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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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EASTGROUP PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 13-2711135
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
300 ONE JACKSON PLACE DAVID H. HOSTER II
188 EAST CAPITOL STREET PRESIDENT AND CHIEF EXECUTIVE OFFICER
JACKSON, MISSISSIPPI 39201-2195 300 ONE JACKSON PLACE
(601) 354-3555 188 EAST CAPITOL STREET
(Address, including zip code, and JACKSON, MISSISSIPPI 39201-2195
telephone number, including area (601) 354-3555
code, of registrant's principal (Name, address, including zip code,
executive offices) and telephone number, including
area code, of agent for service)
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Copies to:
JOSEPH P. KUBAREK, ESQ.
JAECKLE FLEISCHMANN & MUGEL, LLP
800 FLEET BANK BUILDING
TWELVE FOUNTAIN PLAZA
BUFFALO, NEW YORK 14202
(716) 856-0600
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plan, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than the securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Pursuant to Rule 429 under the Securities Act, the Prospectus constituting a
part of this Registration Statement is a combined Prospectus and relates to
equity securities of EastGroup Properties, Inc. registered pursuant to one other
Registration Statement on Form S-3 (No. 333-29193).
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2)(3) AMOUNT OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock(4)....................................
Preferred Stock(5)................................. $220,125,000
Depositary shares representing Preferred
Stock(6).........................................
Total.............................................. $220,125,000 $64,937(7)
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</TABLE>
(1) Any securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) The proposed maximum offering price (a) has been omitted pursuant to
Instruction II.D. of Form S-3 and (b) will be determined, from time to time,
by the Registrant in connection with the issuance by the Registrant of the
securities registered hereunder.
(3) The prospectus forming a part of this Registration Statement, as such
prospectus may be amended or supplemented from time to time (the
"Prospectus"), shall be deemed to relate to the $220,125,000 of securities
registered hereby and, pursuant to Rule 429 under the Securities Act, a
total of $29,875,000 of Common Stock, Preferred Stock, Depositary Shares
representing Preferred Stock and Debt Securities registered by EastGroup
Properties, Inc. ("EastGroup") on a Registration Statement on Form S-3 (No.
333-29193).
(4) Subject to footnote (1), there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from time to
time, by EastGroup. There is also being registered hereunder an
indeterminate number of shares of Common Stock that may be issued upon
conversion of Preferred Stock or Depositary Shares registered hereunder.
(5) Subject to footnote (1), there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold, from time
to time, by EastGroup.
(6) To be represented by Depositary Receipts representing an interest in all or
a specified portion of Preferred Stock.
(7) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
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EXPLANATORY NOTE
This Registration Statement relates to securities which may be offered from
time to time by EastGroup Properties, Inc. ("EastGroup"). This Registration
Statement contains a form of basic prospectus (the "Basic Prospectus") relating
to EastGroup which will be used in connection with an offering of securities by
EastGroup. The specific terms of the securities to be offered will be set forth
in a prospectus supplement relating to such securities (the "Prospectus
Supplement").
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION DATED , 1998
$250,000,000
EASTGROUP PROPERTIES, INC.
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
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EastGroup Properties, Inc. ("EastGroup") may from time to time offer in one
or more series or classes (i) shares of its common stock, par value $0.0001 per
share (the "Common Stock"); (ii) shares of its preferred stock, par value
$0.0001 per share (the "Preferred Stock"); and (iii) Preferred Stock represented
by depositary shares (the "Depositary Shares"); with an aggregate public
offering price of up to $250,000,000 in amounts, at prices and on terms to be
determined at the time of offering. The Common Stock, Preferred Stock and
Depositary Shares (collectively, the "Securities") may be offered, separately or
together, in one or more supplements to this Prospectus (each, a "Prospectus
Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable (i) in the case of Common Stock, any initial
public offering price; (ii) in the case of Preferred Stock, the specific
designation and stated value per share, any dividend, liquidation, redemption,
conversion, voting and other rights, and any initial public offering price; and
(iii) in the case of Depositary Shares, the fractional share of Preferred Stock
represented by each such Depositary Share. In addition, such specific terms may
include limitations on direct or beneficial ownership and restrictions on
transfer of the Securities, in each case as may be consistent with EastGroup's
Articles of Incorporation, as amended (the "Charter"), or as otherwise
appropriate to preserve the status of EastGroup as a real estate investment
trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by EastGroup, or to or through underwriters or dealers. If any agents or
underwriters are involved in the sale of any of the Securities, their names, and
any applicable purchase price, fee, commission or discount arrangement between
or among them, will be set forth, or will be calculable from the information set
forth, in the applicable Prospectus Supplement. See "Plan of Distribution." No
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such series of Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998.
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AVAILABLE INFORMATION
EastGroup is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by EastGroup may be inspected at, and,
upon payment of the Commission's customary charges, copies obtained from, the
Public Reference Section maintained by the Commission, 450 Fifth Street, N.W.,
Washington, DC 20549. Such reports, proxy statements and other information are
also available for inspection and copying at prescribed rates at the
Commission's regional offices in New York, New York (7 World Trade Center, 13th
Floor, New York, New York 10048) and in Chicago, Illinois (Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661-2511). The Commission
maintains a Web site (http://www.sec.gov) that also contains reports, proxy
statements and other information concerning EastGroup. In addition, the Common
Stock is traded on the New York Stock Exchange, Inc. ("NYSE") under the symbol
"EGP" and reports and other information can be inspected and copied at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
EastGroup has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations promulgated thereunder,
with respect to the Securities. This Prospectus constitutes the Prospectus of
EastGroup, filed as part of the Registration Statement. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits listed therein, which can be
inspected at the public reference facilities of the Commission noted above, and
copies of which can be obtained from the Commission at prescribed rates as
indicated above. Statements contained in this Prospectus as to the contents of
any contract or other documents are not necessarily complete, and in each
instance, reference is made to the copy of such contract or documents filed as
an exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated into this Prospectus by reference are the documents listed
below filed by EastGroup under the Exchange Act. Copies of any such documents,
other than exhibits to such documents, are available without charge to each
person to whom a copy of this Prospectus has been delivered upon written or oral
request of such person from EastGroup, 300 One Jackson Place, 188 East Capitol
Street, Jackson, Mississippi 39201-2195, Attention: Chief Financial Officer,
telephone number (601) 354-3555.
The following documents are hereby incorporated into this Prospectus by
reference and are made a part hereof:
(1) EastGroup Properties, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997 (Commission File No. 1-7094).
(2) EastGroup Properties, Inc.'s Proxy Material for its Annual Meeting
of Stockholders held on June 4, 1998 (Commission File No. 1-7094).
(3) EastGroup Properties, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 (Commission File No. 1-7094).
(4) EastGroup Properties, Inc.'s Current Report on Form 8-K dated
February 23, 1998 (Commission File No. 1-7094).
(5) EastGroup Properties, Inc.'s Current Report on Form 8-K dated June
1, 1998 (Commission File No. 1-7094).
(6) EastGroup Properties, Inc.'s Current Report on Form 8-K dated June
19, 1998 (Commission File No. 1-7094).
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Each document filed by EastGroup subsequent to the date of this Prospectus
pursuant to Sections 13(a), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering of all Securities to which this Prospectus relates
shall be deemed to be incorporated by reference in this Prospectus and shall be
part hereof from the date of filing of such document. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus (in the
case of a previously filed document incorporated or deemed to be incorporated by
reference herein) in any accompanying Prospectus Supplement relating to a
specific offering of Securities or in any other subsequently filed document that
is also incorporated or deemed to be incorporated by reference herein, modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any accompanying Prospectus Supplement. Subject to the foregoing,
all information appearing in this Prospectus and each accompanying Prospectus
Supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
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Unless the context otherwise requires, all references in this Prospectus to
"EastGroup" shall mean EastGroup Properties, Inc. and its subsidiaries on a
consolidated basis or, where the context so requires, EastGroup Properties, Inc.
only, and, as the context may require, their predecessors.
THE COMPANY
EastGroup is a self-administered real estate investment trust ("REIT")
focused primarily on the ownership, acquisition and selective development of
industrial properties located in major Sunbelt markets throughout the United
States. As of June 26, 1998 EastGroup's portfolio included 77 industrial
properties in ten states containing approximately 13.8 million square feet of
leasable space, six industrial properties under development or in initial
lease-up containing approximately 468,000 square feet of leasable space, and
three office buildings containing approximately 390,000 square feet of leasable
space. As of May 31, 1998, the industrial portfolio (excluding the six
properties currently under development or in initial lease-up) was 97% leased.
EastGroup is the successor to EastGroup Properties, a Maryland real estate
investment trust ("Parent"). EastGroup was incorporated under the laws of the
State of Maryland on April 4, 1997. Formed as a wholly-owned subsidiary of
Parent, EastGroup merged with Parent on June 5, 1997 (the "Merger"), pursuant to
the Agreement and Plan of Merger dated April 23, 1997 by and between EastGroup
and Parent. As a result of the Merger, EastGroup succeeded to the business and
operations of Parent.
EastGroup's principal executive offices are located at 300 One Jackson
Place, 188 East Capitol Street, Jackson, Mississippi 39201-2195. Its telephone
number is (601) 354-3555.
