UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007       COMMISSION FILE NUMBER 1-07094

                           EASTGROUP PROPERTIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND                                                         13-2711135
(State or other jurisdiction                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)

300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI                                               39201
(Address of principal executive offices)                         (Zip code)

Registrant's telephone number:  (601) 354-3555

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                    SHARES OF COMMON STOCK, $.0001 PAR VALUE,
SHARES OF SERIES D 7.95% CUMULATIVE REDEEMABLE PREFERRED STOCK, $.0001 PAR VALUE
                             NEW YORK STOCK EXCHANGE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark if the  Registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. YES (x) NO ( )

Indicate  by  check  mark if the  Registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. YES ( ) NO (x)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES (x) NO ( )

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )

Indicate by check mark whether the Registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
the definitions of "large accelerated filer,"  "accelerated  filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one)

   Large Accelerated Filer (x) Accelerated Filer () Non-accelerated Filer ()
                          Smaller Reporting Compnay ()

Indicate by check mark whether the  Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES ( ) NO (x)

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common  equity,  as of
the last business day of the Registrant's most recently  completed second fiscal
quarter: $1,005,373,000.

The  number of shares of common  stock,  $.0001  par  value,  outstanding  as of
February 27, 2008 was 23,804,206.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Proxy  Statement  for the 2008 Annual  Meeting of
Shareholders are incorporated by reference into Part III.

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PART I

ITEM 1.  BUSINESS.

Organization
     EastGroup  Properties,  Inc.  (the Company or  EastGroup) is an equity real
estate  investment trust (REIT) organized in 1969. The Company has elected to be
taxed and intends to continue to qualify as a REIT under Sections 856-860 of the
Internal Revenue Code (the Code), as amended.

Available Information
     The Company maintains a website at www.eastgroup.net. The Company posts its
annual reports on Form 10-K,  quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports filed or furnished  pursuant to Section
13(a) of the Securities  Exchange Act of 1934, as amended, as soon as reasonably
practicable  after it  electronically  files or furnishes  such materials to the
Securities and Exchange  Commission  (SEC). In addition,  the Company's  website
includes items related to corporate governance matters,  including,  among other
things,  the  Company's  corporate  governance  guidelines,  charters of various
committees of the Board of Directors, and the Company's code of business conduct
and ethics  applicable to all  employees,  officers and  directors.  The Company
intends to disclose on its website any amendment to, or waiver of, any provision
of this  code  of  business  conduct  and  ethics  applicable  to the  Company's
directors  and  executive  officers  that  would  otherwise  be  required  to be
disclosed under the rules of the SEC or the New York Stock  Exchange.  Copies of
these  reports and  corporate  governance  documents  may be  obtained,  free of
charge,  from the Company's  website.  Any shareholder also may obtain copies of
these  documents,  free of charge,  by sending a request in writing to: Investor
Relations,  EastGroup Properties,  Inc., 300 One Jackson Place, 188 East Capitol
Street, Jackson, MS 39201-2195.

Administration
     EastGroup  maintains its principal  executive  office and  headquarters  in
Jackson,  Mississippi. The Company also has regional offices in Phoenix, Orlando
and Houston and opened a management  office in San Antonio in 2008.  The Company
also has property management offices in Jacksonville, Tampa and Fort Lauderdale.
Offices  at these  locations  allow the  Company to  directly  manage all of its
Florida,  Houston,  San  Antonio,  Arizona  and  Mississippi  properties,  which
together  account  for 62% of the  Company's  total  portfolio  on a square foot
basis.  In addition,  the Company  currently  provides  property  administration
(accounting of operations)  for its entire  portfolio.  The regional  offices in
Arizona,  Florida and Texas also provide development capability and oversight in
those states. As of February 27, 2008,  EastGroup had 63 full-time employees and
one part-time employee.

Operations
     EastGroup  is focused on the  development,  acquisition  and  operation  of
industrial properties in major Sunbelt markets throughout the United States with
an  emphasis  in the states of  Florida,  Texas,  Arizona  and  California.  The
Company's goal is to maximize shareholder value by being the leading provider of
functional,  flexible,  and quality  business  distribution  space for  location
sensitive   tenants  primarily  in  the  5,000  to  50,000  square  foot  range.
EastGroup's  strategy for growth is based on  ownership of premier  distribution
facilities  generally  clustered  near major  transportation  features in supply
constrained  submarkets.  Over 99% of the  Company's  revenue is generated  from
renting real estate.
     During 2007, EastGroup expanded its investments through its development and
acquisition   programs.   The  Company  purchased  seven  operating   properties
(1,079,000 square feet in 15 buildings),  one property for redevelopment (68,000
square  feet) and 102 acres of  developable  land for a  combined  cost of $73.1
million.  Also during 2007, EastGroup  transferred 14 properties (959,000 square
feet)  with  aggregate  costs of $69.8  million  at the  date of  transfer  from
development to real estate properties.
     EastGroup incurs short-term  floating rate bank debt in connection with the
acquisition  and  development of real estate and, as market  conditions  permit,
replaces  floating rate debt with equity,  including  preferred  equity,  and/or
fixed-rate  term  loans  secured  by  real  property.  EastGroup  also  may,  in
appropriate  circumstances,  acquire  one or more  properties  in  exchange  for
EastGroup securities.
     EastGroup holds its properties as long-term investments,  but may determine
to sell certain  properties  that no longer meet its  investment  criteria.  The
Company  may  provide  financing  in  connection  with such sales of property if
market conditions require.  In addition,  the Company may provide financing to a
partner or co-owner in connection  with an acquisition of real estate in certain
situations.
     Subject to the requirements  necessary to maintain our  qualifications as a
REIT,  EastGroup  may  acquire  securities  of  entities  engaged in real estate
activities  or  securitites  of other  issuers,  including  for the  purpose  of
exercising control over those entities.
     The Company  intends to  continue  to qualify as a REIT under the Code.  To
maintain its status as a REIT,  the Company is required to distribute 90% of its
ordinary taxable income to its  shareholders.  The Company has the option of (i)
reinvesting the sales price of properties sold through  tax-deferred  exchanges,
allowing  for a deferral of capital  gains on the sale,  (ii) paying out capital
gains to the  stockholders  with no tax to the  Company,  or (iii)  treating the
capital gains as having been distributed to the stockholders,  paying the tax on
the gain  deemed  distributed  and  allocating  the tax paid as a credit  to the
stockholders.
     EastGroup has no present intention of acting as an underwriter of offerings
of securities of other issuers. The strategies and policies set forth above were
determined  and are subject to review by EastGroup's  Board of Directors,  which
may change such strategies or policies based upon its evaluation of the state of
the real estate  market,  the  performance of  EastGroup's  assets,  capital and
credit market conditions,  and other relevant factors. EastGroup provides annual
reports to its stockholders,  which contain financial  statements audited by the
Company's independent registered public accounting firm.

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Environmental Matters
     Under various federal, state and local laws, ordinances and regulations, an
owner of real  estate may be liable for the costs of removal or  remediation  of
certain  hazardous or toxic  substances on or in such  property.  Many such laws
impose  liability  without  regard  to  whether  the  owner  knows  of,  or  was
responsible  for,  the  presence  of such  hazardous  or toxic  substances.  The
presence  of  such  substances,  or  the  failure  to  properly  remediate  such
substances,  may  adversely  affect  the  owner's  ability  to sell or rent such
property or to use such property as collateral  in its  borrowings.  EastGroup's
properties have been subjected to Phase I Environmental  Site Assessments (ESAs)
by independent  environmental  consultants.  These reports have not revealed any
potential significant  environmental  liability.  Management of EastGroup is not
aware of any  environmental  liability that would have a material adverse effect
on EastGroup's business, assets, financial position or results of operations.

ITEM 1A.  RISK FACTORS.

     In addition to the other information contained or incorporated by reference
in this document,  readers should carefully consider the following risk factors.
Any of these  risks or the  occurrence  of any one or more of the  uncertainties
described below could have a material adverse effect on the Company's  financial
condition and the  performance of its business.  The Company refers to itself as
"we" or "our" in the following risk factors.

Real Estate Industry Risks
     We face risks  associated with local real estate  conditions in areas where
we own properties.  We may be affected adversely by general economic  conditions
and local real estate  conditions.  For example,  an  oversupply  of  industrial
properties in a local area or a decline in the  attractiveness of our properties
to tenants  would have a negative  effect on us.  Other  factors that may affect
general economic conditions or local real estate conditions include:

     o    population and demographic trends;
     o    employment and personal income trends;
     o    income tax laws;
     o    changes in interest rates and availability and costs of financing;
     o    increased operating costs, including insurance premiums, utilities and
          real estate  taxes,  due to inflation  and other factors which may not
          necessarily be offset by increased rents; and
     o    construction costs.

     We may  be  unable  to  compete  with  our  larger  competitors  and  other
alternatives  available to tenants or potential  tenants of our properties.  The
real  estate  business  is highly  competitive.  We  compete  for  interests  in
properties with other real estate  investors and  purchasers,  many of whom have
greater financial resources,  revenues, and geographical diversity than we have.
Furthermore,  we compete  for tenants  with other  property  owners.  All of our
industrial  properties are subject to  significant  local  competition.  We also
compete  with a wide variety of  institutions  and other  investors  for capital
funds  necessary  to support our  investment  activities  and asset  growth.

     We are subject to  significant  regulation  that  inhibits our  activities.
Local zoning and land use laws,  environmental  statutes and other  governmental
requirements   restrict  our  expansion,   rehabilitation   and   reconstruction
activities.  These  regulations may prevent us from taking advantage of economic
opportunities.  Legislation  such as the  Americans  with  Disabilities  Act may
require  us to modify  our  properties  and  noncompliance  could  result in the
imposition  of fines  or an  award  of  damages  to  private  litigants.  Future
legislation  may  impose  additional   requirements.   We  cannot  predict  what
requirements  may be enacted or what  changes  may be  implemented  to  existing
legislation.

Risks Associated with Our Properties
     We may be unable to lease space.  When a lease expires,  a tenant may elect
not to renew it. We may not be able to re-lease the  property on similar  terms,
if we are able to re-lease the property at all. The terms of renewal or re-lease
(including the cost of required  renovations  and/or concessions to tenants) may
be less favorable to us than the prior lease. We also develop properties with no
pre-leasing.  If we are  unable to lease  all or a  substantial  portion  of our
properties,  or if the rental  rates upon such leasing are  significantly  lower
than expected  rates,  our cash  generated  before debt  repayments  and capital
expenditures,  and our ability to make expected  distributions  to stockholders,
may be adversely affected.

     We  have  been  and  may  continue  to be  affected  negatively  by  tenant
bankruptcies and leasing delays. At any time, a tenant may experience a downturn
in its business that may weaken its financial  condition.  Similarly,  a general
decline  in the  economy  may result in a decline in the demand for space at our
industrial  properties.  As a result, our tenants may delay lease  commencement,
fail to make rental  payments  when due, or declare  bankruptcy.  Any such event
could result in the  termination  of that  tenant's  lease and losses to us, and
distributions to investors may decrease. We receive a substantial portion of our
income as rents under long-term leases. If tenants are unable to comply with the
terms of their leases because of rising costs or falling  sales,  we may deem it
advisable  to  modify  lease  terms to allow  tenants  to pay a lower  rent or a
smaller share of taxes, insurance and other operating costs. If a tenant becomes
insolvent or bankrupt, we cannot be sure that we could recover the premises from
the tenant promptly or from a trustee or  debtor-in-possession in any bankruptcy
proceeding  relating to the tenant. We also cannot be sure that we would receive
rent in the  proceeding  sufficient  to cover our  expenses

                                       3

<PAGE>

with  respect  to the  premises.  If a  tenant  becomes  bankrupt,  the  federal
bankruptcy code will apply and, in some  instances,  may restrict the amount and
recoverability  of our claims  against  the  tenant.  A tenant's  default on its
obligations to us could adversely affect our financial condition and the cash we
have available for distribution.

     We face  risks  associated  with our  property  development.  We  intend to
continue to develop  properties where market conditions warrant such investment.
Once made,  our  investments  may not  produce  results in  accordance  with our
expectations.  Risks  associated  with our  current and future  development  and
construction activities include:

     o    the availability of favorable financing alternatives;
     o    the risk that we may not be able to obtain land on which to develop or
          that due to the increased  cost of land,  our activities may not be as
          profitable, especially in certain land constrained areas;
     o    construction costs exceeding original estimates due to rising interest
          rates and increases in the costs of materials and labor;
     o    construction  and lease-up delays resulting in increased debt service,
          fixed expenses and construction costs;
     o    expenditure  of funds and  devotion of  management's  time to projects
          that we do not complete;
     o    occupancy rates and rents at newly completed  properties may fluctuate
          depending  on a number  of  factors,  including  market  and  economic
          conditions,  resulting  in lower  than  projected  rental  rates and a
          corresponding lower return on our investment; and
     o    complications   (including   building   moratoriums   and  anti-growth
          legislation)  in  obtaining  necessary  zoning,  occupancy  and  other
          governmental permits.

     We face risks associated with property acquisitions.  We acquire individual
properties and  portfolios of  properties,  and intend to continue to do so. Our
acquisition activities and their success are subject to the following risks:

     o    when we are able to locate a desired property,  competition from other
          real estate investors may significantly increase the purchase price;
     o    acquired properties may fail to perform as expected;
     o    the actual costs of repositioning or redeveloping  acquired properties
          may be higher than our estimates;
     o    acquired  properties may be located in new markets where we face risks
          associated with an incomplete  knowledge or understanding of the local
          market, a limited number of established business  relationships in the
          area  and  a  relative   unfamiliarity  with  local  governmental  and
          permitting procedures;
     o    we  may  be  unable  to  quickly   and   efficiently   integrate   new
          acquisitions,  particularly  acquisitions of portfolios of properties,
          into  our  existing  operations,  and  as a  result,  our  results  of
          operations and financial condition could be adversely affected; and
     o    we may  acquire  properties  subject to  liabilities  and  without any
          recourse,  or with  only  limited  recourse,  to the  transferor  with
          respect to unknown liabilities.  As a result, if a claim were asserted
          against us based upon ownership of those properties,  we might have to
          pay substantial  sums to settle it, which could  adversely  affect our
          cash flow.

     Coverage under our existing  insurance  policies may be inadequate to cover
losses.  We  generally  maintain  insurance  policies  related to our  business,
including casualty, general liability and other policies,  covering our business
operations,  employees and assets as  appropriate  for the markets where each of
our  properties  and  business  operations  are  located.  However,  we would be
required to bear all losses that are not  adequately  covered by  insurance.  In
addition,  there may be certain losses that are not generally insured against or
that  are  not  generally  fully  insured  against  because  it  is  not  deemed
economically feasible or prudent to do so, including losses due to floods, wind,
earthquakes,  acts of war, acts of terrorism or riots. If an uninsured loss or a
loss in excess of  insured  limits  occurs  with  respect  to one or more of our
properties,  then we could lose the capital we invested  in the  properties,  as
well as the anticipated future revenue from the properties.  In addition, if the
damaged properties are subject to recourse indebtedness, we would continue to be
liable for the indebtedness, even if these properties were irreparably damaged.

     We face risks due to lack of geographic  and real estate sector  diversity.
Substantially  all of our  properties  are located in the Sunbelt  region of the
United  States with an emphasis  in the states of  Florida,  Texas,  Arizona and
California.  A downturn  in general  economic  conditions  and local real estate
conditions in these geographic  regions, as a result of oversupply of or reduced
demand for industrial properties,  local business climate,  business layoffs and
changing  demographics,  would have a particularly  strong adverse effect on us.
Our  investments  in  real  estate  assets  are  primarily  concentrated  in the
industrial  distribution sector. This concentration may expose us to the risk of
economic  downturns  in this  sector to a greater  extent  than if our  business
activities  included a more  significant  portion  of other  sectors of the real
estate industry.

     We face risks due to the  illiquidity  of real  estate  which may limit our
ability to vary our portfolio.  Real estate investments are relatively illiquid.
Our ability to vary our  portfolio  in response to changes in economic and other
conditions  will therefore be limited.  In addition,  the Internal  Revenue Code
limits our ability to sell our  properties.  If we must sell an  investment,  we
cannot  ensure  that  we will be able to  dispose  of the  investment  at  terms
favorable to the Company.

     We face possible environmental liabilities.  Current and former real estate
owners  and  operators  may be  required  by law to  investigate  and  clean  up
hazardous  substances  released at the properties they own or operate.  They may
also be liable to the government or to third parties for substantial property or
natural  resource  damage,  investigation  costs and cleanup costs. In addition,
some  environmental  laws create a lien on the contaminated site in favor of the
government  for damages and costs the government  incurs in connection  with the

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contamination.  Contamination  may affect  adversely the owner's ability to use,
sell or lease real estate or to borrow using the real estate as  collateral.  We
have no way of determining at this time the magnitude of any potential liability
to which we may be subject arising out of environmental conditions or violations
with respect to the  properties  we currently or formerly  owned.  Environmental
laws today can impose  liability  on a previous  owner or operator of a property
that owned or operated the property at a time when hazardous or toxic substances
were disposed of,  released  from, or present at, the property.  A conveyance of
the property,  therefore, does not relieve the owner or operator from liability.
Although  ESAs have been  conducted  at our  properties  to  identify  potential
sources  of  contamination  at the  properties,  such  ESAs  do not  reveal  all
environmental  liabilities  or  compliance  concerns  that could  arise from the
properties.  Moreover, material environmental liabilities or compliance concerns
may  exist,  of which we are  currently  unaware,  that in the future may have a
material adverse effect on our business, assets or results of operations.

Financing Risks
     We face  risks  associated  with the use of debt to fund  acquisitions  and
developments,  including  refinancing risk. We are subject to the risks normally
associated  with debt  financing,  including the risk that our cash flow will be
insufficient to meet required payments of principal and interest.  We anticipate
that a  portion  of the  principal  of our  debt  will  not be  repaid  prior to
maturity.  Therefore, we will likely need to refinance at least a portion of our
outstanding  debt  as it  matures.  There  is a risk  that we may not be able to
refinance  existing  debt or that the  terms of any  refinancing  will not be as
favorable as the terms of the existing debt.

     We face risks related to "balloon  payments." Certain of our mortgages will
have  significant  outstanding  principal  balances  on  their  maturity  dates,
commonly known as "balloon  payments." There can be no assurance whether we will
be able to refinance such balloon  payments on the maturity of the loans,  which
may  force  disposition  of  properties  on  disadvantageous  terms  or  require
replacement with debt with higher interest rates,  either of which would have an
adverse  impact on our  financial  performance  and ability to pay  dividends to
investors.

     We face  risks  associated  with our  dependence  on  external  sources  of
capital.  In order to qualify as a REIT, we are required each year to distribute
to our stockholders at least 90% of our REIT taxable income,  and we are subject
to tax on our  income  to the  extent  it is not  distributed.  Because  of this
distribution  requirement,  we may not be able to fund all future  capital needs
from cash retained from operations.  As a result, to fund capital needs, we rely
on  third-party  sources  of  capital,  which  we may not be able to  obtain  on
favorable terms, if at all. Our access to third-party sources of capital depends
upon a number of factors,  including  (i) general  market  conditions;  (ii) the
market's  perception  of our growth  potential;  (iii) our current and potential
future earnings and cash distributions; and (iv) the market price of our capital
stock.  Additional debt financing may  substantially  increase our debt-to-total
capitalization ratio. Additional equity financing may dilute the holdings of our
current stockholders.

     Covenants in our credit agreements could limit our flexibilty and adversely
affect our financial condistion.  The terms of our various credit agreements and
other indebtedness require us to comply with a number of customary financial and
other  covenants,  such as maintaining debt service coverage and leverage ratios
and maintaining insurance coverage. These covenants may limit our flexibility in
our operatins,  and breaches of these  covenants  could result in defaults under
the instruments  governing the applicable  indebtedness even if we had satisfied
our payment  obligations.  If we are unable to  refinance  our  indebtedness  at
maturity or meet our payment  obligations,  the amount of our distributable cash
flow and our financial condition would be adversely affected.

     Fluctuations  in interest  rates may adversely  affect our  operations  and
value of our stock. As of December 31, 2007, we had  approximately  $135 million
of variable  interest rate debt. As of December 31, 2007,  the weighted  average
interest  rate  on  our  variable  rate  debt  was  5.65%.  We  may  also  incur
indebtedness  in the future that bears  interest at a variable rate or we may be
required to refinance our existing debt at higher rates. Accordingly,  increases
in interest rates could adversely affect our financial condition, our ability to
pay expected distributions to stockholders and the value of our stock.

     A lack of any  limitation  on our debt could  result in our  becoming  more
highly  leveraged.   Our  governing   documents  do  not  limit  the  amount  of
indebtedness  we may  incur.  Accordingly,  our  Board of  Directors  may  incur
additional  debt and would do so, for example,  if it were necessary to maintain
our status as a REIT. We might become more highly leveraged as a result, and our
financial condition and cash available for distribution to stockholders might be
negatively affected and the risk of default on our indebtedness could increase.

Other Risks
     The  market  value  of  our  common  stock  could  decrease  based  on  our
performance and market perception and conditions. The market value of our common
stock  may be  based  primarily  upon  the  market's  perception  of our  growth
potential and current and future cash  dividends,  and may be secondarily  based
upon the real estate market value of our underlying  assets. The market price of
our common stock is influenced  by the dividend on our common stock  relative to
market  interest rates.  Rising interest rates may lead potential  buyers of our
common stock to expect a higher dividend rate,  which would adversely affect the
market price of our common  stock.  In  addition,  rising  interest  rates would
result in  increased  expense,  thereby  adversely  affecting  cash flow and our
ability to service our indebtedness and pay dividends.

     We may fail to qualify as a REIT.  If we fail to qualify as a REIT, we will
not be allowed to deduct  distributions to stockholders in computing our taxable
income and will be  subject to federal  income  tax,  including  any  applicable
alternative  minimum tax, at regular  corporate  rates.  In addition,  we may be
barred   from   qualification   as  a  REIT   for  the  four   years   following
disqualification.  The additional tax incurred at

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regular corporate rates would  significantly  reduce the cash flow available for
distribution  to  stockholders  and for debt service.  Furthermore,  we would no
longer be required by the Internal Revenue Code to make any distributions to our
stockholders  as  a  condition  of  REIT  qualification.  Any  distributions  to
stockholders  would be taxable as  ordinary  income to the extent of our current
and accumulated earnings and profits, although such dividend distributions would
be  subject  to  a  top  federal  tax  rate  of  15%  through  2010.   Corporate
distributees,  however,  may be eligible for the dividends received deduction on
the  distributions,  subject to limitations  under the Internal Revenue Code. To
qualify as a REIT,  we must comply with  certain  highly  technical  and complex
requirements.  We cannot be certain  we have  complied  with these  requirements
because  there are few  judicial  and  administrative  interpretations  of these
provisions.  In addition, facts and circumstances that may be beyond our control
may affect our  ability  to  qualify  as a REIT.  We cannot  assure you that new
legislation, regulations, administrative interpretations or court decisions will
not change the tax laws  significantly  with respect to our  qualification  as a
REIT or with respect to the federal income tax consequences of qualification. We
cannot assure you that we will remain qualified as a REIT.

     There  is a risk  of  changes  in the  tax law  applicable  to real  estate
investment  trusts.  Since the  Internal  Revenue  Service,  the  United  States
Treasury   Department  and  Congress   frequently   review  federal  income  tax
legislation,  we cannot predict whether,  when or to what extent new federal tax
laws,  regulations,  interpretations  or rulings  will be  adopted.  Any of such
legislative  action may prospectively or retroactively  modify our tax treatment
and, therefore, may adversely affect taxation of us and/or our investors.

     Our Charter  contains  provisions  that may  adversely  affect the value of
shareholders' stock. Our charter generally limits any holder from acquiring more
than  9.8%  (in  value  or in  number,  whichever  is more  restrictive)  of our
outstanding equity stock (defined as all of our classes of capital stock, except
our  excess  stock).   The  ownership   limit  may  limit  the  opportunity  for
stockholders  to receive a premium for their  shares of common  stock that might
otherwise  exist if an investor were attempting to assemble a block of shares in
excess of 9.8% of the outstanding  shares of equity stock or otherwise  effect a
change in control. Also, the request of the holders of a majority or more of our
common stock is necessary for  stockholders to call a special  meeting.  We also
require  advance  notice by  stockholders  for the  nomination  of  directors or
proposal of business to be considered at a meeting of stockholders.

     We have adopted a stockholder rights plan that may make a change in control
difficult.  Under the terms of the plan, we declared a dividend of rights on our
common stock.  The rights issued under the plan will be triggered,  with certain
exceptions,  if and when any person or group  acquires,  or  commences  a tender
offer to acquire,  15% or more of our shares, our Board of Directors  determines
that a  substantial  stockholder's  ownership may be adverse to the interests of
our other  stockholders or our qualification as a REIT, or other similar events.
The plan could have the effect of deterring or preventing our acquisition,  even
if a majority of our stockholders were in favor of such  acquisition,  and could
have the  effect  of  making  it more  difficult  for a person  or group to gain
control of us or to change existing management.

     The Company faces risks in attracting and retaining key personnel.  Many of
our  senior  executives  have  strong  industry  reputations,  which  aid  us in
identifying  acquisition and  development  opportunities  and  negotiating  with
tenants  and  sellers  of  properties.  The loss of the  services  of these  key
personnel could affect our operations  because of diminished  relationships with
existing and prospective  tenants,  property sellers and industry personnel.  In
addition,  attracting  new  or  replacement  personnel  may  be  difficult  in a
competitive market.

     We have  severance  and change in control  agreements  with  certain of our
officers that may deter changes in control of the Company.  If, within a certain
time period (as set in the officer's  agreement)  following a change in control,
we terminate the officer's  employment  other than for cause,  or if the officer
elects to terminate his or her employment  with us for reasons  specified in the
agreement,  we will make a  severance  payment  equal to the  officer's  average
annual  compensation  times an  amount  specified  in the  officer's  agreement,
together with the  officer's  base salary and vacation pay that have accrued but
are unpaid through the date of termination.  These agreements may deter a change
in control because of the increased cost for a third party to acquire control of
us.

     Our  Board  of  Directors  may  authorize  and  issue  securities   without
stockholder approval. Under our Charter, the Board has the power to classify and
reclassify  any of our unissued  shares of capital  stock into shares of capital
stock with such  preferences,  rights,  powers and  restrictions as the Board of
Directors  may  determine.  The  authorization  and  issuance  of a new class of
capital  stock  could have the effect of  delaying or  preventing  someone  from
taking control of us, even if a change in control were in our stockholders' best
interests.

     Maryland  business  statutes  may limit  the  ability  of a third  party to
acquire   control  of  us.   Maryland  law  provides   protection  for  Maryland
corporations against unsolicited takeovers by limiting,  among other things, the
duties of the  directors  in  unsolicited  takeover  situations.  The  duties of
directors of Maryland corporations do not require them to (a) accept,  recommend
or  respond  to any  proposal  by a person  seeking  to  acquire  control of the
corporation, (b) authorize the corporation to redeem any rights under, or modify
or render  inapplicable,  any stockholders rights plan, (c) make a determination
under the  Maryland  Business  Combination  Act or the  Maryland  Control  Share
Acquisition  Act, or (d) act or fail to act solely  because of the effect of the
act or failure to act may have on an  acquisition  or potential  acquisition  of
control of the  corporation or the amount or type of  consideration  that may be
offered or paid to the stockholders in an acquisition.  Moreover, under Maryland
law the act of a director of a Maryland  corporation relating to or affecting an
acquisition  or  potential  acquisition  of control is not subject to any higher
duty or  greater  scrutiny  than is  applied  to any  other  act of a  director.
Maryland law also contains a statutory  presumption that an act of a director of
a Maryland  corporation  satisfies  the  applicable  standards  of  conduct  for
directors under Maryland law.

                                       6

<PAGE>

     The Maryland  Business  Combination  Act provides that unless  exempted,  a
Maryland corporation may not engage in business combinations, including mergers,
dispositions of 10 percent or more of its assets, certain issuances of shares of
stock and other specified transactions,  with an "interested  stockholder" or an
affiliate of an interested stockholder for five years after the most recent date
on which the  interested  stockholder  became  an  interested  stockholder,  and
thereafter  unless  specified  criteria are met. An  interested  stockholder  is
generally a person owning or controlling,  directly or indirectly, 10 percent or
more of the voting power of the outstanding stock of the Maryland corporation.
     The Maryland  Control Share  Acquisition Act provides that "control shares"
of a corporation  acquired in a "control share acquisition" shall have no voting
rights  except  to the  extent  approved  by a vote of  two-thirds  of the votes
eligible to cast on the matter.  "Control Shares" means shares of stock that, if
aggregated with all other shares of stock  previously  acquired by the acquirer,
would entitle the acquirer to exercise voting power in electing directors within
one of the following ranges of the voting power: one-tenth or more but less than
one-third,  one-third  or more but less than a majority or a majority or more of
all voting power. A "control share acquisition" means the acquisition of control
shares, subject to certain exceptions.
     If voting rights of control shares acquired in a control share  acquisition
are not approved at a stockholders'  meeting, then subject to certain conditions
and limitations, the issuer may redeem any or all of the control shares for fair
value.  If voting rights of such control shares are approved at a  stockholders'
meeting and the  acquirer  becomes  entitled to vote a majority of the shares of
stock entitled to vote, all other stockholders may exercise appraisal rights.

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

     None.

ITEM 2.  PROPERTIES.

     EastGroup  owned 202  industrial  properties  and one  office  building  at
December 31, 2007. These properties are located  primarily in the Sunbelt states
of Florida,  Texas, Arizona and California,  the majority of which are clustered
around  major  transportation  features in supply  constrained  submarkets.  The
Company has developed  approximately 32% of its total portfolio,  including real
estate properties and development properties in lease-up and under construction.
The Company's focus is the ownership of business  distribution space (78% of the
total  portfolio)  with the  remainder  in bulk  distribution  space  (17%)  and
business  service  space  (5%).  Business   distribution  space  properties  are
typically  multi-tenant  buildings  with a  building  depth of 200 feet or less,
clear  height of 20-24  feet,  office  finish of 10-25% and truck  courts with a
depth of 100-120 feet. See Consolidated  Financial Statement Schedule III - Real
Estate  Properties and Accumulated  Depreciation  for a detailed  listing of the
Company's properties.
     At December 31, 2007,  EastGroup  did not own any single  property that was
10% or more of total book value or 10% or more of total gross  revenues and thus
is not subject to the requirements of Items 14 and 15 of Form S-11.

ITEM 3.  LEGAL PROCEEDINGS.

     The Company is not presently  involved in any material  litigation  nor, to
its knowledge,  is any material litigation threatened against the Company or its
properties,  other than routine  litigation  arising in the  ordinary  course of
business  or  which  is  expected  to be  covered  by  the  Company's  liability
insurance.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

                                       7

<PAGE>


PART II.  OTHER INFORMATION

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

     The Company's shares of Common Stock are listed for trading on the New York
Stock  Exchange  under the symbol "EGP." The following  table shows the high and
low share prices for each quarter reported by the New York Stock Exchange during
the past two years and per share distributions paid for each quarter.

