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, 2008       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.)

190 EAST CAPITOL STREET
SUITE 400
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,
                             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. (x)

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 Company ( )

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
June 30, 2008, the last business day of the Registrant's most recently completed
second fiscal quarter: $1,038,074,000.

The  number of shares of common  stock,  $.0001  par  value,  outstanding  as of
February 25, 2009 was 25,066,494.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Proxy  Statement  for the 2009 Annual  Meeting of
Shareholders are incorporated by reference into Part III.

<PAGE>

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.,  190 East Capitol  Street,  Suite 400,
Jackson, MS 39201-2152.

Administration
     EastGroup  maintains its principal  executive  office and  headquarters  in
Jackson,  Mississippi. The Company also has regional offices in Phoenix, Orlando
and Houston and an asset management office in Charlotte.  EastGroup has property
management  offices in  Jacksonville,  Tampa,  Fort  Lauderdale and San Antonio.
Offices  at these  locations  allow the  Company to  directly  manage all of its
Florida (except Fort Myers), Arizona,  Mississippi, and Houston and San Antonio,
Texas  properties,  which  together  account  for  63%  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 25, 2009, EastGroup had
69 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 2008,  EastGroup  increased its ownership in real estate  properties
through its  development and acquisition  programs.  The Company  purchased five
operating  properties  (669,000  square feet),  one property for  re-development
(150,000  square feet) and 125 acres of developable  land for a combined cost of
$58.2 million.  Also during 2008, EastGroup transferred 16 properties (1,391,000
square feet) with aggregate  costs of $84.3 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  securities  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.

                                       2

<PAGE>

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 adversely affected 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 some  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  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  previous  real
estate  owners and operators may be required  under various  federal,  state and
local laws,  ordinances and  regulations  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. Such laws often impose
liability  without  regard  to  whether  the owner or  operator  knew of, or was

                                       4

<PAGE>

responsible  for,  the  release or  presence of such  hazardous  substances.  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  contamination.  Contamination  may  adversely  affect  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,  may 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  flexibility  and
adversely  affect  our  financial  condition.  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  operations,  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, 2008, we had  approximately  $110 million
of variable  interest rate debt. As of December 31, 2008,  the weighted  average
interest  rate on our  variable  rate debt was  1.23%.  We may incur  additional
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.

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<PAGE>

     The recent market  disruptions may adversely  affect our operating  results
and financial  condition.  The continuation or intensification of the turmoil in
the global  financial  markets may have an adverse impact on the availability of
credit to businesses generally and could lead to a further weakening of the U.S.
and global  economies.  Currently these conditions have not impaired our ability
to access credit  markets and finance our  operations.  However,  our ability to
access the capital  markets may be  restricted  at a time when we would like, or
need, to raise financing, which could have an impact on our flexibility to react
to  changing  economic  and  business  conditions.  Furthermore,   deteriorating
economic conditions including business layoffs,  downsizing,  industry slowdowns
and other similar  factors that affect our  customers  could  negatively  impact
commercial real estate fundamentals and result in lower occupancy,  lower rental
rates and declining  values in our real estate  portfolio and in the  collateral
securing any loan investments we may make. Additionally,  the economic situation
could have an impact on our lenders or  customers,  causing them to fail to meet
their  obligations  to us. No  assurances  can be given that the  effects of the
current  crisis  will  not  have a  material  adverse  effect  on our  business,
financial condition and results of operations.

     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 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  prohibits 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 (of which there is none outstanding)) unless our Board of Directors grants
a waiver.  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 the  proposal of
business to be considered at a meeting of stockholders.

     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 222  industrial  properties  and one  office  building  at
December 31, 2008. These properties are located  primarily in the Sunbelt states
of Florida, Texas, Arizona and California, and the majority are clustered around
major transportation features in supply constrained  submarkets.  As of February
25, 2009,  EastGroup's  portfolio is currently  93.5% leased and 92.7% occupied.
The Company has developed  approximately  33% 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 (77% of the total portfolio) with the remainder in bulk distribution space
(18%) 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, 2008,  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 Year 2008                                Calendar Year 2007
        --------------------------------------------------------------------------------------------------
          Quarter        High        Low        Distributions        High        Low        Distributions
        --------------------------------------------------------------------------------------------------
        <S>              <C>         <C>            <C>             <C>           <C>           <C>
        First          $ 48.07       39.09         $   .52         $ 57.55       50.27         $   .50
        Second           51.07       42.12             .52           52.00       43.24             .50
        Third            50.00       40.52             .52           46.28       38.49             .50
        Fourth           48.53       22.30             .52           48.86       40.44             .50
                                                -------------                               --------------
                                                   $  2.08                                     $  2.00
                                                =============                               ==============
</TABLE>