RATIO OF EARNINGS TO FIXED CHARGES
EastGroup's ratio of earnings to fixed charges for the three months ended
March 31, 1998 was 2.7, for the year ended December 31, 1997 was 3.0, for the
year ended December 31, 1996 was 2.4, for the year ended December 31, 1995 was
2.2, for the year ended December 31, 1994 was 2.8 and for the year ended
December 31, 1993 was 2.9. There was no Preferred Stock outstanding for any of
the periods shown above. Accordingly, the ratio of earnings to fixed charges and
Preferred Stock dividends are identical to the ratio of earnings to fixed
charges.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges, excluding capitalized interest, to pre-tax income from
continuing operations (net income or loss). Fixed charges consist of interest
costs, whether expensed or capitalized, the interest component of rental expense
and amortization of debt issuance costs.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement,
EastGroup intends to use the net proceeds from the offering for general
corporate purposes including, without limitation, the acquisition of real estate
properties, whether by acquisition of properties directly or through potential
business combination transactions, development of new real estate properties,
the repayment of debt and to fund working capital requirements.
DESCRIPTION OF PREFERRED STOCK
GENERAL
EastGroup is authorized to issue Preferred Stock. The Board of Directors of
EastGroup may classify or reclassify any unissued shares of its capital stock
from time to time by setting, altering or voiding the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or
distributions, qualifications, or terms or conditions of redemption of such
shares. As of June 26, 1998, EastGroup had authorized, issued and outstanding
1,725,000 shares of 9.00% Series A Cumulative Redeemable Preferred
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Stock, par value $0.0001 per share (the "Series A Preferred Stock"), there were
no other shares of Preferred Stock outstanding.
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Charter and Bylaws and any applicable articles
supplementing the Charter designating terms of a series of Preferred Stock (a
"Designating Amendment").
TERMS
Subject to the limitations prescribed by the Charter, the Board of
Directors is authorized to fix the number of shares constituting each series of
Preferred Stock and the preference, conversion or other rights, voting powers,
restrictions, limitation as to dividends, qualifications, or terms or conditions
of redemption of the Preferred Stock. The Preferred Stock will, when issued, be
fully paid and nonassessable by EastGroup (except as described under
" -- Stockholder Liability" below) and will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms thereof, including:
(i) The title and stated value of such Preferred Stock;
(ii) The number of such shares of Preferred Stock offered, the
liquidation preference per share and the offering price of such Preferred
Stock;
(iii) The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(iv) The date from which dividends on such Preferred Stock shall
accumulate, if applicable;
(v) The procedures for any auction or remarketing, if any, for such
Preferred Stock;
(vi) The provision for a sinking fund, if any, for such Preferred
Stock;
(vii) The provision for redemption, if applicable, of such Preferred
Stock;
(viii) Any listing of such Preferred Stock on any securities exchange;
(ix) The terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Common Stock, including the
conversion price (or manner of calculation thereof);
(x) Whether interests in such Preferred Stock will be represented by
Depositary Shares;
(xi) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(xii) A discussion of U.S. federal income tax considerations
applicable to such Preferred Stock;
(xiii) The relative ranking of preferences of such Preferred Stock as
to dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of EastGroup;
(xiv) Any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of EastGroup; and
(xv) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to preserve
the status of EastGroup as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock, will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of EastGroup, rank (i) senior to all classes or series
of Common Stock of EastGroup, and to all equity securities ranking junior to
such Preferred
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Stock; (ii) on a parity with all equity securities issued by EastGroup the terms
of which specifically provide that such equity securities rank on a parity with
the Preferred Stock; and (iii) junior to all equity securities issued by
EastGroup the terms of which specifically provide that such equity securities
rank senior to the Preferred Stock. The term "equity securities" does not
include debt securities.
DIVIDENDS
Holders of Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of EastGroup, out of assets
of EastGroup legally available for payment, cash dividends at such rates and on
such dates as will be set forth in the applicable Prospectus Supplement. Each
such dividend shall be payable to holders of record as they appear on the share
transfer books of EastGroup on such record dates as shall be fixed by the Board
of Directors of EastGroup.
Dividends on any series of Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of EastGroup fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and
EastGroup will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
If Preferred Stock of any series are outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of EastGroup of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock of such series. When dividends
are not paid in full (or a sum sufficient for such full payment is not so set
apart) upon Preferred Stock of any series and the shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Preferred Stock of
such series, all dividends declared upon Preferred Stock of such series and any
other series of Preferred Stock ranking on a parity as to dividends with such
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock do not have a cumulative dividend) and such
other series of Preferred Stock bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period; and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other capital
shares ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment or other
distribution shall be declared or made upon the Common Stock, or any other
capital shares of EastGroup ranking junior to or on a parity with the Preferred
Stock of such series as to dividends or upon liquidation, nor shall any shares
of Common Stock, or any other capital shares of EastGroup ranking junior to or
on a parity with the Preferred Stock of such series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or
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any moneys be paid to or made available for a sinking fund for the redemption of
any such shares) by EastGroup (except by conversion into or exchange for other
capital shares of EastGroup ranking junior to the Preferred Stock of such series
as to dividends and upon liquidation). Any dividend payment made on a series of
Preferred Stock shall first be credited against the earliest accrued but unpaid
dividend due with respect to shares of such series which remain payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of
EastGroup, as a whole or in part, in each case upon the terms, at the times and
at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of such shares of
Preferred Stock that shall be redeemed by EastGroup in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such shares of Preferred Stock do not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in cash
or other property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital shares of EastGroup, the terms of such
Preferred Stock may provide that, if no such capital shares have been issued or
to the extent the net proceeds from any issuance are insufficient to pay in full
the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into the applicable capital shares of
EastGroup pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period; and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends of
the Preferred Stock of any series have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, no shares of any series of
Preferred Stock shall be redeemed unless all outstanding Preferred Stock of such
series is simultaneously redeemed; provided, however, that the foregoing shall
not prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of EastGroup or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series. In addition, unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
series of Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past dividend periods and the then current dividend period; and (ii) if
such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, EastGroup shall not
purchase or otherwise acquire directly or indirectly any Preferred Stock of such
series (except by conversion into or exchange for capital stock of EastGroup
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of Preferred Stock of such series to preserve the REIT
status of EastGroup or pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding Preferred Stock of such series.
If fewer than all of the outstanding Preferred Stock of any series are to
be redeemed, the number of shares to be redeemed will be determined by EastGroup
and such shares may be redeemed pro rata from the holders of record of such
shares in proportion to the number of such shares held or for which redemption
is requested by such holder (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by EastGroup.
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Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the share transfer books of
EastGroup. Each notice shall state: (i) the redemption date; (ii) the number of
shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the Preferred Stock of any series are to be
redeemed, the notice mailed to each such holder thereof shall also specify the
number of Preferred Stock to be redeemed from each such holder. If notice of
redemption of any Preferred Stock has been given and if the funds necessary for
such redemption have been set aside by EastGroup in trust for the benefit of the
holders of any Preferred Stock so called for redemption, then from and after the
redemption date dividends will cease to accrue on such Preferred Stock, and all
rights of the holders of such shares will terminate, except the right to receive
the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of EastGroup, then, before any distribution or payment shall be made
to the holders of any shares of Common Stock or any other class or series of
capital shares of EastGroup ranking junior to the Preferred Stock in the
distribution of assets upon any liquidation, dissolution or winding up of
EastGroup, the holders of each series of Preferred Stock shall be entitled to
receive out of assets of EastGroup legally available for distribution to
stockholders liquidating distributions in the amount of the liquidation
preference per share (set forth in the applicable Prospectus Supplement), plus
an amount equal to all dividends accrued and unpaid thereon (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Preferred Stock will have no right or claim to any of
the remaining assets of EastGroup. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of
EastGroup are insufficient to pay the amount of the liquidating distributions on
all outstanding shares of Preferred Stock and the corresponding amounts payable
on all shares of other classes or series of capital shares of EastGroup ranking
on a parity with the Preferred Stock in the distribution of assets, then the
holders of the Preferred Stock and all other such classes or series of capital
shares shall share ratably in any such distribution of assets in proportion to
the full liquidating distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of EastGroup shall be distributed among
the holders of any other classes or series of capital shares ranking junior to
the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
EastGroup with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
EastGroup, shall not be deemed to constitute a liquidation, dissolution or
winding up of EastGroup.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting rights, except as set
forth below or as otherwise from time to time required by law or as indicated in
the applicable Prospectus Supplement.
