EASTGROUP PROPERTIES INC, DEF 14A, 1999-04-27

EASTGROUP PROPERTIES INC
DEF 14A, 1999-04-27
REAL ESTATE INVESTMENT TRUSTS

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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

EASTGROUP PROPERTIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: .......

(2) Aggregate number of securities to which transaction applies: ..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............

(4) Proposed maximum aggregate value of transaction: ......................

(5) Total fee paid: .......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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<PAGE> 2

EASTGROUP PROPERTIES, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195

April 30, 1999

Dear Stockholder:

You are cordially invited to the annual meeting (the "Meeting") of
stockholders of EastGroup Properties, Inc. (the "Company"), to be held on June
2, 1999 at 9:00 a.m., Jackson time, at the Company's offices, 300 One Jackson
Place, 188 East Capitol Street, Jackson, Mississippi.

Stockholders will be asked to vote on the election of eight directors of
the Company, proposed amendments to the Company's 1994 Management Incentive
Plan, as amended, and to transact such other business as may properly come
before the Meeting or any adjournment thereof.

The proposed transactions are important to you as a stockholder. Therefore,
whether or not you plan to attend the Meeting, I urge you to give your immediate
attention to the proposals. Please review the enclosed materials, sign and date
the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.

Very truly yours,
/s/ Leland R. Speed
LELAND R. SPEED
Chairman of the Board of Directors
<PAGE> 3

EASTGROUP PROPERTIES, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 1999

To the Stockholders:

Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of EastGroup Properties, Inc. (the "Company"), will be held at the
Company's offices, 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi, on June 2, 1999 at 9:00 a.m., Jackson time, for the following
purposes:

1. To elect eight directors of the Company;

2. To consider and vote on amendments to the Company's 1994 Management
Incentive Plan, as amended; and

3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.

Only stockholders of record at the close of business on April 21, 1999 are
entitled to notice of and to vote at the Meeting and any adjournment thereof.

The directors sincerely desire your presence at the Meeting. However, so
that we may be sure your vote will be included, please sign and return the
enclosed proxy promptly. A self-addressed, postage-paid return envelope is
enclosed for your convenience.

The prompt return of your proxy will avoid delay and save the expense
involved in further communication. The proxy may be revoked by you at any time
prior to its exercise, and the giving of your proxy will not affect your right
to vote in person if you wish to attend the Meeting.

By Order of the Board of Directors
/s/ Keith McKey
N. KEITH MCKEY
Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary

DATED: April 30, 1999

THIS IS AN IMPORTANT MEETING. STOCKHOLDERS ARE URGED TO VOTE BY SIGNING,
DATING AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE> 4

EASTGROUP PROPERTIES, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
------------------------

PROXY STATEMENT
FOR

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 2, 1999

The following information is being furnished to the stockholders of
EastGroup Properties, Inc. (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company for use at its Annual
Meeting of Stockholders (the "Meeting"), to be held on June 2, 1999 at 9:00
a.m., Jackson time, at the Company's offices, 300 One Jackson Place, 188 East
Capitol Street, Jackson, Mississippi. A copy of the Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1998 accompanies this Proxy
Statement. Additional copies of the Annual Report, Notice, Proxy Statement and
Form of Proxy may be obtained from the Company's Secretary, P.O. Box 22728,
Jackson, Mississippi 39225-2728. This Proxy Statement will first be sent to
stockholders on or about April 30, 1999.

SOLICITATION AND REVOCABILITY OF PROXIES

The enclosed proxy for the Meeting is being solicited by the directors of
the Company. Any person giving a proxy may revoke it at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy may also be
revoked by a stockholder attending the Meeting, withdrawing the proxy and voting
in person.

The expense of preparing, printing and mailing the form of proxy and the
material used in the solicitation thereof will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by the directors,
officers and regular employees of the Company (who will receive no additional
compensation therefor) by means of personal interview, telephone or facsimile.
It is anticipated that banks, brokerage houses and other institutions,
custodians, nominees, fiduciaries or other record holders will be requested to
forward the soliciting material to persons for whom they hold shares and to seek
authority for the execution of proxies; in such cases, the Company will
reimburse such holders for their charges and expenses.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The record date for determining shares of common stock, par value $0.0001
per share, of the Company (the "Common Stock"), and shares of Series B
Cumulative Convertible Preferred Stock, par value $0.0001 per share (the "Series
B Preferred Stock"), entitled to vote at the Meeting has been fixed at the close
of business on April 21, 1999. On such date there were 16,030,642 shares of
Common Stock outstanding and 400,000 shares of Series B Preferred Stock
outstanding. The holders of Common Stock are generally entitled to one vote for
each share of Common Stock on each matter submitted to a vote at a meeting of
stockholders. The holders of Series B Preferred Stock are generally entitled to
1.1364 votes for each share of Series B Preferred Stock on each matter submitted
to a vote at a meeting of stockholders. Pursuant to the Company's Bylaws,
directors will be elected by
<PAGE> 5

a plurality of the votes with each share being voted for as many individuals as
there are directors to be elected and for whose election the share is entitled
to vote.

The presence, in person or by properly executed proxy, of the holders of
shares of Common Stock and Series B Preferred Stock entitled to cast a majority
of all the votes entitled to be cast at the Meeting is necessary to constitute a
quorum. Common Stock and Series B Preferred Stock represented by a properly
signed, dated and returned proxy will be treated as present at the Meeting for
purposes of determining a quorum.

The Common Stock amounts and per share of Common Stock information set
forth in this proxy statement give retroactive effect to a three-for-two stock
split effected by the Company on April 7, 1997.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), beneficially owned, as of April 12, 1999, more than five
percent of the Common Stock and Series B Preferred Stock outstanding, except as
set forth in the following table.

<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS AMOUNT SERIES B
OF BENEFICIAL OWNER BENEFICIALLY OWNED PREFERRED STOCK
- ------------------- ------------------ ---------------
<S> <C> <C>
Five Arrows Realty Securities II L.L.C.
c/o Rothschild Realty, Inc. 400,000 shares of
1251 Avenue of the Americas Series B
New York, New York 10020.................................. Preferred Stock 100%
</TABLE>

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information available to the Company
with respect to shares of Common Stock owned by each director, each nominee for
director, each executive officer and all directors, nominees and executive
officers as a group, as of April 12, 1999.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF SERIES B
NUMBER OF SHARES PREFERRED STOCK PERCENTAGE OF SHARES
DIRECTORS, NOMINEES OF COMMON STOCK PERCENTAGE OF SHARES BENEFICIALLY OF SERIES B
AND EXECUTIVE OFFICERS BENEFICIALLY OWNED OF COMMON STOCK (1) OWNED PREFERRED STOCK
---------------------- ------------------ -------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
D. Pike Aloian................ 0 * 400,000 100% (2)
Alexander G. Anagnos.......... 16,500(3) * 0 *
H.C. Bailey, Jr............... 38,102(4) * 0 *
Anthony J. Bruno.............. 101,201(5) * 0 *
Fredric H. Gould.............. 13,500(6) * 0 *
John N. Palmer................ 18,123(7) * 0 *
David M. Osnos................ 23,250(8) * 0 *
Leland R. Speed............... 291,231(9) 1.8% 0 *
David H. Hoster II............ 215,827(10) 1.3 0 *
N. Keith McKey................ 132,956(11) * 0 *
Diane W. Hayman............... 27,925(12) * 0 *
</TABLE>

2
<PAGE> 6

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF SERIES B
NUMBER OF SHARES PREFERRED STOCK PERCENTAGE OF SHARES
DIRECTORS, NOMINEES OF COMMON STOCK PERCENTAGE OF SHARES BENEFICIALLY OF SERIES B
AND EXECUTIVE OFFICERS BENEFICIALLY OWNED OF COMMON STOCK (1) OWNED PREFERRED STOCK
---------------------- ------------------ -------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Marshall A. Loeb.............. 37,040(13) * 0 *
Jann W. Puckett............... 28,420(14) * 0 *
Stewart R. Speed.............. 62,307(15) * 0 *
Eric C. Lopez................. 200 * 0 *
All directors, nominees and
executive officers as a
group....................... 1,006,582(16) 6.1 400,000 100
</TABLE>

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

* Less than 1.0%.

(1) Based on the number of shares of Common Stock outstanding as of April 12,
1999 which was 16,065,142 shares of Common Stock.

(2) The 400,000 shares of Series B Preferred Stock are held by Five Arrows
Realty Securities II L.L.C. ("Five Arrows"), a Delaware limited liability
company of which Rothschild Realty Investors IIA L.L.C. is the managing
member which has appointed Mr. Aloian, among others, as manager of Five
Arrows. Five Arrows also has the right to acquire 1,325,000 shares of
Series B Preferred Stock pursuant to an Investment Agreement between the
Company and Five Arrows dated as of September 25, 1998. Mr. Aloian
disclaims beneficial ownership of all of the shares of Series B Preferred
Stock.

(3) Includes 16,500 shares of Common Stock that Mr. Anagnos has the right to
acquire under the Company's 1991 Directors Stock Option Plan, as amended
(the "Directors Plan").

(4) Includes (i) 18,750 shares of Common Stock that Mr. Bailey has the right to
acquire under the Directors Plan; (ii) 6,136 shares of Common Stock with
respect to which Mr. Bailey has sole voting and dispositive power; and
(iii) 13,216 shares of Common Stock with respect to which Mr. Bailey has
shared voting and dispositive power.

(5) Includes 16,820 shares of Common Stock owned by the Ensign Property Group
Profit Sharing Plan for Mr. Bruno's benefit and 20,898 shares of Common
Stock owned by a trust of which Mr. Bruno is trustee. As trustee of another
trust, Mr. Bruno also has sole voting and investment power as to 5,000
shares of 9.00% Series A Cumulative Redeemable Preferred Stock, par value
$0.0001 per share, which do not have voting rights at the Meeting.

(6) Includes 7,500 shares of Common Stock that Mr. Gould has the right to
acquire under the Directors Plan and 3,000 shares of Common Stock owned by
One Liberty Properties, Inc. of which Mr. Gould is Chairman. Mr. Gould
disclaims beneficial ownership as to the 3,000 shares of Common Stock owned
by One Liberty Properties, Inc.

(7) Includes 16,500 shares of Common Stock that Mr. Palmer has the right to
acquire under the Directors Plan.

(8) Includes 18,750 shares of Common Stock that Mr. Osnos has the right to
acquire under the Directors Plan.

