Company: EGP
Filing Date: 2025-12-05
Form Type: 424B5
Source: 0001140361-25-044550
Chunk: 69

Company: EASTGROUP PROPERTIES INC
Filing Date: 2025-12-05
Form: 424B5
Chunk 69
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 be treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business depends upon all the facts and circumstances with respect to the particular transaction. However, the Code provides a “safe harbor” pursuant to which sales of properties held for at least two years and meeting certain other requirements will not give rise to prohibited transaction income.

We generally intend to hold properties for investment, but we have made and will make sales of properties consistent with our strategic objectives. However, there can be no assurance that the safe harbor provisions will apply to any particular sale or that the IRS will not contend that one or more of these sales are subject to the 100% penalty tax. The 100% penalty tax will not apply to gains from the sale of property realized through a TRS or other U.S. taxable corporation, although such income will be subject to U.S. federal income tax at the regular corporate rates.

Qualified REIT Subsidiaries and Disregarded Entities

If a REIT owns a subsidiary that is a “qualified REIT subsidiary,” or “QRS,” or if a any person owns (directly or indirectly through disregarded subsidiaries) 100% of the membership interests in a domestic limited liability company or other domestic unincorporated entity that does not elect to be treated as a corporation for U.S. federal income tax purposes, the separate existence of the QRS, limited liability company or other unincorporated entity generally will be disregarded for U.S. federal income tax purposes. Generally, a QRS is a corporation, other than a TRS, all of the stock of which is owned by a REIT (either directly or indirectly through disregarded subsidiaries). All assets, liabilities, and items of income, gain, loss, deduction, and credit of the QRS or disregarded entity will be treated as assets, liabilities, and items of income, gain, loss, deduction, and credit of its REIT (in the case of a QRS) or its first regarded owner (in the case of a disregarded entity). To the extent we own a QRS or a disregarded entity, neither will be subject to U.S. federal corporate income taxation, although such entities may be subject to state and local taxation in some states or foreign taxes if they do business or own property outside the United States.

Currently, the partners in the Operating Partnership are QRSs of us,