Shares of Common Stock Market Prices and Dividends
<TABLE>
<CAPTION>
                                   Calendar 2007                             Calendar 2006
        ---------------------------------------------------------------------------------------------------
           Quarter        High         Low       Distributions        High         Low       Distributions
        ---------------------------------------------------------------------------------------------------
         <S>              <C>         <C>             <C>             <C>         <C>              <C>
         First          $ 57.55       50.27         $   .50         $ 48.60       44.12         $  .49
         Second           52.00       43.24             .50           47.50       42.54            .49
         Third            46.28       38.49             .50           51.29       45.23            .49
         Fourth           48.86       40.44             .50           56.50       48.95            .49
                                                 -------------                               --------------
                                                    $  2.00                                     $ 1.96
                                                 =============                               ==============
</TABLE>

     As of February 27, 2008,  there were 833 holders of record of the Company's
23,804,206  outstanding  shares of common stock. The Company  distributed all of
its 2007 and 2006 taxable income to its stockholders.  Accordingly, no provision
for income taxes was  necessary.  The  following  table  summarizes  the federal
income tax treatment for all distributions by the Company for the years 2007 and
2006.

Federal Income Tax Treatment of Share Distributions
<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                            --------------------------
                                                                             2007                2006
                                                                            --------------------------
               <S>                                                            <C>                 <C>
        Common Share Distributions:
           Ordinary Income......................................            $   1.7449         1.3660
           Return of capital....................................                 .1273              -
           Unrecaptured Section 1250 long-term capital gain.....                 .0236          .4160
           Other long-term capital gain.........................                 .1042          .1780
                                                                            --------------------------
        Total Common Distributions..............................            $   2.0000         1.9600
                                                                            ==========================
</TABLE>

Securities Authorized For Issuance Under Equity Compensation Plans
     See Item 12 of this  Annual  Report on Form 10-K,  "Security  Ownership  of
Certain Beneficial Owners and Management and Related  Stockholder  Matters," for
certain information regarding the Company's equity compensation plans.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers
<TABLE>
<CAPTION>
                                 Total Number       Average         Total Number of Share             Maximum Number of Shares
                                  of Shares       Price Paid     Purchased as Part of Publicly        That May Yet Be Purchased
             Period               Purchased        Per Share      Announced Plans or Programs        Under the Plans or Programs
     ----------------------------------------------------------------------------------------------------------------------------
          <S>                       <C>             <C>                      <C>                                   <C>
     10/01/07 thru 10/31/07          -                  -                      -                              672,300
     11/01/07 thru 11/30/07          -                  -                      -                              672,300
     12/01/07 thru 12/31/07        5,070 (1)        $ 41.85                    -                              672,300 (2)
                                 ------------------------------------------------------------
     Total                         5,070            $ 41.85                    -
                                 ============================================================
</TABLE>

(1) As permitted under the Company's  equity  compensation  plans,  these shares
were  withheld  by the Company to satisfy the tax  withholding  obligations  for
those employees who elected this option in connection with the vesting of shares
of restricted  stock.  Shares  withheld for tax  withholding  obligations do not
affect the total number of remaining  shares  available for repurchase under the
Company's common stock repurchase plan.

(2)  EastGroup's  Board of Directors  has  authorized  the  repurchase  of up to
1,500,000  shares of its outstanding  common stock.  The shares may be purchased
from time to time in the open market or in  privately  negotiated  transactions.
Under the common stock  repurchase  plan,  the Company has  purchased a total of
827,700  shares for  $14,170,000  (an average of $17.12 per share) with  672,300
shares still  authorized for  repurchase.  The Company has not  repurchased  any
shares under this plan since 2000.

                                       8

<PAGE>
Performance Graph

     The following graph compares,  over the five years ended December 31, 2007,
the cumulative  total  shareholder  return on EastGroup's  Common Stock with the
cumulative  total  return of the  Standard  & Poor's 500 Index (S&P 500) and the
Equity REIT index prepared by the National Association of Real Estate Investment
Trusts (NAREIT Equity).
     The  performance  graph  and  related   information  shall  not  be  deemed
"soliciting  material"  or be deemed to be "filed"  with the SEC, nor shall such
information be incorporated  by reference into any future filing,  except to the
extent that the Company  specifically  incorporates  it by  reference  into such
filing.


                                [GRAPHIC OMITTED]

<TABLE>
<CAPTION>
                                                          Fiscal years ended December 31,
                                  -----------------------------------------------------------------------------
                                     2002          2003          2004          2005         2006          2007
                                  -----------------------------------------------------------------------------
             <S>                     <C>            <C>           <C>          <C>          <C>            <C>
           EastGroup              $ 100.00        135.83        169.73        209.43       258.42        211.03
           NAREIT Equity            100.00        137.13        180.44        202.38       273.33        230.44
           S&P 500                  100.00        126.38        137.74        141.87       161.19        166.88
</TABLE>

     The information above assumes that the value of the investment in shares of
EastGroup's  Common Stock and each index was $100 on December 31, 2002, and that
all dividends were reinvested.

                                       9

<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA.

     The following table sets forth selected consolidated financial data for the
Company derived from the audited consolidated financial statements and should be
read in conjunction with the consolidated financial statements and notes thereto
included elsewhere in this report.
<TABLE>
<CAPTION>
                                                                                        Years Ended December 31,
                                                                    ----------------------------------------------------------------
                                                                        2007         2006          2005         2004        2003
                                                                    ----------------------------------------------------------------
                                                                                 (In thousands, except per share data)
<S>                                                                   <C>           <C>            <C>           <C>           <C>
OPERATING DATA
Revenues
  Income from real estate operations..............................  $  150,638      132,963       120,601      109,119      102,105
  Other income....................................................          92          182           413          356          151
                                                                    ----------------------------------------------------------------
                                                                       150,730      133,145       121,014      109,475      102,256
                                                                    ----------------------------------------------------------------
Expenses
  Expenses from real estate operations............................      41,118       37,218        34,377       30,686       30,100
  Depreciation and amortization...................................      47,908       41,377        37,726       31,302       30,280
  General and administrative......................................       8,295        7,401         6,874        6,711        4,966
                                                                    ----------------------------------------------------------------
                                                                        97,321       85,996        78,977       68,699       65,346
                                                                    ----------------------------------------------------------------

Operating Income                                                        53,409       47,149        42,037       40,776       36,910

Other Income (Expense)
  Equity in earnings of unconsolidated investment.................         285          287           450           69            -
  Gain on sales of land...........................................       2,602          123             -            -            -
  Gain on securities..............................................           -            -             -            -          421
  Interest income.................................................         306          142           247          121           22
  Interest expense................................................     (27,314)     (24,616)      (23,444)     (20,349)     (18,878)
  Minority interest in joint ventures.............................        (609)        (600)         (484)        (490)        (416)
                                                                    ----------------------------------------------------------------
Income from Continuing Operations                                       28,679       22,485        18,806       20,127       18,059

Discontinued operations
  Income from real estate operations..............................          95        1,022         2,221        1,750        2,274
  Gain on sales of real estate investments........................         960        5,727         1,164        1,450          112
                                                                    ----------------------------------------------------------------
Income from discontinued operations...............................       1,055        6,749         3,385        3,200        2,386
                                                                    ----------------------------------------------------------------

Net income .......................................................      29,734       29,234        22,191       23,327       20,445
  Preferred dividends-Series A....................................           -            -             -            -        2,016
  Preferred dividends-Series B....................................           -            -             -            -        2,598
  Preferred dividends-Series D....................................       2,624        2,624         2,624        2,624        1,305
  Costs on redemption of Series A preferred.......................           -            -             -            -        1,778
                                                                    ----------------------------------------------------------------
Net income available to common stockholders.......................  $   27,110       26,610        19,567       20,703       12,748
                                                                    ================================================================

BASIC PER COMMON SHARE DATA
  Income from continuing operations...............................  $     1.11          .89           .75          .84          .58
  Income from discontinued operations.............................         .04          .30           .16          .16          .14
                                                                    ----------------------------------------------------------------
  Net income available to common stockholders.....................  $     1.15         1.19           .91         1.00          .72
                                                                    ================================================================

  Weighted average shares outstanding.............................      23,562       22,372        21,567       20,771       17,819
                                                                    ================================================================

DILUTED PER COMMON SHARE DATA
  Income from continuing operations...............................  $     1.10          .87           .74          .83          .57
  Income from discontinued operations.............................         .04          .30           .15          .15          .13
                                                                    ----------------------------------------------------------------
  Net income available to common stockholders.....................  $     1.14         1.17           .89          .98          .70
                                                                    ================================================================

  Weighted average shares outstanding.............................      23,781       22,692        21,892       21,088       18,194
                                                                    ================================================================

OTHER PER SHARE DATA
  Book value (at end of year).....................................  $    15.51        16.28         15.06        15.14        16.01
  Common distributions declared...................................        2.00         1.96          1.94         1.92         1.90
  Common distributions paid.......................................        2.00         1.96          1.94         1.92         1.90

BALANCE SHEET DATA (AT END OF YEAR)
  Real estate investments, at cost ...............................  $1,270,559    1,091,491     1,024,459      904,312      842,577
  Real estate investments, net of accumulated depreciation........   1,001,427      860,385       818,032      729,250      695,643
  Total assets....................................................   1,055,833      911,787       863,538      768,664      729,267
  Mortgage and bank loans payable.................................     600,804      446,506       463,725      390,105      338,272
  Total liabilities...............................................     651,136      490,842       496,972      414,974      360,518
  Minority interest in joint ventures.............................       2,312        2,148         1,702        1,884        1,804
  Total stockholders' equity......................................     402,385      418,797       364,864      351,806      366,945
</TABLE>
                                       10

<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW
     EastGroup's  goal is to  maximize  shareholder  value by being the  leading
provider  in  its  markets  of  functional,   flexible,   and  quality  business
distribution  space for  location  sensitive  tenants  primarily in the 5,000 to
50,000  square  foot  range.  The  Company   develops,   acquires  and  operates
distribution  facilities,  the  majority  of which are  clustered  around  major
transportation  features  in  supply  constrained  submarkets  in major  Sunbelt
regions. The Company's core markets are in the states of Florida, Texas, Arizona
and California.
     The  Company's  primary  revenue  is rental  income;  as such,  EastGroup's
greatest  challenge is leasing space.  During 2007,  leases on 4,990,000  square
feet (21.1%) of EastGroup's total square footage of 23,694,000 expired,  and the
Company was successful in renewing or re-leasing 85% of that total. In addition,
EastGroup  leased  861,000  square feet of other  vacant  space during the year.
During 2007, average rental rates on new and renewal leases increased by 12.4%.
     EastGroup's total leased percentage was 96.0% at December 31, 2007 compared
to 96.6% at December 31, 2006.  Leases scheduled to expire in 2008 were 15.3% of
the  portfolio on a square foot basis at December 31, 2007,  and this figure was
reduced to 13.0% as of February 27, 2008.  Property net operating  income (PNOI)
from same  properties  increased  3.6% for 2007 as compared to 2006.  The fourth
quarter of 2007 was EastGroup's  eighteenth consecutive quarter of same property
PNOI growth.
     The  Company   generates  new  sources  of  leasing   revenue  through  its
acquisition and development  programs.  During 2007,  EastGroup  purchased seven
operating properties  (1,079,000 square feet in 15 buildings),  one property for
redevelopment (68,000 square feet) and 102 acres of developable land for a total
cost of $73.1 million. Two of the properties are in Charlotte, North Carolina, a
new market for  EastGroup in late 2006;  the Company now owns almost one million
square feet in Charlotte.  One of the properties is in San Antonio, Texas, a new
market for  EastGroup  in 2004.  The Company now has  approximately  1.7 million
square feet in this market,  including  properties under development.  The other
four operating properties are located in Tucson,  Arizona; City of Industry (Los
Angeles),  California; Dallas, Texas; and Denver, Colorado. The third new market
for  EastGroup in the last few years is Fort Myers,  Florida,  where the Company
completed the  construction  of two buildings  during the year and currently has
one building under construction.  Construction on the Denver,  Colorado property
purchased for redevelopment was completed in November 2007.
     EastGroup  continues to see targeted  development as a major contributor to
the Company's  growth.  The Company  mitigates risks associated with development
through  a  Board-approved  maximum  level of land held for  development  and by
adjusting  development start dates according to leasing  activity.  During 2007,
the Company transferred 14 properties (959,000 square feet) with aggregate costs
of $69.8  million  at the  date of  transfer  from  development  to real  estate
properties.  These properties,  twelve of which are 100% leased,  are located in
Chandler,  Arizona;  Orlando,  Tampa and Fort  Myers,  Florida;  Houston and San
Antonio,  Texas;  and Santa  Barbara,  California.  During the second quarter of
2007,  the  Company  executed  a  ten-year  lease  for  a  404,000  square  foot
build-to-suit  development  in its  Southridge  Commerce  Park in  Orlando.  The
projected cost of this development is approximately $20.4 million;  construction
began in June 2007 with occupancy projected in the second quarter of 2008.
     During 2007, the Company  primarily  funded its acquisition and development
programs  through a $175 million line of credit.  In January  2008,  the Company
replaced its previous credit facility with a four-year,  $200 million  unsecured
revolving  credit facility as discussed in Liquidity and Capital  Resources.  As
market conditions permit,  EastGroup issues equity,  including preferred equity,
and/or  employs  fixed-rate,  non-recourse first  mortgage  debt to replace  the
short-term bank borrowings.
     On August 8, 2007, the Company closed on a $75 million,  non-recourse first
mortgage loan secured by properties  containing  1,448,000 square feet. The loan
has a fixed interest rate of 5.57%, a ten-year term and an amortization schedule
of 20 years.  The proceeds of this note were used to reduce  variable  rate bank
borrowings.
     During 2007, the Company sold one property in Memphis and recognized a gain
of $603,000. In addition, the Company recognized deferred gains of $387,000 from
previous sales.  Also,  during the fourth quarter of 2007, the Company  received
proceeds of  $3,050,000  for the sale of land in lieu of  condemnation  at Arion
Business  Park and  recognized a gain of  $2,572,000.  In addition,  the Company
received escrow interest income of $167,000 from the transaction.
     Tower Automotive, Inc. (Tower) filed for Chapter 11 reorganization in early
2005.  Tower leases 210,000 square feet from EastGroup under a lease expiring in
December  2010 and has been current with their lease  payments  since  declaring
bankruptcy.  In July 2007,  the  Bankruptcy  Court  approved the  affirmation of
Tower's lease with  EastGroup.  On July 31, 2007,  Tower  announced  that it had
completed the sale of substantially all of its assets to Tower Automotive,  LLC,
an affiliate of Cerberus  Capital  Management,  L.P. The sale concluded  Tower's
restructuring process and finalized its emergence from Chapter 11.
     EastGroup  has  one  reportable   segment - industrial  properties.   These
properties are primarily  located in major Sunbelt regions of the United States,
have similar  economic  characteristics  and also meet the other  criteria  that
permit  the  properties  to be  aggregated  into  one  reportable  segment.  The
Company's chief decision makers use two primary measures of operating results in
making decisions:  property net operating income (PNOI),  defined as income from
real estate operations less property operating expenses (before interest expense
and  depreciation  and  amortization),  and funds from  operations  available to
common stockholders  (FFO),  defined as net income (loss) computed in accordance
with U.S. generally accepted  accounting  principles (GAAP),  excluding gains or
losses from sales of depreciable real estate property,  plus real estate related
depreciation  and  amortization,   and  after  adjustments  for   unconsolidated
partnerships  and  joint  ventures.  The  Company  calculates  FFO  based on the
National Association of Real Estate Investment Trusts' (NAREIT) definition.
     PNOI is a supplemental  industry reporting measurement used to evaluate the
performance of the Company's real estate investments.  The Company believes that
the exclusion of depreciation and amortization in the industry's  calculation of
PNOI provides a supplemental  indicator

                                       11

<PAGE>

of the property's  performance since real estate values have historically  risen
or fallen with market  conditions.  PNOI as calculated by the Company may not be
comparable to similarly  titled but  differently  calculated  measures for other
REITs. The major factors that influence PNOI are occupancy levels,  acquisitions
and sales,  development  properties that achieve stabilized  operations,  rental
rate increases or decreases,  and the recoverability of operating expenses.  The
Company's success depends largely upon its ability to lease space and to recover
from tenants the operating costs associated with those leases.
     Real estate income is comprised of rental income,  pass-through  income and
other real estate income including lease  termination fees.  Property  operating
expenses  are  comprised of property  taxes,  insurance,  utilities,  repair and
maintenance  expenses,  management  fees,  other  operating  costs  and bad debt
expense.  Generally,  the  Company's  most  significant  operating  expenses are
property taxes and insurance. Tenant leases may be net leases in which the total
operating  expenses are recoverable,  modified gross leases in which some of the
operating  expenses  are  recoverable,  or gross leases in which no expenses are
recoverable  (gross leases represent only a small portion of the Company's total
leases).  Increases in property  operating  expenses are fully recoverable under
net leases  and  recoverable  to a high  degree  under  modified  gross  leases.
Modified gross leases often include base year amounts and expense increases over
these  amounts are  recoverable.  The Company's  exposure to property  operating
expenses is primarily due to vacancies and leases for occupied  space that limit
the amount of expenses that can be recovered.
     The Company  believes  FFO is an  appropriate  measure of  performance  for
equity real  estate  investment  trusts.  The Company  believes  that  excluding
depreciation  and  amortization in the  calculation of FFO is appropriate  since
real estate  values have  historically  increased or  decreased  based on market
conditions. FFO is not considered as an alternative to net income (determined in
accordance with GAAP) as an indication of the Company's  financial  performance,
nor is it a measure of the Company's  liquidity or indicative of funds available
to  provide  for  the  Company's  cash  needs,  including  its  ability  to make
distributions.  The Company's key drivers  affecting FFO are changes in PNOI (as
discussed above), interest rates, the amount of leverage the Company employs and
general and  administrative  expense.  The  following  table  presents the three
fiscal years reconciliations of PNOI and FFO Available to Common Stockholders to
Net Income.
<TABLE>
<CAPTION>
                                                                                       Years Ended December 31,
                                                                                --------------------------------------
                                                                                   2007          2006          2005
                                                                                --------------------------------------
                                                                                (In thousands, except per share data)
<S>                                                                                 <C>           <C>           <C>
Income from real estate operations............................................  $ 150,638       132,963       120,601
Expenses from real estate operations..........................................    (41,118)      (37,218)      (34,377)
                                                                                --------------------------------------
PROPERTY NET OPERATING INCOME.................................................    109,520        95,745        86,224

Equity in earnings of unconsolidated investment (before depreciation).........        417           419           582
Income from discontinued operations (before depreciation and amortization)....        245         1,862         3,801
Interest income...............................................................        306           142           247
Other income..................................................................         92           182           413
Interest expense..............................................................    (27,314)      (24,616)      (23,444)
General and administrative expense............................................     (8,295)       (7,401)       (6,874)
Minority interest in earnings (before depreciation and amortization)..........       (783)         (751)         (625)
Gain on sales of land.........................................................      2,602           791            33
Dividends on Series D preferred shares........................................     (2,624)       (2,624)       (2,624)
                                                                                --------------------------------------

FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS........................     74,166        63,749        57,733
Depreciation and amortization from continuing operations......................    (47,908)      (41,377)      (37,726)
Depreciation and amortization from discontinued operations....................       (150)         (840)       (1,580)
Depreciation from unconsolidated investment...................................       (132)         (132)         (132)
Minority interest depreciation and amortization...............................        174           151           141
Gain on sales of depreciable real estate investments..........................        960         5,059         1,131
                                                                                --------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS...................................     27,110        26,610        19,567
Dividends on preferred shares.................................................      2,624         2,624         2,624
                                                                                --------------------------------------

NET INCOME....................................................................  $  29,734        29,234        22,191
                                                                                ======================================

Net income available to common stockholders per diluted share.................  $    1.14          1.17           .89
Funds from operations available to common stockholders per diluted share......       3.12          2.81          2.64
Diluted shares for earnings per share and funds from operations...............     23,781        22,692        21,892
</TABLE>
                                       12

<PAGE>

The Company analyzes the following performance trends in evaluating the progress
of the Company:

o    The FFO change per share  represents  the  increase  or decrease in FFO per
     share from the same quarter in the current year compared to the prior year.
     FFO per share for the fourth  quarter  of 2007 was $.86 per share  compared
     with $.72 per share for the same  period of 2006,  an increase of 19.4% per
     share. PNOI increased 13.6% due to additional PNOI of $1,568,000 from newly
     developed  properties,  $1,404,000  from  2006  and 2007  acquisitions  and
     $352,000 from same property  growth.  A gain on the sale of land in lieu of
     condemnation  at Arion  Business  Park was  recorded  during  the  quarter,
     increasing FFO by $2,572,000. Excluding gain on land sales of $2,579,000 in
     the fourth  quarter of 2007 and $129,000 in the same  quarter of 2006,  FFO
     per share  increased  7.0% in the fourth  quarter of 2007  compared  to the
     previous  year's  quarter.  The fourth  quarter of 2007 was the  fourteenth
     consecutive  quarter of increased  FFO as compared to the  previous  year's
     quarter.

     For the year 2007,  FFO was $3.12 per share  compared  with $2.81 per share
     for 2006,  an  increase  of 11.0% per share.  PNOI  increased  14.4% due to
     additional PNOI of $5,671,000 from newly developed  properties,  $4,813,000
     from 2006 and 2007  acquisitions  and $3,368,000 from same property growth.
     The Company recognized gain on land sales of $2,602,000 in 2007 compared to
     $791,000 in 2006. In addition,  $1,149,000 in lease  termination  fees were
     recognized in 2007 compared to $410,000 in 2006.  Without  termination fees
     and gain on land sales for both years,  the increase in FFO per share would
     have been 7.2%.

o    Same property net operating  income change  represents the PNOI increase or
     decrease for operating  properties  owned during the entire  current period
     and prior year reporting period.  PNOI from same properties  increased 1.4%
     for the  fourth  quarter.  The fourth  quarter  of 2007 was the  eighteenth
     consecutive  quarter of improved  same  property  operations.  For the year
     2007, PNOI from same properties increased 3.6%.

o    Occupancy is the percentage of total leasable  square footage for which the
     lease term has commenced as of the close of the reporting period. Occupancy
     at December  31, 2007 was 95.4%.  Occupancy  has ranged from 91.2% to 96.1%
     for 16 consecutive quarters.

o    Rental rate change  represents  the rental rate increase or decrease on new
     and renewal leases  compared to the prior leases on the same space.  Rental
     rate  increases on new and renewal  leases  (4.2% of total square  footage)
     averaged 17.3% for the fourth  quarter of 2007.  For the year,  rental rate
     increases  on new and  renewal  leases  (21.5%  of  total  square  footage)
     averaged 12.4%.

                                       13

<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The Company's  management  considers the following  accounting policies and
estimates to be critical to the reported operations of the Company.

Real Estate Properties
     The Company  allocates  the purchase  price of acquired  properties  to net
tangible and identified intangible assets based on their respective fair values.
Factors  considered  by  management  in  allocating  the cost of the  properties
acquired  include an estimate of carrying  costs  during the  expected  lease-up
periods  considering  current  market  conditions  and costs to execute  similar
leases.  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.  The  remaining  purchase  price is
allocated among three categories of intangible assets consisting of the above or
below market component of in-place leases,  the value of in-place leases and the
value of  customer  relationships.  The  value  allocable  to the above or below
market  component of an acquired  in-place  lease is  determined  based upon the
present value (using a discount rate which  reflects the risks  associated  with
the acquired leases) of the difference between (i) the contractual amounts to be
paid  pursuant  to the lease  over its  remaining  term,  and (ii)  management's
estimate  of the  amounts  that would be paid using fair  market  rates over the
remaining  term of the lease.  The amounts  allocated  to above and below market
leases are included in Other Assets and Other Liabilities,  respectively, on the
consolidated  balance  sheets  and are  amortized  to  rental  income  over  the
remaining terms of the respective  leases. The total amount of intangible assets
is further  allocated  to in-place  lease  values and to  customer  relationship
values based upon  management's  assessment of their  respective  values.  These
intangible  assets are  included  in Other  Assets on the  consolidated  balance
sheets and are amortized over the remaining term of the existing  lease,  or the
anticipated life of the customer relationship, as applicable.
     During the industrial  development stage, costs associated with development
(i.e.,  land,  construction  costs,  interest  expense during  construction  and
lease-up,  property  taxes and other direct and indirect costs  associated  with
development)  are  aggregated  into the total  capitalization  of the  property.
Included in these costs are management's  estimates for the portions of internal
costs (primarily personnel costs) that are deemed directly or indirectly related
to such development activities.
     The Company  reviews its real estate  investments  for  impairment of value
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be  recoverable.  If any real estate  investment  is considered
permanently  impaired,  a loss is recorded to reduce the  carrying  value of the
property to its estimated fair value. Real estate assets to be sold are reported
at the lower of the  carrying  amount or fair  value  less  selling  costs.  The
evaluation  of real estate  investments  involves  many  subjective  assumptions
dependent  upon future  economic  events that affect the  ultimate  value of the
property.  Currently,  the Company's  management is not aware of any  impairment
issues nor has it experienced any significant impairment issues in recent years.
In the event of  impairment,  the  property's  basis  would be  reduced  and the
impairment  would  be  recognized  as a  current  period  charge  in the  income
statement.

Valuation of Receivables
     The  Company is  subject to tenant  defaults  and  bankruptcies  that could
affect the  collection of  outstanding  receivables.  In order to mitigate these
risks, the Company  performs credit reviews and analyses on prospective  tenants
before  significant  leases are  executed.  On a  quarterly  basis,  the Company
evaluates  outstanding  receivables  and  estimates  the  allowance for doubtful
accounts.   Management   specifically   analyzes  aged   receivables,   customer
credit-worthiness,  historical  bad  debts  and  current  economic  trends  when
evaluating  the adequacy of the  allowance  for doubtful  accounts.  The Company
believes  that  its  allowance  for  doubtful   accounts  is  adequate  for  its
outstanding  receivables  for the  periods  presented.  In the  event  that  the
allowance  for  doubtful  accounts  is  insufficient  for  an  account  that  is
subsequently  written off,  additional bad debt expense would be recognized as a
current period charge in the income statement.

Tax Status
     EastGroup,  a  Maryland  corporation,   has  qualified  as  a  real  estate
investment trust under Sections 856-860 of the Internal Revenue Code and intends
to continue to qualify as such. To maintain its status as a REIT, the Company is
required  to  distribute  at least  90% of its  ordinary  taxable  income to its
stockholders.  The Company has the option of (i)  reinvesting the sales price of
properties  sold  through  tax-deferred  exchanges,  allowing  for a deferral of
capital  gains on the sale,  (ii) paying out capital  gains to the  stockholders
with no tax to the Company,  or (iii)  treating the capital gains as having been
distributed to the stockholders,  paying the tax on the gain deemed  distributed
and  allocating  the tax  paid as a  credit  to the  stockholders.  The  Company
distributed all of its 2007,  2006 and 2005 taxable income to its  stockholders.
Accordingly, no provision for income taxes was necessary.

                                       14

<PAGE>

FINANCIAL CONDITION
     EastGroup's assets were $1,055,833,000 at December 31, 2007, an increase of
$144,046,000  from  December 31, 2006.  Liabilities  increased  $160,294,000  to
$651,136,000  and  stockholders'  equity  decreased  $16,412,000 to $402,385,000
during the same period.  The  paragraphs  that follow  explain  these changes in
detail.

ASSETS

Real Estate Properties
     Real  estate  properties  increased  $141,056,000  during  the  year  ended
December 31, 2007,  primarily  due to the purchase of seven  properties  and the
transfer of fourteen properties from development, as detailed below.
<TABLE>
<CAPTION>
                                                                                               Date
        Real Estate Properties Acquired in 2007        Location                 Size         Acquired             Cost (1)
        --------------------------------------------------------------------------------------------------------------------
                                                                           (Square feet)                     (In thousands)
                          <S>                             <C>                   <C>            <C>                   <C>
        Westinghouse and Lindbergh I & II......      Charlotte, NC             181,000       01/09/07        $       8,939
        North Stemmons III.....................      Dallas, TX                 60,000       01/30/07                2,446
        Fairgrounds Business Park..............      San Antonio, TX           231,000       03/02/07                9,853
        Nations Ford Distribution Center.......      Charlotte, NC             456,000       03/08/07               20,096
        Country Club Commerce Center II........      Tucson, AZ                 45,000       05/15/07                3,796
        Industry Distribution Center III.......      City of Industry, CA       28,000       06/29/07                3,012
        Concord Distribution Center............      Denver, CO                 78,000       12/17/07                5,810
                                                                           -------------                    ----------------
             Total Acquisitions................                              1,079,000                       $      53,952
                                                                           =============                    ================
</TABLE>

(1)  Total cost of the properties acquired was $57,246,000, of which $53,952,000
     was  allocated to real estate  properties as indicated  above.  Intangibles
     associated  with the  purchases  of real estate were  allocated as follows:
     $3,661,000  to in-place  lease  intangibles  and  $246,000 to above  market
     leases (both  included in Other Assets on the  consolidated  balance sheet)
     and $613,000 to below market leases  (included in Other  Liabilities on the
     consolidated  balance  sheet).  All of these costs are  amortized  over the
     remaining  lives  of  the  associated  leases  in  place  at  the  time  of
     acquisition.
<TABLE>
<CAPTION>
        Real Estate Properties Transferred from                                                 Date
                  Development in 2007                  Location               Size          Transferred      Cost at Transfer
        ---------------------------------------------------------------------------------------------------------------------
                                                                         (Square feet)                        (In thousands)
                         <S>                              <C>                  <C>              <C>                 <C>
        Santan 10 II............................     Chandler, AZ              85,000         01/01/07        $       5,501
        Oak Creek III...........................     Tampa, FL                 61,000         03/23/07                3,578
        Southridge VI...........................     Orlando, FL               81,000         04/01/07                5,294
        Arion 16................................     San Antonio, TX           64,000         04/20/07                3,795
        Southridge III..........................     Orlando, FL               81,000         04/20/07                5,166
        Southridge II...........................     Orlando, FL               41,000         05/01/07                3,790
        World Houston 15........................     Houston, TX               63,000         05/01/07                4,802
        World Houston 23........................     Houston, TX              125,000         05/01/07                7,385
        Arion 17................................     San Antonio, TX           40,000         06/01/07                3,028
        Beltway Crossing II.....................     Houston, TX               50,000         09/01/07                2,986
        SunCoast II.............................     Fort Myers, FL            63,000         10/10/07                5,604
        Castilian Research Center...............     Santa Barbara, CA         37,000         10/15/07                8,847
        Oak Creek V.............................     Tampa, FL                100,000         11/01/07                5,396
        World Houston 22........................     Houston, TX               68,000         12/31/07                4,642
                                                                         -------------                        ---------------
              Total Developments Transferred....                              959,000                         $      69,814
                                                                         =============                        ===============
</TABLE>

     The Company  made  capital  improvements  of  $15,881,000  on existing  and
acquired properties (included in the Capital Expenditures table under Results of
Operations).  Also,  the Company  incurred  costs of $4,936,000  on  development
properties subsequent to transfer to real estate properties; the Company records
these  expenditures as development costs on the consolidated  statements of cash
flows during the 12-month period following transfer. These additions were offset
by the  sale  of one  property,  Delp  Distribution  Center  I,  with  costs  of
$3,470,000.