(9) Includes 138,608 shares of Common Stock that Mr. Speed has the right to
acquire pursuant to exercisable options granted under the Company's 1994
Management Incentive Plan, as amended (the "1994 Incentive Plan"), and does
not include 21,888 shares of Common Stock beneficially owned by Mr. Speed's
spouse, as to which he disclaims beneficial ownership.

(10) Includes 151,715 shares of Common Stock that Mr. Hoster has the right to
acquire pursuant to exercisable options granted under the Company's 1994
Incentive Plan and does not include 4,680 shares of Common

3
<PAGE> 7

Stock beneficially owned by Mr. Hoster's wife and daughters, as to which he
disclaims beneficial ownership.

(11) Includes 109,000 shares of Common Stock that Mr. McKey has the right to
acquire pursuant to exercisable options granted under the Company's 1994
Incentive Plan and does not include 773 shares of Common Stock beneficially
owned by Mr. McKey's son, as to which he disclaims beneficial ownership.

(12) Includes 25,925 shares of Common Stock that Ms. Hayman has the right to
acquire pursuant to exercisable options granted under the Company's 1994
Incentive Plan.

(13) Includes 23,000 shares of Common Stock that Mr. Loeb has the right to
acquire pursuant to exercisable options granted under the Company's 1994
Incentive Plan.

(14) Includes 27,925 shares of Common Stock Ms. Puckett has the right to acquire
pursuant to exercisable options granted under the Company's 1994 Incentive
Plan.

(15) Does not include 450 shares of Common Stock owned by Mr. Speed's wife.
Includes 17,000 shares of Common Stock Mr. Speed has the right to acquire
pursuant to exercisable options granted under the Company's 1994 Incentive
Plan.

(16) Includes 78,000 shares of Common Stock that directors of the Company have
the right to acquire under the Directors Plan and 493,173 shares of Common
Stock that officers of the Company have the right to acquire pursuant to
exercisable options granted under the Company's 1994 Incentive Plan.

PROPOSAL NO. 1 -- ELECTION OF DIRECTORS

NOMINEES

Pursuant to the Bylaws of the Company, the number of directors shall be
eight. All eight positions on the Board of Directors are to be filled by the
vote of the stockholders at the Meeting. Each person so elected shall serve
until the Company's next Annual Meeting of Stockholders and until his successor
is elected and qualified.

The Company's directors recommend a vote FOR the eight nominees listed
below. Except where authority to do so has been withheld, it is the intention of
the persons named in the accompanying Form of Proxy to vote at the Meeting FOR
these nominees. Each of the nominees listed below, except Mr. Aloian, was
elected a director at the Company's 1998 Annual Meeting of Stockholders.

Although the directors do not contemplate that any of the nominees listed
below will be unable to serve, if such a situation arises prior to the Meeting,
the enclosed proxy will be voted in accordance with the best judgment of the
person or persons voting the proxy.

4
<PAGE> 8

<TABLE>
<CAPTION>
NAME, POSITION(S) AND PRINCIPAL OCCUPATION AND
TENURE WITH THE COMPANY AGE BUSINESS FOR THE PAST FIVE YEARS (1)
----------------------- --- ----------------------------------------------------
<S> <C> <C>
David H. Hoster II................... 53 Chief Executive Officer of the Company since 1997
Director and President since and President since 1993; Executive Vice President
1993; Chief Executive Officer of the Company until 1993; President of LNH REIT,
since 1997 Inc. ("LNH") from 1995 to 1996 and its Executive
Vice President from 1992 to 1995; Executive Vice
President of Congress Street Properties, Inc.
("Congress Street"), Eastover Corporation
("Eastover"), The Parkway Company (predecessor to
Parkway Properties, Inc. ("Parkway")), and Rockwood
National Corporation ("Rockwood"), from 1988 to
1994, and EB, Inc. ("EB") from 1993 to 1994.
David M. Osnos....................... 67 Attorney and Senior Partner in the law firm of
Director since 1993 Arent, Fox, Kintner, Plotkin & Kahn.
John N. Palmer....................... 64 Chairman of SkyTel Communications, Inc. (formerly
Director since 1994 Mobile Telecommunication Technologies).
Leland R. Speed...................... 66 Chairman of the Board of the Company and Parkway;
Director since 1978 and Chief Executive Officer of the Company and Parkway
Chairman since 1983 until 1997; Chief Executive Officer of LNH until
1996; Chief Executive Officer of Eastover, Congress
Street and Rockwood until 1994, and EB until 1995.
</TABLE>

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

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

OTHER DIRECTORSHIPS AND TRUSTEESHIPS

Directors and nominees to the Company's Board of Directors serve on the
Boards of Directors or the Boards of Trustees of the following publicly-held
companies:

<TABLE>
<CAPTION>
NAME COMPANY
- ---- -------
<S> <C>
D. Pike Aloian................................... Koger Equity, Inc.
Fredric H. Gould................................. BRT Realty Trust
One Liberty Properties, Inc.
Sunstone Hotel Investors, Inc.
David M. Osnos................................... VSE Corporation
Washington Real Estate Investment Trust
John N. Palmer................................... Entergy Corporation
First American Corporation
SkyTel Communications, Inc.
Leland R. Speed.................................. ChemFirst Inc.
Farm Fish, Inc.
KLLM Transport Services, Inc.
Parkway Properties, Inc.
</TABLE>

5
<PAGE> 9

COMMITTEES AND MEETING DATA

The Audit Committee of the Company's Board of Directors consists of Messrs.
Bailey, Gould and Osnos. The Audit Committee met twice during the Company's 1998
fiscal year. The functions performed by this committee consist principally of
conferring with and reviewing the reports of the Company's independent
accountants and bringing to the entire Board of Directors for review those items
relating to audits or to accounting practices which the Audit Committee believes
merit such review.

The Compensation Committee of the Company's Board of Directors consists of
Messrs. Anagnos, Bailey and Palmer. Its function is to recommend compensation
levels for directors, review compensation levels for executive officers and
administer the 1994 Incentive Plan. The Compensation Committee met once during
the Company's 1998 fiscal year.

The Investment Committee of the Company's Board of Directors consists of
Messrs. Bailey, Hoster and Speed. Its function is to approve any purchase of a
real estate asset or investment on which the total investment by the Company
does not exceed $7,500,000. The Investment Committee met eight times during the
Company's 1998 fiscal year.

The Company does not have a standing nominating committee or any committee
performing a similar function.

The Board of Directors held six meetings during the Company's 1998 fiscal
year. Each director attended at least 75% of the aggregate of the total number
of meetings of the Board of Directors and meetings held by all committees of the
Board of Directors on which he served.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires that directors, officers and
more than 10 percent stockholders of the Company file reports with the SEC
within the first 10 days of the month following any purchase or sale of Common
Stock. During 1998, no officer or director of the Company was late in filing a
report under Section 16(a).

EXECUTIVE OFFICERS

The following is a list of the Company's executive officers:

6
<PAGE> 10

<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS
----------------------- --- ----------------------------------------------------
<S> <C> <C>
N. Keith McKey....................... 48 Executive Vice President since 1993, Chief Financial
Executive Vice President of the Officer and Secretary since 1992 and Treasurer since
Company since 1993, Chief Financial 1997; Senior Vice President of LNH from 1992 until
Officer and Secretary since 1992, 1996; Senior Vice President of Congress Street,
Treasurer since 1997 Eastover, EB, Parkway and Rockwood until 1994.
Anthony J. Bruno..................... 57 Senior Vice President of the Company since 1998;
Senior Vice President since 1998 President of EastGroup Property Services, Inc. since
1998; President of The Ensign Company (real estate
development) until 1998.
Marshall A. Loeb..................... 36 Senior Vice President -- Director of Western Region
Senior Vice President -- since 1998 since 1998, Vice President since 1995 and Asset
Manager of the Company since 1991.
Stewart R. Speed..................... 35 Senior Vice President since 1999 and Vice President
Senior Vice President since 1997 of the Company from 1997 until 1998; Vice President
of Merry Land & Investment Co. ("Merry Land") (an
apartment REIT) from 1996 to 1997 and Acquisitions
and Development Specialist of Merry Land from 1993
to 1996.
Diane W. Hayman...................... 37 Vice President since 1997 and Controller of the
Vice President since 1997 and Company.
Controller
Eric C. Lopez........................ 37 Vice President of the Company since 1999; Vice
Vice President since 1999 President of EastGroup Property Services, Inc. since
1998; Vice President of Ensign Properties, Inc. in
1998; Vice President -- Finance & Administration of
Orlando Central Park, Inc. (a subsidiary of Lockheed
Martin Corporation) until 1998.
Jann W. Puckett...................... 51 Vice President of the Company since 1995 and its
Vice President since 1995 Asset Manager since 1992; Vice President and Asset
Manager of Parkway from 1992 to 1995.
</TABLE>

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

Leland R. Speed, Chairman, is the father of Stewart R. Speed, Senior Vice
President of the Company. There are no other family relationships between any of
the directors or executive officers of the Company.

7
<PAGE> 11

EXECUTIVE COMPENSATION

The following table summarizes, for the fiscal years ended December 31,
1998, 1997 and 1996, the amount of the compensation paid by the Company to its
Chief Executive Officer and all other executive officers whose cash compensation
during 1998 exceeded $100,000 (the "Named Officers").

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------ UNDERLYING
NAME AND OTHER ANNUAL OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS (3) PAYOUTS COMPENSATION (4)
------------------ ---- ------ ----- ------------ ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leland R. Speed...... 1998 $152,439 $134,748 -0- -0- -0- $10,500
Chairman 1997 139,731 91,538(2) -0- 47,000 -0- 10,765
1996 130,000(1) 110,502(2) -0- 37,500 -0- 9,124
David H. Hoster II... 1998 223,534 197,048 -0- -0- -0- 14,146
President and 1997 191,855 124,950(2) -0- 84,000 -0- 13,830
Chief Executive 1996 181,865 116,028(2) -0- 52,500 -0- 13,455
Officer
N. Keith McKey....... 1998 156,735 137,475 -0- -0- -0- 14,126
Executive Vice 1997 139,947 90,967(2) -0- 47,000 -0- 13,830
President, Chief 1996 132,404 84,471(2) -0- 37,500 -0- 13,625
Financial Officer,
Treasurer and
Secretary
Anthony J. Bruno..... 1998 127,756 153,196 -0- -0- -0- 709
Senior Vice 1997(5) -0- -0- -0- -0- -0- -0-
President 1996(5) -0- -0- -0- -0- -0- -0-
Marshall A. Loeb..... 1998 134,956 15,000 -0- -0- -0- 13,601
Senior Vice 1997 86,785 17,500 -0- 16,000 -0- 10,209
President 1996 78,875 14,000 -0- 9,000 -0- 9,315
Stewart R. Speed..... 1998 94,192 20,000 -0- -0- -0- 8,383
Senior Vice 1997(6) 46,283 15,000 -0- 22,000 -0- -0-
President 1996(6) -0- -0- -0- -0- -0- -0-
</TABLE>

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

(1) For 1996, Mr. Speed's salary was paid one-half by the Company and one-half
by Parkway, of which he was also Chief Executive Officer until September
1997. For 1996, this amount is the Company's share of Mr. Speed's
compensation.