Whenever dividends on any Preferred Stock shall be in arrears for six or
more consecutive quarterly periods, the holders of such Preferred Stock (voting
separately as a class with all other series of Preferred Stock upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional directors of EastGroup at a special meeting
called by the holders of record of at least ten percent (10%) of any series of
Preferred Stock so in arrears (unless such request is received less than 90 days
before the date fixed for the next annual or special meeting of the
stockholders) or at the next annual meeting of stockholders, and at each
subsequent annual meeting until (i) if such series of Preferred Stock has a
cumulative dividend, all dividends accumulated on such Preferred Stock for the
past dividend periods and
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the then current dividend period shall have been declared and fully paid or
declared and a sum sufficient for the payment thereof set aside for payment or
(ii) if such series of Preferred Stock does not have a cumulative dividend, four
consecutive quarterly dividends shall have been declared and fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
such case, the number of persons constituting the entire Board of Directors of
EastGroup will be increased by two directors.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, EastGroup will not, without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of each series of Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to such series of Preferred
Stock with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up or reclassify any authorized capital
stock of EastGroup into such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such shares; or (ii) amend, alter or repeal the provisions of the Charter or the
Designating Amendment for such series of Preferred Stock, whether by merger,
consolidation or otherwise (an "Event"), so as to materially and adversely
affect any right, preference, privilege or voting power of such series of
Preferred Stock or the holder thereof; provided, however, as to the occurrence
of any of the Events set forth in (ii) above, so long as the Preferred Stock
remains outstanding with the terms thereof materially unchanged, taking into
account that upon the occurrence of an Event, EastGroup may not be the surviving
entity, the occurrence of any such Event shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power of holders
of Preferred Stock and provided further that (a) any increase in the amount of
the authorized Preferred Stock or the creation or issuance of any other series
of Preferred Stock; or (b) any increase in the amount of authorized shares of
such series or any other series of Preferred Stock, in each case ranking on a
parity with or junior to the Preferred Stock of such series with respect to
payment of dividends or the distribution of assets upon liquidation, dissolution
or winding up, shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
Under Maryland law, notwithstanding anything to the contrary set forth
above, holders of each series of Preferred Stock will be entitled to vote upon
any proposed amendment to the Charter if the amendment would change the contract
rights of such shares as expressly set forth in the Charter.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Stock
are convertible into Common Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include the number of shares of
Common Stock into which the shares of Preferred Stock are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversions will be at the option of the holders of the
Preferred Stock or EastGroup, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such series of Preferred Stock.
STOCKHOLDER LIABILITY
As discussed below under "Description of Common Stock -- General,"
applicable Maryland law provides that no stockholder, including holders of
Preferred Stock, will be personally liable for the acts and obligations of
EastGroup and that the funds and property of EastGroup will be the only recourse
for such acts or obligations.
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RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Stock -- Restrictions on
Transfer," for EastGroup to qualify as a REIT under the Code, not more than 50%
in value of its outstanding capital shares may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year. To assist EastGroup in meeting
this requirement, EastGroup may take certain actions to limit the beneficial
ownership, directly or indirectly, by a single person of EastGroup's outstanding
equity securities, including any Preferred Stock of EastGroup. Therefore, the
Designating Amendment for each series of Preferred Stock may contain provisions
restricting the ownership and transfer of the Preferred Stock. The applicable
Prospectus Supplement will specify any additional ownership limitation relating
to a series of Preferred Stock.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
EastGroup may issue receipts ("Depositary Receipts") for Depositary Shares,
each of which will represent a fractional interest of a share of a particular
series of Preferred Stock, as specified in the applicable Prospectus Supplement.
Preferred Stock of each series represented by Depositary Shares will be
deposited under a separate deposit agreement (each, a "Deposit Agreement") among
EastGroup, the depositary named therein (a "Preferred Stock Depositary"), and
the holders from time to time of the Depositary Receipts. Subject to the terms
of the applicable Deposit Agreement, each owner of a Depositary Receipt will be
entitled, in proportion to the fractional interest of a share of a particular
series of Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipt, to all the rights and preferences of the Preferred Stock
represented by such Depositary Shares (including dividend, voting, conversion,
redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by EastGroup to a Preferred Stock
Depositary, EastGroup will cause such Preferred Stock Depositary to issue, on
behalf of EastGroup, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from EastGroup upon
request, and the statements made hereunder relating to Deposit Agreements and
the Depositary Receipts to be issued thereunder are summaries of certain
anticipated provisions thereof and do not purport to be complete and are subject
to, and qualified in their entirety by reference to, all of the provisions of
the applicable Deposit Agreement and related Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
A Preferred Stock Depositary will be required to distribute all cash
dividends or other cash distributions received in respect of the applicable
Preferred Stock to the record holders of Depositary Receipts evidencing the
related Depositary Shares in proportion to the number of such Depositary
Receipts owned by such holders, subject to certain obligations of holders to
file proofs, certificates and other information and to pay certain charges and
expenses to such Preferred Stock Depositary.
In the event of a distribution other than in cash, a Preferred Stock
Depositary will be required to distribute property received by it to the record
holders of Depositary Receipts entitled thereto, subject to certain obligations
of holders to file proofs, certificates and other information and to pay certain
charges and expenses to such Preferred Stock Depositary, unless such Preferred
Stock Depositary determines that it is not feasible to make such distribution,
in which case such Preferred Stock Depositary may, with the approval of
EastGroup, sell such property and distribute the net proceeds from such sale to
such holders.
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No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which have been converted or
exchanged.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office of
the applicable Preferred Stock Depositary (unless the related Depositary Shares
have previously been called for redemption or converted), the holders thereof
will be entitled to delivery at such office, to or upon each such holder's
order, of the number of whole or fractional shares of the applicable Preferred
Stock and any money or other property represented by the Depositary Shares
evidenced by such Depositary Receipts. Holders of Depositary Receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock on
the basis of the proportion of Preferred Stock represented by each Depositary
Share as specified in the applicable Prospectus Supplement, but holders of such
Preferred Stock will not thereafter be entitled to receive Depositary Shares
therefor. If the Depositary Receipts delivered by the holder evidence a number
of Depositary Shares in excess of the number of Depositary Shares representing
the number of Preferred Stock to be withdrawn, the applicable Preferred Stock
Depositary will be required to deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever EastGroup redeems Preferred Stock held by a Preferred Stock
Depositary, such Preferred Stock Depositary will be required to redeem as of the
same redemption date the number of Depositary Shares representing the Preferred
Stock so redeemed, provided EastGroup shall have paid in full to such Preferred
Stock Depositary the redemption price of the Preferred Stock to be redeemed plus
an amount equal to any accrued and unpaid dividends thereon to the date fixed
for redemption. The redemption price per Depositary Share will be equal to the
redemption price and any other amounts per share payable with respect to the
Preferred Stock. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected pro rata (as nearly as may be
practicable without creating fractional Depositary Shares) or by any other
equitable method determined by EastGroup that preserves the REIT status of
EastGroup.
From and after the date fixed for redemption, all dividends in respect of
the Preferred Stock so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts evidencing
the Depositary Shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such Depositary Receipts were entitled upon such
redemption upon surrender thereof to the applicable Preferred Stock Depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Stock are entitled to vote, a Preferred Stock Depositary
will be required to mail the information contained in such notice of meeting to
the record holders of the Depositary Receipts evidencing the Depositary Shares
which represent such Preferred Stock. Each record holder of Depositary Receipts
evidencing Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to instruct such
Preferred Stock Depositary as to the exercise of the voting rights pertaining to
the amount of Preferred Stock represented by such holder's Depositary Shares.
Such Preferred Stock Depositary will be required to vote the amount of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and EastGroup will agree to take all reasonable action which may
be deemed necessary by such Preferred Stock Depositary in order to enable such
Preferred Stock Depositary to do so. Such Preferred Stock Depositary will be
required to abstain from voting the amount of Preferred Stock represented by
such Depositary Shares to the extent it does not receive specific instructions
from the holders of Depositary Receipts evidencing such Depositary Shares. A
Preferred Stock Depositary will not be responsible for any failure to carry out
any instruction to vote, or for the manner or effect of any such vote made, as
long as any such action or non-action is in good faith and does not result from
negligence or willful misconduct of such Preferred Stock Depositary.
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LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of EastGroup,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each Preferred
Share represented by the Depositary Share evidenced by such Depositary Receipt,
as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, will not be convertible into Common Stock
or any other securities or property of EastGroup. Nevertheless, if so specified
in the applicable Prospectus Supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
applicable Preferred Stock Depositary with written instructions to such
Preferred Stock Depositary to instruct EastGroup to cause conversion of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other Preferred Stock or
other shares of stock, and EastGroup will agree that upon receipt of such
instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for delivery
of Preferred Stock to effect such conversion. If the Depositary Shares evidenced
by a Depositary Receipt are to be converted in part only, a new Depositary
Receipt or Receipts will be issued for any Depositary Shares not to be
converted. No fractional shares of Common Stock will be issued upon conversion,
and if such conversion will result in a fractional share being issued, an amount
will be paid in cash by EastGroup equal to the value of the fractional interest
based upon the closing price of the Common Stock on the last business day prior
to the conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
Any form of Depositary Receipt evidencing Depositary Shares which will
represent Preferred Stock and any provision of a Deposit Agreement will be
permitted at any time to be amended by agreement between EastGroup and the
applicable Preferred Stock Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Receipts or that
would be materially and adversely inconsistent with the rights granted to the
holders of the related Preferred Stock will not be effective unless such
amendment has been approved by the existing holders of at least two-thirds of
the applicable Depositary Shares evidenced by the applicable Depositary Receipts
then outstanding. No amendment shall impair the right, subject to certain
anticipated exceptions in the Deposit Agreements, of any holders of Depositary
Receipts to surrender any Depositary Receipt with instructions to deliver to the
holder the related Preferred Stock and all money and other property, if any,
represented thereby, except in order to comply with law. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Depositary Receipt, to consent and
agree to such amendment and to be bound by the applicable Deposit Agreement as
amended thereby.