Development
     The  investment  in  development  at  December  31,  2007 was  $152,963,000
compared to  $114,986,000  at December  31,  2006.  Total  capital  invested for
development during 2007 was $112,960,000.  The table below is net of $233,000 of
land sold during the year.  In addition  to the costs  incurred  for the year as
detailed  in the  development  activity  table,  the Company  incurred  costs of
$4,936,000 for improvements on developments during the 12-month period following
transfer to real estate properties.

                                       15

<PAGE>
     In  the  first  quarter  of  2007,   EastGroup  acquired   Centennial  Park
Distribution Center in Denver for $4,131,000.  The building,  which was built in
1990,  contains  68,000  square feet and is located near  Centennial  Airport in
southeast  Denver.  Redevelopment  was completed in the fourth  quarter of 2007.
Costs associated with this acquisition are included in the development  activity
table.
     In addition,  the Company executed a ten-year lease with United  Stationers
Supply Co. for a 404,000 square foot build-to-suit development in its Southridge
Commerce  Park  in  Orlando.   The  projected   cost  of  this   development  is
approximately  $20.4  million;  construction  began in June 2007 with  occupancy
projected in the second quarter of 2008. As part of this transaction,  EastGroup
entered into  contracts  with United  Stationers to purchase two of its existing
properties  (278,000  square  feet) in  Jacksonville  and  Tampa,  Florida,  for
approximately $9 million.  These acquisitions are expected to close in mid-2008,
in line with completion of the build-to-suit development.
     During  2007,  EastGroup  purchased  102  acres  of  developable  land  for
approximately  $11.7  million.  Costs  associated  with these  acquisitions  are
included  in  the  development   activity  table.  The  Company  transferred  14
developments to real estate  properties  during 2007 with a total  investment of
$69,814,000 as of the date of transfer.

<TABLE>
<CAPTION>
                                                                                     Costs Incurred
                                                                      --------------------------------------------
                                                                         Costs            For the      Cumulative        Estimated
                                                                      Transferred       Year Ended        as of            Total
DEVELOPMENT                                                 Size       in 2007(1)        12/31/07       12/31/07         Costs (4)
------------------------------------------------------------------------------------------------------------------------------------
                                                        (Square feet)                         (In thousands)
<S>                                                         <C>            <C>             <C>              <C>               <C>
LEASE-UP
  Beltway Crossing III & IV, Houston, TX..........        110,000     $      -             1,134           6,212             6,500
  Interstate Commons III, Phoenix, AZ.............         38,000            -             2,475           3,048             3,200
  Oak Creek A & B, Tampa, FL(2)...................         35,000            -             2,190           2,941             3,300
  Southridge VII, Orlando, FL.....................         92,000        3,312             2,774           6,086             6,700
  SunCoast I, Fort Myers, FL......................         63,000            -             2,449           5,076             5,500
  World Houston 24, Houston, TX...................         93,000            -             4,064           5,165             5,600
  World Houston 25, Houston, TX...................         66,000            -             2,549           3,194             3,700
  Centennial Park, Denver, CO.....................         68,000            -             4,747           4,747             4,900
  Beltway Crossing V, Houston, TX.................         83,000        1,077             2,669           3,746             5,000
  Wetmore II, Building A, San Antonio, TX.........         34,000          504             2,297           2,801             3,200
                                                      ------------------------------------------------------------------------------
Total Lease-up....................................        682,000        4,893            27,348          43,016            47,600
                                                      ------------------------------------------------------------------------------

UNDER CONSTRUCTION
  40th Avenue Distribution Center, Phoenix, AZ....         89,000            -             4,046           5,147             6,100
  Arion 18, San Antonio, TX.......................         20,000        1,236               719           1,955             2,500
  Wetmore II, Buildings B & C, San Antonio, TX....        124,000        1,269             5,111           6,380             7,600
  Oak Creek VI,  Tampa, FL........................         89,000        2,412             1,493           3,905             5,800
  Beltway Crossing VI, Houston, TX................        127,000        1,058             2,465           3,523             6,400
  Southridge VIII, Orlando, FL....................         91,000        2,407             1,633           4,040             6,700
  Wetmore II, Building D, San Antonio, TX.........        124,000        1,382             1,603           2,985             8,500
  Sky Harbor, Phoenix, AZ.........................        261,000        6,946             7,062          14,008            22,800
  Southridge XII, Orlando, FL.....................        404,000        4,089            11,011          15,100            20,400
  SunCoast III, Fort Myers, FL....................         93,000        4,175                 -           4,175             8,400
  Techway SW IV, Houston, TX......................         94,000        1,968                 -           1,968             5,800
  World Houston 27, Houston, TX...................         92,000        2,483                 -           2,483             5,500
                                                      ------------------------------------------------------------------------------
Total Under Construction..........................      1,608,000       29,425            35,143          65,669           106,500
                                                      ------------------------------------------------------------------------------

PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
  Phoenix, AZ.....................................              -       (6,946)              431               -                 -
  Tucson, AZ......................................        205,000            -             1,719           2,045            14,300
  Tampa, FL.......................................        335,000       (2,412)            2,332           4,577            20,100
  Orlando, FL.....................................        229,000       (9,808)            5,199           3,762            13,700
  West Palm Beach, FL.............................         20,000            -               126             811             2,300
  Fort Myers, FL..................................        659,000       (4,175)            4,326          12,819            48,100
  El Paso, TX.....................................        251,000            -                 -           2,444             9,600
  Houston, TX.....................................      1,306,000       (6,586)           11,628          14,549            77,000
  San Antonio, TX.................................        410,000       (4,391)            3,551           2,566            24,300
  Jackson, MS.....................................         28,000            -                 -             705             2,000
                                                      ------------------------------------------------------------------------------
Total Prospective Development.....................      3,443,000      (34,318)           29,312          44,278           211,400
                                                      ------------------------------------------------------------------------------
                                                        5,733,000     $      -            91,803         152,963           365,500
                                                      ==============================================================================

DEVELOPMENTS COMPLETED AND TRANSFERRED
TO REAL ESTATE PROPERTIES DURING 2007
  Santan 10 II, Chandler, AZ......................         85,000     $      -                 -           5,501
  Oak Creek III,  Tampa, FL.......................         61,000            -               119           3,578
  Southridge VI, Orlando, FL......................         81,000            -               323           5,294
  Arion 16, San Antonio, TX.......................         64,000            -             1,411           3,795
  Southridge III, Orlando, FL.....................         81,000            -               713           5,166
  Southridge II, Orlando, FL......................         41,000            -               244           3,790
  World Houston 15, Houston, TX...................         63,000            -               276           4,802
  World Houston 23, Houston, TX...................        125,000            -             2,888           7,385
  Arion 17, San Antonio, TX.......................         40,000            -                90           3,028
  Beltway Crossing II, Houston, TX................         50,000            -               911           2,986
  SunCoast II, Fort Myers, FL.....................         63,000            -             2,953           5,604
  Castilian Research Center, Santa Barbara, CA....         37,000            -             3,925           8,847
  Oak Creek V,  Tampa, FL.........................        100,000            -               563           5,396
  World Houston 22, Houston, TX...................         68,000            -             1,572           4,642
                                                      ------------------------------------------------------------
Total Transferred to Real Estate Properties.......        959,000     $      -            15,988          69,814  (3)
                                                      ============================================================
</TABLE>

(1) Represents costs transferred from Prospective  Development  (primarily land)
to Under Construction (or subsequently to Lease-up) during the period.
(2) These buildings were developed for sale.
(3) Represents cumulative costs at the date of transfer.
(4) Included in these costs are  development  obligations  of $31.9  million and
tenant improvement obligations of $5.4 million on properties under development.

                                       16

<PAGE>

     Accumulated  depreciation on real estate properties increased  $38,026,000,
primarily due to depreciation  expense of $39,688,000 on real estate properties,
offset  by  accumulated  depreciation  on  properties  sold of  $1,102,000.  The
majority of this amount represents accumulated depreciation on Delp Distribution
Center I, which was sold in 2007.
     A  summary  of Other  Assets  is  presented  in Note 5 in the  Notes to the
Consolidated Financial Statements.

LIABILITIES

     Mortgage notes payable increased $47,920,000 during the year ended December
31, 2007. In August,  the Company closed a new  $75,000,000  first mortgage loan
secured by properties  containing  1,448,000  square feet.  The loan has a fixed
interest  rate of 5.57%,  a ten-year  term and an  amortization  schedule  of 20
years.  The  proceeds  of this  note  were  used to  reduce  variable  rate bank
borrowings.  This increase was offset by the repayment of two mortgage  loans of
$14,220,000, regularly scheduled principal payments of $12,743,000, and mortgage
loan premium amortization of $117,000.
     Notes payable to banks  increased  $106,378,000  during 2007 as a result of
advances of $332,544,000  exceeding  repayments of  $226,166,000.  The Company's
credit  facilities are described in greater  detail under  Liquidity and Capital
Resources.
     See Note 8 in the  Notes to the  Consolidated  Financial  Statements  for a
summary of Accounts Payable and Accrued Expenses. See Note 9 in the Notes to the
Consolidated Financial Statements for a summary of Other Liabilities.

STOCKHOLDERS' EQUITY

     Distributions in excess of earnings were  $20,445,000  during the year as a
result of dividends on common and preferred  stock of $50,179,000  exceeding net
income for financial reporting purposes of $29,734,000. See Note 11 in the Notes
to the Consolidated  Financial Statements for information related to the changes
in additional paid-in capital resulting from stock-based compensation.

RESULTS OF OPERATIONS

2007 Compared to 2006

     Net income available to common stockholders for 2007 was $27,110,000 ($1.15
per basic share and $1.14 per diluted share) compared to $26,610,000  ($1.19 per
basic share and $1.17 per diluted  share) for 2006.  Diluted  earnings per share
(EPS) for 2007 included a $.15 per share gain on sales of real estate properties
compared to a $.26 per share gain on sales of properties in 2006.
     PNOI  increased  by  $13,775,000,  or  14.4%,  for 2007  compared  to 2006,
primarily due to increased average occupancy and rental rates,  acquisitions and
developments.  Expense to revenue ratios were 27.3% in 2007 compared to 28.0% in
2006. The Company's percentage leased was 96.0% at December 31, 2007 compared to
96.6% at December 31, 2006.  Occupancy at the end of 2007 was 95.4%  compared to
95.9% at the end of 2006.
     The  increase in PNOI was  primarily  attributable  to  additional  PNOI of
$5,671,000  from  newly  developed  properties,  $4,813,000  from  2006 and 2007
acquisitions and $3,368,000 from same property growth. Included in same property
growth was  $1,149,000 in lease  termination  fees for 2007 compared to $410,000
for 2006.  These  increases  in PNOI were offset by increased  depreciation  and
amortization expense and other costs as discussed below.
     During the fourth quarter of 2007, EastGroup recorded a gain on the sale of
land in lieu of condemnation at Arion Business Park of $2,572,000. For the year,
the Company  recognized  gain on land sales of  $2,602,000  in 2007  compared to
$791,000 in 2006.

                                       17

<PAGE>

     The following  table presents the  components of interest  expense for 2007
and 2006:
<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
                                                                                ----------------------------     Increase
                                                                                   2007             2006        (Decrease)
                                                                                ------------------------------------------
                                                                                 (In thousands, except rates of interest)
       <S>                                                                        <C>                <C>            <C>
     Average bank borrowings.......................................             $  96,513           91,314          5,199
     Weighted average variable interest rates......................                 6.36%            6.12%

     VARIABLE RATE INTEREST EXPENSE
     Variable rate interest (excluding loan cost amortization).....                 6,139            5,584            555
     Amortization of bank loan costs...............................                   353              355             (2)
                                                                                ------------------------------------------
     Total variable rate interest expense..........................                 6,492            5,939            553
                                                                                ------------------------------------------

     FIXED RATE INTEREST EXPENSE
     Fixed rate interest (excluding loan cost amortization)........                26,350           22,549          3,801
     Amortization of mortgage loan costs...........................                   558              464             94
                                                                                ------------------------------------------
     Total fixed rate interest expense.............................                26,908           23,013          3,895
                                                                                ------------------------------------------

     Total interest................................................                33,400           28,952          4,448
     Less capitalized interest.....................................                (6,086)          (4,336)        (1,750)
                                                                                ------------------------------------------

     TOTAL INTEREST EXPENSE........................................             $  27,314           24,616          2,698
                                                                                ==========================================
</TABLE>

     Interest costs incurred  during the period of  construction  of real estate
properties are capitalized and offset against  interest  expense.  The Company's
weighted  average  variable  interest rates in 2007 were higher than in 2006. In
recent years,  the Company  closed  several new mortgages with ten-year terms at
fixed rates and used the proceeds to reduce the Company's exposure to changes in
variable bank rates. A summary of the Company's  weighted average interest rates
on mortgage debt at year-end for the past several years is presented below:
<TABLE>
<CAPTION>
                                                         WEIGHTED AVERAGE
     MORTGAGE DEBT AS OF:                                  INTEREST RATE
     -----------------------------------------------------------------------
      <S>                                                      <C>
     December 31, 2003.............................            6.92%
     December 31, 2004.............................            6.74%
     December 31, 2005.............................            6.31%
     December 31, 2006.............................            6.21%
     December 31, 2007.............................            6.06%
</TABLE>

     The increase in mortgage  interest expense in 2007 was primarily due to the
new mortgages detailed in the table below.
<TABLE>
<CAPTION>
     NEW MORTGAGES IN 2006 AND 2007                                INTEREST RATE         DATE             AMOUNT
     --------------------------------------------------------------------------------------------------------------
            <S>                                                         <C>              <C>                <C>
     Huntwood and Wiegman Distribution Centers.................        5.680%          08/08/06      $  38,000,000
     Alamo Downs, Arion 1-15 & 17, Rampart I, II & III,
      Santan 10 and World Houston 16...........................        5.970%          10/17/06         78,000,000
     Broadway VI, World Houston 1 & 2, 21 & 23, Arion 16,
      Ethan Allen, Northpark I-IV, South 55th Avenue, East
      University I & II and Santan 10 II.......................        5.570%          08/08/07         75,000,000
                                                                   -------------                     --------------
       Weighted Average/Total Amount...........................        5.755%                        $ 191,000,000
                                                                   =============                     ==============
</TABLE>

     Mortgage  principal  payments were  $26,963,000 in 2007 and  $45,071,000 in
2006.  Included in these  principal  payments are  repayments  of two  mortgages
totaling  $14,220,000 in 2007 and three mortgages totaling  $35,929,000 in 2006.
The details of these mortgages are shown in the following table:
<TABLE>
<CAPTION>
                                                             INTEREST         DATE             PAYOFF
     MORTGAGE LOANS REPAID IN 2006 AND 2007                    RATE          REPAID            AMOUNT
     ------------------------------------------------------------------------------------------------------
            <S>                                                <C>             <C>               <C>
     Huntwood Distribution Center.......................      7.990%        08/08/06      $    10,557,000
     Wiegman Distribution Center........................      7.990%        08/08/06            4,872,000
     Arion Business Park................................      4.450%        10/16/06           20,500,000
     World Houston 1 & 2................................      7.770%        04/12/07            4,023,000
     E. University I & II, Broadway VI, 55th Avenue
       and Ethan Allen..................................      8.060%        05/25/07           10,197,000
                                                            ----------                    -----------------
       Weighted Average/Total Amount....................      6.539%                      $    50,149,000
                                                            ==========                    =================
</TABLE>

                                       18

<PAGE>

     Depreciation   and  amortization   for  continuing   operations   increased
$6,531,000  for 2007  compared  to 2006.  This  increase  was  primarily  due to
properties  acquired  and  transferred  from  development  during 2006 and 2007.
Property acquisitions and transferred developments were $127 million in 2007 and
$58 million in 2006.
     NAREIT has recommended  supplemental  disclosures concerning  straight-line
rent,  capital  expenditures  and  leasing  costs.  Straight-lining  of rent for
continuing  operations increased income by $839,000 in 2007 compared to $997,000
in 2006.

Capital Expenditures

     Capital expenditures for the years ended December 31, 2007 and 2006 were as
follows:
<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                         Estimated     ---------------------------
                                                        Useful Life      2007               2006
                                                      --------------------------------------------
                                                                              (In thousands)
            <S>                                             <C>            <C>              <C>
        Upgrade on Acquisitions...................         40 yrs      $    141               351
        Tenant Improvements:
           New Tenants............................       Lease Life       7,326             7,240
           New Tenants (first generation) (1).....       Lease Life         495               688
           Renewal Tenants........................       Lease Life       1,963               731
        Other:
           Building Improvements..................        5-40 yrs        1,719             1,818
           Roofs..................................        5-15 yrs        3,273             1,803
           Parking Lots...........................         3-5 yrs          765               686
           Other..................................          5 yrs           199               153
                                                                       ---------------------------
              Total capital expenditures..........                     $ 15,881            13,470
                                                                       ===========================
</TABLE>

(1)  First  generation  refers  to space  that has  never  been  occupied  under
EastGroup's ownership.

Capitalized Leasing Costs

     The Company's leasing costs  (principally  commissions) are capitalized and
included  in Other  Assets.  The  costs  are  amortized  over  the  terms of the
associated  leases and are included in depreciation  and  amortization  expense.
Capitalized leasing costs for the years ended December 31, 2007 and 2006 were as
follows:
<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                         Estimated     ---------------------------
                                                        Useful Life      2007               2006
                                                      --------------------------------------------
                                                                              (In thousands)
            <S>                                             <C>            <C>              <C>
        Development...............................       Lease Life    $  3,108             2,110
        New Tenants...............................       Lease Life       2,805             2,557
        New Tenants (first generation) (1)........       Lease Life         212               112
        Renewal Tenants...........................       Lease Life       2,124             1,987
                                                                       ---------------------------
              Total capitalized leasing costs.....                     $  8,249             6,766
                                                                       ===========================

        Amortization of leasing costs (2).........                     $  5,339             4,304
                                                                       ===========================
</TABLE>

(1)  First  generation  refers  to space  that has  never  been  occupied  under
EastGroup's ownership.
(2) Includes discontinued operations.

Discontinued Operations

     The results of operations,  including interest expense (if applicable), for
the properties sold or held for sale during the periods reported are shown under
Discontinued Operations on the consolidated income statements.  During 2007, the
Company sold one property and  recognized a gain of $603,000.  In addition,  the
Company recognized deferred gains of $357,000 from previous sales.
     During  2006,  the  Company  sold  certain  real  estate   investments  and
recognized  total gains from  discontinued  operations of $5,727,000.  See Notes
1(f)  and 2 in the  Notes  to the  Consolidated  Financial  Statements  for more
information  related to  discontinued  operations and gain on the sales of these
properties.  The following  table presents the components of revenue and expense
for the real estate investments sold during 2007 and 2006.

                                       19

<PAGE>

<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                                       ----------------------------
  Discontinued Operations                                                2007               2006
  -------------------------------------------------------------------------------------------------
                                                                             (In thousands)
      <S>                                                                <C>                 <C>
  Income from real estate operations..............................     $    331             2,634
  Expenses from real estate operations............................          (86)             (772)
                                                                       ----------------------------
    Property net operating income from discontinued operations....          245             1,862

  Depreciation and amortization...................................         (150)             (840)
                                                                       ----------------------------

  Income from real estate operations..............................           95             1,022
    Gain on sales of real estate investments......................          960             5,727
                                                                       ----------------------------

  Income from discontinued operations.............................     $  1,055             6,749
                                                                       ============================
</TABLE>

2006 Compared to 2005

     Net income available to common stockholders for 2006 was $26,610,000 ($1.19
per basic share and $1.17 per diluted share)  compared to $19,567,000  ($.91 per
basic share and $.89 per diluted share) for 2005.  Diluted EPS for 2006 included
a $.26 per share gain on sales of real estate properties  compared to a $.05 per
share gain on sales of properties in 2005.
     PNOI increased by $9,521,000 or 11.0% for 2006 compared to 2005,  primarily
due to increased average  occupancy,  acquisitions and developments.  Expense to
revenue  ratios  were 28.0% in 2006  compared  to 28.5% in 2005.  The  Company's
percentage  leased was 96.6% at December 31, 2006  compared to 95.3% at December
31, 2005. Occupancy at the end of 2006 was 95.9% compared to 94.3% at the end of
2005.
     The increase in PNOI was primarily  attributable  to  $3,740,000  from same
property growth,  $3,148,000 from newly developed properties and $2,455,000 from
2005 and 2006  acquisitions.  These  increases  in PNOI were offset by increased
depreciation and amortization expense and other costs as discussed below.
     The following  table presents the  components of interest  expense for 2006
and 2005:
<TABLE>
<CAPTION>
                                                                                 Years Ended December 31,
                                                                                --------------------------       Increase
                                                                                 2006               2005        (Decrease)
                                                                                ------------------------------------------
                                                                                 (In thousands, except rates of interest)
       <S>                                                                        <C>                <C>            <C>

   Average bank borrowings........................................              $  91,314          100,504         (9,190)
   Weighted average variable interest rates.......................                  6.12%            4.53%

   VARIABLE RATE INTEREST EXPENSE
   Variable rate interest (excluding loan cost amortization)......                  5,584            4,555          1,029
   Amortization of bank loan costs................................                    355              357             (2)
                                                                                ------------------------------------------
   Total variable rate interest expense...........................                  5,939            4,912          1,027
                                                                                ------------------------------------------

   FIXED RATE INTEREST EXPENSE (1)
   Fixed rate interest (excluding loan cost amortization).........                 22,549           20,573          1,976
   Amortization of mortgage loan costs............................                    464              444             20
                                                                                ------------------------------------------
   Total fixed rate interest expense..............................                 23,013           21,017          1,996
                                                                                ------------------------------------------

   Total interest.................................................                 28,952           25,929          3,023
   Less capitalized interest......................................                 (4,336)          (2,485)        (1,851)
                                                                                ------------------------------------------

   TOTAL INTEREST EXPENSE.........................................              $  24,616           23,444          1,172
                                                                                ==========================================
</TABLE>

(1) Does not include interest expense for discontinued operations. See Note 2 in
the Notes to the Consolidated Financial Statements for this information.

                                       20

<PAGE>

     Interest costs incurred  during the period of  construction  of real estate
properties are capitalized and offset against  interest  expense.  The Company's
weighted average variable interest rates in 2006 were significantly  higher than
in 2005.  The Company  closed several new mortgages with ten-year terms at fixed
rates and used the  proceeds  to reduce  the  Company's  exposure  to changes in
variable bank rates. A summary of the Company's  weighted average interest rates
on mortgage debt for the past several years is presented below:
<TABLE>
<CAPTION>
                                                         WEIGHTED AVERAGE
     MORTGAGE DEBT AS OF:                                  INTEREST RATE
     -------------------------------------------------------------------------
       <S>                                                      <C>
     December 31, 2002.............................            7.34%
     December 31, 2003.............................            6.92%
     December 31, 2004.............................            6.74%
     December 31, 2005.............................            6.31%
     December 31, 2006.............................            6.21%
</TABLE>

     The increase in mortgage  interest expense in 2006 was primarily due to the
new and assumed  mortgages on acquired  properties  detailed in the table below.
The Company recorded premiums  totaling  $1,282,000 to adjust the mortgage loans
assumed to fair market value.  These premiums are being amortized over the lives
of the assumed  mortgages and reduce the contractual  interest  expense on these
loans.  The  interest  rates and amounts  shown below for the assumed  mortgages
represent  the fair  market  rates  and  values,  respectively,  at the dates of
assumption.
<TABLE>
<CAPTION>
     NEW AND ASSUMED MORTGAGES IN 2005 AND 2006                        INTEREST RATE           DATE              AMOUNT
     ----------------------------------------------------------------------------------------------------------------------
           <S>                                                               <C>               <C>                 <C>
     Arion Business Park (assumed)...............................           4.450%           01/21/05       $   21,060,000
     Interstate Distribution Center - Jacksonville (assumed).....           5.640%           03/31/05            4,997,000
     Country Club I, Lake Pointe, Techway Southwest II and
        World Houston 19 & 20....................................           4.980%           11/30/05           39,000,000
     Oak Creek Distribution Center IV (assumed)..................           5.680%           12/07/05            4,443,000
     Huntwood and Wiegman Distribution Centers...................           5.680%           08/08/06           38,000,000
     Alamo Downs, Arion 1-15 & 17, Rampart I, II & III,
        Santan 10 and World Houston 16...........................           5.970%           10/17/06           78,000,000
                                                                       -------------                        ---------------
       Weighted Average/Total Amount.............................           5.514%                          $  185,500,000
                                                                       =============                        ===============
</TABLE>

     Mortgage  principal  payments were  $45,071,000 in 2006 and  $25,880,000 in
2005.  Included in these  principal  payments are repayments of three  mortgages
totaling  $35,929,000 in 2006 and five mortgages  totaling  $18,435,000 in 2005.
The details of these mortgages are shown in the following table:
<TABLE>
<CAPTION>
                                                             INTEREST          DATE             PAYOFF
     MORTGAGE LOANS REPAID IN 2005 AND 2006                    RATE           REPAID            AMOUNT
     ------------------------------------------------------------------------------------------------------
         <S>                                                   <C>             <C>              <C>
     Westport Commerce Center...........................      8.000%         03/31/05      $    2,371,000
     Lamar Distribution Center II.......................      6.900%         06/30/05           1,781,000
     Exchange Distribution Center I.....................      8.375%         07/01/05           1,762,000
     Lake Pointe Business Park..........................      8.125%         07/01/05           9,738,000
     JetPort Commerce Park..............................      8.125%         09/30/05           2,783,000
     Huntwood Distribution Center.......................      7.990%         08/08/06          10,557,000
     Wiegman Distribution Center........................      7.990%         08/08/06           4,872,000
     Arion Business Park................................      4.450%         10/16/06          20,500,000
                                                            ----------                     ----------------
       Weighted Average/Total Amount....................      6.663%                       $   54,364,000
                                                            ==========                     ================
</TABLE>

     Depreciation   and  amortization   for  continuing   operations   increased
$3,651,000  for 2006  compared  to 2005.  This  increase  was  primarily  due to
properties  acquired  and  transferred  from  development  during 2005 and 2006.
Property acquisitions and transferred  developments were $58 million in 2006 and
$92 million in 2005.
     NAREIT has recommended  supplemental  disclosures concerning  straight-line
rent,  capital  expenditures  and  leasing  costs.  Straight-lining  of rent for
continuing   operations  increased  income  by  $997,000  in  2006  compared  to
$1,941,000 in 2005.

                                       21

<PAGE>

Capital Expenditures

     Capital expenditures for the years ended December 31, 2006 and 2005 were as
follows:
<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                         Estimated     ---------------------------
                                                        Useful Life      2006               2005
                                                      --------------------------------------------
                                                                              (In thousands)
            <S>                                             <C>           <C>              <C>
        Upgrade on Acquisitions..................         40 yrs       $    351              506
        Tenant Improvements:
           New Tenants...........................       Lease Life        7,240            5,892
           New Tenants (first generation) (1)....       Lease Life          688              615
           Renewal Tenants.......................       Lease Life          731            1,374
        Other:
           Building Improvements.................        5-40 yrs         1,818            1,312
           Roofs.................................        5-15 yrs         1,803              318
           Parking Lots..........................         3-5 yrs           686              999
           Other.................................          5 yrs            153              246
                                                                       ---------------------------
              Total capital expenditures.........                      $ 13,470           11,262
                                                                       ===========================
</TABLE>

(1)  First  generation  refers  to space  that has  never  been  occupied  under
EastGroup's ownership.

Capitalized Leasing Costs

     The Company's leasing costs  (principally  commissions) are capitalized and
included  in Other  Assets.  The  costs  are  amortized  over  the  terms of the
associated  leases and are included in depreciation  and  amortization  expense.
Capitalized leasing costs for the years ended December 31, 2006 and 2005 were as
follows:
<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                         Estimated     ---------------------------
                                                        Useful Life      2006               2005
                                                      --------------------------------------------
                                                                              (In thousands)
            <S>                                             <C>            <C>              <C>
        Development..............................       Lease Life     $  2,110             1,405
        New Tenants..............................       Lease Life        2,557             2,497
        New Tenants (first generation) (1).......       Lease Life          112               187
        Renewal Tenants..........................       Lease Life        1,987             1,448
                                                                       ---------------------------
              Total capitalized leasing costs....                      $  6,766             5,537
                                                                       ===========================

        Amortization of leasing costs (2)........                      $  4,304             3,863
                                                                       ===========================
</TABLE>

(1)  First  generation  refers  to space  that has  never  been  occupied  under
EastGroup's ownership.
(2) Includes discontinued operations.