(2) This is the amount of incentive compensation payable to the Named Officer
under the 1994 Incentive Plan. The amount was paid two-thirds in cash and
one-third in shares of Common Stock.

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

8
<PAGE> 12

(4) This is the Company's discretionary contribution and matching contribution
to its 401(k) Plan for the Named Officer's benefit and the amount of premium
paid by the Company for group term life insurance on the Named Officer's
life.

(5) Mr. Bruno became an executive officer of the Company in June 1998.

(6) Mr. Stewart Speed became an officer of the Company in March 1997.

Option Grants. No options were granted to the Named Officers during the
year ended December 31, 1998.

Option Exercises and Year End Values. No options were exercised by Messrs.
McKey, Bruno, Loeb, L. Speed and S. Speed during 1998. The following table shows
the value realized by Mr. Hoster upon the exercise of options, and the year end
value of unexercised in-the-money options held by the Named Officers. Year end
values are based upon the closing price of shares of Common Stock on the New
York Stock Exchange, Inc. on December 31, 1998 ($18.4375).

AGGREGATED OPTIONS/SAR EXERCISES WITH LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE NUMBER OF UNEXERCISED IN-THE-MONEY
NAME ON EXERCISE REALIZED OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
---- --------------- -------- --------------------- ---------------------
EXERCISABLE/UNEXERCISABLE (1) EXERCISABLE/UNEXERCISABLE
----------------------------- -------------------------
<S> <C> <C> <C> <C>
Leland R. Speed...... N/A N/A 138,608/13,000 $542,575/0
Chairman
David H. Hoster II... 6,785 $45,405 151,715/27,000 $465,345/0
President and Chief
Executive Officer
N. Keith McKey....... N/A N/A 109,000/13,000 $371,811/0
Executive Vice
President, Chief
Financial Officer,
Treasurer and
Secretary
Anthony J. Bruno..... N/A N/A N/A N/A
Senior Vice
President
Marshall A. Loeb..... N/A N/A 23,000/5,000 $ 57,143/0
Senior Vice
President
Stewart R. Speed..... N/A N/A 17,000/5,000 0/0
Senior Vice
President
</TABLE>

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

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

Compensation Committee Report. The Compensation Committee of the Board of
Directors consists of Messrs. Bailey, Palmer and Anagnos. The Compensation
Committee believes that the main purpose of base compensation is to provide
sufficient base compensation to the executive officers of the Company in
relation to salary levels for other real estate companies and the officer's
level of responsibility. The Compensation Committee considered a number of
factors in setting the base compensation of Mr. Hoster, the Company's Chief

9
<PAGE> 13

Executive Officer, the most important of which were the level of compensation
paid to the chief executive officers of other real estate companies the same
relative size as the Company, the success of the Company's recent program of
acquiring new properties and engaging in business combination transactions with
other REITs and his importance in delineating and implementing the Company's
strategic plans.

The Compensation Committee has determined that the primary goals of the
Company's compensation policies should be as follows:

- To provide total compensation opportunities for executive officers which
are competitive with those provided to persons in similar positions with
which the Company competes for employees.

- To strengthen the mutuality of interest between management and
stockholders through the use of incentive compensation directly related
to corporate performance and through the use of the stock-based
incentives that result in increased Common Stock ownership by executive
officers.

The Compensation Committee believes that incentive compensation payable to
the executive officers of the Company should be based upon the Company's
performance and align the interests of management and the Company's
stockholders. In 1994, the Compensation Committee, in conjunction with an
independent compensation consultant, formulated the 1994 Incentive Plan. The
1994 Incentive Plan was approved by the Company stockholders in December 1994.
Under the 1994 Incentive Plan, each year the Compensation Committee establishes
a goal for funds from operations ("FFO") per share, a minimum level for FFO per
share below which incentive compensation should not be paid, and an incentive
award payout objective for each executive officer. Two-thirds of any incentive
award is paid in cash and one-third in shares of Common Stock. For 1998, the
Compensation Committee computed target FFO before bonus accruals of $1.88 as the
minimum FFO per share necessary for any bonus to be paid, and $2.00 as the
target FFO per share under which management would receive their target bonuses,
and $2.12 as the target FFO under which management would receive 200% of their
target bonuses. To the extent the Company's actual FFO per share exceeded $1.88
but was less than $2.12, the target bonus amounts would be pro rated. The target
bonus amounts were 50% of total base salary for Messrs. Speed, Hoster and McKey.
The Compensation Committee determined the FFO targets based upon its analysis of
the Company's internal projected financial results for 1998 and the estimates of
1998 FFO prepared by independent securities analysts who followed the Company.
The Compensation Committee believed that the stockholders of the Company would
be benefitted significantly if the FFO goal was met and would be further
benefitted if such goal were exceeded, and that management should be compensated
for the benefits derived by the Company's stockholders. The target bonus amounts
were set by the Compensation Committee after consultation with the compensation
consultant who helped the Compensation Committee formulate the 1994 Incentive
Plan.

The Company's 1998 FFO per share before bonus awards was $2.10. After
consideration, the Compensation Committee believed that each of Mr. Speed, Mr.
McKey and Mr. Hoster should be paid the amount of incentive compensation
provided by the above formula, under which Messrs. Speed, Hoster and McKey
received bonuses with respect to 1998 of $134,748, $197,048 and $137,475,
respectively, two-thirds of which were paid in cash and one-third of which was
paid in shares of Common Stock.

The Compensation Committee also believes that stock based incentive
compensation in the form of stock options helps to align the interest of the
management of the Company and its stockholders. The Compensation Committee is in
the process of studying the most effective manner in which to provide equity
based incentive compensation to the Company's executives. The amendments to the
1994 Incentive Plan described under

10
<PAGE> 14

"Proposal No. 2 -- Amendments to the Company's 1994 Management Incentive Plan,
as Amended" are intended to give the Compensation Committee more flexibility in
designing such awards.

H.C. BAILEY, JR.
JOHN N. PALMER
ALEXANDER G. ANAGNOS

This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this document or
any portion thereof into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, and shall not
otherwise be deemed filed under such acts.

Performance Comparison. Set forth below is a line graph comparing the
percentage change in the cumulative return to stockholders on shares of Common
Stock over the five years ending December 31, 1998 against the cumulative return
of the Standard & Poor's 500 ("S&P 500"), and the Equity REIT Index prepared by
the National Association of Real Estate Investment Trusts ("NAREIT Equity").

<TABLE>
<CAPTION>
THE COMPANY S&P NAREIT EQUITY
----------- --- -------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 95.55 101.31 103.17
'1995' 123.37 139.23 118.92
'1996' 171.16 171.19 160.86
'1997' 213.09 228.32 193.45
'1998' 195.13 293.57 159.59
</TABLE>

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

Directors Stock Option Plan. At the 1991 annual meeting, the stockholders
of the Company approved the Directors Plan. The Directors Plan authorizes the
issuance of options for up to 150,000 shares of Common Stock to directors of the
Company who are not, and have not been for at least one year prior to the date
of determination, employees of the Company ("Non-Employee Directors"). Under the
Directors Plan, each Non-

11
<PAGE> 15

Employee Director of the Company on March 15, 1991 was automatically granted an
option to purchase 7,500 shares of Common Stock. Each person who first becomes a
Non-Employee Director after March 15, 1991 will automatically be granted an
option to purchase 7,500 shares of Common Stock on the date the person becomes a
Non-Employee Director, if such shares of Common Stock are available. Each
Non-Employee Director will also be granted an option to purchase 2,250
additional shares of Common Stock on the date of any annual meeting at which
such Non-Employee Director is reelected to the Board of Directors. The option
exercise price is the closing price of a share of Common Stock if shares of
Common Stock are listed on an exchange or the average between the bid and the
asked price for the date if the shares of Common Stock are traded
over-the-counter (or, if no shares of Common Stock were publicly traded on that
date, the next preceding date that such shares of Common Stock were so traded).
Such options are exercisable in full on the date of grant and expire ten years
after the date of grant, or, if earlier, six months after the termination of the
optionee's service as a Non-Employee Director, unless such service is terminated
by reason of death, in which case the optionee's legal representative shall have
one year in which to exercise the option.

No director exercised options under the Directors Plan during 1998. On June
4, 1998, Messrs. Anagnos, Bailey, Palmer and Osnos each received an option to
purchase 2,250 shares of Common Stock at an exercise price of $20.625 per share.
On June 4, 1998, Mr. Gould received an option to purchase 7,500 shares of Common
Stock at an exercise price of $20.625 per share.

CERTAIN TRANSACTIONS AND RELATIONSHIPS

Cost Sharing Arrangement with Parkway. The Company and Parkway shared the
same office space at One Jackson Place in Jackson, Mississippi until April 1997
when Parkway moved into its own space. The Company and Parkway shared the rent
with respect to their shared office space based upon the relative number of
employees of each using the space. The Company and Parkway currently share the
services and expenses of the Company's Chairman of the Board and his
administrative assistant.

Ensign Properties, Inc. Acquisition. In March 1998, the Company acquired
Ensign Properties, Inc., an independent industrial developer in Orlando, of
which Mr. Bruno was the owner and President. This acquisition allowed the
Company to become self-managed in Orlando and Tampa with plans to expand
self-management to its other Florida markets. The purchase price of the
acquisition amounting to approximately $1,800,000 was allocated primarily to
goodwill, development costs, leasing commissions and other prepaid costs.