A Deposit Agreement will be permitted to be terminated by EastGroup upon
not less than 30 days' prior written notice to the applicable Preferred Stock
Depositary if (i) such termination is necessary to preserve EastGroup's status
as a REIT or (ii) a majority of each series of Preferred Stock affected by such
termination consents to such termination, whereupon such Preferred Stock
Depositary will be required to deliver or make available to each holder of
Depositary Receipts, upon surrender of the Depositary Receipts held by such
holder, such number of whole or fractional Preferred Stock as are represented by
the Depositary Shares evidenced by such Depositary Receipts together with any
other property held by such Preferred Stock Depositary with respect to such
Depositary Receipts. EastGroup will agree that if a Deposit Agreement is
terminated to preserve EastGroup's status as a REIT, then EastGroup will use its
best efforts to list the Preferred Stock issued upon surrender of the related
Depositary Shares on a national securities exchange. In addition, a Deposit
Agreement will automatically terminate if (i) all outstanding Depositary Shares
thereunder shall have been redeemed; (ii) there shall have been a final
distribution in respect of the related Preferred Stock in connection with any
liquidation, dissolution or winding up of EastGroup and such distribution shall
have been distributed to the holders of Depositary Receipts evidencing the
Depositary
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Shares representing such Preferred Stock; or (iii) each share of the related
Preferred Stock shall have been converted into stock of EastGroup not so
represented by Depositary Shares.
CHARGES OF A PREFERRED STOCK DEPOSITARY
EastGroup will pay all transfer and other taxes and governmental charges
arising solely from the existence of a Deposit Agreement. In addition, EastGroup
will pay the fees and expenses of a Preferred Stock Depositary in connection
with the performance of its duties under a Deposit Agreement. However, holders
of Depositary Receipts will pay the fees and expenses of a Preferred Stock
Depositary for any duties requested by such holders to be performed which are
outside of those expressly provided for in the applicable Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
A Preferred Stock Depositary will be permitted to resign at any time by
delivering to EastGroup notice of its election to do so, and EastGroup will be
permitted at any time to remove a Preferred Stock Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary. A successor Preferred Stock Depositary will be
required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
MISCELLANEOUS
A Preferred Stock Depositary will be required to forward to holders of
Depositary Receipts any reports and communications from EastGroup which are
received by such Preferred Stock Depositary with respect to the related
Preferred Stock.
Neither a Preferred Stock Depositary nor EastGroup will be liable if it is
prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under a Deposit Agreement. The obligations of
EastGroup and Preferred Stock Depositary under a Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Stock represented by the applicable Depositary Shares), gross negligence or
willful misconduct, and neither EastGroup nor any applicable Preferred Stock
Depositary will be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or Preferred Stock
represented thereby unless satisfactory indemnity is furnished. EastGroup and
any Preferred Stock Depositary will be permitted to rely on written advice of
counsel or accountants, or information provided by persons presenting Preferred
Stock represented thereby for deposit, holders of Depositary Receipts or other
persons believed in good faith to be competent to give such information, and on
documents believed in good faith to be genuine and signed by a proper party.
In the event a Preferred Stock Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and EastGroup on the other hand, such Preferred Stock Depositary shall be
entitled to act on such claims, requests or instructions received from
EastGroup.
DESCRIPTION OF COMMON STOCK
GENERAL
EastGroup is authorized to issue up to 68,275,000 shares of Common Stock.
As of June 10, 1998 there were 16,304,176 shares of Common Stock outstanding and
740,108 shares of Common Stock reserved for issuance upon the exercise of
options granted under EastGroup's stock option plans. All of the issued and
outstanding shares of Common Stock are fully paid and non-assessable and have
equal voting, distribution and liquidation rights. Shares of Common Stock are
not subject to call or redemption; provided, however, if the EastGroup Board of
Directors determines that the direct or indirect ownership of Common Stock has
or may become concentrated to an extent which threatens EastGroup's status as a
REIT, the Board of Directors may call for the redemption of a number of shares
of Common Stock.
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The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. The holders of Common Stock have
no cumulative voting rights. Additionally, subject to the rights of holders of
Preferred Stock, holders of Common Stock are entitled to receive such dividends
as may be declared from time to time by the directors out of funds legally
available therefor.
The shares of Common Stock currently outstanding are listed for trading on
the NYSE under the symbol "EGP." EastGroup will apply to the NYSE to list the
additional shares of Common Stock to be sold pursuant to any Prospectus
Supplement, and EastGroup anticipates that such shares will be so listed.
Under Maryland law, stockholders are generally not liable for EastGroup's
debts or obligations. If EastGroup is liquidated, subject to the right of any
holders of Preferred Stock, if any, to receive preferential distributions, each
outstanding share of Common Stock will be entitled to participate pro rata in
the assets remaining after payment of, or adequate provision for, all known
debts and liabilities of EastGroup.
PROVISIONS OF EASTGROUP'S CHARTER AND BYLAWS
EastGroup's Charter provides that the number of directors will be ten,
which number may be increased or decreased pursuant to EastGroup's Bylaws.
Currently, the number of directors is nine and all nine positions on the Board
of Directors are filled by the vote of the stockholders at the annual meeting.
Stockholders do not have cumulative voting rights in the election of directors.
Stockholders are entitled to one vote for each share of Common Stock held by
them.
OTHER MATTERS
The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank, Chicago, Illinois.
RESTRICTIONS ON TRANSFER
Ownership Limits. For EastGroup to qualify as a REIT under the Code, no
more than 50% in value of its outstanding Common Stock may be owned, actually
and constructively under the applicable attribution provisions of the Code, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year (other than the first year) or during a
proportionate part of a shorter taxable year. The Common Stock must also be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year (other than the first year) or during a proportionate part of a shorter
taxable year. Because EastGroup intends to elect to be treated as a REIT, the
Charter contains restrictions on the acquisition of Common Stock intended to
ensure compliance with these requirements.
Pursuant to the provisions of the Charter, if a transfer of stock occurs
whereby any person would own, beneficially or constructively, 9.8 percent or
more (in value or in number, whichever is more restrictive) of the outstanding
capital stock of EastGroup (excluding Excess Shares, as defined below), then
such amount in excess of the 9.8 percent limit shall automatically be converted
into shares of a separate class of stock, the excess stock, par value $0.001 per
share, of EastGroup (the "Excess Shares"), and any such transfer will be void ab
initio. However, such restrictions will not prevent the settlement of a
transaction entered into through the facilities of any interdealer quotation
system or national securities exchange upon which shares of capital stock of
EastGroup are traded, provided that certain transactions may be settled by
providing Excess Shares. Although holders of Excess Shares have no dividend or
voting rights, such holders do have certain rights in the event of any
liquidation, dissolution or winding up of the corporation. The Charter further
provides that the Excess Shares will be held by EastGroup as trustee for the
person or persons to whom the shares are ultimately transferred, until such time
as the shares are re-transferred to a person or persons in whose hands the
shares would not be Excess Shares and certain price-related restrictions are
satisfied. These provisions are designed to enable EastGroup to meet the share
ownership requirements applicable to REITs under the Code, but may also have an
anti-takeover effect. EastGroup currently has 30,000,000 Excess Shares
authorized pursuant to its Charter.
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Each stockholder shall, upon request by EastGroup, furnish such information
that EastGroup may reasonably request in order to determine EastGroup's status
as a REIT, to comply with the requirements of any taxing authority or
governmental agency or to determine any such compliance.
The foregoing ownership limitations may have the effect of precluding
acquisition of control of EastGroup without the consent of the Board of
Directors.
Special Voting Requirements for Certain Business Combinations. Pursuant to
Maryland law, EastGroup is governed by special procedures that apply to certain
business combinations between a corporation and interested stockholders. The
purpose of such provisions is to protect the corporation and its stockholders
against hostile takeovers by requiring that certain criteria are satisfied.
These criteria include prior approval by the board of directors, prior approval
by a majority or supermajority vote of disinterested stockholders and
requirements that a "fair price" be paid to the disinterested stockholders.
Maryland law provides that a Maryland corporation may not engage in any
"business combination" with any "interested stockholder." An "interested
stockholder" is defined, in essence, as any person owning beneficially, directly
or indirectly, ten percent or more of the outstanding voting stock of a Maryland
corporation. Unless an exemption applies, EastGroup may not engage in any
business combination with an interested stockholder for a period of five years
after the interested stockholder became an interested stockholder, and
thereafter may not engage in a business combination unless it is recommended by
the board of directors and approved by the affirmative vote of at least (i)
eighty percent of the votes entitled to be cast by the holders of all
outstanding voting stock of EastGroup, voting together as a single voting group
and (ii) two-thirds of the votes entitled to be cast by all holders of
outstanding shares of voting stock other than voting stock held by the
interested stockholder. The voting requirements do not apply at any time to
business combinations with an interested stockholder or its affiliates if
approved by the board of directors of the corporation prior to the time the
interested stockholder first became an interested stockholder. Additionally, if
the business combination involves the receipt of consideration by the
stockholders in exchange for the corporation's stock, the voting requirements do
not apply if certain "fair price" conditions are met.
Control Share Acquisitions. Maryland law provides for the elimination of
the voting rights of shares held by any person who makes a "control share
acquisition" except to the extent that such acquisition is exempt or is approved
by at least two-thirds of all votes entitled to be cast on the matter, excluding
shares of capital stock owned by the acquirer or by officers or directors who
are employees of the corporation whose shares were acquired. A "control share
acquisition" is the direct or indirect acquisition by any person of ownership
of, or the power to direct the exercise of voting power with respect to, shares
of voting stock ("control shares") that would, if aggregated with all other
voting stock owned by such person, entitle such person to exercise voting power
in electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third; (ii) one-third or more but less than
a majority; or (iii) a majority or more of voting power.