     As of February 25, 2009,  there were 785 holders of record of the Company's
25,066,494  outstanding  shares of common stock. The Company  distributed all of
its 2008 and 2007 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 2008 and
2007.

Federal Income Tax Treatment of Share Distributions
<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
                                                                                ---------------------------
                                                                                  2008               2007
                                                                                ---------------------------
            <S>                                                                   <C>                <C>
        Common Share Distributions:
            Ordinary Income.........................................            $ 2.0758           1.7449
            Return of capital.......................................                   -            .1273
            Unrecaptured Section 1250 long-term capital gain........               .0042            .0236
            Other long-term capital gain............................                   -            .1042
                                                                                ---------------------------
        Total Common Distributions..................................            $ 2.0800           2.0000
                                                                                ===========================
</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 Shares           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>
     10/01/08 thru 10/31/08           -                  -                     -                               672,300
     11/01/08 thru 11/30/08           -                  -                     -                               672,300
     12/01/08 thru 12/31/08       2,631 (1)        $ 35.58                     -                               672,300 (2)
                              ----------------------------------------------------------------
     Total                        2,631            $ 35.58                     -
                              ================================================================
</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, 2008,
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,
                                  ---------------------------------------------------------------------
                                     2003        2004        2005        2006        2007        2008
                                  ---------------------------------------------------------------------
             <S>                     <C>        <C>         <C>          <C>         <C>        <C>
           EastGroup              $ 100.00      124.96      154.19      190.26      155.37      138.62
           NAREIT Equity            100.00      131.58      147.59      199.33      168.05      104.65
           S&P 500                  100.00      110.87      116.32      134.69      142.09       89.52
</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, 2003, 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,
                                                                    ----------------------------------------------------------------
                                                                       2008          2007          2006          2005         2004
                                                                    ----------------------------------------------------------------
                                                                                 (In thousands, except per share data)
<S>                                                                     <C>          <C>           <C>            <C>         <C>
OPERATING DATA
Revenues
  Income from real estate operations..........................      $   168,327      150,083       132,417      119,831     108,559
  Other income................................................              248           92           182          413         356
                                                                    ----------------------------------------------------------------
                                                                        168,575      150,175       132,599      120,244     108,915
                                                                    ----------------------------------------------------------------
Expenses
  Expenses from real estate operations........................           47,374       40,926        37,014       34,154      30,462
  Depreciation and amortization...............................           51,221       47,738        41,198       37,462      31,078
  General and administrative..................................            8,547        8,295         7,401        6,874       6,711
                                                                    ----------------------------------------------------------------
                                                                        107,142       96,959        85,613       78,490      68,251
                                                                    ----------------------------------------------------------------

Operating income..............................................           61,433       53,216        46,986       41,754      40,664

Other income (expense)
  Equity in earnings of unconsolidated investment.............              316          285           287          450          69
  Gain on sales of non-operating real estate..................              321        2,602           123            -           -
  Gain on sales of securities.................................              435            -             -            -           -
  Interest income.............................................              293          306           142          247         121
  Interest expense............................................          (30,192)     (27,314)      (24,616)     (23,444)    (20,349)
  Minority interest in joint ventures.........................             (626)        (609)         (600)        (484)       (490)
                                                                    ----------------------------------------------------------------
Income from continuing operations.............................           31,980       28,486        22,322       18,523      20,015

Discontinued operations
  Income from real estate operations..........................              130          288         1,185        2,504       1,862
  Gain on sales of real estate investments....................            2,032          960         5,727        1,164       1,450
                                                                    ----------------------------------------------------------------
Income from discontinued operations...........................            2,162        1,248         6,912        3,668       3,312
                                                                    ----------------------------------------------------------------