Discontinued Operations

     The results of operations,  including interest expense (if applicable), for
the properties sold or held for sale during the periods reported are shown under
Discontinued  Operations on the consolidated income statements.  During 2006 and
2005,  the Company sold certain real estate  investments  and  recognized  total
gains from discontinued  operations of $5,727,000 and $1,164,000,  respectively.
See Notes 1(f) and 2 in the Notes to the Consolidated  Financial  Statements for
more  information  related to  discontinued  operations and gain on the sales of
these  properties.  The following  table  presents the components of revenue and
expense for the real estate investments sold during 2006 and 2005.
<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                                       ----------------------------
  Discontinued Operations                                                2006               2005
  -------------------------------------------------------------------------------------------------
                                                                             (In thousands)
      <S>                                                                <C>                 <C>
  Income from real estate operations..............................     $  2,634             5,165
  Expenses from real estate operations............................         (772)           (1,394)
                                                                       ----------------------------
    Property net operating income from discontinued operations....        1,862             3,771

  Other income....................................................            -                94
  Interest expense................................................            -               (64)
  Depreciation and amortization...................................         (840)           (1,580)
                                                                       ----------------------------

  Income from real estate operations..............................        1,022             2,221
    Gain on sales of real estate investments......................        5,727             1,164
                                                                       ----------------------------

  Income from discontinued operations.............................     $  6,749             3,385
                                                                       ============================
</TABLE>

                                       22

<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

     In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No. 48 (FIN 48),  Accounting for Uncertainty in Income Taxes, an
Interpretation  of FASB  Statement No. 109. FIN 48 clarifies the  accounting for
uncertainty in income taxes recognized in a company's  financial  statements and
prescribes a recognition  threshold and measurement  attribute for the financial
statement  recognition and measurement of a tax position taken or expected to be
taken  in a tax  return.  FIN  48  was  effective  January  1,  2007.  With  few
exceptions,  the Company's 2003 and earlier tax years are closed for examination
by U.S. federal, state and local tax authorities. The adoption of FIN 48 in 2007
had an immaterial impact on the Company's overall financial position and results
of operations.
     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards (SFAS) No. 157, Fair Value  Measurements,  which provides guidance for
using fair  value to  measure  assets  and  liabilities.  SFAS No.  157  applies
whenever  other  standards  require  (or  permit)  assets or  liabilities  to be
measured  at fair  value but does not  expand  the use of fair  value in any new
circumstances.   The   provisions  of  Statement  157,  with  the  exception  of
nonfinancial  assets and  liabilities,  are effective  for financial  statements
issued for fiscal years  beginning  after November 15, 2007, and interim periods
within those fiscal years.  The FASB deferred for one year the Statement's  fair
value measurement  requirements for nonfinancial assets and liabilities that are
not  required or  permitted  to be measured at fair value on a recurring  basis.
These provisions will be effective for fiscal years beginning after November 15,
2008. EastGroup accounts for its stock-based compensation costs at fair value on
the dates of grant as required under SFAS No. 123R. Also, as required under SFAS
No. 133, the Company  accounts for its interest rate swap cash flow hedge on the
Tower Automotive mortgage at fair value. The application of Statement 157 to the
Company  in 2008 had  virtually  no impact on the  Company's  overall  financial
position or results of operations.
     In December  2007,  the FASB issued SFAS No. 141 (Revised  2007),  Business
Combinations,  which retains the  fundamental  requirements  in SFAS No. 141 and
requires the identifiable  assets  acquired,  the liabilities  assumed,  and any
noncontrolling  interest  in the  acquiree  be  measured at fair value as of the
acquisition  date.  In  addition,  Statement  141R  requires  that any  goodwill
acquired in the business combination be measured as a residual,  and it provides
guidance in  determining  what  information  to disclose to enable  users of the
financial  statements  to  evaluate  the  nature  and  financial  effects of the
business combination. The Statement also requires that acquisition-related costs
be recognized as expenses in the periods in which the costs are incurred and the
services  are  received.   SFAS  No.  141R  applies  prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
first annual  reporting  period beginning on or after December 15, 2008, and may
not be applied  before that date.
     Also in  December  2007,  the  FASB  issued  SFAS No.  160,  Noncontrolling
Interests  in  Consolidated  Financial  Statements,  which  is an  amendment  of
Accounting  Research  Bulletin (ARB) No. 51. Statement 160 provides guidance for
entities that prepare consolidated financial statements that have an outstanding
noncontrolling  interest in one or more  subsidiaries  or that  deconsolidate  a
subsidiary.  SFAS No. 160 is effective  for fiscal  years,  and interim  periods
within those fiscal years,  beginning on or after December 15, 2008, and may not
be applied  before  that date.  The  Company  anticipates  that the  adoption of
Statement  160 on  January  1,  2009,  will  have an  immaterial  impact  on the
Company's financial statements.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash  provided by operating  activities  was  $86,369,000  for the year
ended  December  31,  2007.  The  primary  other  sources of cash were from bank
borrowings,  mortgage  note proceeds and proceeds from the sales of real estate.
The Company distributed  $48,056,000 in common and $2,624,000 in preferred stock
dividends during 2007. Other primary uses of cash were for bank debt repayments,
construction and development of properties,  purchases of real estate,  mortgage
note repayments and capital improvements at various properties.
     Total debt at December 31, 2007 and 2006 is detailed  below.  The Company's
bank credit facilities have certain restrictive  covenants,  and the Company was
in compliance with all of its debt covenants at December 31, 2007 and 2006.
<TABLE>
<CAPTION>
                                                                December 31,
                                                          ------------------------
                                                             2007          2006
                                                          ------------------------
                                                               (In thousands)
                 <S>                                         <C>            <C>
        Mortgage notes payable - fixed rate.........      $  465,360      417,440
        Bank notes payable - floating rate..........         135,444       29,066
                                                          ------------------------
           Total debt...............................      $  600,804      446,506
                                                          ========================
</TABLE>

     During 2007, the Company had a three-year, $175 million unsecured revolving
credit  facility  with a group of nine banks.  This credit  facility  expired on
January 4,  2008,  and was  replaced  by a  four-year,  $200  million  unsecured
revolving  credit facility.  The Company  customarily uses these lines of credit
for acquisitions and developments. The interest rate on the $175 million line of
credit   was  based  on  the  LIBOR   index  and  varied   according   to  total
liability to total asset value ratios (as defined in the credit agreement), with
an annual facility fee of 20 basis points. During the year, EastGroup's interest
rate under this facility was LIBOR plus 95 basis points, except that it could be
lowered based upon the competitive bid option in the note. At December 31, 2007,
the weighted average interest rate was 5.65% on a balance of $128,700,000.
     EastGroup's $200 million credit facility is with a group of seven banks and
was  arranged by PNC Capital  Markets  LLC.  The  interest  rate on this line of
credit  is  based  on  the   LIBOR   index  and   varies   according   to  total
liability to total asset value ratios (as defined in the credit

                                       23

<PAGE>

agreement), with an annual facility fee of 15-20 basis points. The interest rate
on each tranche is usually reset on a monthly basis and is currently  LIBOR plus
70 basis  points with an annual  facility  fee of 20 basis  points.  The line of
credit,  which matures in January 2012,  can be expanded by $100 million and has
an option for a one-year extension. At February 27, 2008, the Company's weighted
average interest rate was 4.02% on a balance of $176 million.
     The Company also had a one-year,  $20 million  unsecured  revolving  credit
facility with PNC Bank, N.A. that matured on January 4, 2008. Upon maturity,  it
was replaced by a four-year, $25 million revolving credit facility. These credit
facilities are customarily  used for working capital needs. The interest rate on
the $20 million line of credit was based on LIBOR and varied  according to total
liability to total  asset  value  ratios (as  defined in the credit  agreement).
During 2007, the Company's interest rate was LIBOR plus 110 basis points with no
annual  facility  fee. At December  31, 2007,  the interest  rate was 5.70% on a
balance of $6,744,000.
     EastGroup's  $25 million  unsecured  revolving  credit facility is with PNC
Bank,  N.A.  The  interest  rate on this working cash line is based on the LIBOR
index and varies according to total liability to total asset value ratios. Under
this facility, the Company's current interest rate is LIBOR plus 75 basis points
with no annual facility fee.
     As market conditions permit,  EastGroup issues equity,  including preferred
equity,  and/or employs  fixed-rate, non-recourse first mortgage debt to replace
the short-term bank borrowings.
     On August 8, 2007, the Company closed on a $75 million, non-recourse  first
mortgage loan secured by properties  containing  1,448,000 square feet. The loan
has a fixed interest rate of 5.57%, a ten-year term and an amortization schedule
of 20 years.  The proceeds of this note were used to reduce  variable  rate bank
borrowings.

Contractual Obligations

     EastGroup's fixed,  noncancelable  obligations as of December 31, 2007 were
as follows:
<TABLE>
<CAPTION>
                                                                          Payments Due by Period
                                               -----------------------------------------------------------------------------
                                                                Less Than                                       More Than
                                                   Total          1 Year        1-3 Years       3-5 Years        5 Years
                                               -----------------------------------------------------------------------------
                                                                            (In thousands)
             <S>                                    <C>            <C>             <C>             <C>             <C>
        Fixed Rate Debt Obligations (1)......  $   465,360          15,088        59,473          137,933         252,866
        Interest on Fixed Rate Debt..........      155,752          27,776        49,032           36,714          42,230
        Variable Rate Debt Obligations (2)...      135,444         135,444             -                -               -
        Operating Lease Obligations:
           Office Leases.....................        1,630             298           544              540             248
           Ground Leases.....................       19,807             707         1,414            1,414          16,272
        Development Obligations (3)..........       31,919          31,919             -                -               -
        Tenant Improvements (4)..............        8,723           8,723             -                -               -
        Purchase Obligations (5).............        8,935           8,935             -                -               -
                                               -----------------------------------------------------------------------------
           Total.............................  $   827,570         228,890       110,463          176,601         311,616
                                               =============================================================================
</TABLE>

(1) These amounts are included on the  Consolidated  Balance Sheet. A portion of
this debt is backed by a letter of credit  totaling  $9,822,000  at December 31,
2007.  This letter of credit is  renewable  annually  and expires on January 15,
2011.
(2) The  Company's  variable rate debt changes  depending on the Company's  cash
needs and,  as such,  both the  principal  amounts  and the  interest  rates are
subject to variability. At December 31, 2007, the weighted average interest rate
was 5.65% on the variable  rate debt due in January 2008.  The Company  obtained
new variable rate debt to replace the expiring  facilities in January 2008.  See
Note 6 in the Notes to the Consolidated Financial Statements.
(3) Represents  commitments on properties under  development,  except for tenant
improvement obligations.
(4) Represents tenant improvement allowance obligations.
(5) At December 31, 2007, EastGroup was under contract with United Stationers to
purchase two of its existing  properties  (278,000  square feet) in Jacksonville
and Tampa, Florida.

     The Company  anticipates  that its current  cash  balance,  operating  cash
flows,  borrowings  under its lines of credit,  proceeds  from new mortgage debt
and/or proceeds from the issuance of equity instruments will be adequate for (i)
operating  and  administrative  expenses,  (ii)  normal  repair and  maintenance
expenses at its properties,  (iii) debt service obligations,  (iv) distributions
to stockholders,  (v) capital improvements,  (vi) purchases of properties, (vii)
development,  and (viii) any other normal  business  activities  of the Company,
both in the short- and long-term.

INFLATION AND OTHER ECONOMIC CONSIDERATIONS

     Most  of  the  Company's   leases   include   scheduled   rent   increases.
Additionally,  most of the Company's leases require the tenants to pay their pro
rata share of operating  expenses,  including  real estate taxes,  insurance and
common area maintenance, thereby reducing the Company's exposure to increases in
operating expenses resulting from inflation.
     EastGroup's  financial results are affected by general economic  conditions
in the  markets in which the  Company's  properties  are  located.  An  economic
recession,  or other adverse  changes in general or local  economic  conditions,
could result in the inability of some of the Company's  existing tenants to make
lease  payments  and may impact our ability to renew  leases or re-let  space as
leases expire. In addition, an economic downturn or recession could also lead to
an  increase  in  overall  vacancy  rates or  decline  in rents we can charge to
re-lease  properties upon  expiration of current leases.  In all of these cases,
our cash flow would be adversely affected.
                                       24

<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company is exposed to interest  rate  changes  primarily as a result of
its lines of credit and long-term debt maturities. This debt is used to maintain
liquidity and fund capital  expenditures  and  expansion of the  Company's  real
estate investment portfolio and operations. The Company's objective for interest
rate risk management is to limit the impact of interest rate changes on earnings
and cash  flows  and to lower  its  overall  borrowing  costs.  To  achieve  its
objectives,  the Company  borrows at fixed  rates but also has several  variable
rate bank lines as discussed  under Liquidity and Capital  Resources.  The table
below presents the principal  payments due and weighted  average  interest rates
for both the fixed rate and variable rate debt.
<TABLE>
<CAPTION>
                                           2008      2009       2010      2011     2012     Thereafter       Total      Fair Value
                                       ---------------------------------------------------------------------------------------------
<S>                                      <C>         <C>        <C>       <C>       <C>         <C>          <C>           <C>
Fixed rate debt(1) (in thousands)...   $  15,088    45,411     14,062    80,426   57,507       252,866      465,360      470,335(2)
Weighted average interest rate......       6.17%     6.57%      5.95%     7.00%    6.69%         5.52%        6.06%
Variable rate debt (in thousands)...   $ 135,444         -          -         -        -             -      135,444      135,444
Weighted average interest rate......       5.65%         -          -         -        -             -        5.65%
</TABLE>

(1) The fixed rate debt shown  above  includes  the Tower  Automotive  mortgage,
which has a variable  interest rate based on the one-month LIBOR.  EastGroup has
an  interest  rate swap  agreement  that  fixes the rate at 4.03% for the 8-year
term.  Interest and related fees result in an annual effective  interest rate of
5.30%.
(2) The fair value of the  Company's  fixed rate debt is estimated  based on the
quoted market prices for similar issues or by discounting expected cash flows at
the  rates  currently  offered  to the  Company  for debt of the same  remaining
maturities, as advised by the Company's bankers.

     As the table above  incorporates  only those  exposures  that existed as of
December 31, 2007, it does not consider those  exposures or positions that could
arise after that date. The ultimate impact of interest rate  fluctuations on the
Company will depend on the  exposures  that arise during the period and interest
rates. If the weighted  average  interest rate on the variable rate bank debt as
shown above changes by 10% or  approximately  57 basis points,  interest expense
and cash flows would increase or decrease by approximately $765,000 annually.
     The Company has an interest  rate swap  agreement  to hedge its exposure to
the variable  interest rate on the Company's  $9,710,000 Tower Automotive Center
recourse  mortgage,  which is  summarized  in the  table  below.  Under the swap
agreement,  the Company  effectively pays a fixed rate of interest over the term
of the agreement  without the exchange of the underlying  notional amount.  This
swap is designated as a cash flow hedge and is considered to be fully  effective
in hedging the  variable  rate risk  associated  with the Tower  mortgage  loan.
Changes  in the  fair  value of the swap are  recognized  in  accumulated  other
comprehensive  income  (loss).  The Company  does not hold or issue this type of
derivative contract for trading or speculative purposes.
<TABLE>
<CAPTION>
                            Current         Maturity                                          Fair Value         Fair Value
      Type of Hedge     Notional Amount       Date        Reference Rate     Fixed Rate       at 12/31/07        at 12/31/06
      ----------------------------------------------------------------------------------------------------------------------
                        (In thousands)                                                                (In thousands)
           <S>               <C>              <C>              <C>               <C>              <C>                <C>
           Swap             $9,710          12/31/10      1 month LIBOR         4.03%            ($56)              $314
</TABLE>

FORWARD-LOOKING STATEMENTS

     Certain statements contained in this report may be deemed  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks,"  "estimates,"  variations  of such words and  similar  expressions  are
intended to identify such  forward-looking  statements,  which generally are not
historical in nature. All statements that address operating performance,  events
or  developments  that the  Company  expects  or  anticipates  will occur in the
future, including statements relating to rent and occupancy growth,  development
activity,  the  acquisition  or sale of  properties,  general  conditions in the
geographic areas where the Company operates and the availability of capital, are
forward-looking statements. Forward-looking statements are inherently subject to
known and unknown  risks and  uncertainties,  many of which the  Company  cannot
predict, including, without limitation:  changes in general economic conditions;
the extent of tenant defaults or of any early lease terminations;  the Company's
ability to lease or re-lease space at current or anticipated  rents;  changes in
the supply of and  demand  for  industrial/warehouse  properties;  increases  in
interest  rate  levels;  increases  in  operating  costs;  the  availability  of
financing;  natural  disasters  and the  Company's  ability  to obtain  adequate
insurance;  changes in governmental  regulation,  tax rates and similar matters;
and other risks  associated  with the development and acquisition of properties,
including  risks that  development  projects  may not be  completed on schedule,
development or operating costs may be greater than anticipated, acquisitions may
not close as  scheduled,  and those  additional  factors  discussed  under "Item
1A. Risk Factors." Although the Company believes that the expectations reflected
in the forward-looking  statements are based upon reasonable  assumptions at the
time made,  the Company can give no  assurance  that such  expectations  will be
achieved.  The Company  assumes no obligation  whatsoever to publicly  update or
revise any forward-looking statements.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The  Registrant's  Consolidated  Balance Sheets as of December 31, 2007 and
2006, and its Consolidated Statements of Income, Changes in Stockholders' Equity
and Cash  Flows and Notes to  Consolidated  Financial  Statements  for the years
ended  December  31,  2007,  2006  and 2005 and the  Report  of the  Independent
Registered  Public  Accounting  Firm thereon are included  under Item 15 of this
report and are incorporated herein by reference.  Unaudited quarterly results of
operations  included in the notes to the consolidated  financial  statements are
also incorporated herein by reference.

                                       25

<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

     None.

ITEM 9A. CONTROLS AND PROCEDURES.

(i) Disclosure Controls and Procedures.

     The Company  carried out an evaluation,  under the supervision and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive  Officer and Chief  Financial  Officer,  of the  effectiveness  of the
design  and  operation  of the  Company's  disclosure  controls  and  procedures
pursuant to Exchange  Act Rule  13a-15.  Based upon that  evaluation,  the Chief
Executive Officer and Chief Financial Officer concluded that, as of December 31,
2007, the Company's  disclosure controls and procedures were effective in timely
alerting them to material  information  relating to the Company  (including  its
consolidated subsidiaries) required to be included in the Company's periodic SEC
filings.

(ii) Internal Control Over Financial Reporting.

(a) Management's annual report on internal control over financial reporting.

     Management  is  responsible  for  establishing  and  maintaining   adequate
internal control over financial  reporting,  as such term is defined in Exchange
Act Rule  13a-15(f).  EastGroup's  Management  Report on Internal  Control  Over
Financial  Reporting  is set forth in Part IV, Item 15 of this Form 10-K on page
31 and is incorporated herein by reference.

(b) Report of the independent registered public accounting firm.

     The  report  of KPMG  LLP,  the  Company's  independent  registered  public
accounting firm, on the Company's  internal control over financial  reporting is
set forth in Part IV,  Item 15 of this Form 10-K on page 31 and is  incorporated
herein by reference.

(c) Changes in internal control over financial reporting.

     There  was no change  in the  Company's  internal  control  over  financial
reporting  during the Company's  fourth fiscal  quarter ended  December 31, 2007
that has materially affected,  or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

     Not applicable.

                                       26

<PAGE>

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

     The information  regarding  directors is  incorporated  herein by reference
from the section entitled "Proposal One: Election of Directors" in the Company's
definitive  Proxy  Statement  ("2008 Proxy  Statement")  to be filed pursuant to
Regulation  14A  of the  Securities  Exchange  Act  of  1934,  as  amended,  for
EastGroup's  Annual Meeting of Stockholders to be held on May 29, 2008. The 2008
Proxy  Statement  will be filed  within 120 days after the end of the  Company's
fiscal year ended December 31, 2007.
     The information  regarding  executive  officers is  incorporated  herein by
reference from the section entitled  "Executive  Officers" in the Company's 2008
Proxy Statement.
     The information regarding compliance with Section 16(a) of the Exchange Act
is  incorporated  herein by reference from the section  entitled  "Section 16(a)
Beneficial   Ownership  Reporting   Compliance"  in  the  Company's  2008  Proxy
Statement.
     Information regarding EastGroup's code of business conduct and ethics found
in the subsection captioned  "Available  Information" in Item 1 of Part I hereof
is also incorporated herein by reference into this Item 10.
     The information  regarding the Company's audit  committee,  its members and
the audit committee  financial  experts is incorporated herein by reference from
the  subsection  entitled  "Audit  Committee"  in the  section  entitled  "Board
Committees and Meetings" in the Company's 2008 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

     The information included under the following captions in the Company's 2008
Proxy Statement is incorporated  herein by reference:  "Compensation  Discussion
and Analysis,"  "Summary  Compensation  Table," "Grants of Plan-Based  Awards in
2007,"  "Outstanding  Equity Awards at 2007 Fiscal Year-End,"  "Option Exercises
and Stock Vested in 2007,"  "Potential  Payments upon  Termination  or Change in
Control,"  "Director  Compensation" and "Compensation  Committee  Interlocks and
Insider Participation." The information included under the heading "Compensation
Committee  Report" in the Company's 2008 Proxy Statement is incorporated  herein
by reference;  however,  this information  shall not be deemed to be "soliciting
material" or to be "filed" with the SEC or subject to Regulation  14A or 14C, or
to the liabilities of Section 18 of the Exchange Act.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

     Information  regarding  security ownership of certain beneficial owners and
management  is  incorporated  herein by  reference  from the  sections  entitled
"Security  Ownership of Certain  Beneficial  Owners" and "Security  Ownership of
Management and Directors" in the Company's 2008 Proxy Statement.
     The following  table  summarizes  the Company's  equity  compensation  plan
information as of December 31, 2007.
<TABLE>
<CAPTION>
                                               Equity Compensation Plan Information
                                  (a)                          (b)                      (c)
        Plan category             Number of securities to      Weighted-average         Number of securities remaining
                                  be issued upon exercise      exercise price of        available for future issuance
                                  of outstanding options,      outstanding options,     under equity compensation plans
                                  warrants and rights          warrants and rights      (excluding securities reflected
                                                                                        in column (a))
             <S>                         <C>                             <C>                           <C>
        Equity compensation
          plans approved by
          security holders              119,406                       $21.39                         1,757,392
        Equity compensation
          plans not approved
          by security holders                 -                            -                                 -
                                  ----------------------------------------------------------------------------------------
        Total                           119,406                       $21.39                         1,757,392
                                  ========================================================================================
</TABLE>

ITEM  13.  CERTAIN   RELATIONSHIPS  AND  RELATED   TRANSACTIONS,   AND  DIRECTOR
INDEPENDENCE.

     The information  regarding  transactions  with related parties and director
independence  is  incorporated  herein by reference  from the sections  entitled
"Independent  Directors" and "Certain  Transactions  and  Relationships"  in the
Company's 2008 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     The  information   regarding   principal   auditor  fees  and  services  is
incorporated  herein  by  reference  from  the  section  entitled   "Independent
Registered Public Accounting Firm" in the Company's 2008 Proxy Statement.

                                       27

<PAGE>

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Index to Financial Statements:
<TABLE>
<S> <C>    <C>                                                                                                                <C>
                                                                                                                             Page
(a) (1)  Consolidated Financial Statements:
         Report of Independent Registered Public Accounting Firm                                                              30
         Management Report on Internal Control Over Financial Reporting                                                       31
         Report of Independent Registered Public Accounting Firm                                                              31
         Consolidated Balance Sheets - December 31, 2007 and 2006                                                             32
         Consolidated Statements of Income - Years ended December 31, 2007, 2006 and 2005                                     33
         Consolidated Statements of Changes in Stockholders' Equity - Years ended December 31, 2007, 2006 and 2005            34
         Consolidated Statements of Cash Flows - Years ended December 31, 2007, 2006 and 2005                                 35
         Notes to Consolidated Financial Statements                                                                           36
     (2) Consolidated Financial Statement Schedules:
         Schedule III - Real Estate Properties and Accumulated Depreciation                                                   52
         Schedule IV - Mortgage Loans on Real Estate                                                                          58
</TABLE>

All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related  instructions or are inapplicable,  and therefore have been omitted,  or
the required information is included in the notes to the consolidated  financial
statements.

     (3)  Exhibits required by Item 601 of Regulation S-K:

          (3)  Articles of Incorporation and Bylaws

               (a)  Articles of  Incorporation  (incorporated  by  reference  to
                    Appendix B to the Company's  Proxy  Statement for its Annual
                    Meeting of Stockholders held on June 5, 1997).
               (b)  Bylaws of the Company  (incorporated by reference to Exhibit
                    3.1 to the Company's Form 8-K filed December 13, 2007).
               (c)  Articles Supplementary of the Company relating to the Series
                    C Preferred Stock (incorporated by reference to Exhibit A to
                    Exhibit 4 to the Company's Form 8-A filed December 9, 1998).
               (d)  Articles  Supplementary of the Company relating to the 7.95%
                    Series D Cumulative Redeemable Preferred Stock (incorporated
                    by  reference to Exhibit 3 to the  Company's  Form 8-A filed
                    June 6, 2003).

          (4)  Instruments Defining the Rights of Security Holders

               (a)  Rights  Agreement  dated as of December 3, 1998  between the
                    Company and Harris Trust and Savings  Bank,  as Rights Agent
                    (incorporated  by  reference  to Exhibit 4 to the  Company's
                    Form 8-A filed December 9, 1998).
               (b)  First Amendment to Rights  Agreement dated December 20, 2004
                    between the Company and Equiserve Trust Company, N.A., which
                    replaced  Harris  Trust and Savings  Bank,  as Rights  Agent
                    (incorporated  by reference to Exhibit 99.1 to the Company's
                    Form 8-K filed December 22, 2004).
               (c)  Second  Amendment to Rights  Agreement  dated as of July 23,
                    2007  between the  Company  and Wells  Fargo Bank,  National
                    Association,  as Rights Agent  (incorporated by reference to
                    Exhibit 4.1 to the Company's Form 8-K filed July 23, 2007).

          (10) Material   Contracts   (*Indicates   management  or  compensatory
               agreement):

               (a)  EastGroup Properties, Inc. 1991 Directors Stock Option Plan,
                    as Amended  (incorporated  by  reference to Exhibit B to the
                    Company's   Proxy   Statement  for  its  Annual  Meeting  of
                    Stockholders held on December 8, 1994).*
               (b)  EastGroup  Properties,  Inc. 1994 Management Incentive Plan,
                    as  Amended  and  Restated  (incorporated  by  reference  to
                    Appendix A to the Company's  Proxy  Statement for its Annual
                    Meeting of Stockholders held on June 2, 1999).*
               (c)  Amendment No. 1 to the Amended and Restated 1994  Management
                    Incentive Plan  (incorporated  by reference to Exhibit 10(c)
                    to the Company's Form 8-K filed January 8, 2007).*
               (d)  EastGroup Properties,  Inc. 2000 Directors Stock Option Plan
                    (incorporated  by reference  to Appendix A to the  Company's
                    Proxy Statement for its Annual Meeting of Stockholders  held
                    on June 1, 2000).*
               (e)  EastGroup  Properties,   Inc.  2004  Equity  Incentive  Plan
                    (incorporated  by reference  to Appendix D to the  Company's
                    Proxy Statement for its Annual Meeting of Stockholders  held
                    on May 27, 2004).*
               (f)  Amendment   No.  1  to  the  2004  Equity   Incentive   Plan
                    (incorporated by reference to Exhibit 10(f) to the Company's
                    Form 10-K for the year ended December 31, 2006). *

                                       28

<PAGE>

               (g)  Amendment   No.  2  to  the  2004  Equity   Incentive   Plan
                    (incorporated by reference to Exhibit 10(d) to the Company's
                    Form 8-K filed January 8, 2007).*
               (h)  EastGroup  Properties,  Inc. 2005 Directors Equity Incentive
                    Plan  (incorporated  by  reference  to  Appendix  B  to  the
                    Company's   Proxy   Statement  for  its  Annual  Meeting  of
                    Stockholders held on June 2, 2005).*
               (i)  Amendment No. 1 to the 2005 Directors  Equity Incentive Plan
                    (incorporated  by reference to Exhibit 10.1 to the Company's
                    Form 8-K filed June 6, 2006).*
               (j)  Form of Severance and Change in Control  Agreement  that the
                    Company  has entered  into with  Leland R.  Speed,  David H.
                    Hoster II and N. Keith McKey  (incorporated  by reference to
                    Exhibit  10(a) to the  Company's  Form 8-K filed  January 8,
                    2007).*
               (k)  Form of Severance and Change in Control  Agreement  that the
                    Company has entered  into with John F.  Coleman,  William D.
                    Petsas, Brent W. Wood and C. Bruce Corkern  (incorporated by
                    reference to Exhibit 10(b) to the  Company's  Form 8-K filed
                    January 8, 2007).*
               (l)  Compensation  Program for Non-Employee  Directors (a written
                    description  thereof  is  set  forth  in  Item  1.01  of the
                    Company's Form 8-K filed June 6, 2006).*
               (m)  Annual  Cash  Bonus  and  2007  Annual  Long-Term  Incentive
                    Performance  Goals (a  written  description  thereof  is set
                    forth in Item 5.02 of the  Company's  Form 8-K filed June 5,
                    2007).*
               (n)  Multi-Year Long-Term Incentive  Performance Goals (a written
                    description  thereof  is  set  forth  in  Item  1.01  of the
                    Company's Form 8-K filed June 6, 2006).*
               (o)  Second Amended and Restated  Credit  Agreement Dated January
                    4,  2008  among  EastGroup   Properties,   L.P.;   EastGroup
                    Properties,   Inc.;  PNC  Bank,  National  Association,   as
                    Administrative  Agent;  Regions  Bank and  SunTrust  Bank as
                    Co-Syndication    Agents;   Wells   Fargo   Bank,   National
                    Association as Documentation  Agent; and PNC Capital Markets
                    LLC,  as Sole Lead  Arranger  and Sole  Bookrunner;  and the
                    Lenders  thereunder  (incorporated  by  reference to Exhibit
                    10.1 to the Company's Form 8-K filed January 10, 2008).

          (21) Subsidiaries of EastGroup Properties, Inc. (filed herewith).

          (23) Consent of KPMG LLP (filed herewith).

          (24) Powers of attorney (filed herewith).

          (31) Rule 13a-14(a)/15d-14(a)  Certifications (pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002)

               (a)  David H. Hoster II, Chief Executive Officer
               (b)  N. Keith McKey, Chief Financial Officer

          (32) Section  1350  Certifications  (pursuant  to  Section  906 of the
               Sarbanes-Oxley Act of 2002)

               (a)  David H. Hoster II, Chief Executive Officer
               (b)  N. Keith McKey, Chief Financial Officer

                                       29

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

THE BOARD OF DIRECTORS AND STOCKHOLDERS
EASTGROUP PROPERTIES, INC.:

We have  audited  the  accompanying  consolidated  balance  sheets of  EastGroup
Properties,  Inc.  and  subsidiaries  (the  Company) as of December 31, 2007 and
2006,   and  the  related   consolidated   statements  of  income,   changes  in
stockholders'  equity  and cash  flows for each of the  years in the  three-year
period ended December 31, 2007. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
     We  conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.
     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of EastGroup
Properties,  Inc. and  subsidiaries  as of December  31, 2007 and 2006,  and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period ended  December 31, 2007, in conformity  with U.S.  generally
accepted accounting principles.
     As discussed in Notes 1 and 11 to the  consolidated  financial  statements,
effective  January 1, 2006,  the Company  changed its method of  accounting  for
share-based  payments in  accordance  with  Statement  of  Financial  Accounting
Standards No. 123 (Revised 2004).
     We also have  audited,  in  accordance  with the  standards  of the  Public
Company  Accounting  Oversight  Board (United  States),  the Company's  internal
control over financial  reporting as of December 31, 2007, based on the criteria
established in Internal  Control - Integrated  Framework issued by the Committee
of Sponsoring  Organizations of the Treadway  Commission  (COSO), and our report
dated February 27, 2008,  expressed an unqualified  opinion on the effectiveness
of the Company's internal control over financial reporting.