A person who has made or proposes to make a control share acquisition, upon
the satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting. If voting rights are not
approved at the meeting or if the acquiring person does not deliver an acquiring
person statement as permitted by the statute, then, subject to certain
conditions and limitations, the corporation may redeem any or all of the control
shares (except those for which voting rights have previously been approved) for
fair value determined, without regard to voting rights, as of the date of the
last control share acquisition or as of the date of any meeting of stockholders
at which the voting rights of such shares are considered and not approved.
If voting rights for control shares are approved at a stockholders meeting
and the acquirer becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise appraisal rights. The fair value of
the stock as determined for purposes of such appraisal rights may not be less
than the highest price per share paid in the control share acquisition, and
certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.
The
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control share acquisition statute does not apply to stock acquired in a merger,
consolidation or stock exchange if the corporation is a party to the
transaction.
Supermajority Votes. The Charter provides that (i) no term or provision of
the Charter may be added, amended or repealed in any respect which, in the
determination of the Board of Directors, causes EastGroup not to qualify as a
REIT under the Code; (ii) the sections of the Charter concerning the removal of
directors, amendment of the Bylaws, the indemnification of agents and limitation
of liability of directors and officers and the section concerning special
stockholder vote requirements shall not be amended or repealed; and (iii) no
provision imposing cumulative voting in the election of directors may be added
to the Charter, except, in addition to any vote required by the terms of then
outstanding Preferred Stock, upon the affirmative vote of the holders of not
less than eighty percent of all votes entitled to be cast on the matter.
FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTORY NOTES
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a prospective holder of securities of
EastGroup. This discussion is based on current law. The discussion is not
exhaustive of all possible tax considerations and does not give a detailed
discussion of any state, local, or foreign tax considerations. It also does not
discuss all of the aspects of Federal income taxation that may be relevant to a
prospective stockholder in light of his particular circumstances or to certain
types of stockholders (including insurance companies, tax-exempt entities,
financial institutions or broker-dealers, foreign corporations and persons who
are not citizens or residents of the United States) who are subject to special
treatment under the Federal income tax laws.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE, OWNERSHIP AND
SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS A REAL ESTATE INVESTMENT
TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, SALE, AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
General. EastGroup has elected to be taxed as a REIT under Sections 856
through 860 of the Code effective since its inception. EastGroup's qualification
and taxation as a REIT depends upon its ability to meet on a continuing basis,
through actual annual operating results, distribution levels and diversity of
stock ownership, the various qualification tests and organizational requirements
imposed under the Code, as discussed below. EastGroup believes that it is
organized and has operated in such a manner as to qualify under the Code for
taxation as a REIT commencing since its inception, and it intends to continue to
operate in such a manner. No assurances, however, can be given that EastGroup
will operate in a manner so as to qualify or remain qualified as a REIT. See
"Failure to Qualify" below.
The following is a general summary of the Code provisions that govern the
Federal income tax treatment of a REIT and its stockholders. These provisions of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, the regulations promulgated
thereunder ("Treasury Regulations"), and administrative and judicial
interpretations thereof.
If EastGroup qualifies for taxation as a REIT and distributes to its
stockholders at least 95% of its REIT taxable income, it generally will not be
subject to Federal corporate income taxes on net income that it currently
distributes to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from
investment in a corporation. Notwithstanding its REIT election, however,
EastGroup will be subject to Federal income tax in the following circumstances.
First, EastGroup will be taxed at regular corporate rates on any undistributed
taxable income, including undistributed net capital gains. Second, under certain
circumstances, the company may be subject to the
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"alternative minimum tax" on its items of tax preference. Third, if EastGroup
has (i) net income from the sale or other disposition of "foreclosure property"
(which is, in general, property acquired by foreclosure or otherwise on default
of a loan secured by the property) that is held primarily for sale to customers
in the ordinary course of business or (ii) other non-qualifying income from
foreclosure property, it will be subject to tax at the highest corporate rate on
such income. Fourth, if EastGroup has net income from prohibited transactions
(which are, in general, certain sales or other dispositions of property (other
than foreclosure property) held primarily for sale to customers in the ordinary
course of business), such income will be subject to a 100% tax. Fifth, if
EastGroup should fail to satisfy the 75% gross income test or the 95% gross
income test (as discussed below), and has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on the net income attributable to the greater of
the amount by which it fails the 75% or 95% test, multiplied by a fraction
intended to reflect its profitability. Sixth, if EastGroup should fail to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year; (ii) 95% of its REIT capital gain net income for
such year (for this purpose such term includes capital gains which EastGroup
elects to retain but which it reports as distributed to its stockholders, see
"Annual Distribution Requirements" below); and (iii) any undistributed taxable
income from prior years, EastGroup would be subject to a 4% excise tax on the
excess of such required distribution over the amounts actually distributed.
Seventh, if EastGroup acquires any asset from a C corporation (i.e., a
corporation generally subject to full corporate level tax) in a transaction in
which the basis of the asset in EastGroup's hands is determined by reference to
the basis of the asset (or any other property) in the hands of the C
corporation, and EastGroup recognizes gain on the disposition of such asset
during the 10-year period beginning on the date on which such asset was acquired
by it, then, to the extent of such property's built-in gain (the excess of the
fair market value of such property at the time of acquisition by EastGroup over
the adjusted basis of such property at such time), such gain will be subject to
tax at the highest regular corporate rate applicable (as provided in Service
regulations that have not yet been promulgated).
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (i) which is managed by one or more trustees or directors;
(ii) the beneficial ownership of which is evidenced by transferable shares or by
transferable certificates of beneficial interest; (iii) which would be taxable
as a domestic corporation but for Sections 856 through 860 of the Code; (iv)
which is neither a financial institution nor an insurance company subject to
certain provisions of the Code; (v) the beneficial ownership of which is held by
100 or more persons; (vi) during the last half of each taxable year not more
than 50% in value of the outstanding stock of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities); and (vii) which meets certain other tests, described below,
regarding the nature of its income and assets. The Code provides that conditions
(i) through (iv), inclusive, must be met during the entire taxable year and that
condition (v) must be met during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12 months.
Conditions (v) and (vi) will not apply until after the first taxable year for
which an election is made to be taxed as a REIT. EastGroup has issued sufficient
Common Stock with sufficient diversity of ownership to allow it to satisfy
requirements (v) and (vi). In addition, EastGroup's Charter contains
restrictions regarding the transfer of its shares that are intended to assist it
in continuing to satisfy the share ownership requirements described in (v) and
(vi) above. See "Capital Stock of EastGroup -- Restrictions on Transfer."
EastGroup is currently in the process of reorganizing its operations into
an umbrella partnership REIT ("UPREIT") structure pursuant to which all of
EastGroup's real estate assets will be owned by EastGroup Properties, L.P., a
Delaware limited partnership the sole partners of which are wholly-owned
subsidiaries of EastGroup (the "Operating Partnership"). EastGroup anticipates
completing the reorganization of its operations into an UPREIT structure in July
1998. EastGroup anticipates that the UPREIT structure will enable it to pursue
new investment opportunities by giving EastGroup the ability to offer units in
the Operating Partnership to property owners in exchange for properties in
transactions intended to achieve certain tax advantages.
In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the gross
income of the partnership attributable to such share. In addition, the assets
and gross income of the
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partnership will retain the same character in the hands of the REIT for purposes
of section 856 of the Code, including satisfying the gross income and asset
tests described below. Thus, EastGroup's proportionate share of the assets,
liabilities and items of income of the Operating Partnership and the
non-corporate subsidiaries, which are either limited liability companies or
partnerships, will be treated as assets, liabilities and items of income of
EastGroup for purposes of applying the requirements described herein.
Code section 856(i) provides that a corporation that is a "qualified REIT
subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities and items of income, deduction and credit of a "qualified REIT
subsidiary" shall be treated as assets, labilities and items of income,
deduction and credit of the REIT. A "qualified REIT subsidiary" is a
corporation, all the capital stock of which is owned by the REIT. In applying
the requirements described herein, any "qualified REIT subsidiary" will be
ignored, and all assets, liabilities and items of income, deduction and credit
of such subsidiaries will be treated as assets, liabilities and items of income,
deduction and credit of EastGroup.
In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. EastGroup's taxable year is the calendar
year.
For tax years beginning prior to January 1, 1998, pursuant to applicable
Treasury Regulations, to be able to elect to be taxed as a REIT, EastGroup must
maintain certain records and request on an annual basis certain information from
its stockholders designed to disclose the actual ownership of its outstanding
shares. EastGroup has complied with such requirements. For tax years beginning
January 1, 1998 and beyond, these records and informational requirements are no
longer a condition to REIT election. Instead, a monetary penalty will be imposed
for failure to comply with these requirements.
Income Tests. In order for EastGroup to maintain qualification as a REIT,
three separate percentage tests relating to the source of its gross income must
be satisfied annually. First, at least 75% of the REIT's gross income (excluding
gross income from prohibited transactions) for each taxable year must be derived
directly or indirectly from investments relating to real property or mortgages
on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
at least 95% of the REIT's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real property
investments described above, and from dividends, interest and gain from the sale
or disposition of stock or securities, or from any combination of the foregoing.
Third, for tax years beginning prior to January 1, 1998, gain from the sale or
other disposition of (i) stock or securities held for less than one year; (ii)
prohibited transactions; and (iii) certain real property held for less than four
years (apart from involuntary conversions and sales of foreclosure property)
must represent less than 30% of the REIT's gross income (including gross income
from prohibited transactions) for each taxable year.
Rents received by EastGroup will qualify as "rents from real property" in
satisfying the above gross income tests only if several conditions are met.