Net income ...................................................           34,142       29,734        29,234       22,191      23,327
  Preferred dividends-Series D................................            1,326        2,624         2,624        2,624       2,624
  Costs on redemption of Series D preferred shares............              682            -             -            -           -
                                                                    ----------------------------------------------------------------
Net income available to common stockholders...................      $    32,134       27,110        26,610       19,567      20,703
                                                                    ================================================================

BASIC PER COMMON SHARE DATA
  Income from continuing operations...........................      $      1.22         1.10           .88          .74         .84
  Income from discontinued operations.........................              .09          .05           .31          .17         .16
                                                                    ----------------------------------------------------------------
  Net income available to common stockholders.................      $      1.31         1.15          1.19          .91        1.00
                                                                    ================================================================

  Weighted average shares outstanding.........................           24,503       23,562        22,372       21,567      20,771
                                                                    ================================================================

DILUTED PER COMMON SHARE DATA
  Income from continuing operations...........................      $      1.21         1.09           .87          .72         .82
  Income from discontinued operations.........................              .09          .05           .30          .17         .16
                                                                    ----------------------------------------------------------------
  Net income available to common stockholders.................      $      1.30         1.14          1.17          .89         .98
                                                                    ================================================================

  Weighted average shares outstanding.........................           24,653       23,781        22,692       21,892      21,088
                                                                    ================================================================

OTHER PER SHARE DATA
  Book value (at end of year).................................      $     16.39        15.51         16.28        15.06       15.14
  Common distributions declared...............................             2.08         2.00          1.96         1.94        1.92
  Common distributions paid...................................             2.08         2.00          1.96         1.94        1.92

BALANCE SHEET DATA (AT END OF YEAR)
  Real estate investments, at cost ...........................      $ 1,409,476    1,270,691     1,091,653    1,024,459     904,312
  Real estate investments, net of accumulated depreciation....        1,099,125    1,001,559       860,547      818,032     729,250
  Total assets................................................        1,156,205    1,055,833       911,787      863,538     768,664
  Mortgage and bank loans payable.............................          695,692      600,804       446,506      463,725     390,105
  Total liabilities...........................................          742,829      651,136       490,842      496,972     414,974
  Minority interest in joint ventures.........................            2,536        2,312         2,148        1,702       1,884
  Total stockholders' equity..................................          410,840      402,385       418,797      364,864     351,806
</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  expects the slowdown in the economy to affect its  operations.
The Company is  projecting a decrease in  occupancy,  and there are no plans for
development  starts.  The current economic  situation is also impacting lenders,
and it is more  difficult to obtain  financing.  The Company  believes  that its
lines of credit provide the capacity to fund debt  maturities and the operations
of the Company for 2009 and 2010.
     The  Company's  primary  revenue  is rental  income;  as such,  EastGroup's
greatest  challenge is leasing space.  During 2008,  leases on 4,223,000  square
feet (16.5%) of EastGroup's total square footage of 25,612,000 expired,  and the
Company was successful in renewing or re-leasing 83% of that total. In addition,
EastGroup  leased  1,354,000  square feet of other vacant space during the year.
During 2008, average rental rates on new and renewal leases increased by 11.1%.
     EastGroup's total leased percentage was 94.8% at December 31, 2008 compared
to 96.0% at December 31, 2007.  Leases scheduled to expire in 2009 were 14.6% of
the  portfolio on a square foot basis at December 31, 2008,  and this figure was
reduced to 12.2% as of February 25, 2009.  Property net operating  income (PNOI)
from same  properties  increased  0.3% for 2008 as compared  to 2007.  Excluding
termination fees of $798,000 and $1,149,000 in 2008 and 2007, respectively, PNOI
from same properties  increased  0.6%.  Excluding  termination  fees, the fourth
quarter  of 2008 was the  twenty-second  consecutive  quarter of  improved  same
property operations.
     The  Company   generates  new  sources  of  leasing   revenue  through  its
acquisition  and development  programs.  During 2008,  EastGroup  purchased five
operating  properties  (669,000  square feet),  one property for  re-development
(150,000 square feet),  and 125 acres of development land for a combined cost of
$58.2 million.  The five operating  properties and 9.9 acres of development land
are located in metropolitan  Charlotte,  North  Carolina,  where the Company now
owns over 1.6 million square feet. The property  acquired for  re-development is
located in Jacksonville,  Florida, and the remaining development land is located
in Orlando (94.3 acres), San Antonio (12.7 acres), and Houston (8.1 acres).
     EastGroup  continues to see targeted  development as a major contributor to
the Company's  long-term  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.
EastGroup's  development activity has slowed considerably as a result of current
market  conditions.  The Company had one development start in the fourth quarter
of 2008 and does not  currently  have  any  plans to start  construction  on new
developments  in 2009.  During  2008,  the  Company  transferred  16  properties
(1,391,000  square feet) with  aggregate  costs of $84.3  million at the date of
transfer from development to real estate  properties.  These  properties,  which
were  collectively  91.8% leased as of February  25,  2009,  are located in Fort
Myers, Orlando, and Tampa, Florida;  Phoenix,  Arizona; Houston and San Antonio,
Texas; and Denver, Colorado.
     During 2008, the Company  initially  funded its acquisition and development
programs through its $225 million lines of credit (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.
     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 of the properties' 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 real estate investment trusts (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 a meaningful  supplemental measure of operating
performance for equity REITs. The Company  believes that excluding  depreciation
and  amortization  in the  calculation of FFO is  appropriate  since real estate
values have historically

