33-70574) filed October 19,
1993).

(c) EastGroup Properties 1989 Incentive Plan (incorporated by reference to
Exhibit A of EastGroup's proxy statement dated April 26, 1991).

II-2
<PAGE> 142
(d) EastGroup Properties 1991 Trustees Stock Option Plan (incorporated by
reference to Exhibit B of EastGroup's proxy statement dated April 26,
1991).

(e) Agreement and Plan of Merger dated February 12, 1996 by and between
EastGroup and Copley Properties, Inc. (incorporated by reference to
Exhibit 10(e) to Amendment No. 1 to EastGroup's Registration Statement
on Form S-4 (No. 33-65337) filed on February 27, 1996).

(11) Statement regarding computation of earnings per share (incorporated by
reference to Exhibit (11) of EastGroup's 1993 Annual Report on Form
10-K).

(22) Subsidiaries of EastGroup (incorporated by reference to Exhibit 22 to
Amendment No. 1 to EastGroup's Registration Statement on Form S-4 (No.
33-65337) filed on February 27, 1996).

(23)(a) Consent of Ernst & Young LLP, filed herewith.

(b) Consent of KPMG Peat Marwick LLP, filed herewith.

(d) Consent of Rauscher Pierce Refsnes, Inc., filed herewith.

(e) Consent of Jaeckle, Fleischmann & Mugel, contained in Exhibit 5(a)
hereto.

(24) Powers of Attorney (incorporated by reference to Exhibit 24 to
EastGroup's Registration Statement on Form S-4 (No. 33-65337) filed on
December 22, 1995).

(28) Agreement of EastGroup to furnish the SEC with copies of instruments
defining the rights of holders of long-term debt (incorporated by
reference to Exhibit 28(e) of EastGroup's 1986 Annual Report on Form
10-K).

(99)(a) Opinion of Rauscher Pierce Refsnes, Inc. as to the fairness of the
transaction to LNH shareholders, attached as Appendix B to the Proxy
Statement/Prospectus.

(b) Form of proxy (incorporated by reference to Exhibit 99(b) to Amendment
No. 1 to EastGroup's Registration Statement on Form S-4 (No. 33- 65337)
filed on February 27, 1996).

II-3
<PAGE> 143
ITEM 22. UNDERTAKINGS

EastGroup, the undersigned registrant, hereby undertakes:

(1) To file, during any period during which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(b) 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;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment 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.

(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.

(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, 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 Securities and
Exchange Commission 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 trustee, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, 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 of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of this issue.

(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.

II-4
<PAGE> 144
(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
became effective.

II-5
<PAGE> 145
SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Jackson, State of
Mississippi, on March 27, 1996.

EASTGROUP PROPERTIES

By: /s/David H. Hoster II
-----------------------------------
David H. Hoster II, President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below by N. Keith McKey on March 27, 1996,
individually and as attorney-in-fact for the following persons:

</TABLE>

II-6

<PAGE> 1
EXHIBIT 5

JAECKLE, FLEISCHMANN & MUGEL
A T T O R N E Y S A T L A W

FLEET BANK BUILDING TWELVE FOUNTAIN PLAZA BUFFALO, NEW YORK 14202-2292
TEL (716) 856-0600 FAX (716) 856-0432

December 22, 1995

EastGroup Properties
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201-2195

Ladies and Gentlemen:

We are furnishing this opinion in connection with a
Registration Statement on Form S-4 (the "Registration Statement") filed by
EastGroup Properties ("EastGroup"), covering shares of beneficial interest,
$1.00 par value per share (the "Shares"), to be issued by EastGroup in
connection with the merger of EastGroup-LNH Corporation ("Sub") and LNH REIT,
Inc. ("LNH") under the terms of an Agreement and Plan of Merger dated as of
December 22, 1995 among EastGroup, Sub and LNH (the "Merger Agreement").

We have examined EastGroup's Restated Declaration of Trust, as
amended, and Trustees Regulations, as amended, such records of proceedings of
EastGroup as we deemed material, the Registration Statement and such other
documents as we deemed necessary for the purposes of this opinion.

Based on the foregoing, we are of the opinion that the Shares
have been duly authorized for issuance by all necessary corporate action and,
upon the issuance thereof in accordance with the terms of the Merger Agreement,
the Shares will be legally issued, fully paid and non-assessable.

Very truly yours,

JAECKLE, FLEISCHMANN & MUGEL

<PAGE> 1

Exhibit 23(a)

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-4, No. 33-65337) and
related prospectus of EastGroup Properties for the registration of 682,344
shares of EastGroup's shares of beneficial interest and to the incorporation by
reference therein 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.

Ernst & Young LLP

Jackson, Mississippi
March 28, 1996

<PAGE> 1

Exhibit 23(b)

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
March 27, 1996

<PAGE> 1

Exhibit 23(c)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
to the Board of Directors of Copley Properties, Inc. dated March 15, 1996,
included in or made a part of Amendment No. 2 of Registration Statement File
No. 33-65337.

Boston, Masschusetts
March 28, 1996

<PAGE> 1

Exhibit 23(d)

CONSENT OF RAUSCHER PIERCE REFSNES, INC.

On behalf of Rauscher Pierce Refsnes, Inc. ("RPR"), the undersigned
hereby consents to the inclusion of the opinion of RPR, dated as of December
21, 1995, as to the fairness, from a financial point of view, of the
consideration to be received by the shareholders of LNH REIT, Inc. ("LNH") in
the merger of LNH with and into a subsidiary of EastGroup Properties.

DATED: March 27, 1996

Sincerely,

/s/ G. Clyde Buck
-------------------------------------
G. Clyde Buck
Managing Director