Company: EGP
Filing Date: 2025-12-05
Form Type: S-3ASR
Source: 0001140361-25-044456
Chunk: 51

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-12-05
Form: S-3ASR
Chunk 51
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 be required to include certain amounts in income for U.S. federal income tax purposes no later than the time such amounts are reflected on certain financial statements. The application of this rule may accelerate the accrual of certain amounts with respect to our debt instruments.

We also could make preferred equity investments in entities that directly or indirectly own real property. If the issuer of the preferred equity is taxed as a partnership and the preferred equity investment is properly treated as equity for U.S. federal income tax purposes, for purposes of the REIT income and asset tests we will be required to include our proportionate share of the assets and income of the partnership, based on our share of partnership capital, as if we owned such share of the issuer’s assets directly under the rules generally applicable to investments in partnerships. As a result, absent sufficient controls to ensure that the underlying real property is operated in compliance with the REIT rules, preferred equity investments may jeopardize our compliance with REIT income and asset tests. Moreover, at least one IRS internal memorandum would treat the preferred return on certain equity investments as interest income for purposes of the REIT income tests, which treatment would cause such amounts to

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be nonqualifying income for purposes of the 75% gross income test. Although we do not believe that interest income treatment is appropriate, and that analysis was not followed in subsequent IRS private letter rulings, the IRS could re-assert that position. In addition, if the underlying property is dealer property and our preferred equity investment is treated as equity for U.S. federal income tax purposes, our share of gains from the sale of the property would be subject to the 100% prohibited transaction tax. In some cases, the proper characterization of debt-like preferred equity investments as unsecured indebtedness or as equity for U.S. federal income tax purposes may be unclear. If we rely on a characterization of a particular instrument as debt or equity and the IRS successfully challenged our characterization, our compliance with the REIT asset or income tests could be jeopardized and/or we could incur taxes or penalties that we otherwise would not have incurred.

#### Investments in TRSs
As of the date hereof, we own a subsidiary that has elected to be treated as a TRS for U.S. federal income tax purposes, and we may form or acquire additional TRSs. A TRS of ours is a corporation in which we directly or indirectly own stock and that jointly elects with us to be treated as our TRS