Series B Cumulative Convertible Preferred Stock. In September 1998, the
Company entered into an agreement with Five Arrows, an investment fund managed
by Rothschild Realty, Inc., a member of the Rothschild Group, providing for the
sale of 2,800,000 shares of Series B Preferred Stock at a net price of $24.50
per share. The Series B Preferred Stock, which is convertible into Common Stock
at a conversion price of $22.00 per share, is entitled to quarterly dividends in
arrears equal to the greater of $0.547 per share or the dividend on the number
of shares of Common Stock into which a share of Series B Preferred Stock is
convertible. Under the terms of the agreement with Five Arrows, the Company
could sell 2,800,000 shares of Series B Preferred Stock to Five Arrows at up to
five closings, at the Company's option, through September 25, 1999. In
connection with this offering, the Company has entered into certain related
agreements with Five Arrows, providing, among other things, for certain
registration rights with respect to the Series B Preferred Stock and the right
to designate a member of the Board of Directors under certain circumstances,
including the issuance by the Company of such number of shares of Series B
Preferred Stock such that the total number of outstanding shares of Series B
Preferred Stock exceeds 1,600,000 shares. In December 1998, the Company sold
$10,000,000 of the Series B Preferred Stock to Five Arrows and plans to sell the
remaining $60,000,000 by September 25, 1999. The Board of

12
<PAGE> 16

Directors has decided to nominate the Five Arrows nominee (Mr. Aloian) at the
Meeting because the Board anticipates that Five Arrows will own the requisite
numbers of shares prior to September 25, 1999.

PROPOSAL NO. 2 -- AMENDMENTS TO THE COMPANY'S
1994 MANAGEMENT INCENTIVE PLAN, AS AMENDED

At the Meeting, the stockholders will be asked to vote on a proposal to
ratify the adoption of amendments to the 1994 Incentive Plan. The amendments
would allow the grant of restricted shares of Common Stock to employees of the
Company and increase the number of shares of Common Stock available under the
plan. The affirmative vote of the holders of a majority of the shares of Common
Stock and Series B Preferred Stock entitled to vote on the matter is required
for ratification of the amendments to the 1994 Incentive Plan. The directors
recommend a vote FOR ratification of the amendments to the 1994 Incentive Plan.
Unless otherwise instructed, proxies will be voted FOR ratification of the
amendments to the 1994 Incentive Plan.

Appendix A to the Proxy Statement sets forth the text of the 1994 Incentive
Plan as restated to include the proposed amendments. The following description
of the 1994 Incentive Plan and the proposed amendments to the 1994 Incentive
Plan contains summaries of certain provisions of the 1994 Incentive Plan and is
qualified in its entirety by reference to the restated 1994 Incentive Plan
itself.

SUMMARY OF THE 1994 INCENTIVE PLAN, AS AMENDED AND RESTATED

The 1994 Incentive Plan authorizes the grant of options to purchase shares
of Common Stock to employees of the Company and the grant of incentive awards,
payable partially in cash and partially in shares of Common Stock, to officers
of the Company. The amendments to the 1994 Incentive Plan for which stockholder
ratification is sought would also authorize the grant of restricted shares of
Common Stock to employees of the Company.

As originally adopted on September 22, 1994, the 1994 Incentive Plan
authorized the issuance of 200,000 shares of Common Stock pursuant to the plan.
Under the 1994 Incentive Plan as in effect before the amendments for which
ratification is sought, the number of shares available automatically increased
or decreased by 5 percent of the number of shares of Common Stock sold by the
Company in a public or private offering or repurchased by the Company, and
automatically increased by 5 percent of the number of shares of Common Stock
issued by the Company in any merger or other business combination. The
amendments for which ratification is sought would change such an increase or
decrease from 5 percent to 9 percent of such number of shares, effective for
transactions after March 11, 1999. As of March 10, 1999, the aggregate number of
shares available under the 1994 Incentive Plan was 788,286. The amendments for
which ratification is sought would increase the aggregate number of shares
available to 1,450,000 as of March 11, 1999, and would authorize the issuance of
the lesser of 700,000 shares or 30 percent of the aggregate number of shares
available, as restricted shares. The 1994 Incentive Plan provides that when an
option expires or terminates unexercised, the shares subject to the option are
again available under the plan. The amendments for which ratification is sought
also provide that upon the forfeiture of restricted shares, the number forfeited
will again be available under the plan, as will the number of shares tendered in
payment of the option exercise price or retained by the Company in satisfaction
of its tax withholding obligations.

The 1994 Incentive Plan is administered by a committee of the Board of
Directors (the "Plan Committee") composed of not less than two directors.

The Plan Committee selects the employees of the Company to whom options are
granted under the 1994 Incentive Plan and determines the number of shares that
may be issued under options, the terms, conditions, and

13
<PAGE> 17

periods of exercisability of such options, and whether such options shall be
incentive stock options ("ISOs") under section 422 of the Internal Revenue Code
of 1986, as amended, (the "Code") or options that are not ISOs. The exercise
price per share of Common Stock for an option granted under the 1994 Incentive
Plan will not be less than the fair market value of a share on the date of
grant. Options are exercisable no earlier than twelve months after the date of
grant and expire no later than ten years after the date of grant.

Upon an employee's termination of employment before retirement, disability,
or death, options exercisable at the date of termination remain exercisable for
three months and all other options expire at the date of termination. Upon an
employee's termination of employment by reason of retirement (as defined in the
1994 Incentive Plan), options exercisable at retirement remain exercisable for a
year and all other options expire at retirement, except that the Plan Committee
may accelerate the exercisability of an option in whole or part upon the
employee's retirement. In the event of the disability (as defined in the 1994
Incentive Plan) or death of an active employee, the employee or the employee's
legal representative, as the case may be, may exercise the option in full within
one year following disability or death. Options are nontransferable except by
will or by the laws of descent and distribution. The amendment would increase
the total number of shares of Common Stock that an individual might purchase
under all options granted under the 1994 Incentive Plan from 100,000 shares to
500,000 shares. No options may be granted under the 1994 Incentive Plan after
September 21, 2004.

The 1994 Incentive Plan provides that incentive awards may be made to
officers of the Company designated by the Plan Committee. For each fiscal year
of the Company, the Plan Committee establishes the Company's goal for FFO per
share for the purposes of the 1994 Incentive Plan for the year and the minimum
FFO that the Company must exceed as a condition for the payment of any incentive
awards for the year under the 1994 Incentive Plan.

The Plan Committee establishes incentive award payout objectives for each
participant for each year of participation under the annual incentive award
portion of the 1994 Incentive Plan and composes a set of incentive awards
guidelines. The guidelines set out participants' incentive award payout
objectives for the year in relation to the Company's FFO goal for the year. The
Plan Committee then determines the actual amount, if any, of a participant's
incentive award for the year, subject to the approval of those members of the
Board of Directors who are disinterested directors. An annual incentive award is
payable partly in cash and partly in shares of Common Stock as determined by the
Plan Committee. The portion paid in cash from any year may vary among
participants. The 1994 Incentive Plan contains a method for determining the
value of the shares issued as a portion of an incentive award.

The 1994 Incentive Plan as amended subject to stockholder ratification
provides for the grant of restricted shares under the 1994 Incentive Plan. The
Plan Committee will select employees of the Company to whom restricted shares
will be granted and the number of restricted shares to be granted. Restricted
shares will be forfeitable and not assignable or transferable until the
satisfaction of one or more, or alternative, conditions prescribed by the Plan
Committee. The conditions may relate to the Company's performance, the
continuation of the employment of the employee, or other matters. Unless the
Plan Committee provides otherwise, the employee will be entitled to receive
dividends on and vote restricted shares during the period the restricted shares
are forfeitable. An employee will forfeit restricted shares upon termination of
employment while the shares remain forfeitable, unless the Plan Committee
provides otherwise in the case of death or disability. The maximum number of
restricted shares that may be granted to any employee is 500,000.

Outstanding option and restricted share grants are subject to adjustment in
the event of a subdivision or consolidation of shares of Common Stock, a share
dividend, a recapitalization, or other change in the Company's capital
structure. Under the 1994 Incentive Plan as amended subject to stockholder
ratification, if the Company is

14
<PAGE> 18

merged or consolidated with another corporation, the Plan Committee is
authorized to adjust outstanding option and restricted share grants to give
effect to the merger or consolidation on an equitable basis. Upon a change in
control of the Company (as defined in the 1994 Incentive Plan), all options will
become immediately exercisable and all restricted shares will become
nonforfeitable, provided, however, that if the acceleration of exercisability or
nonforfeitability would result in a less favorable after-tax position for an
employee (taking into account income taxes and golden parachute excise taxes)
than would no or limited acceleration or nonforfeitability, then acceleration or
nonforfeitability will be limited to the extent required to achieve an optimum
after-tax position for the employee.

The 1994 Incentive Plan is subject to amendment by the Board of Directors,
except that, without stockholder approval, the Board of Directors cannot
increase the number of shares of Common Stock available under the 1994 Incentive
Plan, decrease the minimum option purchase price per share, materially increase
the benefits accruing to employees, extend the term of the 1994 Incentive Plan,
change the classes of employees to whom options may be granted or awards paid,
provide for administration other than by the Plan Committee, or materially
increase the cost of the 1994 Incentive Plan to the Company.

The Company believes that under present law the federal income tax
consequences of options granted to employees under the 1994 Incentive Plan will
generally be the following: The grant of an option will have no tax consequences
for the employee or the Company. Upon the exercise of an option that is not an
ISO, the employee will recognize ordinary income in an amount equal to the
excess of the fair market value of the acquired shares on the exercise date over
the option price, and the Company will be entitled to a deduction in the same
amount. Upon the exercise of an ISO, the employee will not recognize any
ordinary income, nor will the Company be entitled to a deduction. However, the
alternative minimum tax may apply, because the excess of the fair market value
of ISO shares on the date of exercise over the option price is an adjustment to
the employee's alternative minimum taxable income. If there is no disposition of
ISO shares before the later of two years from the date of grant and one year
from the date of exercise, then the employee will realize a capital gain or loss
upon a sale of the ISO shares. If the ISO shares are sold before the later of
two years from the date of grant and one year from the date of exercise, the
amount of gain realized on the sale or, if less, the excess of the fair market
value on the exercise date over the option price, will be ordinary income for
the employee and deductible by the Company; any balance of the gain or loss
recognized by the employee on the sale will be a capital gain or loss.

