Company: EGP
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0000049600-25-000065
Chunk: 15

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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 portions of internal costs (primarily personnel costs) deemed related to such development activities.  The internal costs are allocated to specific development projects based on development activity.  As the property becomes occupied, depreciation commences on the occupied portion of the building, and costs are capitalized only for the portion of the building that remains vacant.  The Company transfers properties from Development and value-add properties to Real estate properties as follows:  (1) for development properties, at the earlier of 90% occupancy or one year after completion of the shell construction, and (2) for value-add properties, at the earlier of 90% occupancy or one year after acquisition or completion of redevelopment, as applicable.  Upon the earlier of 90% occupancy or one year after completion of the shell construction/value-add acquisition date, capitalization of development costs, including interest expense, property taxes and internal personnel costs, ceases and depreciation commences on the entire property (excluding the land).

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EASTGROUP PROPERTIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(7)REAL ESTATE PROPERTY ACQUISITIONS AND ACQUIRED INTANGIBLES

 Upon acquisition of real estate properties, EastGroup applies the principles of FASB 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 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 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