First, the amount of rent must not be based in whole or in part on the income or
profits of any person. However, amounts received or accrued generally will not
be excluded from "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts or sales. Second, rents received
from a tenant will not qualify as "rents from real property" if EastGroup, or a
direct or indirect owner of 10% or more of EastGroup, actually or constructively
owns 10% or more of such tenant (a "Related Party Tenant"). Third, if rent
attributable to personal property that is leased in connection with a lease of
real property is greater than 15% of the total rent received under the lease,
then the portion of rent attributable to such personal property will not qualify
as "rents from real property." Finally, for rents received to qualify as "rents
from real property," EastGroup generally must not operate or manage the
property, or furnish or render services to tenants, other than through an
"independent contractor" who is adequately compensated and from whom EastGroup
derives no revenue. The "independent contractor" requirement, however, does not
apply to the extent the services provided by EastGroup are "usually or
customarily rendered" in connection with the rental of space for occupancy only
and are not otherwise considered "rendered to the occupant."
For taxable years beginning after December 31, 1997, rental income received
by EastGroup will not cease to qualify as "rents from real property" merely
because EastGroup performs non-customary services for a tenant if the amount
that EastGroup receives as a result of performing such services does not exceed
1% of all
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amounts received directly or indirectly by EastGroup with respect to such
property. In applying this limitation, the amount that EastGroup is treated as
having received for performing such services will not be less than 150% of the
direct cost to EastGroup of providing those services. EastGroup believes that
all services that are provided to its tenants will be considered "usually or
customarily" rendered in connection with the rental of comparable properties.
Further, any noncustomary services will be provided only through qualifying
independent contractors or within the 1% safe harbor described above. EastGroup
believes that the income generated from its currently owned assets and its
proposed method of operations will permit it to meet the income tests outlined
above.
If EastGroup fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions generally will be available if its failure to meet such tests was due
to reasonable cause and not due to willful neglect, EastGroup attaches a
schedule of the sources of its income to its federal income tax return for such
years, and any incorrect information on the schedules was not due to fraud with
intent to evade tax. It is not possible, however, to state whether in all
circumstances EastGroup would be entitled to the benefit of these relief
provisions. As discussed above in "-- General," even if these relief provisions
were to apply, a tax would be imposed with respect to the excess net income.
Asset Tests. At the close of each quarter of its taxable year, EastGroup
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of EastGroup's total assets must be represented by real
estate assets (including stock or debt instruments held for not more than one
year purchased with the proceeds of a stock or debt offering of the company),
cash, cash items and government securities. Second, not more than 25% of
EastGroup's total assets may be represented by securities other than those in
the 75% asset class. Third, of the investments included in the 25% asset class,
the value of any one issuer's securities owned by EastGroup may not exceed 5% of
the value of EastGroup's total assets, and EastGroup may not own more than 10%
of any one issuer's outstanding voting securities (excluding securities of a
qualified REIT subsidiary or another REIT). The 5% test must generally be met
for any quarter in which a REIT acquires securities of an issuer.
If EastGroup should fail to satisfy the asset tests at the end of a
calendar quarter, such a failure would not cause it to lose its REIT status if
(i) it satisfied the asset tests at the close of the preceding calendar quarter,
and (ii) the discrepancy between the value of EastGroup's assets and the asset
tests either did not exist immediately after the acquisition of any particular
asset or was not wholly or partly caused by such an acquisition (e.g., the
discrepancy arose from changes in the market values of its assets). If the
conditions described in clause (ii) of the preceding sentence were not
satisfied, EastGroup still could avoid disqualification by eliminating any
discrepancy within 30 days after the close of the calendar quarter in which it
arose.
Annual Distribution Requirements. EastGroup, in order to qualify as a REIT,
is required to distribute dividends (other than capital gain dividends) to its
stockholders in an amount at least equal to (i) the sum of (a) 95% of its "REIT
taxable income" (computed without regard to the dividends paid deduction and the
REIT's net capital gain) and (b) 95% of the net income (after tax), if any, from
foreclosure property, minus (ii) the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before EastGroup timely files its tax
return for such year and if paid on or before the first regular dividend payment
after such declaration. To the extent that EastGroup does not distribute all of
its net capital gain or distributes at least 95%, but less than 100%, of its
"REIT taxable income," as adjusted, it will be subject to tax on the
nondistributed amount at regular capital gains and ordinary corporate tax rates.
Furthermore, if EastGroup should fail to distribute during each calendar year at
least the sum of (i) 85% of its REIT ordinary income for such year; (ii) 95% of
its REIT capital gain income for such year; and (iii) any undistributed taxable
income from prior periods, it will be subject to a 4% excise tax on the excess
of such required distribution over the amounts actually distributed.
For taxable years beginning after December 31, 1997, EastGroup may elect to
retain and pay tax on net long-term capital gains and require its stockholders
to include their proportionate share of such undistributed net capital gains in
their income. If EastGroup makes such election, stockholders would receive a tax
credit attributable to their share of the capital gains tax paid by EastGroup,
and would receive an increase in the
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basis of their shares in EastGroup in an amount equal to the stockholder's share
of the undistributed net long-term capital gain reduced by the amount of the
credit. Further, any undistributed net long-term capital gains that are included
in the income of EastGroup stockholders pursuant to this rule, will be treated
as distributed for purposes of the 4% excise tax.
EastGroup has made and intends to continue to make timely distributions
sufficient to satisfy the annual distribution requirements. It is possible,
however, that the company, from time to time, may not have sufficient cash or
liquid assets to meet the distribution requirements due to timing differences
between the actual receipt of income and actual payment of deductible expenses,
and the inclusion of such income and deduction of such expenses in arriving at
EastGroup's taxable income, or if the amount of nondeductible expenses such as
principal amortization or capital expenditures exceed the amount of noncash
deductions. In the event that such timing differences occur, in order to meet
the distribution requirements, EastGroup may arrange for short-term, or possible
long-term, borrowing to permit the payment of required dividends. If the amount
of nondeductible expenses exceeds noncash deductions, EastGroup may refinance
its indebtedness to reduce principal payments and borrow funds for capital
expenditures.
Under certain circumstances, EastGroup may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year that may be included in EastGroup's deduction for
dividends paid for the earlier year. Thus, EastGroup may be able to avoid being
taxed on amounts distributed as deficiency dividends; however, the company will
be required to pay interest to the Service based upon the amount of any
deduction taken for deficiency dividends.
Failure to Qualify. If EastGroup fails to qualify for taxation as a REIT in
any taxable year and no relief provisions apply, EastGroup will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which
EastGroup fails to qualify will not be deductible by it, nor will such
distributions be required to be made. In such event, to the extent of current
and accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and, subject to certain limitations in the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, EastGroup also
will be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. It is not possible to
state whether in all circumstances EastGroup would be entitled to such statutory
relief.
TAXATION OF STOCKHOLDERS
Taxation of Taxable Domestic Stockholders. As long as EastGroup qualifies
as a REIT, distributions made to its taxable domestic stockholders out of
current or accumulated earnings and profits (and not designated as capital gain
dividends) will be taken into account by them as ordinary income, and corporate
stockholders will not be eligible for the dividends received deduction as to
such amounts. Distributions that are designated as capital gain dividends will
be taxed as long-term capital gains (to the extent they do not exceed
EastGroup's actual net capital gain for the taxable year) without regard to the
period for which the stockholder has held his shares. However, corporate
stockholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income. Distributions in excess of current and accumulated
earnings and profits will not be taxable to a stockholder to the extent that
they do not exceed the adjusted basis of such stockholder's Common Stock, but
rather will reduce the adjusted basis of such shares. To the extent that such
distributions exceed the adjusted basis of a stockholder's Common Stock, they
will be included in income as long-term capital gain (or short-term capital gain
if the shares have been held for one year or less), assuming the shares are a
capital asset in the hands of the stockholder. In addition, any dividend
declared by the company in October, November or December of any year payable to
a stockholder of record on a specific date in any such month shall be treated as
both paid by EastGroup and received by the stockholder on December 31 of such
year, provided that the dividend is actually paid by the company during January
of the following calendar year. Stockholders may not include in their individual
income tax returns any net operating losses or capital losses of EastGroup.
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In general, any gain or loss realized upon a taxable disposition of shares
by a stockholder who is not a dealer in securities will be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise a short-term capital gain or loss. However, any loss upon a
sale or exchange of Common Stock by a stockholder who has held such shares for
six months or less (after applying certain holding period rules) will be treated
as long-term capital loss to the extent of distributions from EastGroup required
to be treated by such stockholder as long-term capital gain.
The Taxpayer Relief Act of 1997 reduced the top tax rate for individuals,
estates and trusts on certain long-term capital gains. Generally, long-term
capital gains on property held for more than 18 months will not be taxed at a
rate greater than 20% and the maximum rate is reduced to 18% for assets acquired
after December 31, 2000 and held for more than five years. For taxpayers subject
to the 15% regular tax bracket, long-term capital gains on property held for
more than 18 months will not be taxed at a rate greater than 10%, and, effective
for taxable years beginning after December 31, 2000, the rate is reduced to 8%
for assets held more than five years. Long-term capital gain from the sale or
exchange of certain depreciable real property held for more than 18 months which
would be treated as ordinary income if the real property was depreciable
personal property is subject to a maximum tax rate of 25% rather than 20%.