Jackson, Mississippi                            KPMG LLP
February 27, 2008

                                       30

<PAGE>

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

EastGroup's  management is responsible for establishing and maintaining adequate
internal control over financial  reporting,  as such term is defined in Exchange
Act  Rule  13a-15(f).  Under  the  supervision  and with  the  participation  of
management,  including the chief executive officer and chief financial  officer,
EastGroup  conducted an evaluation of the effectiveness of internal control over
financial  reporting  based on the  framework  in Internal  Control - Integrated
Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission.  Based on  EastGroup's  evaluation  under the  framework in Internal
Control - Integrated  Framework,  management concluded that our internal control
over financial reporting was effective as of December 31, 2007.

Jackson, Mississippi                    EASTGROUP PROPERTIES, INC.
February 27, 2008




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

THE BOARD OF DIRECTORS AND STOCKHOLDERS
EASTGROUP PROPERTIES, INC.:

We have audited  EastGroup  Properties,  Inc. and  subsidiaries'  (the  Company)
internal control over financial  reporting as of December 31, 2007, based on the
criteria  established in Internal  Control - Integrated  Framework issued by the
Committee of Sponsoring  Organizations of the Treadway  Commission  (COSO).  The
Company's  management is responsible for maintaining  effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management Report
on Internal Control over Financial  Reporting.  Our responsibility is to express
an opinion on the Company's  internal control over financial  reporting based on
our audit.
     We  conducted  our audit in  accordance  with the  standards  of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and  perform  the audit to obtain  reasonable  assurance  about  whether
effective  internal  control over  financial  reporting  was  maintained  in all
material  respects.  Our audit included  obtaining an  understanding of internal
control over financial  reporting,  assessing the risk that a material  weakness
exists,  and testing and  evaluating the design and operating  effectiveness  of
internal control based on the assessed risk. Our audit also included  performing
such other  procedures  as we  considered  necessary  in the  circumstances.  We
believe that our audit provides a reasonable basis for our opinion.
     A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.
     Because  of its  inherent  limitations,  internal  control  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation  of  effectiveness  to future  periods  are  subject to the risk that
controls may become  inadequate  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.
     In our opinion, EastGroup Properties,  Inc. and subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of
December  31,  2007,  based on the criteria  established  in Internal  Control -
Integrated Framework issued by the Committee of Sponsoring  Organizations of the
Treadway Commission.
     We also have  audited,  in  accordance  with the  standards  of the  Public
Company  Accounting  Oversight Board (United States),  the consolidated  balance
sheets of EastGroup  Properties,  Inc. and  subsidiaries as of December 31, 2007
and  2006,  and the  related  consolidated  statements  of  income,  changes  in
stockholders'  equity  and cash  flows for each of the  years in the  three-year
period  ended  December  31,  2007,  and our report  dated  February  27,  2008,
expressed an unqualified opinion on those consolidated financial statements.

Jackson, Mississippi                          KPMG LLP
February 27, 2008

                                       31

<PAGE>

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                ----------------------------------------------------
                                                                                          2007                         2006
                                                                                ----------------------------------------------------
                                                                                 (In thousands, except for share and per share data)
       <S>                                                                                 <C>                          <C>
ASSETS
  Real estate properties........................................................ $      1,114,966                      973,910
  Development...................................................................          152,963                      114,986
                                                                                ----------------------------------------------------
                                                                                        1,267,929                    1,088,896
    Less accumulated depreciation...............................................         (269,132)                    (231,106)
                                                                                ----------------------------------------------------
                                                                                          998,797                      857,790

  Unconsolidated investment.....................................................            2,630                        2,595
  Cash..........................................................................              724                          940
  Other assets..................................................................           53,682                       50,462
                                                                                ----------------------------------------------------
    TOTAL ASSETS................................................................ $      1,055,833                      911,787
                                                                                ====================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Mortgage notes payable........................................................ $        465,360                      417,440
  Notes payable to banks........................................................          135,444                       29,066
  Accounts payable & accrued expenses...........................................           34,179                       32,589
  Other liabilities.............................................................           16,153                       11,747
                                                                                ----------------------------------------------------
                                                                                          651,136                      490,842
                                                                                ----------------------------------------------------

                                                                                ----------------------------------------------------
Minority interest in joint ventures.............................................            2,312                        2,148
                                                                                ----------------------------------------------------

STOCKHOLDERS' EQUITY
  Series C Preferred Shares; $.0001 par value; 600,000 shares authorized;
    no shares issued............................................................                -                            -
  Series D 7.95% Cumulative Redeemable Preferred Shares and additional
    paid-in capital; $.0001 par value; 1,320,000 shares authorized and issued;
    stated liquidation preference of $33,000....................................           32,326                       32,326
  Common shares; $.0001 par value; 68,080,000 shares authorized;
    23,808,768 shares issued and outstanding at December 31, 2007 and
    23,701,275 at December 31, 2006.............................................                2                            2
  Excess shares; $.0001 par value; 30,000,000 shares authorized;
    no shares issued............................................................                -                            -
  Additional paid-in capital on common shares...................................          467,573                      463,170
  Distributions in excess of earnings...........................................          (97,460)                     (77,015)
  Accumulated other comprehensive income (loss).................................              (56)                         314
                                                                                ----------------------------------------------------
                                                                                          402,385                      418,797
                                                                                ----------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...................................... $      1,055,833                      911,787
                                                                                ====================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       32

<PAGE>

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                                              Years Ended December 31,
                                                                                ----------------------------------------------------
                                                                                     2007               2006               2005
                                                                                ----------------------------------------------------
                                                                                        (In thousands, except per share data)
<S>                                                                                   <C>                <C>                 <C>
REVENUES
  Income from real estate operations.....................................       $    150,638            132,963             120,601
  Other income...........................................................                 92                182                 413
                                                                                ----------------------------------------------------
                                                                                     150,730            133,145             121,014
                                                                                ----------------------------------------------------
EXPENSES
  Expenses from real estate operations...................................             41,118             37,218              34,377
  Depreciation and amortization..........................................             47,908             41,377              37,726
  General and administrative.............................................              8,295              7,401               6,874
                                                                                ----------------------------------------------------
                                                                                      97,321             85,996              78,977
                                                                                ----------------------------------------------------

OPERATING INCOME.........................................................             53,409             47,149              42,037

OTHER INCOME (EXPENSE)
  Equity in earnings of unconsolidated investment........................                285                287                 450
  Gain on sales of land..................................................              2,602                123                   -
  Interest income........................................................                306                142                 247
  Interest expense.......................................................            (27,314)           (24,616)            (23,444)
  Minority interest in joint ventures....................................               (609)              (600)               (484)
                                                                                ----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS........................................             28,679             22,485              18,806
                                                                                ----------------------------------------------------

DISCONTINUED OPERATIONS
  Income from real estate operations.....................................                 95              1,022               2,221
  Gain on sales of real estate investments...............................                960              5,727               1,164
                                                                                ----------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS .....................................              1,055              6,749               3,385
                                                                                ----------------------------------------------------

NET INCOME...............................................................             29,734             29,234              22,191

  Preferred dividends-Series D...........................................              2,624              2,624               2,624
                                                                                ----------------------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS..............................       $     27,110             26,610              19,567
                                                                                ====================================================

BASIC PER COMMON SHARE DATA
  Income from continuing operations......................................       $       1.11                .89                 .75
  Income from discontinued operations....................................                .04                .30                 .16
                                                                                ----------------------------------------------------
  Net income available to common stockholders............................       $       1.15               1.19                 .91
                                                                                ====================================================

  Weighted average shares outstanding....................................             23,562             22,372              21,567
                                                                                ====================================================

DILUTED PER COMMON SHARE DATA
  Income from continuing operations......................................       $       1.10                .87                 .74
  Income from discontinued operations....................................                .04                .30                 .15
                                                                                ----------------------------------------------------
  Net income available to common stockholders............................       $       1.14               1.17                 .89
                                                                                ====================================================

  Weighted average shares outstanding....................................             23,781             22,692              21,892
                                                                                ====================================================

Dividends declared per common share......................................       $       2.00               1.96                1.94
                                                                                ====================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       33

<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                                                         Additional     Distributions         Other
                                                   Preferred   Common     Paid-In         In Excess       Comprehensive
                                                     Stock      Stock     Capital        Of Earnings      Income (Loss)     Total
                                                   ---------------------------------------------------------------------------------
                                                                  (In thousands, except for share and per share data)
<S>                                                   <C>        <C>         <C>          <C>               <C>             <C>
BALANCE, DECEMBER 31, 2004........................ $  32,326        2     354,671         (35,207)             14          351,806
Comprehensive income
  Net income......................................         -        -           -          22,191               -           22,191
  Net unrealized change in fair value of
    interest rate swap............................         -        -           -               -             297              297
                                                                                                                         -----------
    Total comprehensive income....................                                                                          22,488
                                                                                                                         -----------
Common dividends declared - $1.94 per share.......         -        -           -         (42,290)              -          (42,290)
Preferred dividends declared - $1.9876 per share..         -        -           -          (2,624)              -           (2,624)
Issuance of 860,000 shares of common stock,
  common stock offering, net of expenses .........         -        -      31,597               -               -           31,597
Stock-based compensation, net of forfeitures......         -        -       2,073               -               -            2,073
Issuance of 72,415 shares of common stock,
  options exercised...............................         -        -       1,507               -               -            1,507
Issuance of 8,279 shares of common stock,
  dividend reinvestment plan......................         -        -         346               -               -              346
Other.............................................         -        -         (39)              -               -              (39)
                                                   ---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2005........................    32,326        2     390,155         (57,930)            311          364,864
Comprehensive income
  Net income......................................         -        -           -          29,234               -           29,234
  Net unrealized change in fair value of
    interest rate swap............................         -        -           -               -               3                3
                                                                                                                         -----------
    Total comprehensive income....................                                                                          29,237
                                                                                                                         -----------
Common dividends declared - $1.96 per share.......         -        -           -         (45,695)              -          (45,695)
Preferred dividends declared - $1.9876 per share..         -        -           -          (2,624)              -           (2,624)
Issuance of 1,437,500 shares of common stock,
  common stock offering, net of expenses..........         -        -      68,112               -               -           68,112
Stock-based compensation, net of forfeitures......         -        -       2,943               -               -            2,943
Issuance of 118,269 shares of common stock,
  options exercised...............................         -        -       2,154               -               -            2,154
Issuance of 6,236 shares of common stock,
  dividend reinvestment plan......................         -        -         305               -               -              305
Other.............................................         -        -        (499)              -               -             (499)
                                                   ---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2006........................    32,326        2     463,170         (77,015)            314          418,797
Comprehensive income
  Net income......................................         -        -           -          29,734               -           29,734
  Net unrealized change in fair value of
    interest rate swap............................         -        -           -               -            (370)            (370)
                                                                                                                         -----------
    Total comprehensive income....................                                                                          29,364
                                                                                                                         -----------
Common dividends declared - $2.00 per share.......         -        -           -         (47,555)              -          (47,555)
Preferred dividends declared - $1.9876 per share..         -        -           -          (2,624)              -           (2,624)
Stock-based compensation, net of forfeitures......         -        -       3,198               -               -            3,198
Issuance of 67,150 shares of common stock,
  options exercised...............................         -        -       1,475               -               -            1,475
Issuance of 6,281 shares of common stock,
  dividend reinvestment plan......................         -        -         279               -               -              279
11,382 shares withheld to satisfy tax withholding
  obligations in connection with the vesting of
  restricted stock ...............................         -        -        (549)              -               -             (549)
                                                   ---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2007........................ $  32,326        2     467,573         (97,460)            (56)         402,385
                                                   =================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       34

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                   Years Ended December 31,
                                                                                           -----------------------------------------
                                                                                               2007          2006          2005
                                                                                           -----------------------------------------
                                                                                                        (In thousands)
<S>                                                                                             <C>           <C>            <C>
OPERATING ACTIVITIES
  Net income.............................................................................  $   29,734         29,234        22,191
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization from continuing operations.............................      47,908         41,377        37,726
    Depreciation and amortization from discontinued operations...........................         150            840         1,580
    Minority interest depreciation and amortization......................................        (174)          (151)         (141)
    Amortization of mortgage loan premiums...............................................        (117)          (403)         (333)
    Gain on sales of land and real estate investments....................................      (3,562)        (5,850)       (1,164)
    Stock-based compensation expense.....................................................       2,220          2,125         1,593
    Equity in earnings of unconsolidated investment, net of distributions................         (35)            23           (20)
    Changes in operating assets and liabilities:
      Accrued income and other assets....................................................       3,536         (4,765)          336
      Accounts payable, accrued expenses and prepaid rent................................       6,709          4,141         5,798
                                                                                           -----------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................................................      86,369         66,571        67,566
                                                                                           -----------------------------------------

INVESTING ACTIVITIES
  Real estate development................................................................    (112,960)       (77,666)      (58,192)
  Purchases of real estate...............................................................     (57,838)       (19,539)      (46,507)
  Real estate improvements...............................................................     (15,881)       (13,470)      (11,262)
  Proceeds from sales of land and real estate investments................................       6,357         38,412         6,034
  Distributions from unconsolidated investment...........................................           -              -         6,658
  Repayments on mortgage loans receivable................................................           -              -         7,550
  Changes in other assets and other liabilities..........................................      (3,786)        (2,792)       (2,794)
                                                                                           -----------------------------------------
NET CASH USED IN INVESTING ACTIVITIES....................................................    (184,108)       (75,055)      (98,513)
                                                                                           -----------------------------------------

FINANCING ACTIVITIES
  Proceeds from bank borrowings..........................................................     332,544        191,689       187,286
  Repayments on bank borrowings..........................................................    (226,166)      (279,387)     (156,953)
  Proceeds from mortgage notes payable...................................................      75,000        116,000        39,000
  Principal payments on mortgage notes payable...........................................     (26,963)       (45,071)      (25,880)
  Debt issuance costs....................................................................        (701)        (1,048)         (664)
  Distributions paid to stockholders.....................................................     (50,680)       (47,843)      (44,907)
  Proceeds from common stock offerings...................................................           -         68,112        31,597
  Proceeds from exercise of stock options................................................       1,475          2,154         1,507
  Proceeds from dividend reinvestment plan...............................................         279            305           346
  Other..................................................................................      (7,265)         2,598           322
                                                                                           -----------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES................................................      97,523          7,509        31,654
                                                                                           -----------------------------------------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS.........................................        (216)          (975)          707
  CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.........................................         940          1,915         1,208
                                                                                           -----------------------------------------
  CASH AND CASH EQUIVALENTS AT END OF YEAR...............................................  $      724            940         1,915
                                                                                           =========================================

SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid for interest, net of amount capitalized of $6,086, $4,336 and $2,485
    for 2007, 2006 and 2005, respectively................................................  $   25,838         23,870        22,842
  Fair value of debt assumed by the Company in the purchase of real estate...............           -              -        30,500
  Fair value of common stock awards issued to employees and directors, net of
    forfeitures..........................................................................       1,443          3,234         1,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                       35

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007, 2006 AND 2005

(1)  SIGNIFICANT ACCOUNTING POLICIES


(a)  Principles of Consolidation
     The  consolidated  financial  statements  include the accounts of EastGroup
Properties,  Inc., its wholly-owned subsidiaries and its investment in any joint
ventures in which the Company has a controlling  interest. At December 31, 2005,
the  Company had a  controlling  interest  in one joint  venture:  the 80% owned
University  Business  Center.  At December 31, 2006 and 2007,  the Company had a
controlling  interest in two joint ventures:  the 80% owned University  Business
Center and the 80% owned Castilian  Research Center. The Company records 100% of
the joint  ventures'  assets,  liabilities,  revenues and expenses with minority
interests  provided for in  accordance  with the joint venture  agreements.  The
equity   method  of   accounting   is  used  for  the  Company's  50%  undivided
tenant-in-common  interest in Industry  Distribution  Center II. All significant
intercompany transactions and accounts have been eliminated in consolidation.

(b)  Income Taxes
     EastGroup,  a  Maryland  corporation,   has  qualified  as  a  real  estate
investment  trust (REIT) under Sections 856-860 of the Internal Revenue Code and
intends to continue to qualify as such.  To maintain  its status as a REIT,  the
Company is required to  distribute  90% of its  ordinary  taxable  income to its
stockholders.  The Company has the option of (i)  reinvesting the sales price of
properties  sold  through  tax-deferred  exchanges,  allowing  for a deferral of
capital  gains on the sale,  (ii) paying out capital  gains to the  stockholders
with no tax to the Company,  or (iii)  treating the capital gains as having been
distributed to the stockholders,  paying the tax on the gain deemed  distributed
and  allocating  the tax  paid as a  credit  to the  stockholders.  The  Company
distributed all of its 2007,  2006 and 2005 taxable income to its  stockholders.
Accordingly,  no provision for income taxes was necessary.  The following  table
summarizes the federal income tax treatment for all distributions by the Company
for the years ended 2007, 2006 and 2005.

Federal Income Tax Treatment of Share Distributions
<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                     ---------------------------------------
                                                                         2007          2006          2005
                                                                     ---------------------------------------
          <S>                                                            <C>            <C>           <C>
        Common Share Distributions:
          Ordinary income.....................................       $   1.7449        1.3660       1.4816
          Return of capital...................................            .1273             -        .3724
          Unrecaptured Section 1250 long-term capital gain....            .0236         .4160        .0828
          Other long-term capital gain........................            .1042         .1780        .0032
                                                                     ---------------------------------------
        Total Common Distributions............................       $   2.0000        1.9600       1.9400
                                                                     =======================================

        Series D Preferred Share Distributions:
          Ordinary income.....................................       $   1.8608        1.3852       1.8788
          Unrecaptured Section 1250 long-term capital gain....            .0234         .4220        .1044
          Other long-term capital gain........................            .1034         .1804        .0044
                                                                     ---------------------------------------
        Total Preferred D Distributions.......................       $   1.9876        1.9876       1.9876
                                                                     =======================================
</TABLE>

     The Company's  income may differ for tax and financial  reporting  purposes
principally  because of (1) the timing of the  deduction  for the  provision for
possible losses and losses on investments,  (2) the timing of the recognition of
gains or losses from the sale of investments, (3) different depreciation methods
and lives,  (4) real  estate  properties  having a  different  basis for tax and
financial reporting purposes, and (5) differences in book and tax allowances and
timing for stock-based compensation expense.

(c)  Income Recognition
     Minimum  rental  income  from real estate  operations  is  recognized  on a
straight-line  basis. The straight-line  rent calculation on leases includes the
effects of rent  concessions  and scheduled rent  increases,  and the calculated
straight-line rent income is recognized over the lives of the individual leases.
The Company  maintains  allowances for doubtful accounts  receivable,  including
deferred  rent  receivable,  based  upon  estimates  determined  by  management.
Management specifically analyzes aged receivables,  customer  credit-worthiness,
historical bad debts and current economic trends when evaluating the adequacy of
the allowance for doubtful accounts.
     Revenue  is  recognized  on  payments   received  from  tenants  for  early
terminations  after all criteria have been met in accordance  with  Statement of
Financial  Accounting  Standards (SFAS) No. 13, Accounting for Leases.  Interest
income on mortgage  loans  receivable is recognized  based on the accrual method
unless  a  significant  uncertainty  of  collection  exists.  If  a  significant
uncertainty exists, interest income is recognized as collected.
     The Company recognizes gains on sales of real estate in accordance with the
principles set forth in SFAS No. 66,  Accounting for Sales of Real Estate.  Upon
closing  of real  estate  transactions,  the  provisions  of SFAS No. 66 require
consideration for the transfer of rights of ownership to the purchaser,  receipt
of an  adequate  cash  down  payment  from the  purchaser,  adequate  continuing
investment by the purchaser and no  substantial  continuing  involvement  by the
Company.  If the requirements for recognizing  gains have not been met, the sale
and related  costs are  recorded,  but the gain is deferred and  recognized by a
method other than the full accrual method.

                                       36

<PAGE>

(d)  Real Estate Properties
     EastGroup  has  one   reportable   segment-industrial   properties.   These
properties  are  concentrated  in major  Sunbelt  markets of the United  States,
primarily in the states of Florida, Texas, Arizona and California,  have similar
economic  characteristics  and also  meet the other  criteria  that  permit  the
properties to be aggregated  into one reportable  segment.  The Company  reviews
long-lived  assets for impairment  whenever  events or changes in  circumstances
indicate  that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future undiscounted net cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized by the amount by which the
carrying  amount of the asset  exceeds the fair value of the asset.  Real estate
properties  held for investment are reported at the lower of the carrying amount
or fair value.  Depreciation  of  buildings  and other  improvements,  including
personal  property,  is computed using the  straight-line  method over estimated
useful  lives  of  generally  40  years  for  buildings  and 3 to 15  years  for
improvements and personal property. Building improvements are capitalized, while
maintenance and repair expenses are charged to expense as incurred.  Significant
renovations  and  improvements  that  extend the useful  life of or improve  the
assets are  capitalized.  Depreciation  expense for continuing and  discontinued
operations was $39,688,000, $35,428,000 and $32,693,000 for 2007, 2006 and 2005,
respectively.

(e)  Development
     During the period when a property is under  development,  costs  associated
with  development  (i.e.,  land,  construction  costs,  interest  expense during
construction  and lease-up,  property  taxes and other direct and indirect costs
associated with  development) are aggregated into the total capitalized costs of
the  property.  Included  in these  costs  are  management's  estimates  for the
portions of internal costs (primarily  personnel costs) that are deemed directly
or indirectly  related to such development  activities.  As the property becomes
occupied,  interest,  depreciation,  property  taxes  and  other  costs  for the
percentage occupied only are expensed as incurred. When the property becomes 80%
occupied or one year after completion of the shell construction, whichever comes
first, the property is no longer  considered a development  property and becomes
an industrial  property.  Once the property becomes  classified as an industrial
property,  all  interest  and  property  taxes  are  expensed  and  depreciation
commences on the entire property (excluding the land).

(f)  Real Estate Held for Sale
     The Company considers a real estate property to be held for sale when it is
probable  that the  property  will be sold  within a year.  A key  indicator  of
probability  of sale is whether  the buyer has a  significant  amount of earnest
money at risk. Real estate properties that are held for sale are reported at the
lower of the carrying  amount or fair value less estimated costs to sell and are
not depreciated  while they are held for sale. In accordance with the guidelines
established  under SFAS No. 144,  the results of  operations  for the  operating
properties  sold or held for sale  during the  reported  periods are shown under
Discontinued Operations on the consolidated income statements.  Interest expense
is not  generally  allocated to the  properties  that are held for sale or whose
operations are included  under  Discontinued  Operations  unless the mortgage is
required to be paid in full upon the sale of the property.

(g)  Derivative Instruments and Hedging Activities
     The Company applies SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities,  which requires that all derivatives be recognized as either
assets or liabilities  in the balance sheet and measured at fair value.  Changes
in fair  value  are to be  reported  either in  earnings  or as a  component  of
stockholders'  equity  depending on the intended use of the  derivative  and the
resulting  designation.  Entities  applying  hedge  accounting  are  required to
establish  at the  inception  of  the  hedge  the  method  used  to  assess  the
effectiveness  of the  hedging  derivative  and  the  measurement  approach  for
determining  the  ineffective  aspect of the hedge.  The Company has an interest
rate swap agreement, which is summarized in Note 6.

(h)  Cash Equivalents
     The Company  considers  all highly  liquid  investments  with a maturity of
three months or less when purchased to be cash equivalents.

(i)  Amortization
     Debt origination  costs are deferred and amortized using the  straight-line
method  over the term of the loan.  Amortization  of loan  costs for  continuing
operations  was  $911,000,  $819,000  and  $801,000  for  2007,  2006 and  2005,
respectively.
     Leasing costs are deferred and  amortized  using the  straight-line  method
over the term of the lease.  Leasing costs  amortization  expense for continuing
and discontinued operations was $5,339,000,  $4,304,000 and $3,863,000 for 2007,
2006 and 2005, respectively. Amortization expense for in-place lease intangibles
is disclosed in Business Combinations and Acquired Intangibles.

(j)  Business Combinations and Acquired Intangibles
     Upon  acquisition  of real  estate  properties,  the  Company  applies  the
principles of SFAS No. 141, Business  Combinations,  to 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 Company determines
whether any financing  assumed is above or below market based upon comparison to
similar  financing  terms for  similar  properties.  The cost of the  properties
acquired may be adjusted based on  indebtedness  assumed from the seller that is
determined to be above or below market rates.  Factors  considered by management
in  allocating  the cost of the  properties  acquired  include  an  estimate  of
carrying costs during the expected lease-up periods  considering  current market
conditions  and costs to execute  similar  leases.  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.

                                       37

<PAGE>

     The  remaining  purchase  price is  allocated  among  three  categories  of
intangible  assets consisting of the above or below market component of in-place
leases,  the value of in-place  leases and the value of customer  relationships.
The  value  allocable  to the above or below  market  component  of an  acquired
in-place lease is determined based upon the present value (using a discount rate
which reflects the risks  associated with the acquired leases) of the difference
between (i) the  contractual  amounts to be paid  pursuant to the lease over its
remaining term, and (ii) management's estimate of the amounts that would be paid
using fair  market  rates over the  remaining  term of the  lease.  The  amounts
allocated  to above and below  market  leases are  included in Other  Assets and
Other  Liabilities,  respectively,  on the  consolidated  balance sheets and are
amortized to rental income over the remaining  terms of the  respective  leases.
The total amount of  intangible  assets is further  allocated to in-place  lease
values and to customer relationship values based upon management's assessment of
their respective values. These intangible assets are included in Other Assets on
the consolidated balance sheets and are amortized over the remaining term of the
existing  lease,  or the  anticipated  life  of the  customer  relationship,  as
applicable.  Amortization expense for in-place lease intangibles was $3,031,000,
$2,485,000 and $2,750,000 for 2007, 2006 and 2005, respectively. Amortization of
above  and  below  market  leases  was  immaterial  for all  periods  presented.
Projected  amortization of in-place lease intangibles for the next five years as
of December 31, 2007 is as follows:
<TABLE>
<CAPTION>
                 Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
           <S>                                                <C>
        2008......................................     $        2,128
        2009......................................              1,388
        2010......................................                809
        2011......................................                443
        2012......................................                262
</TABLE>

     Total cost of the properties  acquired for 2007 was  $57,246,000,  of which
$53,952,000 was allocated to real estate properties. In accordance with SFAS No.
141, intangibles  associated with the purchases of real estate were allocated as
follows:  $3,661,000 to in-place lease  intangibles and $246,000 to above market
leases  (both  included in Other  Assets on the balance  sheet) and  $613,000 to
below market leases (included in Other Liabilities on the balance sheet).  These
costs are amortized over the remaining  lives of the associated  leases in place
at the time of acquisition.
     The Company acquired one property during 2006 for a cost of $19,539,000, of
which  $18,690,000  was  allocated  to  real  estate   properties.   Intangibles
associated  with  the  purchase  of  real  estate  were  allocated  as  follows:
$1,095,000 to in-place lease intangibles and $246,000 to below market leases.
     The Company  periodically reviews (at least annually) the recoverability of
goodwill and (on a quarterly basis) the  recoverability of other intangibles for
possible impairment. In management's opinion, no material impairment of goodwill
and other intangibles existed at December 31, 2007 and 2006.

(k)  Stock-Based Compensation
     The  Company  has  a  management   incentive  plan  that  was  approved  by
shareholders  and adopted in 2004, which authorizes the issuance of common stock
to  employees  in the form of options,  stock  appreciation  rights,  restricted
stock,  deferred stock units,  performance  shares,  stock  bonuses,  and stock.
Typically,  the Company  issues new shares to fulfill  stock  grants or upon the
exercise of stock options.
     Under the modified prospective application method, the Company continues to
recognize compensation cost on a straight-line basis over the service period for
awards that  precede the adoption of SFAS No. 123  (Revised  2004),  Share-Based
Payment,  on January 1,  2006.  (Prior to the  adoption  of SFAS No.  123R,  the
Company  had  adopted  the fair value  recognition  provisions  of SFAS No. 148,
Accounting for Stock-Based  Compensation-Transition and Disclosure, an amendment
of SFAS No. 123, Accounting for Stock-Based  Compensation,  prospectively to all
awards  granted,  modified,  or settled  after  January  1,  2002.) The cost for
performance-based  awards after January 1, 2006 is  determined  using the graded
vesting attribution method which recognizes each separate vesting portion of the
award as a separate award on a  straight-line  basis over the requisite  service
period.  This method  accelerates  the  expensing  of the award  compared to the
straight-line method. The cost for market-based awards after January 1, 2006 and
awards that only require service are expensed on a straight-line  basis over the
requisite service periods.
     The total  compensation  cost for service and  performance  based awards is
based upon the fair market  value of the shares on the grant date,  adjusted for
estimated forfeitures.  The grant date fair value for awards that are subject to
a market condition are determined using a simulation  pricing model developed to
specifically accommodate the unique features of the awards.
     During the restricted period for awards not subject to  contingencies,  the
Company accrues  dividends and holds the certificates  for the shares;  however,
the employee can vote the shares. For shares subject to contingencies, dividends
are accrued based upon the number of shares expected to vest. Share certificates
and dividends are delivered to the employee as they vest.

(l)  Earnings Per Share
     Basic  earnings per share (EPS)  represents  the amount of earnings for the
period available to each share of common stock outstanding  during the reporting
period.  The Company's basic EPS is calculated by dividing net income  available
to  common  stockholders  by  the  weighted  average  number  of  common  shares
outstanding.
     Diluted EPS represents  the amount of earnings for the period  available to
each share of common stock  outstanding  during the reporting period and to each
share that would have been  outstanding  assuming the issuance of common  shares
for all  dilutive  potential  common  shares  outstanding  during the  reporting
period.  The Company  calculates diluted EPS by dividing net income available to
common  stockholders by the

                                       38

<PAGE>

weighted average number of common shares outstanding plus the dilutive effect of
nonvested restricted stock and stock options had the options been exercised. The
dilutive  effect of stock  options  and  their  equivalents  (such as  nonvested
restricted  stock) was determined  using the treasury stock method which assumes
exercise of the options as of the  beginning  of the period or when  issued,  if
later,  and assumes  proceeds  from the exercise of options are used to purchase
common stock at the average market price during the period.

(m)  Use of Estimates
     The preparation of financial  statements in conformity with U.S.  generally
accepted accounting  principles (GAAP) requires management to make estimates and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
revenues and expenses  during the  reporting  period,  and to disclose  material
contingent  assets  and  liabilities  at the date of the  financial  statements.
Actual results could differ from those estimates.

