Company: EGP
Filing Date: 2025-02-12
Form Type: 10-K
Source: 0000049600-25-000019
Chunk: 178

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-02-12
Form: 10-K
Item: Item 3
Chunk 178
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 Property Acquisitions and Acquired IntangiblesUpon acquisition of real estate properties, EastGroup applies the principles of ASC 805, Business Combinations. The FASB Codification provides a framework for determining whether transactions should be accounted for as acquisitions of assets or businesses.  Under the guidance, companies are required to utilize an initial screening test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set is not a business.  Criteria considered in grouping similar assets include geographic location, market and operational risks and the physical characteristics of the assets.  EastGroup determined that its real estate property acquisitions in 2024, 2023 and 2022 are considered to be acquisitions of groups of similar identifiable assets; therefore, the acquisitions are not considered to be acquisitions of a business.  As a result, the Company has capitalized acquisition costs related to its 2024, 2023 and 2022 acquisitions. The FASB Codification also provides guidance on how to properly determine the allocation of the purchase price among the individual components of both the tangible and intangible assets based on their relative fair values.  The allocation to tangible assets (land, building and improvements) is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models.  Land is valued using comparable land sales specific to the applicable market, provided by a third-party.  The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar properties.  The cost of the properties acquired may be adjusted based on indebtedness assumed from the seller that is determined to be above or below market rates.  The purchase price is also allocated among the following categories of intangible assets:  the above or below market component of in-place leases and the value of in-place leases at the time of the acquisition.  The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using a discount rate reflecting the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease 

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EASTGROUP PROPERTIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

over its remaining term, and (ii) management’s estimate of the amounts that would be paid using current market rents over the remaining term of