Long-term capital gain (other than certain depreciation recapture taxable as
ordinary income) allocated to a stockholder by EastGroup will be subject to the
25% rate to the extent that the gain does not exceed depreciation on real
property sold by EastGroup. The maximum rate of capital gains tax for capital
assets held for more than one year but not more than 18 months remains at 28%.
The taxation of capital gains by corporations was not changed.
In addition, Internal Revenue Notice 97-64 provides temporary guidance with
respect to the taxation of distributions by EastGroup designated as capital gain
dividends. Pursuant to Internal Revenue Notice 97-64, forthcoming Temporary
Regulations will provide that capital gains allocated to a stockholder by a REIT
may be designated as a 20% rate gain distribution, an unrecaptured Section 1250
gain distribution (subject to the 25% rate), or a 28% rate gain distribution. In
determining the amounts which may be designated as each class of capital gains
dividends, a REIT must calculate its net capital gains as if it were an
individual subject to a marginal tax rate of 28%. Unless specifically designated
otherwise by EastGroup, a distribution designated as a capital gain distribution
is presumed to be a 28% rate gain distribution. If EastGroup elects to retain
any net long-term capital gain, as discussed above, the undistributed long-term
capital gains are considered to be designated as capital gain dividends for
purposes of Internal Revenue Notice 97-64.
Backup Withholding. EastGroup will report to its domestic stockholders and
the Service the amount of dividends paid during each calendar year, and the
amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a stockholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
stockholder who does not provide EastGroup with its correct taxpayer
identification number may also be subject to penalties imposed by the Service.
Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability. In addition, EastGroup may be required to
withhold a portion of capital gain distributions made to any stockholders who
fail to certify their non-foreign status to the company. See "Taxation of
Non-U.S. Stockholders" below.
Taxation of Tax-Exempt Stockholders. Most tax-exempt entities, including
employees' pension trusts, are not subject to Federal income tax except to the
extent of "unrelated business taxable income" ("UBTI"). The Service has ruled
that amounts distributed by a REIT to a tax-exempt employees' pension trust do
not constitute UBTI. Based upon this ruling and the analysis therein, and
subject to the discussion below regarding qualified pension trust investors,
distributions by EastGroup to a stockholder that is a tax-exempt entity
generally should not constitute UBTI, provided that the tax-exempt entity has
not financed the acquisition of its shares with "acquisition indebtedness"
within the meaning of the Code and the Common Stock is not otherwise used in an
unrelated trade or business of the tax-exempt entity. Revenue rulings, however,
are interpretative in nature and subject to revocation or modification by the
Service.
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A "qualified trust" (defined to be any trust described in section 401(a) of
the Code and exempt from tax under section 501(a) of the Code) that holds more
than 10% of the value of the shares of a REIT may be required, under certain
circumstances, to treat a portion of distributions from the REIT as UBTI. This
requirement will apply for a taxable year only if (i) the REIT satisfies the
requirement that not more than 50% of the value of its shares be held by five or
fewer individuals (the "five or fewer requirement") only by relying on a special
"look-through" rule under which shares held by qualified trust stockholders are
treated as held by the beneficiaries of such trusts in proportion to their
actuarial interests therein; and (ii) the REIT is "predominantly held" by
qualified trusts. A REIT is "predominantly held" by qualified trusts if either
(i) a single qualified trust holds more than 25% of the value of the REIT
shares, or (ii) one or more qualified trusts, each owning more than 10% of the
value of the REIT shares, hold in the aggregate more than 50% of the value of
the REIT shares. If the foregoing requirements are met, the percentage of any
REIT dividend treated as UBTI to a qualified trust that owns more than 10% of
the value of the REIT shares is equal to the ratio of (i) the UBTI earned by the
REIT (computed as if the REIT were a qualified trust and therefore subject to
tax on its UBTI) to (ii) the total gross income (less certain associated
expenses) of the REIT for the year in which the dividends are paid. A de minimis
exception applies where the ratio set forth in the preceding sentence is less
than 5% for any year.
The provisions requiring qualified trusts to treat a portion of REIT
distributions as UBTI will not apply if the REIT is able to satisfy the five or
fewer requirement without relying on the "look-through" rule. The restrictions
on ownership of Common Stock in EastGroup's Charter should prevent application
of the foregoing provisions to qualified trusts purchasing Common Stock of
EastGroup pursuant to the Offering, absent a waiver of the restrictions by the
Board of Directors.
Taxation of Non-U.S. Stockholders. The rules governing U.S. Federal income
taxation of nonresident alien individuals, foreign corporations, foreign
partnerships and other foreign stockholders (collectively, "Non-U.S.
Stockholders") are complex, and no attempt will be made herein to provide more
than a limited summary of such rules. The discussion does not consider any
specific facts or circumstances that may apply to a particular Non-U.S.
Stockholder. Prospective Non-U.S. Stockholders should consult with their own tax
advisors to determine the impact of U.S. Federal, state and local income tax
laws with regard to an investment in Common Stock, including any reporting
requirements.
Distributions that are not attributable to gain from sales or exchanges by
EastGroup of U.S. real property interests and not designated by EastGroup as
capital gain dividends will be treated as dividends of ordinary income to the
extent that they are made out of current or accumulated earnings and profits of
EastGroup. Such distributions, ordinarily, will be subject to a withholding tax
equal to 30% of the gross amount of the distribution unless an applicable tax
treaty reduces such rate. However, if income from the investment in Common Stock
is treated as effectively connected with the Non-U.S. Stockholder's conduct of a
U.S. trade or business, the Non-U.S. Stockholder generally will be subject to a
tax at graduated rates, in the same manner as U.S. stockholders are taxed with
respect to such dividends (and may also be subject to a branch profits tax of up
to 30% if the stockholder is a foreign corporation). EastGroup expects to
withhold U.S. income tax at the rate of 30% on the gross amount of any dividends
paid to a Non-U.S. Stockholder that are not designated as capital gain
dividends, unless (i) a lower treaty rate applies and the required form
evidencing eligibility for that reduced rate is filed with EastGroup or (ii) the
Non-U.S. Stockholder files an IRS Form 4224 with EastGroup claiming that the
distribution is income treated as effectively connected to a U.S. trade or
business.
Distributions in excess of current and accumulated earnings and profits of
EastGroup will not be taxable to a stockholder to the extent that they do not
exceed the adjusted basis of the stockholder's Common Stock, but rather will
reduce the adjusted basis of such shares. To the extent that such distributions
exceed the adjusted basis of a Non-U.S. Stockholder's shares, they will give
rise to tax liability if the Non-U.S. Stockholder would otherwise be subject to
tax on any gain from the sale or disposition of his or her Common Stock as
described below. If at any time EastGroup is not a "domestically controlled
REIT," as defined below, EastGroup must withhold U.S. income tax at the rate of
10% on distributions to Non-U.S. Stockholders that are not paid out of current
or accumulated earnings and profits unless the Non-U.S. Stockholders provide
EastGroup with withholding certificates evidencing their exemption from
withholding tax. If it cannot be
22
<PAGE> 25
determined at the time that such a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the distribution will be subject to withholding at the rate applicable to
dividends. However, the Non-U.S. Stockholder may seek a refund of such amounts
from the Service if it is subsequently determined that such distribution was, in
fact, in excess of current and accumulated earnings and profits of EastGroup.
For any year in which EastGroup qualifies as a REIT, distributions that are
attributable to gain from sales or exchanges by EastGroup of U.S. real property
interests will be taxed to a Non-U.S. Stockholder under the provisions of the
Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under FIRPTA,
these distributions are taxed to a Non-U.S. Stockholder as if such gain were
effectively connected with a U.S. business. Thus, Non-U.S. Stockholders will be
taxed on such distributions at the normal capital gain rates applicable to U.S.
stockholders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals). Also,
distributions subject to FIRPTA may be subject to a 30% branch profits tax in
the hands of a corporate Non-U.S. Stockholder not entitled to treaty relief or
exemption. EastGroup is required by applicable Treasury Regulations to withhold
35% of any distribution that could be designated by EastGroup as a capital gain
dividend. This amount is creditable against the Non-U.S. Stockholder's FIRPTA
tax liability.
Gain recognized by a Non-U.S. Stockholder upon a sale of Common Stock
generally will not be taxed under FIRPTA if EastGroup is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of its shares was held directly
or indirectly by Non-U.S. Stockholders. EastGroup believes that it currently
qualifies as a "domestically controlled REIT," and that the sale of Common Stock
will not therefore be subject to tax under FIRPTA. Because EastGroup is publicly
traded, however, no assurance can be given that the company will continue to be
a domestically controlled REIT. Even if EastGroup is not a "domestically
controlled REIT," a Non-U.S. Stockholder's sale of Common Stock generally will
not be subject to tax under FIRPTA as a sale of U.S. real property interests,
provided that (i) EastGroup's Common Stock is "regularly traded" on an
established securities market, and (ii) the selling Non-U.S. Stockholder held 5%
or less of EastGroup's Common Stock at all times during the specified testing
period. In addition, gain not subject to FIRPTA will be taxable to a Non-U.S.
Stockholder if (i) the investment in Common Stock is treated as effectively
connected with the Non-U.S. Stockholder's trade or business, in which case the
Non-U.S. Stockholder will be subject to the same treatment as the U.S.
stockholders with respect to such gain; or (ii) the Non-U.S. Stockholder is a
nonresident alien individual who was present in the United States for 183 days
or more during the taxable year and has a "tax home" in the United States, in
which case the nonresident alien individual will be subject to a 30% withholding
tax on the individual's capital gains. If the gain on the sale of Common Stock
were to be subject to tax under FIRPTA, the Non-U.S. Stockholder would be
subject to the same treatment as U.S. stockholders with respect to such gain
(subject to applicable alternative minimum tax and a special alternative minimum
tax in the case of nonresident alien individuals).
