Company: EGP
Filing Date: 2025-10-23
Form Type: 10-Q
Source: 0000049600-25-000109
Chunk: 81

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-10-23
Form: 10-Q
Item: Part I, Item 8
Chunk 81
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 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 and the first nine months of 2025 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 capitalized acquisition costs related to its 2024 and 2025 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 respective 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 leases in-place at the time of 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 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 the lease.  The amounts allocated to above and below market lease intangibles are included in Other assets, net and Other liabilities, respectively, on the Consolidated Balance Sheets and are amortized to rental income over the remaining terms of the respective leases.  In-place lease intangibles are valued based upon management’s assessment of factors such as an estimate of forgone rents and avoided leasing costs during the expected lease-up periods considering current market conditions and costs to execute similar leases.  These intangible assets are included in Other assets, net on the Consolidated Balance