(n)  New Accounting Pronouncements
     In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No. 48 (FIN 48),  Accounting for Uncertainty in Income Taxes, an
Interpretation  of FASB  Statement No. 109. FIN 48 clarifies the  accounting for
uncertainty in income taxes recognized in a company's  financial  statements and
prescribes a recognition  threshold and measurement  attribute for the financial
statement  recognition and measurement of a tax position taken or expected to be
taken  in a tax  return.  FIN  48  was  effective  January  1,  2007.  With  few
exceptions,  the Company's 2003 and earlier tax years are closed for examination
by U.S. federal, state and local tax authorities. The adoption of FIN 48 in 2007
had an immaterial impact on the Company's overall financial position and results
of operations.
     In September  2006, the FASB issued SFAS No. 157, Fair Value  Measurements,
which provides  guidance for using fair value to measure assets and liabilities.
SFAS No. 157 applies  whenever  other  standards  require (or permit)  assets or
liabilities  to be  measured  at fair  value but does not expand the use of fair
value in any new  circumstances.  The  provisions  of  Statement  157,  with the
exception of nonfinancial  assets and  liabilities,  are effective for financial
statements  issued for fiscal years  beginning  after  November  15,  2007,  and
interim  periods  within those fiscal years.  The FASB deferred for one year the
Statement's fair value  measurement  requirements  for  nonfinancial  assets and
liabilities that are not required or permitted to be measured at fair value on a
recurring  basis.  These provisions will be effective for fiscal years beginning
after November 15, 2008.  EastGroup  accounts for its  stock-based  compensation
costs at fair value on the dates of grant as required under SFAS No. 123R. Also,
as required under SFAS No. 133, the Company  accounts for its interest rate swap
cash flow hedge on the Tower Automotive  mortgage at fair value. The application
of Statement 157 to the Company in 2008 had virtually no impact on the Company's
overall financial position or results of operations.
     In December  2007,  the FASB issued SFAS No. 141 (Revised  2007),  Business
Combinations,  which retains the  fundamental  requirements  in SFAS No. 141 and
requires the identifiable  assets  acquired,  the liabilities  assumed,  and any
noncontrolling  interest  in the  acquiree  be  measured at fair value as of the
acquisition  date.  In  addition,  Statement  141R  requires  that any  goodwill
acquired in the business combination be measured as a residual,  and it provides
guidance in  determining  what  information  to disclose to enable  users of the
financial  statements  to  evaluate  the  nature  and  financial  effects of the
business combination. The Statement also requires that acquisition-related costs
be recognized as expenses in the periods in which the costs are incurred and the
services  are  received.   SFAS  No.  141R  applies  prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
first annual  reporting  period beginning on or after December 15, 2008, and may
not be applied  before that date.
     Also in  December  2007,  the  FASB  issued  SFAS No.  160,  Noncontrolling
Interests  in  Consolidated  Financial  Statements,  which  is an  amendment  of
Accounting  Research  Bulletin (ARB) No. 51. Statement 160 provides guidance for
entities that prepare consolidated financial statements that have an outstanding
noncontrolling  interest in one or more  subsidiaries  or that  deconsolidate  a
subsidiary.  SFAS No. 160 is effective  for fiscal  years,  and interim  periods
within those fiscal years,  beginning on or after December 15, 2008, and may not
be applied  before  that date.  The  Company  anticipates  that the  adoption of
Statement  160 on  January  1,  2009,  will  have an  immaterial  impact  on the
Company's financial statements.

(o)  Reclassifications
     Certain  reclassifications have been made in the 2006 and 2005 consolidated
financial statements to conform to the 2007 presentation.

(2)  REAL ESTATE OWNED

     The Company's real estate  properties at December 31, 2007 and 2006 were as
follows:
<TABLE>
<CAPTION>
                                                                               December 31,
                                                                    ---------------------------------
                                                                          2007              2006
                                                                    ---------------------------------
                                                                              (In thousands)
            <S>                                                            <C>               <C>
        Real estate properties:
           Land................................................     $     175,496           154,384
           Buildings and building improvements.................           763,980           670,751
           Tenant and other improvements.......................           175,490           148,775
        Development............................................           152,963           114,986
                                                                    ---------------------------------
                                                                        1,267,929         1,088,896
           Less accumulated depreciation.......................          (269,132)         (231,106)
                                                                    ---------------------------------
                                                                    $     998,797           857,790
                                                                    =================================
</TABLE>

                                       39

<PAGE>

     The Company is currently  developing the properties  detailed below.  Costs
incurred  include   capitalization  of  interest  costs  during  the  period  of
construction.  The interest costs capitalized on real estate properties for 2007
were $6,086,000 compared to $4,336,000 for 2006 and $2,485,000 for 2005.
     Total capital investment for development during 2007 was $112,960,000.  The
table below is net of $233,000 of land sold during the year.  In addition to the
costs  incurred for the year as detailed in the table below,  development  costs
included  $4,936,000 for improvements on developments during the 12-month period
following transfer to Real Estate Properties.
<TABLE>
<CAPTION>
                                                                                     Costs Incurred
                                                                      ---------------------------------------------
                                                                         Costs            For the       Cumulative       Estimated
                                                                      Transferred       Year Ended         as of           Total
                                                           Size        in 2007(1)        12/31/07        12/31/07        Costs (4)
                                                      ------------------------------------------------------------------------------
DEVELOPMENT                                             (Unaudited)                                                     (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                       (Square feet)                          (In thousands)
<S>                                                         <C>            <C>             <C>              <C>               <C>
LEASE-UP
  Beltway Crossing III & IV, Houston, TX..........        110,000     $      -             1,134           6,212             6,500
  Interstate Commons III, Phoenix, AZ.............         38,000            -             2,475           3,048             3,200
  Oak Creek A & B, Tampa, FL(2)...................         35,000            -             2,190           2,941             3,300
  Southridge VII, Orlando, FL.....................         92,000        3,312             2,774           6,086             6,700
  SunCoast I, Fort Myers, FL......................         63,000            -             2,449           5,076             5,500
  World Houston 24, Houston, TX...................         93,000            -             4,064           5,165             5,600
  World Houston 25, Houston, TX...................         66,000            -             2,549           3,194             3,700
  Centennial Park, Denver, CO.....................         68,000            -             4,747           4,747             4,900
  Beltway Crossing V, Houston, TX.................         83,000        1,077             2,669           3,746             5,000
  Wetmore II, Building A, San Antonio, TX.........         34,000          504             2,297           2,801             3,200
                                                      ------------------------------------------------------------------------------
Total Lease-up....................................        682,000        4,893            27,348          43,016            47,600
                                                      ------------------------------------------------------------------------------

UNDER CONSTRUCTION
  40th Avenue Distribution Center, Phoenix, AZ....         89,000            -             4,046           5,147             6,100
  Arion 18, San Antonio, TX.......................         20,000        1,236               719           1,955             2,500
  Wetmore II, Buildings B & C, San Antonio, TX....        124,000        1,269             5,111           6,380             7,600
  Oak Creek VI,  Tampa, FL........................         89,000        2,412             1,493           3,905             5,800
  Beltway Crossing VI, Houston, TX................        127,000        1,058             2,465           3,523             6,400
  Southridge VIII, Orlando, FL....................         91,000        2,407             1,633           4,040             6,700
  Wetmore II, Building D, San Antonio, TX.........        124,000        1,382             1,603           2,985             8,500
  Sky Harbor, Phoenix, AZ.........................        261,000        6,946             7,062          14,008            22,800
  Southridge XII, Orlando, FL.....................        404,000        4,089            11,011          15,100            20,400
  SunCoast III, Fort Myers, FL....................         93,000        4,175                 -           4,175             8,400
  Techway SW IV, Houston, TX......................         94,000        1,968                 -           1,968             5,800
  World Houston 27, Houston, TX...................         92,000        2,483                 -           2,483             5,500
                                                      ------------------------------------------------------------------------------
Total Under Construction..........................      1,608,000       29,425            35,143          65,669           106,500
                                                      ------------------------------------------------------------------------------

PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
  Phoenix, AZ.....................................              -       (6,946)              431               -                 -
  Tucson, AZ......................................        205,000            -             1,719           2,045            14,300
  Tampa, FL.......................................        335,000       (2,412)            2,332           4,577            20,100
  Orlando, FL.....................................        229,000       (9,808)            5,199           3,762            13,700
  West Palm Beach, FL.............................         20,000            -               126             811             2,300
  Fort Myers, FL..................................        659,000       (4,175)            4,326          12,819            48,100
  El Paso, TX.....................................        251,000            -                 -           2,444             9,600
  Houston, TX.....................................      1,306,000       (6,586)           11,628          14,549            77,000
  San Antonio, TX.................................        410,000       (4,391)            3,551           2,566            24,300
  Jackson, MS.....................................         28,000            -                 -             705             2,000
                                                      ------------------------------------------------------------------------------
Total Prospective Development.....................      3,443,000      (34,318)           29,312          44,278           211,400
                                                      ------------------------------------------------------------------------------
                                                        5,733,000     $      -            91,803         152,963           365,500
                                                      ==============================================================================

DEVELOPMENTS COMPLETED AND TRANSFERRED
TO REAL ESTATE PROPERTIES DURING 2007
  Santan 10 II, Chandler, AZ......................         85,000     $      -                 -           5,501
  Oak Creek III,  Tampa, FL.......................         61,000            -               119           3,578
  Southridge VI, Orlando, FL......................         81,000            -               323           5,294
  Arion 16, San Antonio, TX.......................         64,000            -             1,411           3,795
  Southridge III, Orlando, FL.....................         81,000            -               713           5,166
  Southridge II, Orlando, FL......................         41,000            -               244           3,790
  World Houston 15, Houston, TX...................         63,000            -               276           4,802
  World Houston 23, Houston, TX...................        125,000            -             2,888           7,385
  Arion 17, San Antonio, TX.......................         40,000            -                90           3,028
  Beltway Crossing II, Houston, TX................         50,000            -               911           2,986
  SunCoast II, Fort Myers, FL.....................         63,000            -             2,953           5,604
  Castilian Research Center, Santa Barbara, CA....         37,000            -             3,925           8,847
  Oak Creek V,  Tampa, FL.........................        100,000            -               563           5,396
  World Houston 22, Houston, TX...................         68,000            -             1,572           4,642
                                                      ------------------------------------------------------------
Total Transferred to Real Estate Properties.......        959,000     $      -            15,988          69,814  (3)
                                                      ============================================================
</TABLE>


(1) Represents costs transferred from Prospective  Development  (primarily land)
to Under Construction (or subsequently to Lease-up) during the period.
(2) These properties were developed for sale.
(3) Represents cumulative costs at the date of transfer.
(4) Included in these costs are  development  obligations  of $31.9  million and
tenant improvement obligations of $5.4 million on properties under development.

                                       40

<PAGE>

     In 2007, one Memphis property,  Delp Distribution Center I, was transferred
to real estate held for sale and was subsequently  sold. Also, during the fourth
quarter of 2007,  the Company  received  proceeds of $3,050,000  for the sale of
land in lieu of condemnation at Arion Business Park in San Antonio. During 2006,
five Memphis  properties-Senator  1, Senator 2, Southeast Crossing,  Lamar 1 and
Crowfarn - and the Auburn Hills  Facility in Michigan were  transferred  to real
estate held for sale and were  subsequently  sold. The sales of these properties
continues  to reflect the  Company's  plan of reducing  ownership in Memphis and
other noncore markets, as market conditions permit.
     Real estate  properties that are held for sale are reported at the lower of
the  carrying  amount or fair  value  less  estimated  costs to sell and are not
depreciated  while they are held for sale.  In  accordance  with the  guidelines
established  under SFAS No. 144, the results of  operations  for the  properties
sold or held for sale during the reported  periods are shown under  Discontinued
Operations  on the  consolidated  income  statements.  No  interest  expense was
allocated  to the  properties  that are held  for sale or whose  operations  are
included under Discontinued  Operations except for Lamar Distribution Center II,
the  mortgage  of which  was  required  to be paid in full  upon the sale of the
property in June 2005.  Accordingly,  Discontinued  Operations includes interest
expense  of  $64,000  for  2005.  A  summary  of gain on  sales  of real  estate
investments for the years ended December 31, 2007, 2006 and 2005 follows:

Gain on Sales of Real Estate Investments
<TABLE>
<CAPTION>
                                                                              Date         Net                 Deferred   Recognized
      Real Estate Properties             Location              Size           Sold     Sales Price     Basis     Gain        Gain
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       (In thousands)
      <S>                                   <C>                 <C>           <C>          <C>         <C>        <C>        <C>
2007
Delp Distribution Center I..........    Memphis, TN         152,000 SF      10/11/07   $   3,080       2,477          -         603
Arion Business Park land............    San Antonio, TX     13.1 Acres      10/11/07       2,890         318          -       2,572
Deferred gain recognized from
  previous sales....................                                                                                            387
                                                                                       ---------------------------------------------
                                                                                       $   5,970       2,795          -       3,562
                                                                                       =============================================
2006
Madisonville land...................    Madisonville, KY     1.2 Acres      01/05/06   $     804          27        162         615
Senator I & II/Southeast Crossing...    Memphis, TN         534,000 SF      03/09/06      14,870      14,466          -         404
Dallas land.........................    Dallas, TX            0.1 Acre      03/16/06          66          13          -          53
Lamar Distribution Center I.........    Memphis, TN         125,000 SF      06/30/06       2,980       2,951          -          29
Crowfarn Distribution Center........    Memphis, TN         106,000 SF      12/14/06       2,650       2,263          -         387
Auburn Facility.....................    Auburn Hills, MI    114,000 SF      12/28/06      17,251      12,698        329       4,224
Fort Myers land.....................    Fort Myers, FL        0.8 Acre      12/29/06         267         144          -         123
Deferred gain recognized from
  previous sale.....................                                                                                             15
                                                                                       ---------------------------------------------
                                                                                       $  38,888      32,562        491       5,850
                                                                                       =============================================
2005
Delp Distribution Center II.........    Memphis, TN         102,000 SF      02/23/05   $   2,085       1,708          -         377
Lamar Distribution Center II........    Memphis, TN         151,000 SF      06/30/05       3,725       2,956         15         754
Sabal land..........................    Tampa, FL            1.9 Acres      09/30/05         239         206          -          33
                                                                                       ---------------------------------------------
                                                                                       $   6,049       4,870         15       1,164
                                                                                       =============================================
</TABLE>

                                       41

<PAGE>

     The following schedule indicates approximate future minimum rental receipts
under noncancelable leases for real estate properties by year as of December 31,
2007:

Future Minimum Rental Receipts Under Noncancelable Leases
<TABLE>
<CAPTION>
                 Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
           <S>                                                <C>
        2008......................................     $     117,443
        2009......................................            95,288
        2010......................................            73,473
        2011......................................            53,619
        2012......................................            38,522
        Thereafter................................            70,029
                                                       ---------------
           Total minimum receipts.................     $     448,374
                                                       ===============
</TABLE>

Ground Leases
     As of December 31, 2007, the Company owned two  properties in Florida,  two
properties  in Texas and one  property  in  Arizona  that are  subject to ground
leases.  These leases have terms of 40 to 50 years,  expiration  dates of August
2031 to November 2037, and renewal options of 15 to 35 years, except for the one
lease in Arizona which is automatically and perpetually renewed annually.  Total
lease  expenditures  for the years ended  December 31, 2007,  2006 and 2005 were
$708,000, $707,000 and $686,000, respectively. Payments are subject to increases
at 3 to 10 year  intervals  based upon the agreed or appraised fair market value
of the leased  premises  on the  adjustment  date or the  Consumer  Price  Index
percentage  increase  since the base rent date.  In December  2007,  the Company
exercised  its option to purchase  the land under the ground  lease on its Tower
property in Mississippi for $10. The following  schedule  indicates  approximate
future  minimum lease  payments for these  properties by year as of December 31,
2007:

Future Minimum Ground Lease Payments
<TABLE>
<CAPTION>
                 Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
           <S>                                                <C>
        2008......................................     $         707
        2009......................................               707
        2010......................................               707
        2011......................................               707
        2012......................................               707
        Thereafter................................            16,272
                                                       ---------------
           Total minimum payments.................     $      19,807
                                                       ===============
</TABLE>

(3)  UNCONSOLIDATED INVESTMENT

     In November  2004,  the Company  acquired a 50% undivided  tenant-in-common
interest in Industry  Distribution  Center II, a 309,000  square foot  warehouse
distribution  building in the City of Industry (Los  Angeles),  California.  The
building was  constructed in 1998 and is 100% leased through  December 2014 to a
single tenant who owns the other 50% interest in the property.  This  investment
is accounted for under the equity method of accounting  and had a carrying value
of $2,630,000  at December 31, 2007.  At the end of May 2005,  EastGroup and the
property  co-owner closed a non-recourse first mortgage loan secured by Industry
Distribution  Center II. The $13.3  million  loan has a fixed  interest  rate of
5.31%, a ten-year term and an amortization  schedule of 25 years. The co-owner's
50%  share of the loan  proceeds  ($6.65  million)  were paid to  EastGroup  and
reduced the Company's  mortgage loan  receivable  (see Note 4).  EastGroup's 50%
share of the loan proceeds  ($6.65  million)  reduced the carrying  value of the
investment.  EastGroup's  share of this mortgage was  $6,309,000 at December 31,
2007 and $6,451,000 at December 31, 2006.

(4)  MORTGAGE LOANS RECEIVABLE

     In connection  with the closing of the investment in Industry  Distribution
Center II, EastGroup advanced a total of $7,550,000 in two separate notes to the
property co-owner, one for $6,750,000 and one for $800,000. As discussed in Note
3, the  Company  and the  property  co-owner  obtained  a  permanent  fixed-rate
mortgage on the  investment in Industry  Distribution  Center II in May 2005. As
part of this  transaction,  the loan proceeds  payable to the property  co-owner
($6.65 million) were paid to EastGroup to reduce the $6.75 million note. Also at
the  closing of the  permanent  financing,  the  co-owner  repaid the  remaining
balance  of  $100,000  on this  note.  The  $800,000  note was repaid in full to
EastGroup during the last half of 2005. Mortgage interest income for these notes
was $224,000 for 2005.

                                       42

<PAGE>

(5)  OTHER ASSETS

     A summary of the Company's Other Assets follows:
<TABLE>
<CAPTION>
                                                                                                   December 31,
                                                                                            --------------------------
                                                                                                2007          2006
                                                                                            --------------------------
                                                                                                  (In thousands)
               <S>                                                                              <C>           <C>
        Leasing costs (principally commissions), net of accumulated amortization........    $   18,693        15,821
        Straight-line rent receivable, net of allowance for doubtful accounts...........        14,016        13,530
        Accounts receivable, net of allowance for doubtful accounts.....................         3,587         5,189
        Acquired in-place lease intangibles, net of accumulated amortization
          of $5,308 and $4,294 for 2007 and 2006, respectively..........................         5,303         4,674
        Goodwill........................................................................           990           990
        Prepaid expenses and other assets...............................................        11,093        10,258
                                                                                            --------------------------
                                                                                            $   53,682        50,462
                                                                                            ==========================
</TABLE>

(6)  NOTES PAYABLE TO BANKS

     During 2007, the Company had a three-year, $175 million unsecured revolving
credit  facility  with a group of nine banks.  This credit  facility  expired on
January 4,  2008,  and was  replaced  by a  four-year,  $200  million  unsecured
revolving  credit facility.  The Company  customarily uses these lines of credit
for acquisitions and developments.
     The  interest  rate on the $175  million  credit  facility was based on the
LIBOR index and varied  according to total liability to total asset value ratios
(as defined in the credit  agreement),  with an annual  facility fee of 20 basis
points. During the year, EastGroup's interest rate under this line of credit was
LIBOR  plus 95 basis  points,  except  that it could be  lowered  based upon the
competitive  bid option in the note. At December 31, 2007, the weighted  average
interest rate was 5.65% on a balance of $128,700,000.
     The Company also had a one-year,  $20 million  unsecured  revolving  credit
facility with PNC Bank, N.A. that matured on January 4, 2008. Upon maturity,  it
was replaced by a four-year,  $25 million  unsecured  revolving credit facility.
These  facilities are customarily  used for working capital needs.  The interest
rate on the $20 million  line of credit was based on LIBOR and varied  according
to total  liability  to total  asset  value  ratios  (as  defined  in the credit
agreement).  During 2007,  the Company's  interest rate was LIBOR plus 110 basis
points with no annual  facility fee. At December 31, 2007, the interest rate was
5.70% on a balance of $6,744,000.
     Average bank borrowings were $96,513,000 in 2007 compared to $91,314,000 in
2006 with weighted  average interest rates of 6.36% in 2007 compared to 6.12% in
2006. Weighted average interest rates including  amortization of loan costs were
6.73% for 2007 and 6.50% for 2006. Amortization of bank loan costs was $353,000,
$355,000 and $357,000 for 2007, 2006 and 2005, respectively.
     The Company's bank credit  facilities have certain  restrictive  covenants,
and the Company was in compliance with all of its debt covenants at December 31,
2007.
     The Company has an interest  rate swap  agreement  to hedge its exposure to
the variable  interest rate on the Company's  $9,710,000 Tower Automotive Center
recourse  mortgage  (see  Note  7).  Under  the  swap  agreement,   the  Company
effectively pays a fixed rate of interest over the term of the agreement without
the exchange of the  underlying  notional  amount.  This swap is designated as a
cash flow hedge and is considered to be fully  effective in hedging the variable
rate risk associated with the Tower mortgage loan.  Changes in the fair value of
the swap are recognized in accumulated other  comprehensive  income (loss).  The
Company does not hold or issue this type of  derivative  contract for trading or
speculative purposes. The interest rate swap agreement is summarized as follows:
<TABLE>
<CAPTION>
                             Current                                                                  Fair Value        Fair Value
        Type of Hedge    Notional Amount      Maturity Date     Reference Rate      Fixed Rate        at 12/31/07       at 12/31/06
        ----------------------------------------------------------------------------------------------------------------------------
                         (In thousands)                                                                      (In thousands)
             <S>              <C>               <C>                   <C>               <C>              <C>                 <C>
            Swap            $9,710 (1)          12/31/10        1 month LIBOR          4.03%             ($56)             $314
</TABLE>

(1) This  mortgage  is  backed  by a letter of  credit  totaling  $9,822,000  at
December  31, 2007.  The letter of credit is  renewable  annually and expires on
January 15, 2011.

                                       43

<PAGE>

(7)  MORTGAGE NOTES PAYABLE

     A summary of mortgage notes payable follows:
<TABLE>
<CAPTION>

                                                                                               Carrying Amount      Balance at
                                                                         Monthly                 of Securing        December 31,
                                                                           P&I      Maturity    Real Estate at   -------------------
Property                                                       Rate      Payment      Date     December 31, 2007  2007       2006
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          (In thousands)
<S>                                                           <C>           <C>       <C>           <C>                <C>     <C>
World Houston 1 & 2........................................   7.770%    $ 33,019     Repaid    $           -           -      4,044
East University I & II, Broadway VI, 55th Avenue
  and Ethan Allen..........................................   8.060%      96,974     Repaid                -           -     10,336
Dominguez, Kingsview, Walnut, Washington,
  Industry and Shaw........................................   6.800%     358,770    03/01/09          52,456      33,787     35,723
Oak Creek Distribution Center I............................   8.875%      52,109    09/01/09           5,625       1,010      1,521
Tower Automotive Center (recourse)(1)......................   5.300%  Semiannual    01/15/11           9,189       9,710     10,040
Interstate I, II & III, Venture, Stemmons Circle,
  Glenmont I & II,  West Loop I & II, Butterfield Trail
  and Rojas................................................   7.250%     325,263    05/01/11          41,785      39,615     40,606
America Plaza, Central Green and World Houston 3-9.........   7.920%     191,519    05/10/11          25,284      24,264     24,625
University Business Center (120 & 130 Cremona).............   6.430%      81,856    05/15/12           9,166       5,154      5,782
University Business Center (125 & 175 Cremona).............   7.980%      88,607    06/01/12          12,580      10,012     10,265
Oak Creek Distribution Center IV...........................   5.680%      31,253    06/01/12           6,469       4,134      4,270
Airport Distribution, Southpointe, Broadway I, III  &
  IV, Southpark, 51st Avenue, Chestnut, Main Street,
  Interchange Business Park, North Stemmons I
  and World Houston 12 & 13................................   6.860%     279,149    09/01/12          42,810      36,184     37,021
Interstate Distribution Center - Jacksonville..............   5.640%      31,645    01/01/13           6,699       4,724      4,830
Broadway V, 35th Avenue, Sunbelt, Beltway I,
  Lockwood, Northwest Point, Techway Southwest I
  and World Houston 10, 11 & 14............................   4.750%     259,403    09/05/13          43,410      41,028     42,163
Kyrene Distribution Center I...............................   9.000%      11,246    07/01/14           2,258         669        740
World Houston 17, Kirby, Americas Ten I, Shady Trail,
  Palm River North I, II & III and Westlake I & II(2)......   5.680%     175,479    10/10/14          28,723      29,837     30,236
Country Club I, Lake Pointe, Techway Southwest II and
  World Houston 19 & 20....................................   4.980%     256,952    12/05/15          22,527      36,605     37,832
Huntwood and Wiegman Distribution Centers..................   5.680%     265,275    09/05/16          23,330      36,676     37,743
Alamo Downs, Arion 1-15 & 17, Rampart I, II & III,
  Santan 10 and World Houston 16...........................   5.970%     557,467    11/05/16          60,610      75,731     77,831
Broadway VI, World Houston 1 & 2, 21 & 23, Arion 16,
  Ethan Allen, Northpark I-IV, South 55th Avenue,
  East University I & II and Santan 10 II..................   5.570%     518,885    09/05/17          61,934      74,485          -
Blue Heron Distribution Center II..........................   5.390%      16,176    02/29/20           5,428       1,735      1,832
                                                                                               -------------------------------------
                                                                                               $     460,283     465,360    417,440
                                                                                               =====================================
</TABLE>

(1) The Tower  Automotive  mortgage  has a variable  interest  rate based on the
one-month  LIBOR.  EastGroup has an interest rate swap  agreement that fixes the
rate at 4.03% for the 8-year term. Interest and related fees result in an annual
effective interest rate of 5.30%. Semiannual principal payments are made on this
note;  interest is paid monthly.  (See Note 6.) The  principal  amounts of these
payments increase incrementally as the loan approaches maturity.
(2) Interest only was paid on this note until November 2006.

     The Company's  mortgage notes payable have certain  restrictive  covenants,
and the Company was in compliance with all of its debt covenants at December 31,
2007.
     The Company currently  intends to repay its debt  obligations,  both in the
short- and  long-term,  through its operating cash flows,  borrowings  under its
lines of credit,  proceeds  from new  mortgage  debt  and/or  proceeds  from the
issuance  of equity  instruments.  Principal  payments  due during the next five
years as of December 31, 2007 are as follows:
<TABLE>
<CAPTION>
                 Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
          <S>                                                <C>
        2008......................................     $      15,088
        2009......................................            45,411
        2010......................................            14,062
        2011......................................            80,426
        2012......................................            57,507
</TABLE>

                                       44

<PAGE>
(8)  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     A summary of the Company's Accounts Payable and Accrued Expenses follows:
<TABLE>
<CAPTION>

                                                                         December 31,
                                                               -------------------------------
                                                                    2007             2006
                                                               -------------------------------
                                                                        (In thousands)
               <S>                                                  <C>                <C>
        Property taxes payable............................     $         9,744          8,235
        Development costs payable.........................              13,022          8,408
        Dividends payable.................................               2,337          2,839
        Other payables and accrued expenses...............               9,076         13,107
                                                               -------------------------------
                                                               $        34,179         32,589
                                                               ===============================
</TABLE>

(9)  OTHER LIABILITIES

     A summary of the Company's Other Liabilities follows:
<TABLE>
<CAPTION>
                                                                         December 31,
                                                               -------------------------------
                                                                    2007             2006
                                                               -------------------------------
                                                                        (In thousands)
           <S>                                                     <C>                <C>
        Security deposits.................................     $         7,529          6,414
        Prepaid rent and other deferred income............               6,911          4,375
        Other liabilities.................................               1,713            958
                                                               -------------------------------
                                                               $        16,153         11,747
                                                               ===============================
</TABLE>

(10) COMMON STOCK ACTIVITY

     The following  table presents the common stock activity for the three years
ended December 31, 2007:
<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                                               -----------------------------------------------
                                                                    2007             2006             2005
                                                               -----------------------------------------------
                                                                                 Common Shares
             <S>                                                   <C>                <C>             <C>
        Shares outstanding at beginning of year...........        23,701,275       22,030,682     21,059,164
        Common stock offerings............................                 -        1,437,500        860,000
        Stock options exercised...........................            67,150          118,269         72,415
        Dividend reinvestment plan........................             6,281            6,236          8,279
        Incentive restricted stock granted................            44,646          118,334         33,446
        Incentive restricted stock forfeited..............            (2,250)          (3,756)        (3,396)
        Director incentive restricted stock granted.......                 -                -            481
        Director common stock awarded.....................             3,048            3,402          1,200
        Restricted stock withheld for tax obligations.....           (11,382)          (9,392)          (907)
                                                               -----------------------------------------------
        Shares outstanding at end of year.................        23,808,768       23,701,275     22,030,682
                                                               ===============================================
</TABLE>

Common Stock Issuances
     On September 13, 2006,  EastGroup closed on the sale of 1,437,500 shares of
its  common  stock.  The net  proceeds  from the  offering  of the  shares  were
approximately  $68,112,000  after deducting the underwriting  discount and other
offering expenses.
     On March 31,  2005,  EastGroup  closed  the sale of  800,000  shares of its
common  stock.  On May 2, 2005,  the  underwriter  closed on the  exercise  of a
portion of its  over-allotment  option and purchased 60,000  additional  shares.
Total net  proceeds  from the  offering  of the shares  were  $31,597,000  after
deducting the underwriting discount and other offering expenses.

Dividend Reinvestment Plan
     The Company has a dividend  reinvestment  plan that allows  stockholders to
reinvest cash distributions in new shares of the Company.

Common Stock Repurchase Plan
     EastGroup's  Board of Directors  has  authorized  the  repurchase  of up to
1,500,000  shares of its outstanding  common stock.  The shares may be purchased
from time to time in the open market or in  privately  negotiated  transactions.
Under the common stock  repurchase  plan,  the Company has  purchased a total of
827,700  shares for  $14,170,000  (an average of $17.12 per share) with  672,300
shares still  authorized for  repurchase.  The Company has not  repurchased  any
shares under this plan since 2000.