State and Local Taxes. EastGroup and its stockholders may be subject to
state or local taxation in various state or local jurisdictions, including those
in which it or they transact business or reside (although stockholders who are
individuals generally should not be required to file state income tax returns
outside of their state of residence with respect to EastGroup's operations and
distributions). The state and local tax treatment of EastGroup and its
stockholders may not conform to the Federal income tax consequences discussed
above. Consequently, prospective stockholders should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in
the Securities.
PLAN OF DISTRIBUTION
EastGroup may sell Securities to or through underwriters or dealers for
public offering and sale by or through them, and also may sell Securities
directly to other purchasers or agents or through any combination of these
methods of sale.
23
<PAGE> 26
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from EastGroup or from purchasers of Securities, for whom they may
act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers, and agents that participate in the distribution
of Securities may be deemed to be underwriters, and any discounts or commissions
they receive from EastGroup and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from EastGroup will be described, in the applicable
Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the shares of Common Stock which are listed on the NYSE. Any shares
of Common Stock sold pursuant to a Prospectus Supplement will be listed on such
exchange, subject to official notice of issuance. EastGroup may elect to list
any series of Preferred Stock or Depositary Shares on an exchange, but is not
obligated to do so. It is possible that one or more underwriters may make a
market in a series of Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of the trading market for the
Securities.
Under agreements EastGroup may enter into, underwriters, dealers and agents
who participate in the distribution of Securities may be entitled to
indemnification by EastGroup against certain liabilities, including liabilities
under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, EastGroup in the ordinary course of
business.
If so indicated in the applicable Prospectus Supplement, EastGroup will
authorize underwriters or other persons acting as EastGroup's agents to solicit
offers by certain institutions to purchase Securities from EastGroup pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
EastGroup. The obligations of any purchaser under any such contract will be
subject to the condition that the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
EXPERTS
The consolidated financial statements and financial statement schedules of
EastGroup as of December 31, 1997 and 1996, and for each of the years in the
three year period ended December 31, 1997, and the December 31, 1997 historical
summaries of gross income and direct operating expenses of Wal-Mart Distribution
Center, World Houston 1 and 2, Estrella Distribution Center and Industry
Distribution Center, have been incorporated by reference in the Prospectus and
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Securities will be passed upon for EastGroup by Jaeckle
Fleischmann & Mugel, LLP, Buffalo, New York.
24
<PAGE> 27
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
issuance and distribution of the Securities, other than underwriting discounts
and commissions. All of the amounts shown are estimated except the Securities
and Exchange Commission ("Commission") registration fee.
<TABLE>
<S> <C>
Commission Registration Fee................................. $ 64,937
New York Stock Exchange, Inc. Listing Fee................... 35,000
Blue Sky fees and expenses.................................. 5,000
Printing and engraving expenses............................. 100,000
Legal fees and expenses..................................... 100,000
Accounting fees and expenses................................ 75,000
Miscellaneous............................................... 15,063
--------
Total..................................................... $395,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
EastGroup's Articles of Incorporation, as amended, contain a provision
authorizing EastGroup to indemnify and hold harmless, to the fullest extent
permitted by Maryland law, directors 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
corporation, subject to certain limitations, to indemnify its officers and
directors 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
director 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 director received an improper personal benefit or, with respect to a
criminal action or proceeding, the director had no reasonable cause to believe
the director's conduct was unlawful.
EastGroup has entered into an indemnification agreement (the
"Indemnification Agreement") with each of its directors and officers, and the
Board of Directors has authorized EastGroup to enter into an Indemnification
Agreement with each of the future directors and officers of EastGroup. The
Indemnification Statute permits a corporation to indemnify its directors and
officers. However, the protection that is specifically afforded by the
Indemnification Statute authorizes other arrangements for indemnification of
directors and officers, including insurance. The Board of Directors has approved
and the stockholders have ratified the Indemnification Agreement, which is
intended to provide indemnification to the maximum extent allowable by, or not
in violation of, or offensive to, any law of the State of Maryland.
The Indemnification Agreement provides that EastGroup shall indemnify a
director 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 director 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> 28
ITEM 16. EXHIBITS.
The following exhibits are filed herewith (or incorporated by reference):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <S>
1 Form of Underwriting Agreement.*
3(a) Charter of EastGroup.**
(b) Articles Supplementary to the Charter of EastGroup.**
(c) Bylaws of EastGroup.**
5 Opinion of Jaeckle Fleischmann & Mugel, LLP regarding
legality of securities being registered.*
8 Opinion of Jaeckle Fleischmann & Mugel, LLP regarding tax
matters.*
12 Statement regarding computation of ratios.+
23(a) Consent of KPMG Peat Marwick LLP.+
(b) Consent of Jaeckle Fleischmann & Mugel, LLP (incorporated by
reference to Exhibit 5).
24 Powers of Attorney.+
</TABLE>
- ---------------
+ Filed herewith.
* To be filed by amendment or to be incorporated by reference herein by a
Current Report on Form 8-K.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Sections 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities
II-2
<PAGE> 29
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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 director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form or prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 30
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF JACKSON, STATE OF MISSISSIPPI AS OF THE 26TH OF JUNE
1998.
EASTGROUP PROPERTIES, INC.
By: /s/ DAVID H. HOSTER II
------------------------------------
David H. Hoster II
President and Chief
Executive Officer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints each of David H. Hoster II or N. Keith
McKey his or her true and lawful attorney-in-fact and agent, each with full
power of substitution and revocation, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each
attorney-in-fact and agent, full power and authority to do and perform each such
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND THE FOREGOING POWERS OF ATTORNEY HAVE BEEN SIGNED BY
THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ LELAND R. SPEED Chairman and Director June 26, 1998
- ------------------------------------------------
Leland R. Speed
/s/ DAVID H. HOSTER II Chief Executive Officer, President June 26, 1998
- ------------------------------------------------ and Director
David H. Hoster II
/s/ N. KEITH MCKEY Executive Vice President, Chief June 26, 1998
- ------------------------------------------------ Financial Officer, Treasurer and
N. Keith McKey Secretary
/s/ DIANE W. HAYMAN Vice President and Controller June 26, 1998
- ------------------------------------------------ (Principal Accounting Officer)
Diane W. Hayman
/s/ ALEXANDER G. ANAGNOS Director June 23, 1998
- ------------------------------------------------
Alexander G. Anagnos
/s/ H.C. BAILEY, JR. Director June 23, 1998
- ------------------------------------------------
H.C. Bailey, Jr.
/s/ FREDRIC H. GOULD Director June 24, 1998
- ------------------------------------------------
Fredric H. Gould
/s/ DAVID M. OSNOS Director June 23, 1998
- ------------------------------------------------
David M. Osnos
/s/ JOHN N. PALMER Director June 23, 1998
- ------------------------------------------------
John N. Palmer
</TABLE>
II-4
<PAGE> 1
EXHIBIT 12
EASTGROUP PROPERTIES, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
3 MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, 1998 DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pretax income from continuing operations
(net income (loss)) 4,998,350.88 20,778,583.10 12,509,189.35 7,710,814.49 7,167,825.65 6,414,661.94
Add: fixed charges 2,939,651.99 10,551,416.44 8,929,889.00 6,286,788.07 3,905,060.22 3,415,318.22
------------ ------------- ------------- ------------- ------------- ------------
7,938,002.87 31,329,999.54 21,439,078.35 13,997,602.56 11,072,885.87 9,829,980.16
2,939,651.99 10,551,416.44 8,929,889.00 6,286,788.07 3,905,060.22 3,415,318.22
------------ ------------- ------------- ------------- ------------- ------------
Ratio of earnings to fixed charges 2.700321 2.96927 2.4008 2.226511 2.835522 2.878203
============ ============= ============= ============= ============= ============
Fixed charges:
Interest expense per original
financials 5,975,348.70 3,746,867.98 3,112,526.97
Add: amortization of loan costs 311,439.37 158,192.24 302,791.25
------------- ------------ ------------
Interest per adjusted 10-K 6,286,788.07 3,905,060.22 3,415,318.22
============= ============= ============
</TABLE>
Fixed charges consist of interest costs and amortization of debt issuance costs.
II-7
<PAGE> 1
EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
EastGroup Properties, Inc.:
We consent to the use of our reports, as listed below, incorporated herein
by reference:
- Reports dated March 16, 1998 with respect to the consolidated balance
sheets of EastGroup Properties, Inc. and subsidiaries as of December 31,
1997 and 1996 and the related consolidated statements of income, changes
in stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, and all related schedules,
which reports appear in the December 31, 1997 annual report on Form 10-K
of EastGroup Properties, Inc.; and
- Reports dated April 28, 1998, April 28, 1998, April 30, 1998 and May 19,
1998, respectively, with respect to the December 31, 1997 historical
summaries of gross income and direct operating expenses of Wal-Mart
Distribution Center, World Houston 1 and 2, Estrella Distribution Center
and Industry Distribution Center, respectively, which reports appear in
the Form 8-K of EastGroup Properties, Inc. dated June 1, 1998.
We also consent to the reference to our Firm under the heading "Experts" in
the prospectus.
Jackson, Mississippi KPMG Peat Marwick LLP
July 1, 1998