The federal income tax consequences of the grant of restricted shares to
employees will generally be the following: provided the employee makes no
election under section 83(b) of the Code, the grant of restricted shares will
have no tax consequences for the employee or the Company, but on the date the
restricted shares become nonforfeitable, the employee will recognize ordinary
income in an amount equal to the fair market value of the shares on that date,
and the Company will be entitled to a deduction in the same amount. If the
employee files an election under section 83(b) of the Code with the Internal
Revenue Service within 30 days of the grant of restricted shares, the employee
will recognize ordinary income on the date of grant in an amount equal to the
fair market value of the shares on that date, and the Company will be entitled
to a deduction in the same amount on that date, and there will be no tax
consequences for the employee or the Company if the employee subsequently
forfeits the shares. Upon a sale of the shares, the employee will recognize a
capital gain (or loss) to the extent the proceeds of the sale exceed (or are
less than) the fair market value of the shares determined either as of the date
the shares became nonforfeitable or, if the employee made an election under
section 83(b) of the Code, as of the date of grant.

The Company may not deduct compensation of more than $1,000,000 that is
paid in one taxable year to an individual who is, on the last day of the year,
the chief executive officer or one of its four other highest paid officers. The
deduction limit, however, does not apply to certain types of performance-based
compensation. The

15
<PAGE> 19

Company believes that compensation attributable to options granted under the
1994 Incentive Plan will be treated as qualified performance-based compensation
and thus will not be subject to the deduction limit. Compensation attributable
to the payment of incentive awards will not be treated as qualified
performance-based compensation and will be subject to the deduction limit.
Whether compensation attributable to the grant or vesting of restricted shares
will be treated as qualified performance-based compensation will depend upon the
conditions attached to the restricted shares by the Plan Committee.

The Board of Directors adopted the proposed amendments to the 1994
Incentive Plan on March 11, 1999, subject to ratification by the stockholders at
the Meeting.

PROPOSAL NO. 3 -- OTHER MATTERS

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

INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed KPMG Peat Marwick LLP as the Company's
auditors for the year ending December 31, 1998. A representative of KPMG Peat
Marwick LLP is expected to be present at the Meeting and will have an
opportunity to make a statement, if he so desires, and will be available to
respond to appropriate questions.

STOCKHOLDER PROPOSALS FOR THE
2000 ANNUAL MEETING OF STOCKHOLDERS

PROPOSALS FOR THE COMPANY'S PROXY MATERIAL

Any Company stockholder who wishes to submit a proposal for presentation at
the Company's 2000 Annual Meeting of Stockholders must submit such proposal to
the Company at its office at 300 One Jackson Place, 188 East Capitol Street,
Jackson, Mississippi 39201, Attention: Secretary no later than January 2, 2000,
in order to be considered for inclusion, if appropriate, in the Company's proxy
statement and form of proxy relating to its 2000 Annual Meeting of Stockholders.

PROPOSALS TO BE INTRODUCED AT THE MEETING BUT NOT INTENDED TO BE INCLUDED IN THE
COMPANY'S PROXY MATERIAL

For any stockholder proposal to be presented in connection with the 2000
Annual Meeting of Stockholders, including any proposal relating to the
nomination of a director to be elected to the Board of Directors of the Company,
a stockholder must give timely written notice thereof in writing to the
Secretary of the Company in compliance with the advance notice and eligibility
requirements contained in the Company's Bylaws. To be timely, a stockholder's
notice must be delivered to the Secretary at the principal executive offices of
the Company not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following
the day on which public announcement

16
<PAGE> 20

of the date of such meeting is first made. The notice must contain specified
information about each nominee or the proposed business and the stockholder
making the nomination or proposal.

In the event that the number of directors to be elected to the Board of
Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Company at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice will be considered
timely, but only with respect to nominees for any new positions created by such
increase, if the notice is delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Company.

Based upon an initial mailing date of April 30, 1999 for this Proxy
Statement, a qualified stockholder intending to introduce a proposal or nominate
a director at the 2000 Annual Meeting of Stockholders should give written notice
to the Company's Secretary not later than April 4, 2000 and not earlier than
March 5, 2000.

The advance notice provision in the Company's Bylaws also provide that in
the case of a special meeting of stockholders called for the purpose of electing
one or more directors, a stockholder may nominate a person or persons (as the
case may be) for election to such position if the stockholder's notice is
delivered to the Secretary at the principal executive offices of the Company not
earlier than the 90th day prior to the special meeting and not later than the
close of business on the later of the 60th day prior to the special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.

The specific requirements of these advance notice and eligibility
provisions are set forth in Article II, Section 12 of the Company's Bylaws, a
copy of which is available upon request. Such requests and any stockholder
proposals should be sent to the Secretary of the Company at 300 One Jackson
Place, 188 East Capitol Street, Jackson, Mississippi 39201.

By Order Of The Board Of Directors
/s/ Keith McKey
N. KEITH MCKEY
Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary

17
<PAGE> 21

APPENDIX A

EASTGROUP PROPERTIES, INC.
1994 MANAGEMENT INCENTIVE PLAN

(AS RESTATED AND AMENDED AS OF MARCH 11, 1999)

A-1
<PAGE> 22

EASTGROUP PROPERTIES, INC.
1994 MANAGEMENT INCENTIVE PLAN

(AS RESTATED AND AMENDED AS OF MARCH 11, 1999)

TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION TITLE PAGE NO.
------- ----- --------
<S> <C> <C>
Section 1. In General.................................................. A-3
1.1 Introduction........................................... A-3
1.2 Purpose................................................ A-3
1.3 Forms of Incentives.................................... A-3
1.4 Definitions............................................ A-3
1.5 Administration......................................... A-4
1.6 Shares Available....................................... A-4
Section 2. Options..................................................... A-5
2.1 Grant of Options....................................... A-5
2.2 Terms of Options....................................... A-5
2.3 Additional Terms of Incentive Stock Options............ A-7
2.4 Limitations on Option Grants........................... A-7
Section 3. Annual Incentive Awards..................................... A-7
3.1 Participants........................................... A-7
3.2 Company FFO Goals...................................... A-7
3.3 Incentive Award Payout Objectives...................... A-7
3.4 Annual Award Guidelines................................ A-7
3.5 Determination of Actual Amounts of Awards.............. A-7
3.6 Termination of Employment; Less than a Full Year of
Participation.......................................... A-8
3.7 Payment of Awards...................................... A-8
3.8 Payment Upon Death; Designation of Beneficiary......... A-8
3.9 No Assignment.......................................... A-9
Section 4. Incentive Restricted Shares................................. A-9
4.1 Grant of Incentive Restricted Shares................... A-9
4.2 Terms of Incentive Restricted Shares................... A-9
4.3 Limitations on Incentive Restricted Shares............. A-10
Section 5. Miscellaneous............................................... A-10
5.1 Effective Date......................................... A-10
5.2 Recapitalization or Reorganization..................... A-10
5.3 Change in Control...................................... A-11
5.4 Amendment.............................................. A-12
5.5 Termination of Plan.................................... A-12
5.6 No Right to Continued Employment....................... A-12
5.7 Restrictions on Issuance of Shares; Rights as
Shareholders........................................... A-12
5.8 Construction........................................... A-13
5.9 Satisfaction of Tax Liabilities........................ A-13
</TABLE>

A-2
<PAGE> 23

EASTGROUP PROPERTIES, INC.
1994 MANAGEMENT INCENTIVE PLAN
(AS RESTATED AND AMENDED AS OF MARCH 11, 1999)

SECTION 1. IN GENERAL

1.1 Introduction. EastGroup Properties, Inc. (the "Company") establishes
the EastGroup Properties, Inc. 1994 Management Incentive Plan (the "Plan"),
effective September 22, 1994.

1.2 Purpose. The purposes of this 1994 Management Incentive Plan are to
provide greater incentive for management Employees, who are or will be primarily
responsible for the growth and success of the Company's business, to exert their
best efforts on behalf of the Company, and to further the identity of the
interest of management with those of the Company's shareholders by encouraging
management's holdings of Shares in the Company.

1.3 Forms of Incentives. This Plan shall provide incentives for certain
management Employees through grants of Options for Shares (see Section 2 below),
through annual bonuses that are related to the Company's achievement of FFO
goals and payable in part in the form of Shares (see Section 3 below), and
through the grant of Incentive Restricted Shares (see Section 4 below).

1.4 Definitions. As used in this Plan:

(a) "Board of Directors" or "Board" shall mean the Board of Directors
of the Company.

(b) "Committee" shall mean a committee of the Board of Directors,
which committee shall be composed of those members of the Compensation
Committee of the Board of Directors who are Disinterested Directors,
provided that, should there be fewer than two members of the Compensation
Committee who are Disinterested Directors, the Committee shall be composed
of two or more members of the Board of Directors who are Disinterested
Directors, including any who is a member of the Compensation Committee.

(c) "Disinterested Directors" shall mean those members of the Board
of Directors who are disinterested persons within the meaning of Rule 16b-3
of the General Rules and Regulations under the Securities Exchange Act of
1934.

(d) "Employee" shall mean an employee of the Company or a Subsidiary.

(e) "FFO" shall mean funds from operations per Share. FFO shall be
measured by net income of the Company, excluding gains or losses from sales
of property and other non-operating extraordinary items, plus depreciation,
and after adjustments for unconsolidated partnerships to reflect funds from
operations on the same basis. This measurement is intended to conform to
the current definition of "funds from operations" adopted by the National
Association of Real Estate Investment Trusts ("NAREIT") and shall be
construed accordingly. For purposes of the Plan, the measurement of FFO may
be changed in any year upon approval of the Board of Directors to conform
to a change in the definition of "funds from operations" adopted by NAREIT.
If the measurement of FFO is so changed for any year, the measurement of
FFO for the prior year (against which the current year's change will be
calculated) shall be similarly changed so that the year-to-year comparisons
utilize consistent definitions of FFO.

(f) "Fair Market Value" of a Share shall mean, on any date, (i) if
Shares are traded on a national securities exchange, the closing price of
the Shares as reported on such exchange or under any composite transaction
report of such exchange on that date, or, if no prices are so reported on
that date, on the next

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<PAGE> 24

preceding date on which such prices are so reported, or (ii) if the Shares
are traded in the over-the-counter market, the mean between the closing bid
and asked prices of the Shares or the price of Shares quoted on that date,
or, if no prices are so quoted on that date, on the next preceding date on
which such prices are so quoted.

(g) "Incentive Restricted Share" shall mean a Share granted to an
Employee pursuant to an Incentive Restricted Share agreement and subject to
the terms and conditions determined by the Committee.

