Company: EGP
Filing Date: 2025-12-05
Form Type: 424B5
Source: 0001140361-25-044550
Chunk: 77

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-12-05
Form: 424B5
Chunk 77
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 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 under Section 856(l) of the Code. In addition, if a TRS owns, directly or indirectly, securities representing 35% or more of the vote or value of a subsidiary corporation, that subsidiary will also be treated as a TRS of ours. A domestic TRS pays U.S. federal, state, and local income taxes at the full applicable corporate rates on its taxable income prior to payment of any dividends. A foreign TRS with income from a U.S. business or U.S. source investment income also generally is subject to U.S. federal income and/or withholding tax. A TRS owning property outside of the U.S. may pay foreign taxes. The taxes owed by a TRS could be substantial. To the extent that any of our TRSs is required to pay U.S. federal, state or local taxes or foreign taxes, the cash available for distribution by us will be reduced accordingly.

A TRS is permitted to provide impermissible tenant services that cannot be performed directly by us without jeopardizing our qualification as a REIT. A TRS may also engage in other activities that, if conducted by us other than through a TRS, could result in the receipt of non-qualified income or the ownership of non-qualified assets or the receipt of income subject to the 100% tax on net income from prohibited transactions. However, a TRS is not permitted to directly or indirectly operate or manage certain lodging facilities or health care facilities. Several provisions regarding the arrangements between a REIT and its TRS ensure that a TRS will be subject to an appropriate level of U.S. federal income taxation. For example, we will be obligated to pay a 100% penalty tax on some payments that we receive or on certain expenses deducted by the TRS if the economic arrangements among us, our tenants, and/or the TRS are not comparable to similar arrangements among unrelated parties.

A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests described above. However, no more than 20% (for taxable years beginning before January 1, 2026) or 25% (for taxable years beginning on or