                                       11

<PAGE>

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  reconciliations  of PNOI and FFO Available to
Common Stockholders to Net Income for three fiscal years.
<TABLE>
<CAPTION>
                                                                                       Years Ended December 31,
                                                                                ---------------------------------------
                                                                                    2008          2007          2006
                                                                                ---------------------------------------
                                                                                 (In thousands, except per share data)
<S>                                                                                 <C>          <C>             <C>
Income from real estate operations............................................  $  168,327       150,083       132,417
Expenses from real estate operations..........................................     (47,374)      (40,926)      (37,014)
                                                                                ---------------------------------------
PROPERTY NET OPERATING INCOME.................................................     120,953       109,157        95,403

Equity in earnings of unconsolidated investment (before depreciation).........         448           417           419
Income from discontinued operations (before depreciation and amortization)....         201           608         2,204
Interest income...............................................................         293           306           142
Gain on sales of securities...................................................         435             -             -
Other income..................................................................         248            92           182
Interest expense..............................................................     (30,192)      (27,314)      (24,616)
General and administrative expense............................................      (8,547)       (8,295)       (7,401)
Minority interest in earnings (before depreciation and amortization)..........        (827)         (783)         (751)
Gain on sales of land and non-operating real estate...........................         321         2,602           791
Dividends on Series D preferred shares........................................      (1,326)       (2,624)       (2,624)
Costs on redemption of Series D preferred shares..............................        (682)            -             -
                                                                                ---------------------------------------

FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS........................      81,325        74,166        63,749
Depreciation and amortization from continuing operations......................     (51,221)      (47,738)      (41,198)
Depreciation and amortization from discontinued operations....................         (71)         (320)       (1,019)
Depreciation from unconsolidated investment...................................        (132)         (132)         (132)
Minority interest depreciation and amortization...............................         201           174           151
Gain on sales of depreciable real estate investments..........................       2,032           960         5,059
                                                                                ---------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS...................................      32,134        27,110        26,610
Dividends on Series D preferred shares........................................       1,326         2,624         2,624
Costs on redemption of Series D preferred shares..............................         682             -             -
                                                                                ---------------------------------------

NET INCOME....................................................................  $   34,142        29,734        29,234
                                                                                =======================================

Net income available to common stockholders per diluted share.................  $     1.30          1.14          1.17
Funds from operations available to common stockholders per diluted share......        3.30          3.12          2.81
Diluted shares for earnings per share and funds from operations...............      24,653        23,781        22,692
</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 2008 was $.85 per share  compared
     with $.86 per share for the same  period of 2007,  a  decrease  of 1.2% per
     share.  FFO for the fourth  quarter of 2008  included gain on sales of land
     and  non-operating  real estate of $8,000 as compared to  $2,579,000 in the
     same period of 2007.  Excluding these gains for both periods, FFO per share
     increased 11.8%. The fourth quarter of 2008 was the eighteenth  consecutive
     quarter of increased FFO (excluding gain on sales of land and non-operating
     real estate) as compared to the previous  year's  quarter.  PNOI  increased
     11.2%  primarily due to additional  PNOI of $1,865,000 from newly developed
     properties,  $740,000  from 2007 and 2008  acquisitions,  and $587,000 from
     same property growth.