(h) "Internal Revenue Code" or "Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.

(i) "Option" shall mean an option granted pursuant to the Plan to
purchase a Share and may refer to either an incentive stock option as
defined in section 422 of the Internal Revenue Code or a non-qualified
stock option, that is, an option that is not an incentive stock option.

(j) "Permanent Disability" means a medically determinable physical or
mental impairment which may be expected to result in death or to last at
least a year and which renders an Employee incapable of performing that
Employee's duties with the Company. A determination of disability will be
made by the Committee in a uniform, nondiscriminatory manner on the basis
of medical evidence.

(k) "Restricted Period" shall mean the period described in Section
4.2(a)(1).

(l) "Retirement" shall mean the termination of employment with the
Company and its Subsidiaries after the attainment of age 65 or after the
attainment of age 55 and the completion of 6 years of service with the
Company or its Subsidiaries.

(m) "Shares" shall mean the shares of common stock, $0.0001 par
value, of the Company.

(n) "Subsidiary" shall mean any present or future subsidiary
corporation of the Company as defined in section 425(f) of the Internal
Revenue Code.

1.5 Administration. The Plan shall be administered by the Committee. The
Committee shall have all the powers vested in it by the terms of the Plan. The
Committee shall have full authority to interpret the Plan and the Options
granted under the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, and to make any determinations it believes necessary or
advisable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any Option in the manner and to the extent the Committee deems desirable. Any
decision of the Committee in the administration of the Plan shall be in its sole
discretion and conclusive. The Committee may act only by a majority of its
members in office, except that the Committee may authorize any one or more of
its members or any officer of the Company to execute and deliver documents on
behalf of the Committee.

The authority to make certain determinations under the Plan has been
reserved for the entire Board of Directors, exclusive of those members of the
Board who are not Disinterested Directors. Any such determination of the
Disinterested Directors shall be in their sole discretion and conclusive.
Whenever the approval of the Disinterested Directors is required under this
Plan, such approval shall require the affirmative vote of a majority of the
members of the Board of Directors who are Disinterested Directors.

1.6 Shares Available. As of March 10, 1999, the aggregate number of Shares
that may be made subject to Options granted under the Plan and issued in
connection with the payment of incentive awards under the Plan (including grants
and payments made before and after that date) was 788,286, composed of the
200,000 Shares originally available under the Plan on September 22, 1994, and 5
percent of the number of Shares sold in public

A-4
<PAGE> 25

offerings by the Company since that date and before March 11, 1999. On March 11,
1999, that number was increased to 1,450,000, and the purposes to which such
Shares may be applied was expanded to include the grant of Incentive Restricted
Shares under the Plan. Should the Company make a public or private offering of
Shares or repurchase any Shares after March 11, 1999, the aggregate number of
Shares available under the Plan shall automatically increase or decrease by a
number of Shares that is 9 percent of the number of Shares sold in such offering
or repurchased by the Company, as the case may be. A decrease in the number of
Shares available under the Plan pursuant to the preceding sentence shall not
effect any outstanding Option or Incentive Restricted Share under this Plan. In
addition, the number of Shares available under the Plan shall increase by a
number that is 9 percent of the number of Shares issued by the Company in any
merger or business transactions. The aggregate Shares made subject to Options
that are incentive stock options shall not exceed 1,450,000 of the number of
Shares determined under the preceding sentences. The aggregate number of Shares
made subject to grant as Incentive Restricted Shares shall not exceed 30 percent
of the number of Shares available for grant under the Plan or, if less, 700,000
Shares. Upon the expiration, termination, or forfeiture in whole or part of any
unexercised Option or any Incentive Restricted Shares, the Shares subject to
such Option or forfeited grant of Incentive Restricted Shares shall again be
available for grant under the Plan. Further, any Shares tendered (by surrender
or attestation) in payment of the purchase price under an Option or of the
Company's tax withholding obligation, and any Shares retained by the Company to
satisfy its tax withholding obligation shall again be available for grant under
the Plan.

SECTION 2. OPTIONS

2.1 Grant of Options.

(a) The Company may from time to time grant Options to Employees to
purchase Shares under the Plan.

(b) The Committee shall select the Employees to whom Options are to
be granted and shall determine when Options are to be granted and the
number of Shares to be subject to each Option.

2.2 Terms of Options. Each Option granted to an Employee under the Plan
shall be evidenced by a written option agreement executed on behalf of the
Company and by the holder of the Option, in such form and upon such terms and
conditions as the Committee shall determine and as are consistent with the
provisions of the Plan, including the following:

(a) The Committee shall determine the purchase price of each Share
subject to an Option, which price shall not be less than the Fair Market
Value of a Share on the date the Option is granted.

(b) An Option may be exercised in whole or in part from time to time
during such period as the Option shall specify, provided that no Option
shall be exercisable within one year after, or more than ten years after,
the date of the grant of the Option.

(c) An Option may require that the holder represent at the time of
each exercise of the Option that the Shares purchased are being acquired
for investment and not with a view to distribution.

(d) The purchase price of the Shares with respect to which an Option
is exercised shall be payable in full on the date the Option is exercised,
in cash or, to the extent authorized by the Committee at the time the
Option is granted, in Shares or in a combination of cash and Shares. The
value of a Share delivered in payment of the purchase price shall be its
Fair Market Value on the date the Option is exercised.

A-5
<PAGE> 26

(e) An Option shall not be assignable or transferable by the Employee
to whom granted except by will or the laws of descent and distribution and
shall be exercisable, during the Employee's lifetime, only by him.

(f) Unless the Committee shall specify otherwise, the right of each
an Option holder to exercise his Option to purchase the number of Shares to
which the Option initially related shall accrue on a cumulative basis as
follows:

(i) One year after the Option is granted: 1/2

(ii) Two years after the Option is granted: 1/2

(g) Each agreement relating to an Option shall state the extent to
which the Option is intended to be either an incentive stock option or a
nonqualified stock option.

(h) Any Option that has not already expired, shall expire upon the
termination of the holder's employment with the Company and its
Subsidiaries, whether by death or otherwise, and no Shares may thereafter
be purchased pursuant to the Option, except that:

(i) If an Option holder's employment is terminated by reason of
Permanent Disability or death, the Option holder's right to exercise the
Option in full shall automatically be accelerated as of the date
preceding the Option holder's Permanent Disability or Death. The Option
holder or, in the case of the Option holder's death while in the employ
of the Company or a Subsidiary, the Option holder's estate or the person
to whom the Option holder's rights under the Option are transferred by
will or the law of descent and distribution may, within one year of the
date of the Option holder's Permanent Disability or Death, purchase all
the Shares remaining subject to the Option.

(ii) If an Option holder's employment is terminated by reason of
Retirement, the Option holder may, within twelve months after the date
of his Retirement, purchase any Shares the Option holder was entitled to
purchase under the Option on the date of his Retirement. The Committee
may, in its discretion, determine to accelerate, in whole or in part,
the right of an Option holder to exercise the Option upon Retirement, in
which case the number of Shares with respect to which the Option holder
may exercise the Option shall be adjusted accordingly.

(iii) If an Option holder's employment is terminated for any
reason other than Retirement, Permanent Disability, or death, the Option
holder may, within three months after the termination of his employment,
purchase any Shares the Option holder was entitled to purchase under the
Option on the date of the termination of his employment.

(iv) If the Option holder dies within the twelve month period
following his Retirement or Permanent Disability or within the three
month period following the termination of his employment for any other
reason, the Option holder's estate or the person to whom the Option
holder's rights are transferred by will or under the law of descent and
distribution may, within one year of the Option holder's death, purchase
any Shares the Option holder was entitled to purchase under the Option
on the date of his death.

(v) Nothing in this subsection (h) shall authorize the exercise of
an Option after the expiration of the exercise period provided in the
Option, nor later than ten years after the date of the grant of the
Option.

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<PAGE> 27

2.3 Additional Terms of Incentive Stock Options. Each incentive stock
option granted under the Plan shall be subject to the following terms and
conditions in addition to the terms and conditions described in Section 2.2
above:

(a) The purchase price of each Share subject to an incentive stock
option granted to an Employee who, at the time the Option is granted, owns
(directly and within the meaning of section 424(d) of the Code) Shares
possessing more than 10 percent of the combined voting power of all classes
of Shares of the Company shall not be less than 110 percent of the Fair
Market Value of a Share on the date the Option is granted, and the Option
shall not be exercisable more than five years after the date of grant.

(b) To the extent the aggregate Fair Market Value (determined as of
the date an Option is granted) of the Shares for which an Employee is
granted Options designated incentive stock options first exercisable in any
calendar year (under this Plan and under all plans of the Company and its
Subsidiaries) exceeds $100,000, the Option shall be treated as an Option
that is not an incentive stock option.

(c) If an Option holder disposes of Shares acquired pursuant to the
exercise of an incentive stock option in a disqualifying disposition within
the time periods identified in section 422(a)(1) of the Code, the Option
holder shall be required to notify the Company of the disposition and
provide the Company with information as to the date of disposition, sales
price, number of Shares involved, and any other information about the
disposition the Company may reasonably request.

2.4 Limitations on Option Grants. No individual shall be granted Options
under this Plan that, combined with all other Options granted to that individual
under this Plan, will entitle that individual to purchase more than 500,000
Shares under Options granted pursuant to this Plan.

SECTION 3. ANNUAL INCENTIVE AWARDS

3.1 Participants. For each fiscal year of the Company, the Committee shall
designate those officers of the Company who may participate in the annual
incentive awards for that year.

3.2 Company FFO Goals. Each year, at a meeting of the Board of Directors,
the Committee shall establish the Company's FFO goal for the purposes of the
Plan for the year and the minimum FFO that the Company must exceed as a
condition for the payment of any incentive awards for the year under this
Section 3 of the Plan.

3.3 Incentive Award Payout Objectives. The Committee shall establish
incentive award payout objectives for each participant for each year of
participation in the annual incentive award portion of this Plan. In preparation
for establishing such payout objectives, the Committee may seek the Chief
Executive Officer's recommendation regarding the payout objectives to be
established for participants other than the Chief Executive Officer.

3.4 Annual Award Guidelines. The Committee shall compose a set of
incentive award guidelines for each year. The guidelines shall set out
participants' incentive award payout objectives for the year in relation to the
Company's FFO goal for the year. Appendix A displays the format for the
incentive award guidelines.

