Company: EGP
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0000049600-25-000065
Chunk: 81

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Part I, Item 8
Chunk 81
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 operations and economic conditions.  The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.  The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments.  Specifically, the Company has entered into derivative instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Company’s derivative instruments, described below, are used to manage differences in the amount, timing and duration of the Company’s known or expected cash payments principally related to certain of the Company’s borrowings.  The Company’s objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the term of the agreements without exchange of the underlying notional amount.  As of March 31, 2025, the Company had five interest rate swaps outstanding, all of which are used to hedge the variable cash flows associated with unsecured loans.  All of the Company’s interest rate swaps convert the related loans’ Term SOFR rate components to effectively fixed interest rates, and the Company has concluded that each of the hedging relationships is highly effective.   The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in Other comprehensive income (loss) and are subsequently reclassified into earnings through Interest expense as interest payments are made or received on the Company’s variable-rate debt in the period that the hedged forecasted transaction affects earnings.  The Company estimates that an additional $8,530,000 will be reclassified from Other comprehensive income (loss) as a decrease to Interest expense over the next twelve months.The Company’s valuation methodology for over-the-counter (“OTC”) derivatives is to discount cash flows based on SOFR market data. Uncollateralized or partially-collateralized trades include appropriate economic adjustments for funding costs and credit risk. The Company calculates its derivative valuations using mid-market prices.As of March 31, 2025 and December 31, 2024, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk:NOTIONAL VALUE OF INTEREST RATE DERIVATIVESMarch