                                       45

<PAGE>

Shareholder Rights Plan
     In December 1998,  EastGroup  adopted a Shareholder  Rights Plan (the Plan)
designed to enhance the ability of all of the Company's  stockholders to realize
the long-term  value of their  investment.  Under the Plan,  Shareholder  Rights
(Rights) were distributed as a dividend on each share of Common Stock (one Right
for each share of Common Stock) held as of the close of business on December 28,
1998.  A Right was also  delivered  with all shares of Common Stock issued after
December 28, 1998.
     Each whole Right will entitle the holder to buy one one-thousandth (1/1000)
of a newly issued share of EastGroup's  Series C Preferred  Stock at an exercise
price of $70.00. The Rights attach to and trade with the shares of the Company's
Common Stock.  No separate  Rights  Certificates  will be issued unless an event
triggering the Rights  occurs.  The Rights will detach from the Common Stock and
will initially  become  exercisable  for shares of Series C Preferred Stock if a
person or group  acquires  beneficial  ownership  of, or  commences  a tender or
exchange offer which would result in such person or group  beneficially  owning,
15% or more of  EastGroup's  Common Stock,  except  through a tender or exchange
offer for all shares which the Board  determines to be fair and otherwise in the
best  interests of EastGroup and its  shareholders.  The Rights will also detach
from the Common  Stock if the Board  determines  that a person  holding at least
9.8% of  EastGroup's  Common  Stock  intends to cause  EastGroup to take certain
actions adverse to it and its shareholders or that such holder's ownership would
have a material adverse effect on EastGroup.
     On December  20,  2004,  EastGroup  amended the Plan to require a committee
comprised  entirely of independent  directors to review and evaluate the Plan to
consider  whether the maintenance of the Plan continues to be in the interest of
the Company,  its stockholders and other relevant  constituencies of the Company
at least  every  three  years.  This  three-year  review  was  conducted  by the
Nominating  and Corporate  Governance  Committee in December 2007 and based upon
its recommendation,  the Board of Directors voted to allow the Plan to terminate
on its stated expiration date of Decemter 3, 2008.
     If prior to December 3, 2008, any person  becomes the  beneficial  owner of
15% or more of  EastGroup's  Common  Stock and the Board of  Directors  does not
within 10 days thereafter  redeem the Rights,  or a 9.8% holder is determined by
the Board to be an  adverse  person,  each  Right  not  owned by such  person or
related  parties  will then  enable  its  holder  to  purchase,  at the  Right's
then-current   exercise   price,   EastGroup   Common   Stock  (or,  in  certain
circumstances  as determined  by the Board,  a  combination  of cash,  property,
common stock or other  securities)  having a value of twice the Right's exercise
price.
     Under  certain  circumstances,  if  EastGroup  is  acquired  in a merger or
similar  transaction with another person,  or sells more than 50% of its assets,
earning power or cash flow to another entity, each Right that has not previously
been exercised will entitle its holder to purchase,  at the Right's then-current
exercise  price,  common stock of such other entity  having a value of twice the
Right's exercise price.
     EastGroup  will  generally  be entitled to redeem the Rights at $0.0001 per
Right at any time until the 10th day following  public  announcement  that a 15%
position has been  acquired,  or until the Board has determined a 9.8% holder to
be an adverse person.  Prior to such time, the Board of Directors may extend the
redemption period.

(11) STOCK-BASED COMPENSATION

     The  Company   adopted  SFAS  No.  123  (Revised  2004)  (SFAS  No.  123R),
Share-Based Payment, on January 1, 2006. The rule requires that the compensation
cost relating to share-based payment transactions be recognized in the financial
statements  and that the cost be  measured  on the fair  value of the  equity or
liability  instruments  issued.  The Company's  adoption of SFAS No. 123R had no
material  impact on its overall  financial  position  or results of  operations.
Prior to the  adoption  of SFAS No.  123R,  the  Company  adopted the fair value
recognition   provisions   of  SFAS  No.   148,   Accounting   for   Stock-Based
Compensation-Transition and Disclosure, an amendment of SFAS No. 123, Accounting
for Stock-Based Compensation,  prospectively to all awards granted, modified, or
settled after January 1, 2002.

MANAGEMENT INCENTIVE PLAN
     The  Company  has a  management  incentive  plan which was  approved by the
shareholders and adopted in 2004 (the 2004 Plan),  which authorizes the issuance
of up to  1,900,000  shares of common stock to employees in the form of options,
stock  appreciation  rights,  restricted  stock  (limited  to  570,000  shares),
deferred stock units, performance shares, stock bonuses, and stock. Total shares
available  for grant were  1,715,523;  1,751,796;  and 1,865,572 at December 31,
2007, 2006 and 2005,  respectively.  Typically, the Company issues new shares to
fulfill stock grants or upon the exercise of stock options.
     Stock-based  compensation  was  $3,043,000,  $2,788,000  and $2,021,000 for
2007, 2006 and 2005, respectively, of which $978,000, $768,000 and $455,000 were
capitalized as part of the Company's development costs for the respective years.

Restricted Stock
     The purpose of the  restricted  stock plan is to act as a retention  device
since it allows  participants  to benefit  from  dividends  on shares as well as
potential stock appreciation. Vesting occurs from 2 1/2 years to nine years from
the date of grant for  awards  subject  to  service  only.  Restricted  stock is
granted to executive  officers subject to the satisfaction of annual performance
goals  and  multi-year  market  conditions  as  determined  by the  Compensation
Committee  with vesting over one to seven years from the grant date.  Restricted
stock is granted to non-executive  officers and other employees  subject only to
continued  service.  Under the  modified  prospective  application  method,  the
Company continues to recognize  compensation cost on a straight-line  basis over
the service  period for awards that precede the  adoption of SFAS No. 123R.  The
cost for  performance-based  awards after January 1, 2006 is amortized using the
graded vesting attribution method which recognizes each separate vesting portion
of the award as a separate  award on a  straight-line  basis over the  requisite
service period.  This method

                                       46

<PAGE>

accelerates the expensing of the award compared to
the straight-line method. The cost for market-based awards after January 1, 2006
and awards that only require service is amortized on a straight-line  basis over
the requisite service periods.
     The total compensation  expense for service and performance based awards is
based upon the fair market  value of the shares on the grant date,  adjusted for
estimated forfeitures.  The grant date fair value for awards that are subject to
a market condition (total shareholder  return) was determined using a simulation
pricing model developed to  specifically  accommodate the unique features of the
awards.
     In the second  quarter of 2007,  the Company  granted  shares to  executive
officers  contingent  upon the attainment of certain annual  performance  goals.
These goals are for the period  ending  December 31, 2007,  so any shares issued
upon  attainment  of these goals will be issued  after that date.  The number of
shares to be issued could range from zero to 34,973.  These shares will vest 20%
on the date shares are determined and awarded and 20% per year on each January 1
for the  subsequent  four years.  During  2007,  8,450  shares  were  granted to
non-executive officers at a weighted average grant date fair value of $44.36 and
are subject only to continued  service as of the vesting date. These shares vest
1/3 on January 1, 2008, 2009, and 2010.
     In the second  quarter of 2006,  the Company  granted  shares to  executive
officers  contingent upon the attainment of certain annual performance goals and
multi-year  market  conditions.  The weighted  average grant date fair value for
shares to be awarded under the multi-year market conditions was $26.34 per share
with a total cost of  approximately  $2.1  million.  These shares will vest over
four years following the three-year performance measurement period which ends on
December  31,  2008.  In March 2007,  36,196  shares were  awarded  based on the
attainment of the 2006 annual performance goals at a weighted average grant date
fair value of $43.83 per share.  These shares  vested 20% on March 8, 2007,  and
will vest 20% per year over the next four years.
     During the restricted period for awards no longer subject to contingencies,
the  Company  accrues  dividends  and holds  the  certificates  for the  shares;
however,  the employee can vote the shares. For shares subject to contingencies,
dividends  are accrued  based upon the number of shares  expected to be awarded.
Share  certificates and dividends are delivered to the employee as they vest. As
of December 31, 2007,  there was $2,234,940 of  unrecognized  compensation  cost
related to  nonvested  restricted  stock  compensation  that is  expected  to be
recognized over a weighted average period of 1.87 years.
     Following is a summary of the total  restricted  shares granted,  forfeited
and delivered (vested) to employees with the related weighted average grant date
fair value share prices for 2007,  2006 and 2005. The table does not include the
shares  granted  in 2007 or 2006 that are  contingent  on  performance  goals or
market  conditions.  Of the shares  that vested in 2007,  2006 and 2005,  11,382
shares, 9,392 shares and 907 shares, respectively,  were withheld by the Company
to satisfy the tax  obligations  for those  employees who elected this option as
permitted  under the  applicable  equity plan. As shown in the table below,  the
fair  value  of  shares  that  were  granted  during  2007,  2006  and  2005 was
$1,961,000,  $4,511,000 and $1,008,000 respectively. As of the vesting date, the
fair value of shares  that vested  during  2007,  2006 and 2005 was  $4,350,000,
$4,849,000, and $2,415,000, respectively.
<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                       -------------------------------------------------------------------------------
Restricted Stock Activity:                       2007                      2006                       2005
                                       -------------------------------------------------------------------------------
                                                     Weighted                  Weighted                    Weighted
                                                      Average                   Average                     Average
                                                    Grant Date                Grant Date                  Grant Date
                                          Shares    Fair Value      Shares    Fair Value       Shares     Fair Value
                                       -------------------------------------------------------------------------------
<S>                                       <C>           <C>         <C>          <C>            <C>            <C>
Nonvested at beginning of year....       196,671    $    28.66     177,444    $    23.01      204,348     $    22.25
Granted (1).......................        44,646         43.93     118,334         38.12       33,446          30.15
Forfeited.........................        (2,250)        23.52      (3,756)        22.07       (3,396)         22.94
Vested............................       (94,978)        31.42     (95,351)        30.15      (56,954)         24.50
                                       -----------               -----------                -----------
Nonvested at end of year..........       144,089         31.65     196,671         28.66      177,444          23.01
                                       ===========               ===========                ===========
</TABLE>

(1) Includes shares granted in prior years for which performance conditions have
been satisfied and the number of shares have been determined.

Following is a vesting schedule of the total nonvested shares as of December 31,
2007:
<TABLE>
<CAPTION>
Nonvested Shares Vesting Schedule              Number of Shares
----------------------------------------------------------------
<S>                                                   <C>
2008......................................               83,120
2009......................................               43,677
2010......................................               10,056
2011......................................                7,236
                                               -----------------
Total Nonvested Shares....................              144,089
                                               =================
</TABLE>

Employee Stock Options
     The  Company  has not  granted  stock  options  to  employees  since  2002.
Outstanding  employee  stock  options  vested  equally  over a two-year  period;
accordingly,  all  options  are now  vested.  The  intrinsic  value  realized by
employees  from  the  exercise  of  options  during  2007,  2006  and  2005  was
$1,492,000,  $3,641,000 and $758,000, respectively. There were no employee stock
options granted or forfeited during the years presented.  Following is a summary
of the total employee stock options  exercised and expired with related weighted
average exercise share prices for 2007, 2006 and 2005.

                                       47

<PAGE>

<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                       ------------------------------------------------------------------------------------------
Stock Option Activity:                           2007                         2006                           2005
                                       ------------------------------------------------------------------------------------------
                                                       Weighted                      Weighted                        Weighted
                                                        Average                       Average                         Average
                                          Shares    Exercise Price      Shares    Exercise Price       Shares     Exercise Price
                                       ------------------------------------------------------------------------------------------
<S>                                       <C>           <C>             <C>            <C>             <C>             <C>
Outstanding at beginning of year....     135,056    $      21.10       251,075    $      19.80        286,740     $      19.85
Exercised...........................     (58,400)          21.89      (116,019)          18.29        (34,665)           20.11
Expired.............................           -               -             -               -         (1,000)           24.40
                                       -----------                  ------------                    -----------
Outstanding at end of year..........      76,656           20.49       135,056           21.10        251,075            19.80
                                       ===========                  ============                    ===========

Exercisable at end of year..........      76,656    $      20.49       135,056    $      21.10        251,075     $      19.80
</TABLE>
<TABLE>
<CAPTION>
Employee outstanding stock options at December 31, 2007, all exercisable:
-----------------------------------------------------------------------------------------------
                                      Weighted Average
                                         Remaining          Weighted Average        Intrinsic
Exercise Price Range     Number       Contractual Life       Exercise Price           Value
-----------------------------------------------------------------------------------------------
         <S>              <C>               <C>                     <C>                <C>
$  18.50-25.30           76,656          1.7 years              $ 20.49            $1,637,000
</TABLE>

Directors Equity Plan
     The Company has a directors  equity plan that was approved by  shareholders
and  adopted in 2005 (the 2005 Plan),  which  authorizes  the  issuance of up to
50,000 shares of common stock  through  awards of shares and  restricted  shares
granted to  nonemployee  directors of the Company.  The 2005 Plan replaced prior
plans under which directors were granted stock option awards. Outstanding grants
under prior plans will be fulfilled under those plans.
     Directors were issued 3,048 shares, 3,402 shares and 1,200 shares of common
stock for 2007, 2006 and 2005, respectively. In addition, in 2005, 481 shares of
restricted  stock at $41.57 were granted,  of which 240 shares were vested as of
December 31, 2007. The restricted stock vests 25% per year for four years. As of
December 31, 2007, there was $7,500 of unrecognized compensation cost related to
nonvested restricted stock compensation that is expected to be recognized over a
weighted  average period of 1.50 years.  There were 41,869 shares  available for
grant under the 2005 Plan at December 31, 2007.
     Stock-based  compensation expense for directors was $155,000,  $105,000 and
$27,000 for 2007, 2006 and 2005,  respectively.  The intrinsic value realized by
directors  from the exercise of options was  $218,000,  $70,000 and $670,000 for
2007, 2006 and 2005, respectively.
     There were no director  stock options  granted or expired  during the years
presented  below.  Following is a summary of the total  director  stock  options
exercised with related weighted average exercise share prices for 2007, 2006 and
2005.
<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                       ------------------------------------------------------------------------------------------
Stock Option Activity:                           2007                         2006                           2005
                                       ------------------------------------------------------------------------------------------
                                                       Weighted                      Weighted                        Weighted
                                                        Average                       Average                         Average
                                         Shares     Exercise Price     Shares     Exercise Price      Shares      Exercise Price
                                       ------------------------------------------------------------------------------------------
<S>                                       <C>           <C>             <C>            <C>             <C>             <C>
Outstanding at beginning of year....     51,500     $      22.93       53,750     $      22.58        91,500      $      22.12
Exercised...........................     (8,750)           22.49       (2,250)           14.58       (37,750)            21.47
                                       ----------                    ----------                    -----------
Outstanding at end of year..........     42,750            23.01       51,500            22.93        53,750             22.58
                                       ==========                    ==========                    ===========

Exercisable at end of year..........     42,750     $      23.01       51,500     $      22.93        53,750      $      22.58
</TABLE>
<TABLE>
<CAPTION>
Director outstanding stock options at December 31, 2007, all exercisable:
-----------------------------------------------------------------------------------------------
                                      Weighted Average
                                         Remaining          Weighted Average        Intrinsic
Exercise Price Range     Number       Contractual Life       Exercise Price           Value
-----------------------------------------------------------------------------------------------
         <S>              <C>               <C>                     <C>                <C>
  $  20.25-26.60         42,750          3.3 years              $ 23.01              $805,000
</TABLE>

(12) PREFERRED STOCK

Series D 7.95% Cumulative Redeemable Preferred Stock
     In July 2003,  EastGroup sold 1,320,000 shares of 7.95% Series D Cumulative
Redeemable  Preferred  Stock at  $25.00  per  share in a direct  placement.  The
preferred  stock is redeemable by the Company at $25.00 per share,  plus accrued
and  unpaid  dividends,  on or after July 2, 2008.  The  preferred  stock has no
stated  maturity,  sinking fund or mandatory  redemption and is not  convertible
into any other securities of the Company.
     The Company declared  dividends of $1.9876 per share for Series D Preferred
for each of the years 2007, 2006 and 2005.

                                       48

<PAGE>

(13) COMPREHENSIVE INCOME

     Comprehensive  income is comprised of net income plus all other  changes in
equity from nonowner sources.  The components of accumulated other comprehensive
income  (loss)  for  2007,   2006  and  2005  are  presented  in  the  Company's
Consolidated  Statements of Changes in  Stockholders'  Equity and are summarized
below.
<TABLE>
<CAPTION>
                                                                            -------------------------------------------
                                                                               2007            2006            2005
                                                                            -------------------------------------------
                                                                                          (In thousands)
               <S>                                                               <C>               <C>            <C>
        ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
        Balance at beginning of year.....................................   $     314              311              14
            Change in fair value of interest rate swap...................        (370)               3             297
                                                                            -------------------------------------------
        Balance at end of year...........................................   $     (56)             314             311
                                                                            ===========================================
</TABLE>

(14) EARNINGS PER SHARE

     The  Company  applies  SFAS No. 128,  Earnings  Per Share,  which  requires
companies to present basic EPS and diluted EPS. Reconciliation of the numerators
and denominators in the basic and diluted EPS computations is as follows:

Reconciliation of Numerators and Denominators
<TABLE>
<CAPTION>
                                                                            -------------------------------------------
                                                                               2007            2006             2005
                                                                            -------------------------------------------
                                                                                          (In thousands)
          <S>                                                                  <C>              <C>              <C>
        BASIC EPS COMPUTATION
          Numerator-net income available to common stockholders..........   $  27,110           26,610          19,567
          Denominator-weighted average shares outstanding................      23,562           22,372          21,567
        DILUTED EPS COMPUTATION
          Numerator-net income available to common stockholders..........   $  27,110           26,610          19,567
          Denominator:
            Weighted average shares outstanding..........................      23,562           22,372          21,567
            Common stock options.........................................          87              143             171
            Nonvested restricted stock...................................         132              177             154
                                                                            -------------------------------------------
               Total Shares..............................................      23,781           22,692          21,892
                                                                            ===========================================
</TABLE>

(15) QUARTERLY RESULTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
                                                              2007 Quarter Ended (1)                  2006 Quarter Ended (1)
                                                   ---------------------------------------------------------------------------------
                                                     Mar 31    Jun 30    Sep 30    Dec 31    Mar 31    Jun 30    Sep 30     Dec 31
                                                   ---------------------------------------------------------------------------------
                                                                       (In thousands, except per share data)
          <S>                                        <C>        <C>        <C>      <C>       <C>       <C>        <C>        <C>
        Revenues...............................    $ 36,100    37,203    39,285    41,335    32,269    32,828    34,036     34,564
        Expenses...............................     (29,553)  (31,087)  (31,902)  (32,702)  (27,495)  (27,491)  (28,316)   (27,910)
                                                   ---------------------------------------------------------------------------------
        Income from continuing operations......       6,547     6,116     7,383     8,633     4,774     5,337     5,720      6,654
        Income from discontinued operations....          40        16       331       668     1,387       239       200      4,923
                                                   ---------------------------------------------------------------------------------
        Net income.............................       6,587     6,132     7,714     9,301     6,161     5,576     5,920     11,577
        Preferred dividends....................        (656)     (656)     (656)     (656)     (656)     (656)     (656)      (656)
                                                   ---------------------------------------------------------------------------------
        Net income available to common
           stockholders........................    $  5,931     5,476     7,058     8,645     5,505     4,920     5,264     10,921
                                                   =================================================================================
        BASIC PER SHARE DATA (2)
        Net income available to common
           stockholders........................    $    .25       .23       .30       .37       .25       .22       .24        .47
                                                   =================================================================================
        Weighted average shares outstanding....      23,531    23,550    23,562    23,605    21,881    21,932    22,235     23,425
                                                   =================================================================================
        DILUTED PER SHARE DATA (2)
        Net income available to common
           stockholders........................    $    .25       .23       .30       .36       .25       .22       .23        .46
                                                   =================================================================================
        Weighted average shares outstanding....      23,769    23,776    23,778    23,819    22,208    22,237    22,553     23,749
                                                   =================================================================================
</TABLE>

(1) Certain  reclassifications  have been made to the quarterly data  previously
disclosed  due to the disposal of  properties  in 2007 and 2006 whose results of
operations  were  reclassified  to  discontinued  operations in the consolidated
financial statements.

(2) The  above  quarterly  earnings  per  share  calculations  are  based on the
weighted  average  number of common shares  outstanding  during each quarter for
basic earnings per share and the weighted  average number of outstanding  common
shares and common share equivalents during each quarter for diluted earnings per
share. The annual earnings per share calculations in the Consolidated Statements
of Income are based on the weighted average number of common shares  outstanding
during each year for basic earnings per share and the weighted average number of
outstanding  common  shares and common  share  equivalents  during each year for
diluted  earnings per share.  The sum of quarterly  financial data may vary from
the annual data due to rounding.

                                       49

<PAGE>
(16) DEFINED CONTRIBUTION PLAN

     EastGroup  maintains a 401(k)  plan for its  employees.  The Company  makes
matching contributions of 50% of the employee's  contribution (limited to 10% of
compensation  as  defined  by the plan) and may also make  annual  discretionary
contributions.  The Company's total expense for this plan was $429,000, $378,000
and $387,000 for 2007, 2006 and 2005, respectively.

(17) LEGAL MATTERS

     The Company is not presently  involved in any material  litigation  nor, to
its knowledge,  is any material litigation threatened against the Company or its
properties,  other than routine  litigation  arising in the  ordinary  course of
business  or  which  is  expected  to be  covered  by  the  Company's  liability
insurance.

(18) FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following table presents the carrying amounts and estimated fair values
of the Company's  financial  instruments at December 31, 2007 and 2006. SFAS No.
107,  Disclosures  About Fair Value of Financial  Instruments,  defines the fair
value of a financial  instrument as the amount at which the instrument  could be
exchanged in a current transaction between willing parties.
<TABLE>
<CAPTION>
                                            --------------------------------------------------------
                                                         2007                         2006
                                            --------------------------------------------------------
                                               Carrying         Fair        Carrying        Fair
                                                Amount          Value        Amount         Value
                                            --------------------------------------------------------
                                                                  (In thousands)
         <S>                                     <C>           <C>             <C>             <C>
        Financial Assets
           Cash and cash equivalents......  $       724            724           940           940
           Interest rate swap.............            -              -           314           314
        Financial Liabilities
           Interest rate swap.............           56             56             -             -
           Mortgage notes payable.........      465,360        470,335       417,440       421,271
           Notes payable to banks.........      135,444        135,444        29,066        29,066
</TABLE>

Carrying  amounts  shown in the table are included in the  consolidated  balance
sheets under the indicated captions, except as indicated in the notes below.

The following  methods and assumptions  were used to estimate fair value of each
class of financial instruments:

Cash and Cash Equivalents:  The carrying amounts  approximate fair value because
of the short maturity of those instruments.
Interest  Rate Swap:  The fair value of the interest  rate swap is the amount at
which it could be settled,  based on estimates  obtained from the  counterparty.
The interest rate swap is shown on the  consolidated  balance sheets under Other
Liabilities and Other Assets in 2007 and 2006, respectively.
Mortgage Notes Payable:  The fair value of the Company's  mortgage notes payable
is  estimated  based on the  quoted  market  prices  for  similar  issues  or by
discounting  expected cash flows at the rates  currently  offered to the Company
for debt of the same remaining maturities, as advised by the Company's bankers.
Notes Payable to Banks: The carrying  amounts  approximate fair value because of
the  variable  rates of interest on the debt and the  associated  credit  spread
approximates market.

(19) SUBSEQUENT EVENTS

     On January 4, 2008, EastGroup executed a four-year,  $200 million unsecured
revolving  credit facility with a group of seven banks which was arranged by PNC
Capital  Markets LLC.  The interest  rate on this line of credit is based on the
LIBOR index and varies according to total liability to total asset value ratios,
with an annual  facility fee of 15-20 basis  points.  Under this  facility,  the
Company's interest rate is currently LIBOR plus .70% with an annual facility fee
of .20%. This line of credit,  which matures in January 2012, can be expanded by
$100 million and has an option for a one-year  extension.  This credit  facility
replaces the  three-year,  $175 million credit  facility that expired in January
2008.
     Also on January 4, 2008,  the  Company  executed a  four-year,  $25 million
unsecured  revolving  credit  facility with PNC Bank,  N.A. The interest rate on
this line of credit is based on the LIBOR  index and varies  according  to total
liability to total asset value ratios. Under this facility,  EastGroup's current
interest  rate is LIBOR  plus .75%  with no annual  facility  fee.  This  credit
facility  replaces the  one-year,  $20 million  credit  facility that expired in
January 2008.
     The Company is under  contract to purchase a  portfolio  of  properties  in
Charlotte for a total purchase price of $41.9 million. The portfolio consists of
five  buildings  with 669,000  square feet in four  different  locations and 9.9
acres of developable land.
     In December  2007,  EastGroup  executed an  application  for a $78 million,
non-recourse  first  mortgage loan secured by properties  containing 1.6 million
square  feet.  The loan is expected to close in March 2008 and will have a fixed
rate of 5.50%, a seven-year term and an amortization  schedule of 20 years.  The
proceeds of this mortgage will be used to reduce variable rate bank borrowings.

                                       50

<PAGE>

REPORT OF INDEPENDENT  REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL  STATEMENT
SCHEDULES

THE BOARD OF DIRECTORS AND STOCKHOLDERS
EASTGROUP PROPERTIES, INC.:

     Under date of February 27, 2008,  we reported on the  consolidated  balance
sheets of EastGroup  Properties,  Inc. and  subsidiaries as of December 31, 2007
and  2006,  and the  related  consolidated  statements  of  income,  changes  in
stockholders'  equity  and cash  flows for each of the  years in the  three-year
period ended December 31, 2007,  which are included in the 2007 Annual Report on
Form 10-K.  In  connection  with our audits of the  aforementioned  consolidated
financial  statements,  we  also  audited  the  related  consolidated  financial
statement  schedules as listed in Item  15(a)(2) of Form 10-K.  These  financial
statement  schedules are the  responsibility  of the Company's  management.  Our
responsibility is to express an opinion on these financial  statement  schedules
based on our audits.
     In our opinion,  such financial  statement  schedules,  when  considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
present fairly, in all material respects, the information set forth therein.

Jackson, Mississippi                            KPMG LLP
February 27, 2008

                                       51

<PAGE>

                                  SCHEDULE III
               REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
                        DECEMBER 31, 2007 (In thousands)
<TABLE>
<CAPTION>
                                                                         Gross Amount at
                                   Initial Cost                          which Carried at
                                  to the Company                         Close of Period
                               ---------------------                --------------------------
                                                         Costs
                                                      Capitalized                                Accumulated
                                      Buildings and  Subsequent to        Buildings and          Depreciation     Year      Year
Description       Encumbrances  Land  Improvements    Acqusition    Land  Improvements   Total  Dec. 31, 2007   Acquired Constructed
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>         <C>       <C>            <C>        <C>       <C>        <C>         <C>          <C>       <C>
Real Estate
  Properties (c):
Industrial:
FLORIDA
  Jacksonville
   Deerwood       $       -      1,147     1,799        1,417       1,147      3,216     4,363     1,442          1989          1978
   Phillips               -      1,375     2,961        3,426       1,375      6,387     7,762     2,819          1994       1984/95
   Lake Pointe (l)   16,236      3,442     6,450        4,166       3,442     10,616    14,058     5,696          1993       1986/87
   Ellis                  -        540     7,513          362         540      7,875     8,415     2,347          1997          1977
   Westside               -      1,170    12,400        3,932       1,170     16,332    17,502     5,343          1997          1984
   Beach                  -        476     1,899          559         476      2,458     2,934       734          2000          2000
   Interstate Dist.   4,724      1,879     5,700          296       1,879      5,996     7,875     1,176          2005          1990
  Orlando
   Chancellor             -        291     1,711           90         291      1,801     2,092       687       1996/97       1996/97
   Exchange I             -        603     2,414        1,548         603      3,962     4,565     1,882          1994          1975
   Exchange II            -        300       945           42         300        987     1,287       355          2002          1976
   Exchange III           -        320       997           17         320      1,014     1,334       357          2002          1980
   Sunbelt
    Center (j)        7,734      1,474     5,745        4,251       1,474      9,996    11,470     4,556    1989/97/98 1974/87/97/98
   John Young I           -        497     2,444          567         497      3,011     3,508       955       1997/98       1997/98
   John Young II          -        512     3,613           87         512      3,700     4,212     1,371          1998          1999
   Altamonte I            -      1,518     2,661        1,055       1,518      3,716     5,234     1,757          1999       1980/82
   Altamonte II           -        745     2,618          536         745      3,154     3,899       722          2003          1975
   Sunport I              -        555     1,977          590         555      2,567     3,122       813          1999          1999
   Sunport II             -        597     3,271          891         597      4,162     4,759     1,990          1999          2001
   Sunport III            -        642     3,121          442         642      3,563     4,205     1,133          1999          2002
   Sunport IV             -        642     2,917          315         642      3,232     3,874       604          1999          2004
   Sunport V              -        750     2,509        1,854         750      4,363     5,113       797          1999          2005
   Sunport VI             -        672         -        3,306         672      3,306     3,978       231          1999          2006
   Southridge I           -        373         -        4,445         701      4,117     4,818       650          2003          2006
   Southridge II          -        342         -        3,888         621      3,609     4,230       227          2003          2007
   Southridge III         -        547         -        4,898         873      4,572     5,445       132          2003          2007
   Southridge IV          -        506         -        4,326         776      4,056     4,832       289          2003          2006
   Southridge V           -        382         -        4,153         638      3,897     4,535       495          2003          2006
   Southridge VI          -        571         -        4,752         843      4,480     5,323       154          2003          2007
  Tampa
   56th Street            -        843     3,567        2,325         843      5,892     6,735     3,262          1993    1981/86/97
   Jetport                -      1,575     6,591        2,849       1,575      9,440    11,015     4,566       1993-99       1974-85
   Westport               -        980     3,800        1,983         980      5,783     6,763     2,672          1994       1983/87
   Benjamin I & II        -        843     3,963          409         883      4,332     5,215     1,924          1997          1996
   Benjamin III           -        407     1,503          276         407      1,779     2,186     1,040          1999          1988
   Palm River
    Center                -      1,190     4,625        1,201       1,190      5,826     7,016     2,471       1997/98    1990/97/98
   Palm River
    North I & III (k) 5,565      1,005     4,688        1,581       1,005      6,269     7,274     1,865          1998          2000
   Palm River
    North II (k)      5,107        724     4,418          249         634      4,757     5,391     1,508       1997/98          1999
   Palm River South I     -        655     3,187          336         655      3,523     4,178       532          2000          2005
   Palm River South II    -        655         -        4,262         655      4,262     4,917       529          2000          2006
   Walden I               -        337     3,318          302         337      3,620     3,957     1,121       1997/98          2001
   Walden II              -        465     3,738          535         465      4,273     4,738     1,531          1998          1998
   Oak Creek I        1,010      1,110     6,126          212       1,109      6,339     7,448     1,823          1998          1998
   Oak Creek II           -        647     3,603          418         647      4,021     4,668       894          2003          2001
   Oak Creek III          -        665         -        2,925         665      2,925     3,590       172          2005          2007
   Oak Creek IV       4,134        805     6,472          (58)        805      6,414     7,219       750          2005          2001
   Oak Creek V            -      1,114         -        4,763       1,114      4,763     5,877        27          2005          2007
   Airport Commerce       -      1,257     4,012          698       1,257      4,710     5,967     1,429          1998          1998
   Westlake (k)       7,090      1,333     6,998          992       1,333      7,990     9,323     2,996          1998       1998/99
   Expressway II          -      1,013     3,247          175       1,013      3,422     4,435       807          2003          2001
   Expressway I           -        915     5,346          310         915      5,656     6,571     1,106          2002          2004
  Fort Myers
   SunCoast II            -        911         -        4,756         928      4,739     5,667        63          2005          2007