3.5 Determination of Actual Amounts of Awards. The Committee shall
determine the actual amount, if any, of a participant's incentive award for the
year, subject to the approval of those members of the Board of Directors who are
Disinterested Directors.

In preparation for determining the amount of a participant's award, the
Committee shall compute the amount that would be awarded if the participant's
incentive award payout objective as related to the Company's FFO for the year
were to be awarded in full and may seek, with respect to each participant other
than the Chief Executive

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<PAGE> 28

Officer, the Chief Executive Officer's evaluation of the participant's
contribution to the Company during the year, in particular the participant's
contribution to the Company's achievement of its FFO goal for the year, and the
Chief Executive Officer's recommendation regarding the amount to be awarded to
the participant for the year. In making its determination the Committee shall
take into account its own evaluation of participants' contributions, the Chief
Executive Officer's evaluations and recommendations, the extent to which the
Company has achieved or exceeded its FFO goal, and any other factors the
Committee finds relevant.

Upon approval of those members of the Board of Directors who are the
Disinterested Directors, the Committee's determination of the actual amount of
an award for a year or that no award shall be made to a participant for a year
shall be final and binding, provided however that no award shall be made for a
year unless the Company's FFO for the year exceeds the minimum established for
the year, and that a participant's award for a year shall not exceed the maximum
payout objective specified in the participant's incentive award guidelines for
the year.

3.6 Termination of Employment; Less than a Full Year of Participation.
Participants who retire or resign or who are discharged or whose employment with
the Company is otherwise terminated during a fiscal year are not eligible for
incentive awards with respect to such year. If a Participant's employment
terminates during the year because of death, the Committee in its sole
discretion may elect to award a partial bonus in an amount the Committee deems
appropriate or it may elect not to award a bonus.

Individuals may become participants during a fiscal year and may be
eligible for an award as determined by the Committee.

3.7 Payment of Awards. An annual incentive award under this Plan shall be
payable partly in cash and partly in Shares as determined by the Committee. The
portion paid in cash from any year may vary among Participants. The Company
shall make the cash payment and issue the required Shares as soon as practicable
following the determination of the amount of the award, subject to Section 5.7.

For the purpose of calculating the number of Shares to be issued with
respect to a participant's incentive award for a given fiscal year of the
Company, the value of a Share shall be deemed to equal the average of the
closing prices of a Share on the last five days on which Shares were traded in
each quarter of such fiscal year. If Shares have not been traded on an exchange
or over the counter on at least five days in each quarter of the given year, the
Committee shall determine the manner in which the value of a Share shall be
determined for purposes of this Plan.

If the payment of awards for a given year in the method described in the
first paragraph of this Section 3.7 would cause the aggregate number of Shares
issued under this Plan to exceed the maximum available number of Shares in
effect on the date of payment under Section 1.6, then the portion of awards for
that year payable in Shares shall be reduced from one-third to a fraction that
would not result in the maximum being exceeded, and awards for subsequent years
shall be paid fully in cash, unless and except to the extent the maximum
available number of Shares increases automatically in connection with a public
offering or the Board of Directors with the approval of the Company's
shareholders authorizes the issuance of a larger number of Shares under the
Plan.

3.8 Payment Upon Death; Designation of Beneficiary. A participant may
designate one or more primary and contingent beneficiaries to receive any
incentive award that may be payable under this Section 3 of the Plan after the
participant's death. The designation of beneficiary shall be made in writing,
shall not be effective unless filed with the Committee before the participant's
death, and may be changed or revoked at any time without notice to any
beneficiary by the filing of a subsequent designation with the Committee. If a
participant designates more than one beneficiary, each shall share equally
unless the participant specifies a different allocation. If a

A-8
<PAGE> 29

participant fails to designate a beneficiary, or should no designated
beneficiary survive a participant, any award that may be payable under this Plan
after the participant's death shall be paid to the participant's estate.

If a beneficiary entitled to payment should die after the participant's
death but before receiving payment of the full amount payable to him, the
balance of any amount payable shall be paid to the surviving beneficiary or
beneficiaries designated by the participant in accordance with the participant's
beneficiary designation. If there should be no designated beneficiaries
surviving, the balance shall be paid to the estate of the last beneficiary to
die.

3.9 No Assignment. A participant may not assign any right to an incentive
award or payment under this Plan, and awards and payments shall not be subject
to alienation whether by garnishment, lien, or otherwise, except as required by
law.

SECTION 4. INCENTIVE RESTRICTED SHARES.

4.1 Grant of Incentive Restricted Shares.

(a) The Company may from time to time grant Incentive Restricted
Shares to Employees under the Plan.

(b) The Committee shall determine and designate the Employees to whom
Incentive Restricted Shares are to be granted and shall determine when
Incentive Restricted Shares are to be granted and the number of Incentive
Restricted Shares to be granted.

4.2 Terms of Incentive Restricted Shares.

(a) The grant of Incentive Restricted Shares to an Employee pursuant
to Section 4.1 shall be evidenced by an agreement signed by the Employee to
whom the Incentive Restricted Shares are granted and by an officer of the
Company. The Incentive Restricted Share agreement shall set forth such
terms, conditions, restrictions, and limits on the Incentive Restricted
Shares as the Committee shall determine and as are consistent with the
provisions of the Plan, including the following:

(1) During a period of time established by the Committee, the
Employee's interest in the Incentive Restricted Shares shall be
forfeitable, and the Incentive Restricted Shares shall not be assignable
or otherwise transferable. The Committee may stipulate that these
restrictions on the Incentive Restricted Shares shall lapse only upon
the satisfaction of one or more, or alternative, prescribed conditions.
The conditions may relate to the Company's performance, the continuation
of the Employee's employment with the Company, or other matters. The
Committee may establish a period of time by which or upon the expiration
of which each condition shall have been satisfied, and shall specify the
extent to which the restrictions shall then lapse. The period during
which Incentive Restricted Shares remain subject to such restrictions
and conditions shall be referred to as the "Restricted Period."

(2) The Company shall register a certificate in the Employee's
name for the number of Shares subject to the grant of Incentive
Restricted Shares, but the Company shall retain custody of the
certificate during the Restricted Period.

(3) Unless otherwise provided by the Committee in the Incentive
Restricted Share agreement, the Employee to whom Incentive Restricted
Shares have been granted shall be entitled, during the Restricted
Period, to vote those Shares and to receive the dividends payable with
respect to those Shares.

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<PAGE> 30

(4) Upon the expiration or termination of the Restricted Period
with respect to specified Incentive Restricted Shares, either because of
the satisfaction of conditions prescribed by the Committee, or at the
time and to the extent provided by the Committee in accordance with
Section 4.2(a)(5) (regarding death or Permanent Disability), the
restrictions applicable to those Incentive Restricted Shares shall lapse
and the certificate for those Shares shall be delivered to the Employee
or to the Employee's estate or the person to whom the Employee's rights
are transferred by will or under the laws of descent and distribution,
as the case may be, free of all restrictions, provided, however, that no
Share shall be delivered before the Employee, the Employee's estate, or
such other person has provided, in the manner described in Section 5.9,
for satisfaction of any federal, state, and local income and employment
tax withholding obligation incurred by the Company in connection with
the delivery of the Shares, termination of the Restricted Period, or
lapse of the conditions and restrictions on the Shares.

(5) The Committee may provide that upon the termination of the
Employee's employment during the Restricted Period by reason of death or
Permanent Disability, the conditions and restrictions on all or a
portion of the Incentive Restricted Shares shall lapse and the
Restricted Period with respect to those Shares shall expire.

(6) Except as provided by the Committee in accordance with Section
4.2(a)(5), the Employee shall forfeit all Incentive Restricted Shares
upon (i) the termination of the Employee's employment with the Company
and its Subsidiaries during the Restricted Period or (ii) the expiration
of the Restricted Period without the satisfaction of any conditions
prescribed by the Committee.

Upon such a forfeiture, all of the Employee's interest in the
Incentive Restricted Shares shall automatically revert to the Company.

(7) The Committee may provide in the Incentive Restricted Share
agreement that the Employee shall receive, rather than the dividends
payable with respect to Incentive Restricted Shares, a credit equivalent
to the amount of such dividends, which shall be payable to the Employee
only if and at the time the Incentive Restricted Shares to which the
dividend equivalents are attributable are delivered to the Employee; if
the Employee forfeits Incentive Restricted Shares, the Employee shall
simultaneously forfeit the dividend equivalents attributable to such
Incentive Restricted Shares.

4.3 Limitations on Incentive Restricted Shares. The Company shall grant no
more than 500,000 Incentive Restricted Shares to any one individual under this
Plan.

SECTION 5. MISCELLANEOUS

5.1 Effective Date. This Plan is effective as of September 22, 1994,
subject to the approval of the Company's shareholders. If such approval is not
obtained within twelve months of September 22, 1994, this Plan and all Options
granted pursuant to this Plan shall be void.

5.2 Recapitalization or Reorganization. The existence of the Plan and the
grant of Options and Incentive Restricted Shares under the Plan shall not affect
the right or power of the Board or the shareholders of the Company to make or
authorize the adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting Shares or the rights of Shares, the dissolution or
liquidation of the Company or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding.

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<PAGE> 31

Any Shares with respect to which Options and Incentive Restricted Shares
may be granted are Shares as presently constituted, but if, and whenever, before
the expiration of an Option or of the Restricted Period with respect to
Incentive Restricted Shares, the Company shall effect a subdivision or
consolidation of Shares or the payment of a Share dividend on Shares without
receipt of consideration by the Company, the number of Shares subject to the
grant (i) in the event of an increase in the number of outstanding Shares, shall
be proportionately increased and (in the case of an Option) the purchase price
per Share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding Shares, shall be proportionately reduced and the
purchase price per Share shall be proportionately increased, and the number of
Shares available under Section 1.6 shall be adjusted accordingly.

If the Company shall effect a recapitalization or other change in its
capital structure, the number of Shares subject to an outstanding Option or
Incentive Restricted Share grant shall be the number and class of Shares to
which the holder would have been entitled pursuant to the terms of such
recapitalization if, immediately prior to such recapitalization, the holder had
been the holder of record of the number of Shares subject to the outstanding
grant, and the number of Shares available under Section 1.6 shall be adjusted
accordingly. If the Company is merged or consolidated with a corporation, the
Committee shall make appropriate adjustments to outstanding Option and Incentive
Restricted Share grants to give effect to the merger or consolidation on an
equitable basis in terms of issuance of shares of the corporation surviving the
merger or the consolidated corporation.