     For the year 2008,  FFO was $3.30 per share  compared  with $3.12 per share
     for  2007,  an  increase  of 5.8%  per  share.  Gain on  sales  of land and
     non-operating  real  estate  was  $321,000  ($.01 per  share)  for 2008 and
     $2,602,000  ($.11 per share) for 2007.  Costs on  redemption  of  preferred
     shares was $682,000 ($.03 per share) for 2008.  Gain on sales of securities
     was  $435,000  ($.02 per  share)  for  2008.  PNOI  increased  10.8% due to
     additional PNOI of $7,966,000 from newly developed  properties,  $3,660,000
     from 2007 and 2008 acquisitions and $282,000 from same property growth.

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 2.1%
     for the fourth quarter.  Excluding termination fees of $68,000 and $133,000
     in the  fourth  quarters  of 2008 and  2007,  respectively,  PNOI from same
     properties increased 2.4% for the quarter.  Excluding termination fees, the
     fourth  quarter  of  2008  was the  twenty-second  consecutive  quarter  of
     improved  same  property  operations.  For the year  2008,  PNOI  from same
     properties  increased  0.3%.  Excluding  termination  fees of $798,000  and
     $1,149,000  for 2008 and 2007,  respectively,  PNOI  from  same  properties
     increased 0.6%.

o    Occupancy is the  percentage of leased  square  footage for which the lease
     term has commenced as compared to the total  leasable  square footage as of
     the close of the  reporting  period.  Occupancy  at  December  31, 2008 was
     93.8%.  Occupancy  has  ranged  from  93.8% to 95.4% in the  previous  four
     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  (3.7% of total square  footage)
     averaged  4.5% for the fourth  quarter of 2008.  For the year,  rental rate
     increases  on new and  renewal  leases  (18.9%  of  total  square  footage)
     averaged 11.1%.

o    Development  starts  were $48  million  in 2008,  and there are no  planned
     development starts for 2009.

                                       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  period  in  which  a  property  is  under  development,  costs
associated with development (i.e., land,  construction costs,  interest expense,
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.
     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.
EastGroup  currently  has the  intent  and  ability  to  hold  its  real  estate
investments and to hold its land inventory for future development.  In the event
of impairment, the property's basis would be reduced and the impairment would be
recognized as a current period charge on the Consolidated Statements of Income.

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 on the Consolidated Statements of Income.

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 2008,  2007 and 2006 taxable income to its  stockholders.
Accordingly, no provision for income taxes was necessary.

                                       14

<PAGE>

FINANCIAL CONDITION
     EastGroup's assets were $1,156,205,000 at December 31, 2008, an increase of
$100,372,000  from  December  31, 2007.  Liabilities  increased  $91,693,000  to
$742,829,000  and  stockholders'  equity  increased  $8,455,000 to  $410,840,000
during the same period.  The  paragraphs  that follow  explain  these changes in
detail.

ASSETS

Real Estate Properties
     Real  estate  properties  increased  $137,316,000  during  the  year  ended
December 31, 2008, primarily due to the purchase of five operating properties in
a single  transaction  and the transfer of 16 properties  from  development,  as
detailed under Development below. These increases were offset by the disposition
of two operating properties,  North Stemmons I and Delp Distribution Center III,
during the year. In addition, EastGroup sold 41 acres of residential land in San
Antonio, Texas, for $841,000 with no gain or loss. This property was acquired as
part of the Company's Alamo Ridge industrial land acquisition in September 2007.
<TABLE>
<CAPTION>
                                                                                               Date
           Real Estate Properties Acquired in 2008           Location          Size          Acquired         Cost (1)
        ------------------------------------------------------------------------------------------------------------------
                                                                           (Square feet)                   (In thousands)
             <S>                                                <C>             <C>             <C>                <C>
        Airport Commerce Center I & II,
           Interchange Park, Ridge Creek III and
           Waterford Distribution Center..............     Charlotte, NC      669,000        02/29/08       $    39,018
</TABLE>