                                       52

<PAGE>
  Fort Lauderdale/
   Pompano Beach area
   Linpro                 -        613     2,243        1,141         616      3,381     3,997     1,681          1996          1986
   Cypress Creek          -          -     2,465        1,248           -      3,713     3,713     1,464          1997          1986
   Lockhart               -          -     3,489        1,851           -      5,340     5,340     1,961          1997          1986
   Interstate Commerce    -        485     2,652          431         485      3,083     3,568     1,254          1998          1988
   Sample 95              -      2,202     8,785        1,795       2,202     10,580    12,782     3,797       1996/98       1990/99
   Blue Heron             -        975     3,626        1,527         975      5,153     6,128     1,559          1999          1986
   Blue Heron II      1,735      1,385     4,222          756       1,385      4,978     6,363       935          2004          1988
   Executive Airport      -      1,991     4,857        4,697       1,991      9,554    11,545     1,455          2001       2004/06
NORTH CAROLINA
  Charlotte
   NorthPark (f)     18,979      2,758    15,932          116       2,758     16,048    18,806     1,606          2006       1987-89
   Westinghouse           -        765     4,303          290         765      4,593     5,358       195          2007          1983
   Lindbergh I & II       -        470     3,401           38         470      3,439     3,909       265          2007       2001/03
   Nations Ford           -      3,924    16,171          127       3,924     16,298    20,222     1,446          2007       1989/94
CALIFORNIA
  San Francisco area
   Wiegman (m)       13,785      2,197     8,788        1,014       2,308      9,691    11,999     3,054          1996       1986/87
   Huntwood (m)      22,891      3,842    15,368          716       3,842     16,084    19,926     5,541          1996          1988
   San Clemente           -        893     2,004           92         893      2,096     2,989       598          1997          1978
   Yosemite               -        259     7,058          709         259      7,767     8,026     2,213          1999       1974/87
  Los Angeles area
   Kingsview (e)      1,570        643     2,573            7         643      2,580     3,223       796          1996          1980
   Dominguez (e)      5,436      2,006     8,025        1,128       2,006      9,153    11,159     3,400          1996          1977
   Main Street (i)    3,817      1,606     4,103          532       1,606      4,635     6,241     1,476          1999          1999
   Walnut (e)         4,123      2,885     5,274          306       2,885      5,580     8,465     1,924          1996       1966/90
   Washington (e)     3,361      1,636     4,900          364       1,636      5,264     6,900     1,663          1997       1996/97
   Ethan Allen (f)   12,932      2,544    10,175           95       2,544     10,270    12,814     3,277          1998          1980
   Industry I (e)    11,477     10,230    12,373          957      10,230     13,330    23,560     4,234          1998          1959
   Industry III           -          -     3,012           10           -      3,022     3,022        38          2007          1992
   Chestnut (i)       3,224      1,674     3,465          132       1,674      3,597     5,271       965          1998          1999
   Los Angeles
    Corporate Center      -      1,363     5,453        1,244       1,363      6,697     8,060     2,415          1996          1986
  Santa Barbara
   University Bus.
    Center           15,166      5,517    22,067        2,571       5,520     24,635    30,155     8,409          1996       1987/88
   Castilian
    (Redevelopment)       -      2,719     1,410        4,790       2,719      6,200     8,919        55          2005          2007
  Fresno
   Shaw (e)           7,820      2,465    11,627        1,962       2,465     13,589    16,054     4,888          1998    1978/81/87
  San Diego
   Eastlake               -      3,046     6,888        1,224       3,046      8,112    11,158     2,648          1997          1989
TEXAS
  Dallas
   Interstate
    I & II (h)        4,845      1,757     4,941        1,748       1,746      6,700     8,446     3,896          1988          1978
   Interstate
    III (h)           1,821        520     2,008          646         519      2,655     3,174       880          2000          1979
   Interstate IV          -        416     2,481           99         416      2,580     2,996       450          2004          2002
   Venture (h)        3,776      1,452     3,762        1,369       1,452      5,131     6,583     2,883          1988          1979
   Stemmons
    Circle (h)        1,537        363     2,014          300         363      2,314     2,677     1,016          1998          1977
   Ambassador Row         -      1,156     4,625        1,587       1,156      6,212     7,368     2,926          1998       1958/65
   North
    Stemmons I (i)    2,566        619     3,264          312         619      3,576     4,195     1,057          2001          1979
   North
    Stemmons II           -        150       583          183         150        766       916       250          2002          1971
   North
    Stemmons III          -        380     2,066            2         380      2,068     2,448        59          2007          1974
   Shady Trail (k)    3,161        635     3,621          118         635      3,739     4,374       676          2003          1998
  Houston
   Northwest
    Point (j)         6,509      1,243     5,640        2,770       1,243      8,410     9,653     3,550          1994       1984/85
   Lockwood (j)       5,180        749     5,444        1,489         749      6,933     7,682     2,136          1997       1968/69
   West Loop (h)      3,869        905     4,383        1,457         905      5,840     6,745     2,230     1997/2000          1980
   World Houston
    1 & 2 (f)         7,514        660     5,893          892         660      6,785     7,445     2,518          1998          1996
   World Houston
    3, 4 & 5 (g)      4,889      1,025     6,413          300       1,025      6,713     7,738     2,616          1998          1998

                                       53

<PAGE>

   World
    Houston 6 (g)     2,214        425     2,423           55         425      2,478     2,903       882          1998          1998
   World Houston
    7 & 8 (g)         5,628        680     4,584        3,231         680      7,815     8,495     2,921          1998          1998
   World
    Houston 9 (g)     4,890        800     4,355        1,460         800      5,815     6,615     1,341          1998          1998
   World
    Houston 10 (j)    3,892        933     4,779           59         933      4,838     5,771     1,151          2001          1999
   World
    Houston 11 (j)    3,473        638     3,764          748         638      4,512     5,150     1,185          1999          1999
   World
    Houston 12 (i)    1,798        340     2,419          181         340      2,600     2,940       705          2000          2002
   World
    Houston 13 (i)    1,855        282     2,569          182         282      2,751     3,033     1,229          2000          2002
   World
    Houston 14 (j)    2,527        722     2,629          397         722      3,026     3,748       900          2000          2003
   World
    Houston 15            -        731         -        5,369         731      5,369     6,100       286          2000          2007
   World
    Houston 16 (n)    4,877        519     4,248          159         519      4,407     4,926       724          2000          2005
   World
    Houston 17 (k)    2,762        373     1,945          758         373      2,703     3,076       351          2000          2004
   World
    Houston 18            -        323     1,512           27         323      1,539     1,862       191          2005          1995
   World
    Houston 19 (l)    3,903        373     2,256          750         373      3,006     3,379       803          2000          2004
   World
    Houston 20 (l)    4,726        346     1,948        1,798       1,008      3,084     4,092       594          2000          2004
   World
    Houston 21 (f)    3,928        436         -        3,456         436      3,456     3,892       142       2000/03          2006
   World
    Houston 22            -        436         -        4,206         436      4,206     4,642        92          2000          2007
   World
    Houston 23 (f)    7,994        910         -        7,011         910      7,011     7,921       184          2000          2007
   America Plaza (g)  3,506        662     4,660          450         662      5,110     5,772     1,762          1998          1996
   Central Green (g)  3,137        566     4,031           97         566      4,128     4,694     1,411          1999          1998
   Glenmont (h)       4,775        936     6,161        1,226         937      7,386     8,323     2,511          1998     1999/2000
   Techway I (j)      3,875        729     3,765        1,252         729      5,017     5,746     1,111          2000          2001
   Techway II (l)     5,252        550     3,689          308         550      3,997     4,547       885          2000          2004
   Techway III            -        597         -        5,178         751      5,024     5,775       258          1999          2006
   Beltway I (j)      4,817        458     5,712          973         458      6,685     7,143     1,716          2002          2001
   Beltway II             -        415         -        2,745         415      2,745     3,160        62          2005          2007
   Kirby (k)          3,102        530     3,153          240         530      3,393     3,923       453          2004          1980
   Clay Campbell          -        742     2,998          234         742      3,232     3,974       666          2005          1982
  El Paso
   Butterfield
    Trail (h)        15,286          -    22,144        4,505           -     26,649    26,649    10,911     1997/2000       1987/95
   Rojas (h)          3,706        900     3,659        1,901         900      5,560     6,460     2,945          1999          1986
   Americas
    Ten I (k)         3,050        526     2,778          982         526      3,760     4,286     1,075          2001          2003
  San Antonio
   Alamo Downs (n)    8,115      1,342     6,338          517       1,342      6,855     8,197     1,607          2004     1986/2002
   Arion (n)         35,871      4,593    31,432          208       4,143     32,090    36,233     6,622          2005  1988-2000/06
   Arion 14 (n)       3,652        423         -        3,266         423      3,266     3,689       195          2005          2006
   Arion 16 (f)       3,935        427         -        3,472         427      3,472     3,899        87          2005          2007
   Arion 17 (n)       3,771        616         -        3,193         616      3,193     3,809        86          2005          2007
   Wetmore                -      1,494    10,804        1,107       1,494     11,911    13,405     1,862          2005       1998/99
   Fairgrounds            -      1,644     8,209           69       1,644      8,278     9,922       389          2007       1985/86
   Alamo Ridge land       -        591         -            2         593          -       593         -          2007           n/a
ARIZONA
  Phoenix area
   Broadway I (i)     2,867        837     3,349          501         837      3,850     4,687     1,549          1996          1971
   Broadway II            -        455       482          125         455        607     1,062       282          1999          1971
   Broadway III (i)   1,586        775     1,742           76         775      1,818     2,593       686          2000          1983
   Broadway IV (i)    1,373        380     1,652          212         380      1,864     2,244       676          2000          1986
   Broadway V (j)     1,003        353     1,090           44         353      1,134     1,487       367          2002          1980
   Broadway VI (f)    2,617        599     1,855          139         599      1,994     2,593       680          2002          1979
   Kyrene               669        850     2,044          349         850      2,393     3,243       985          1999          1981
   Kyrene II              -        640     2,409          550         640      2,959     3,599     1,013          1999          2001
   Metro                  -      1,927     7,708        4,002       1,927     11,710    13,637     3,738          1996       1977/79
   35th Avenue (j)    2,018        418     2,381          194         418      2,575     2,993       761          1997          1967
   Estrella               -        628     4,694          302         628      4,996     5,624     1,433          1998          1988
   51st Avenue (i)    1,703        300     2,029          455         300      2,484     2,784       824          1998          1987
   East University
    I and II (f)      5,941      1,120     4,482          285       1,120      4,767     5,887     1,680          1998       1987/89
   55th Avenue (f)    5,071        912     3,717          396         917      4,108     5,025     1,469          1998          1987
   Interstate
    Commons I             -        798     3,632          434         798      4,066     4,864     1,404          1999          1988

                                       54

<PAGE>
   Interstate
    Commons II            -        320     2,448          256         320      2,704     3,024       739          1999          2000
   Southpark (i)      2,585        918     2,738          570         918      3,308     4,226       868          2001          2000
   Airport Commons        -      1,000     1,510          178       1,000      1,688     2,688       468          2003          1971
   Santan 10 I (n)    3,695        846     2,647          239         846      2,886     3,732       623          2001          2005
   Santan 10 II (f)   5,574      1,088         -        4,435       1,088      4,435     5,523       228          2004          2007
  Tucson
   Country Club I (l) 6,488        506     3,564        1,547         506      5,111     5,617     1,188     1997/2003     1994/2003
   Airport Dist. (i)  4,328      1,103     4,672        1,301       1,103      5,973     7,076     1,693          1998          1995
   Southpointe (i)    4,224          -     3,982        2,924           -      6,906     6,906     1,983          1999          1989
   Benan                  -        707     1,842          394         707      2,236     2,943       455          2005          2001
   Country Club II        -        415     3,381            3         415      3,384     3,799        82          2007          2000
TENNESSEE
  Memphis
   Air Park I             -        250     1,916          239         250      2,155     2,405       727          1998          1975
   Delp III               -        130       538           68         130        606       736       246          1998          1977
LOUISIANA
  New Orleans
   Elmwood                -      2,861     6,337        2,338       2,861      8,675    11,536     4,443          1997          1979
   Riverbend              -      2,592    17,623        1,799       2,592     19,422    22,014     7,346          1997          1984
COLORADO
  Denver
   Rampart I(n)       5,495      1,023     3,861          666       1,023      4,527     5,550     2,391          1988          1987
   Rampart II(n)      4,052        230     2,977          886         230      3,863     4,093     1,913       1996/97       1996/97
   Rampart III (n)    6,203      1,098     3,884        1,283       1,098      5,167     6,265     1,723       1997/98          1999
   Concord                -      1,083     4,728            -       1,083      4,728     5,811        12          2007          2000
OKLAHOMA
  Oklahoma City
   Northpointe            -        777     3,113          654         998      3,546     4,544       917          1998       1996/97
  Tulsa
   Braniff Park West      -      1,066     4,641        1,969       1,066      6,610     7,676     2,770          1996          1974
MISSISSIPPI
   Interchange (i)    4,258        343     5,007        1,611         343      6,618     6,961     2,636          1997          1981
   Tower              9,710          -     9,958        1,172           -     11,130    11,130     1,941          2001          2002
   Metro Airport I        -        303     1,479          857         303      2,336     2,639       553          2001          2003
                   --------------------------------------------------------------------------------------
                    465,360    173,099   713,790      228,077     175,496    939,470 1,114,966   268,944
                   --------------------------------------------------------------------------------------
Industrial
 Development (d):
FLORIDA
 Oak Creek A & B          -        512         -        2,429         512      2,429     2,941         -          2005           n/a
 Oak Creek land           -      2,490         -        5,992       3,438      5,044     8,482         -          2005           n/a
 SouthRidge land          -      4,471         -       24,517       6,951     22,037    28,988        11       2003/05           n/a
 Blue Heron III           -        450         -          361         450        361       811         -          2004           n/a
 SunCoast I               -        911         -        4,165         928      4,148     5,076        35          2005           n/a
 SunCoast land            -     12,626         -        4,367      12,866      4,127    16,993         -          2006           n/a
CALIFORNIA
TEXAS
 Techway IV               -        535         -        1,433         674      1,294     1,968         -          1999           n/a
 World Houston 24         -        838         -        4,327         838      4,327     5,165         -          2005           n/a
 World Houston 25         -        508         -        2,686         508      2,686     3,194         -          2005           n/a
 World Houston 27         -        838         -        1,645         838      1,645     2,483         -          2005           n/a
 World Houston land       -      3,401         -        1,082       3,401      1,082     4,483         - 2000/03/05/06           n/a
 Beltway III & IV         -        920         -        5,292         920      5,292     6,212       129          2005           n/a
 Beltway V                -        701         -        3,045         701      3,045     3,746         -          2005           n/a
 Beltway VI               -        618         -        2,905         618      2,905     3,523         -          2005           n/a
 Beltway land             -      1,486         -          339       1,486        339     1,825         -          2005           n/a
 Beltway
  Phase II land           -      1,841         -          138       1,841        138     1,979         -          2007           n/a
 Lee Road land            -      5,975         -          288       5,975        288     6,263         -          2007           n/a
 Americas Ten II & III    -      1,365         -        1,079       1,365      1,079     2,444         -          2001           n/a
 Arion 18                 -        418         -        1,537         418      1,537     1,955         -          2005           n/a
 Wetmore Phase II,
  Building A              -        412         -        2,389         412      2,389     2,801         7          2006           n/a
 Wetmore Phase II,
  Buildings B & C         -      1,051         -        5,329       1,051      5,329     6,380         -          2006           n/a
 Wetmore Phase II,
  Building D              -      1,056         -        1,929       1,056      1,929     2,985         -          2006           n/a
 Alamo Ridge land         -      2,449         -          117       2,449        117     2,566         -          2007           n/a
COLORADO
 Centennial Park
  (Redevelopment)         -        750     3,319          678         750      3,997     4,747         -          2007           n/a
ARIZONA
 40th Street              -        703         -        4,444         703      4,444     5,147         -          2004           n/a
 Interstate
  Commons III             -        242         -        2,806         242      2,806     3,048         6          2000           n/a
 Sky Harbor land          -      5,840         -        8,168       5,840      8,168    14,008         -          2006           n/a
 Airport Dist. II         -        300         -           67         300         67       367         -          2000           n/a
 Country Club land        -      1,434         -          244       1,434        244     1,678         -          2007           n/a
MISSISSIPPI
 Metro Airport II         -        307         -          398         307        398       705         -          2001           n/a
                   --------------------------------------------------------------------------------------
                          -     55,448     3,319       94,196      59,272     93,691   152,963       188
                   --------------------------------------------------------------------------------------
Total real estate
  owned (a)(b)     $465,360    228,547   717,109      322,273     234,768  1,033,161 1,267,929   269,132
                   ======================================================================================
</TABLE>
                                       55

<PAGE>
(a) Changes in Real Estate Properties follow:
<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                             --------------------------------------
                                                                2007          2006          2005
                                                             --------------------------------------
                                                                         (In thousands)
          <S>                                                     <C>          <C>           <C>
     Balance at beginning of year..........................  $ 1,088,896     1,021,841     887,506
     Purchase of real estate properties....................       54,543        18,690      71,103
     Development of real estate properties.................      112,960        77,666      58,192
     Improvements to real estate properties................       15,881        13,470      11,262
     Carrying amount of investments sold...................       (3,791)      (42,485)     (6,034)
     Write-off of improvements.............................         (560)         (213)       (188)
     Other.................................................            -           (73)          -
                                                             --------------------------------------
     Balance at end of year (1) ...........................  $ 1,267,929     1,088,896   1,021,841
                                                             ======================================
</TABLE>

     (1)  Includes  20%  minority  interests  in  Castilian  Research  Center of
     $1,784,000  at December  31, 2007 and  $981,000 at December 31, 2006 and in
     University Business Center of $6,031,000 and $5,926,000, respectively.

Changes in the accumulated depreciation on real estate properties follow:
<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                             --------------------------------------
                                                                2007          2006          2005
                                                             --------------------------------------
                                                                         (In thousands)
           <S>                                                   <C>           <C>           <C>
     Balance at beginning of year..........................  $   231,106       206,427     175,062
     Depreciation expense..................................       39,688        35,428      32,693
     Accumulated depreciation on assets sold...............       (1,102)      (10,630)     (1,234)
     Other.................................................         (560)         (119)        (94)
                                                             --------------------------------------
     Balance at end of year ...............................  $   269,132       231,106     206,427
                                                             ======================================
</TABLE>

(b) The estimated  aggregate cost of real estate properties at December 31, 2007
for  federal  income  tax  purposes  was  approximately   $1,210,155,000  before
estimated  accumulated tax depreciation of $173,555,000.  The federal income tax
return for the year ended December 31, 2007 has not been filed and, accordingly,
this estimate is based on preliminary data.

(c) The Company computes  depreciation  using the straight-line  method over the
estimated  useful lives of the buildings  (generally 40 years) and  improvements
(generally 3 to 15 years).

(d) The Company transfers  development  properties to real estate properties the
earlier of 80% occupancy or one year after completion of the shell construction.

(e)  EastGroup  has  a  $33,787,000   non-recourse   first  mortgage  loan  with
Metropolitan Life secured by Dominguez,  Kingsview, Walnut, Washington, Industry
Distribution Center I and Shaw.

(f) EastGroup has a $74,485,000 non-recourse first mortgage loan with Prudential
Life  secured by Broadway  VI,  World  Houston 1 & 2, 21 & 23,  Arion 16,  Ethan
Allen,  Northpark I-IV, South 55th Avenue,  East University I & II and Santan 10
II.

(g) EastGroup has a $24,264,000  non-recourse  first mortgage loan with New York
Life secured by America Plaza, Central Green and World Houston 3-9.

(h)  EastGroup  has  a  $39,615,000   non-recourse  first   mortgage  loan  with
Metropolitan Life secured by Interstate I, II & III,  Venture,  Stemmons Circle,
Glenmont I & II, West Loop I & II, Butterfield Trail and Rojas.

(i)  EastGroup  has  a  $36,184,000   non-recourse  first   mortgage  loan  with
Metropolitan Life secured by Airport Distribution,  Southpointe, Broadway I, III
& IV, Southpark, 51st Avenue, Chestnut, Main Street,  Interchange Business Park,
North Stemmons I and World Houston 12 & 13.

(j) EastGroup has a $41,028,000 non-recourse first mortgage loan with Prudential
Life secured by Broadway V, 35th Avenue, Sunbelt, Freeport (aka Beltway Crossing
I), Lockwood,  Northwest Point,  Techway  Southwest I and World Houston 10, 11 &
14.

(k) EastGroup has a $29,837,000  non-recourse first  mortgage loan with New York
Life secured by World Houston 17, Kirby, Americas Ten I, Shady Trail, Palm River
North I, II & III and Westlake I & II.

(l) EastGroup has a $36,605,000 non-recourse first mortgage loan with Prudential
Life secured by Country Club Commerce Center I, Lake Pointe,  Techway  Southwest
II and World Houston 19 & 20.

(m) EastGroup has a $36,676,000 non-recourse first mortgage loan with Prudential
Life secured by Huntwood and Wiegman.

(n) EastGroup has a $75,731,000 non-recourse first mortgage loan with Prudential
Life secured by Alamo Downs, Arion 1-15 & 17, Rampart I, II & III, Santan 10 and
World Houston 16.

                                       56

<PAGE>

                                   SCHEDULE IV
                          MORTGAGE LOANS ON REAL ESTATE
                                DECEMBER 31, 2007
<TABLE>
<CAPTION>
                                            Number of       Interest       Maturity               Periodic
                                              Loans           Rate           Date              Payment Terms
                                           ----------------------------------------------------------------------
<S>                                            <C>            <C>           <C>                     <C>
Second mortgage loan:
   Madisonville land, Kentucky                  1             7.00%         01/12          Principal and interest
                                                                                                   monthly
                                           -----------
Total mortgage loans (c)                        1
                                           ===========
</TABLE>
<TABLE>
<CAPTION>
                                                                                              Principal
                                            Face Amount          Carrying                  Amount of Loans
                                            of Mortgages         Amount of              Subject to Delinquent
                                           Dec. 31, 2007         Mortgages             Principal or Interest (d)
                                           ----------------------------------------------------------------------
                                                                       (In thousands)
<S>                                              <C>              <C>                            <C>
Second mortgage loan:
   Madisonville land, Kentucky             $        132            132                            -
                                           ----------------------------------------------------------------------
Total mortgage loans                       $        132            132  (a)(b)                    -
                                           ======================================================================
</TABLE>

(a)  Changes in mortgage loans follow:
<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                              --------------------------------------
                                                                 2007          2006          2005
                                                              --------------------------------------
                                                                          (In thousands)
<S>                                                              <C>            <C>           <C>
Balance at beginning of year................................  $      162           -          7,550
Advances on mortgage notes receivable.......................           -         185              -
Payments on mortgage notes receivable.......................         (30)        (23)        (7,550)
                                                              --------------------------------------
Balance at end of year......................................  $      132         162              -
                                                              ======================================
</TABLE>

(b) The aggregate cost for federal income tax purposes is zero.

(c)  Reference  is  made  to  allowance  for  possible  losses  on  real  estate
investments in the notes to consolidated financial statements.

(d)  Interest in arrears for three  months or less is  disregarded  in computing
principal amount of loans subject to delinquent interest.

                                       57

<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

               EASTGROUP PROPERTIES, INC.

               By: /s/ DAVID H. HOSTER II
                   -------------------------------------------------------------
               David H. Hoster II, Chief Executive Officer, President & Director
               February 28, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

*                                          *
---------------------------------------    -------------------------------------
D. Pike Aloian, Director                   H. C. Bailey, Jr., Director
February 26, 2008                          February 26, 2008

*                                          *
---------------------------------------    -------------------------------------
Hayden C. Eaves III, Director              Fredric H. Gould, Director
February 26, 2008                          February 26, 2008

*                                          *
---------------------------------------    -------------------------------------
Mary Elizabeth McCormick, Director         David M. Osnos, Director
February 26, 2008                          February 26, 2008

*                                          /s/ N. KEITH MCKEY
---------------------------------------    -------------------------------------
Leland R. Speed, Chairman of the Board     * By N. Keith McKey, Attorney-in-fact
(Principal Executive Officer)              February 28, 2008
February 26, 2008

/s/BRUCE CORKERN
--------------------------------------------------------------------------
Bruce Corkern, Sr. Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)
February 28, 2008

/s/N. KEITH MCKEY
---------------------------------------------------------
N. Keith McKey, Executive Vice-President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial Officer)
February 28, 2008

                                       58

<PAGE>
EXHIBIT INDEX

The  following  exhibits are included in this Form 10-K or are  incorporated  by
reference as noted in the following table:

(3) Exhibits required by Item 601 of Regulation S-K:

     (3)  Articles of Incorporation and Bylaws

          (a)  Articles of Incorporation  (incorporated by reference to Appendix
               B to the  Company's  Proxy  Statement  for its Annual  Meeting of
               Stockholders held on June 5, 1997).
          (b)  Bylaws of the Company  (incorporated  by reference to Exhibit 3.1
               to the Company's Form 8-K filed December 13, 2007).
          (c)  Articles  Supplementary  of the Company  relating to the Series C
               Preferred  Stock  (incorporated  by  reference  to  Exhibit  A to
               Exhibit 4 to the Company's Form 8-A filed December 9, 1998).
          (d)  Articles  Supplementary  of the  Company  relating  to the  7.95%
               Series D Cumulative  Redeemable  Preferred Stock (incorporated by
               reference  to Exhibit 3 to the  Company's  Form 8-A filed June 6,
               2003).

     (4)  Instruments Defining the Rights of Security Holders

          (a)  Rights Agreement dated as of December 3, 1998 between the Company
               and Harris Trust and Savings Bank, as Rights Agent  (incorporated
               by  reference  to  Exhibit  4 to the  Company's  Form  8-A  filed
               December 9, 1998).
          (b)  First  Amendment  to Rights  Agreement  dated  December  20, 2004
               between the Company and  Equiserve  Trust  Company,  N.A.,  which
               replaced   Harris  Trust  and  Savings   Bank,  as  Rights  Agent
               (incorporated  by reference to Exhibit 99.1 to the Company's Form
               8-K filed December 22, 2004).
          (c)  Second  Amendment to Rights  Agreement  dated as of July 23, 2007
               between the Company and Wells Fargo Bank,  National  Association,
               as Rights Agent (incorporated by reference to Exchibit 4.1 to the
               Company's Form 8-K filed July 23, 2007).

     (10) Material Contracts (*Indicates management or compensatory agreement):

          (a)  EastGroup  Properties,  Inc. 1991 Directors Stock Option Plan, as
               Amended  (incorporated by reference to Exhibit B to the Company's
               Proxy  Statement for its Annual Meeting of  Stockholders  held on
               December 8, 1994).*
          (b)  EastGroup  Properties,  Inc. 1994  Management  Incentive Plan, as
               Amended and Restated  (incorporated by reference to Appendix A to
               the  Company's   Proxy   Statement  for  its  Annual  Meeting  of
               Stockholders held on June 2, 1999).*
          (c)  Amendment  No. 1 to the  Amended  and  Restated  1994  Management
               Incentive Plan (incorporated by reference to Exhibit 10(c) to the
               Company's Form 8-K filed January 8, 2007).*
          (d)  EastGroup  Properties,  Inc.  2000  Directors  Stock  Option Plan
               (incorporated  by reference to Appendix A to the Company's  Proxy
               Statement for its Annual Meeting of Stockholders  held on June 1,
               2000).*
          (e)  EastGroup   Properties,   Inc.   2004   Equity   Incentive   Plan
               (incorporated  by reference to Appendix D to the Company's  Proxy
               Statement for its Annual Meeting of Stockholders  held on May 27,
               2004).*
          (f)  Amendment No. 1 to the 2004 Equity  Incentive Plan  (incorporated
               by reference to Exhibit 10(f) to the Company's  Form 10-K for the
               year ended December 31, 2006). *
          (g)  Amendment No. 2 to the 2004 Equity  Incentive Plan  (incorporated
               by reference  to Exhibit  10(d) to the  Company's  Form 8-K filed
               January 8, 2007).*
          (h)  EastGroup  Properties,  Inc. 2005 Directors Equity Incentive Plan
               (incorporated  by reference to Appendix B to the Company's  Proxy
               Statement for its Annual Meeting of Stockholders  held on June 2,
               2005).*
          (i)  Amendment  No.  1 to the 2005  Directors  Equity  Incentive  Plan
               (incorporated  by reference to Exhibit 10.1 to the Company's Form
               8-K filed June 6, 2006).*
          (j)  Form of  Severance  and  Change  in  Control  Agreement  that the
               Company has entered into with Leland R. Speed, David H. Hoster II
               and N. Keith McKey (incorporated by reference to Exhibit 10(a) to
               the Company's Form 8-K filed January 8, 2007).*
          (k)  Form of  Severance  and  Change  in  Control  Agreement  that the
               Company has entered into with John F. Coleman, William D. Petsas,
               Brent W. Wood and C. Bruce Corkern  (incorporated by reference to
               Exhibit 10(b) to the Company's Form 8-K filed January 8, 2007).*
          (l)  Compensation  Program  for  Non-Employee   Directors  (a  written
               description  thereof  is set forth in Item 1.01 of the  Company's
               Form 8-K filed June 6, 2006).*
          (m)  Annual Cash Bonus and 2007 Annual Long-Term Incentive Performance
               Goals (a written description thereof is set forth in Item 5.02 of
               the Company's Form 8-K filed June 5, 2007).*
          (n)  Multi-Year  Long-Term  Incentive  Performance  Goals  (a  written
               description  thereof  is set forth in Item 1.01 of the  Company's
               Form 8-K filed June 6, 2006).*

                                       59

<PAGE>

          (o)  Second  Amended and Restated  Credit  Agreement  Dated January 4,
               2008 among  EastGroup  Properties,  L.P.;  EastGroup  Properties,
               Inc.; PNC Bank, National  Association,  as Administrative  Agent;
               Regions Bank and SunTrust Bank as  Co-Syndication  Agents;  Wells
               Fargo Bank, National  Association as Documentation Agent; and PNC
               Capital  Markets LLC, as Sole Lead Arranger and Sole  Bookrunner;
               and the Lenders there under (incorporated by reference to Exhibit
               10.1 to the Company's Form 8-K filed January 10, 2008).

     (21) Subsidiaries of EastGroup Properties, Inc. (filed herewith).

     (23) Consent of KPMG LLP (filed herewith).

     (24) Powers of attorney (filed herewith).

     (31) Rule  13a-14(a)/15d-14(a)  Certifications  (pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002)

          (a)  David H. Hoster II, Chief Executive Officer
          (b)  N. Keith McKey, Chief Financial Officer

     (32) Section   1350   Certifications   (pursuant  to  Section  906  of  the
          Sarbanes-Oxley Act of 2002)

          (a)  David H. Hoster II, Chief Executive Officer
          (b)  N. Keith McKey, Chief Financial Officer

                                       60