Except as expressly provided in this Section, the issuance by the Company
of shares of any class or securities convertible into shares of any class, for
cash, property, labor or services, upon direct sale, upon the exercise of rights
or warrants, or upon the conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment shall be made with respect
to, the number of Shares subject to Options previously granted or the purchase
price per Share or the number of Incentive Restricted Shares subject to a grant.

5.3 Change in Control. For purpose of this Plan, a "Change in Control" of
the Company shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is then subject to such reporting
requirements; provided that, without limitation, such a Change in Control shall
be deemed to have occurred if (a) any "person" (as such term is used in section
13(d) and 14(d) of the Exchange Act) is or becomes "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30 percent or more of the combined voting
power of the Company's then outstanding securities; or (B) during any period of
two consecutive years, the following persons (the "Continuing Directors") cease
for any reason to constitute a majority of the Board: individuals who at the
beginning of such period constitute the Board and new Directors each of whose
election to the Board or nomination for election to the Board by the Company's
security holders was approved by a vote of at least two-thirds of the Directors
then still in office who either were Directors at the beginning of the period or
whose election or nomination for election was previously so approved; or (C) the
security holders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (i) a merger or consolidation that would
result in the voting securities of the Company outstanding immediately before
the merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of such surviving
entity) more than 50 percent of the combined voting power of the voting
securities of the Company or of such surviving entity outstanding immediately
after such merger or consolidation or (ii) a merger of consolidation that is
approved by a Board having a majority of its members persons who are Continuing
Directors, of which Continuing Directors not less than two-thirds have approved
the merger or consolidation; or (D) the security holders of the Company approve
a plan of complete

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<PAGE> 32

liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.

Notwithstanding any contrary provision of this Plan, all outstanding
Options shall become immediately exercisable in full upon a Change in Control.
Similarly, upon a Change in Control all restrictions otherwise applicable with
respect to Incentive Restricted Shares shall lapse, the Restricted Period shall
expire, and any prescribed conditions shall be deemed to be satisfied, so that
the Employee to whom the Incentive Restricted Shares were granted shall be
entitled to the delivery of a certificate for Shares, subject to satisfaction of
the Company's withholding obligation as described in Section 5.9.

If the excise tax imposed by section 4999 of the Internal Revenue Code
would apply with respect to any payments to which an Employee is entitled,
whether or not in connection with this Plan, and if limiting the effect of the
provisions of the preceding paragraph would result in the Employee's realization
of a net amount from such payments, after taking into account income taxes and
such excise taxes, that is greater than the net after-tax amount the Employee
would realize from such payments if the provisions of the preceding paragraph
were given full effect, then the provisions of the preceding paragraph shall be
given effect to the extent, but only to the extent, required to maximize the net
after-tax amount to be realized by the Employee. All determinations required to
be made for the purposes of this paragraph, including determinations of the net
after-tax amount realizable by the Employee, the result of giving full or
limited effect to the provisions of the preceding paragraph, and whether, the
extent to which, and how the effectiveness of the preceding paragraph shall be
limited, shall be made by tax counsel chosen as follows: the Employee and the
Company may each propose a candidate; if the Employee and the Company do not
agree on a choice within 10 days of the Change in Control, the proposed
candidates shall choose a third party who shall act as tax counsel; if either
the Company or the Employee fails to propose a candidate within 10 days of the
Change in Control, the candidate proposed by the other shall act as tax counsel.
All determinations of the tax counsel so chosen shall be final and binding on
the Company and the Employee. The Company shall pay all reasonable expenses of
employing the tax counsel.

5.4 Amendment. The Board of Directors may amend the Plan in any respect,
provided, however, that without the approval of the shareholders of the Company
the Board may not (i) except as provided in Sections 1.6 and 5.2, increase the
maximum number of Shares that may be issued under the Plan as set forth in
Section 1.6 or decrease the minimum purchase price of Shares subject to an
Option, as set forth in Section 2.2(a); (ii) materially increase the benefits
accruing to Employees under the Plan; (iii) extend the term of the Plan; (iv)
change the classes of employees to whom Options may be granted or awards paid
under the Plan; (v) provide for the administration of the Plan otherwise than by
a Committee composed entirely of Disinterested Directors as set forth in Section
1.4(b); or (vi) materially increase the cost of the Plan to the Company. No
amendment shall adversely affect any right of any holder of an Option already
granted without the holder's written consent.

5.5 Termination of Plan. The Board of Directors may terminate the Plan at
any time with respect to any Shares for which Options have not already been
granted. Unless terminated earlier by the Board of Directors, the Plan shall
terminate on September 21, 2004.

5.6 No Right to Continued Employment. Nothing in the Plan or in any Option
granted or incentive award guideline issued pursuant to the Plan shall confer
upon any Employee the right to continue in the employ of the Company or restrict
the right of the Company to terminate the employment of any Employee.

5.7 Restrictions on Issuance of Shares; Rights as Shareholders. Should the
Board of Directors determine that the listing, registration, or qualification of
Shares upon any securities exchange or under any state or federal law or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition to or in connection with the issuance of or delivery of
Shares under this Plan, no such Shares shall be issued or

A-12
<PAGE> 33

delivered unless such listing, registration, qualification, consent, or approval
has been effected or obtained free of any conditions not acceptable to the Board
of Directors.

The certificates representing Shares issued by the Company under this Plan
may bear a legend describing any restrictions on resale of such Shares under
applicable securities laws, and stop transfer orders with respect to such
certificates may be entered on the Company's stock transfer records.

A participant shall have no rights as a shareholder of the Company with
respect to any Shares to be issued in connection with the exercise of an Option
or payment of an annual incentive award under this Plan until the date of
issuance of the certificate for such Shares. No adjustment shall be made for
dividends or other rights for which the record date precedes the date the
certificate is issued.

5.8 Construction. The Plan shall be construed in accordance with the law
of the State of Maryland. With respect to any Options granted under the Plan
that are intended to qualify as incentive stock options as defined in section
422 of the Code, the terms of the Plan and of each incentive stock option
granted pursuant to the Plan shall be construed to give effect to such
intention.

5.9 Satisfaction of Tax Liabilities. Whenever under the Plan Shares are to
be issued upon the exercise of Options, payment of an annual incentive award, or
grant of Incentive Restricted Shares, the Company shall have a right to require
the holder or payee to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements, if any, before the
delivery of any certificate for such Shares. In the holder's or payee's
discretion, such requirements shall be satisfied through the retention of Shares
otherwise issuable, or the delivery of Shares to the Company, under such terms
as the Committee finds appropriate. The value of a Share used to satisfy
withholding requirements shall be its Fair Market Value on the date as of which
the withholding obligation is calculated.

A-13
<PAGE> 34

APPENDIX A

[A] INCENTIVE AWARD GUIDELINES

[B]

The following table sets out the participant's incentive award payout
objectives for [A] as related to the percentage by which the Company's [A] FFO
exceeds its [C] FFO:

<TABLE>
<CAPTION>
MINIMUM GOAL MAXIMUM
------- ---- ------------
<S> <C> <C> <C>
THE Company'S FFO
If the [A] FFO exceeds the [C] FFO by:................... [D]% [F]% [H]% or more
INCENTIVE AWARD
The payout objective will be:
[B]...................................................... $[E] $[G] $[I]
</TABLE>

If the Company's [A] FFO exceeds its [C] FFO by less than the minimum
threshold of [D]%, no incentive award will be made for [A]. If the Company's [A]
FFO exceeds its [C] FFO by more than [D]% but less than [F]%, or by more than
[F]% but less than [H]%, the participant's incentive award payout objectives
will be determined by proration.

This table sets out payout objectives for the participant's [A] incentive
award. The actual amount of the award, if any, will be determined by the
Committee, subject to the approval of the members of the Board who are
Disinterested Directors.

CODE:

[A] Calendar year to which guidelines apply
[B] Participant's title
[C] Calendar year immediately preceding [A]
[D] Minimum threshold FFO increase from [C] to [A], under which no awards are
payable
[E] Award payout objective if [D] achieved
[F] Goal for FFO increase from [C] to [A]
[G] Award payout objective if [F] achieved
[H] Maximum amount of FFO increase from [C] to [A] considered under Plan
[I] Maximum award; payout objective if [H] or more achieved

A-14
<PAGE> 35
PROXY

EASTGROUP PROPERTIES, INC.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201

THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS

The undersigned hereby appoints DAVID H. HOSTER II and N. KEITH McKEY, or either
of them, Proxies for the undersigned, each with full power of substitution, and
hereby authorizes them to represent and to vote all shares of common stock,
$0.0001 par value per share, of EastGroup Properties, Inc. (the "Company"), and
all shares of Series B Cumulative Convertible Preferred Stock, par value $0.0001
per share, of the Company which the undersigned would be entitled to vote at the
Annual Meeting of Stockholders to be held at the Company's offices, 300 One
Jackson Place, 188 East Capitol Street, Jackson, Mississippi, on Wednesday, June
2, 1999, at 9:00 a.m., Jackson time, or any adjournment or postponement thereof,
and directs that the shares represented by this Proxy shall be voted as
indicated on the reverse.

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE.

(continued and to be signed on the reverse side)

(FRONT)

<PAGE> 36

1. ELECTION OF DIRECTORS

[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT

Nominees: D. Pike Aloian; Alexander G. Anagnos; H. C. Bailey, Jr.;
Fredric H. Gould; David H. Hoster II; David M. Osnos; John N. Palmer;
and Leland R. Speed.

---------------------------------------------------------------------
(Except for nominee(s) written above)

2. Proposal to amend the Company's 1994 Management Incentive Plan, as amended.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE MATTERS INDICATED IN 1 AND 2 ABOVE AND WILL BE VOTED IN THE
DISCRETION OF THE PROXIES NAMED HEREIN WITH RESPECT TO ANY MATTERS REFERRED TO
IN 3 ABOVE. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.

Dated:____________________________, 1999

Signature(s)____________________________

________________________________________
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON
STOCK CERTIFICATE(S). A corporation is
requested to sign its name by its
President or other authorized officer,
with the office held so designated. A
partnership should sign in the
partnership name by an authorized
person. Executors, trustees,
administrators, etc. are requested to
indicate the capacity in which they are
signing. JOINT TENANTS SHOULD BOTH SIGN.

YOUR VOTE IS IMPORTANT!

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.

(BACK)