(1)  Total cost of the properties acquired was $41,913,000, of which $39,018,000
     was allocated to real estate properties as indicated above and $855,000 was
     allocated to development. Intangibles associated with the purchases of real
     estate were allocated as follows: $2,143,000 to in-place lease intangibles,
     $252,000 to above  market  leases  (both  included  in Other  Assets on the
     Consolidated  Balance Sheets) and $355,000 to below market leases (included
     in Other  Liabilities on the  Consolidated  Balance  Sheets).  All of these
     costs are amortized over the remaining  lives of the  associated  leases in
     place at the time of acquisition.

     The Company  made  capital  improvements  of  $15,210,000  on existing  and
acquired properties (included in the Capital Expenditures table under Results of
Operations).  Also,  the Company  incurred  costs of $4,116,000  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.

Development
     The  investment  in  development  at  December  31,  2008 was  $150,354,000
compared to  $152,963,000  at December  31,  2007.  Total  capital  invested for
development during 2008 was $85,441,000,  which primarily  consisted of costs of
$81,642,000  as  detailed  in  the  development  activity  table  and  costs  of
$4,116,000 on  developments  transferred  to real estate  properties  during the
12-month period following transfer.
     During 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.  In
March 2008, construction on this project (Southridge XII) was completed, and the
tenant, United Stationers Supply Company, occupied the space. In connection with
this  transaction,  EastGroup  entered into contracts with United  Stationers to
purchase two of its existing properties in Jacksonville and Tampa. In July 2008,
EastGroup  closed on the  first  contract  for the  acquisition  of 12th  Street
Distribution Center, a 150,000 square foot building in Jacksonville. The Company
purchased  the  vacant  property  for  $3,776,000  and is  re-developing  it for
multi-tenant use for a projected total investment of $4,900,000. In August 2008,
EastGroup  closed the second  contract for the  acquisition  of a 128,000 square
foot  warehouse in Tampa through its taxable REIT  subsidiary.  The Company then
sold the building, recognizing a gain of $294,000.
     During 2008,  EastGroup purchased 125 acres of developable land for a total
cost of $13,368,000.  Costs  associated with these  acquisitions are included in
the development  activity table. The Company transferred 16 developments to Real
Estate  Properties  during 2008 with a total investment of $84,251,000 as of the
date of transfer.

                                       15

<PAGE>
<TABLE>
<CAPTION>
                                                                                       Costs Incurred
                                                                       ----------------------------------------------
                                                                            Costs          For the        Cumulative      Estimated
                                                                         Transferred     Year Ended          as of          Total
DEVELOPMENT                                                 Size         in 2008 (1)       12/31/08        12/31/08       Costs (2)
------------------------------------------------------------------------------------------------------------------------------------
                                                        (Square feet)                            (In thousands)
<S>                                                          <C>             <C>             <C>              <C>             <C>
LEASE-UP
  40th Avenue Distribution Center, Phoenix, AZ.........       89,000     $       -            1,392           6,539          6,900
  Wetmore II, Building B, San Antonio, TX..............       55,000             -              750           3,633          3,900
  Beltway Crossing VI, Houston, TX.....................      128,000             -            2,084           5,607          6,700
  Oak Creek VI,  Tampa, FL.............................       89,000             -            1,682           5,587          6,100
  Southridge VIII, Orlando, FL.........................       91,000             -            1,961           6,001          6,900
  Techway SW IV, Houston, TX...........................       94,000             -            2,875           4,843          6,100
  SunCoast III, Fort Myers, FL.........................       93,000             -            2,543           6,718          8,400
  Sky Harbor, Phoenix, AZ..............................      264,000             -            8,821          22,829         25,100
  World Houston 26, Houston, TX........................       59,000         1,110            1,708           2,818          3,300
  12th Street Distribution Center, Jacksonville, FL....      150,000             -            4,850           4,850          4,900
                                                        ----------------------------------------------------------------------------
Total Lease-up.........................................    1,112,000         1,110           28,666          69,425         78,300
                                                        ----------------------------------------------------------------------------
UNDER CONSTRUCTION
  Beltway Crossing VII, Houston, TX....................       95,000         2,123            2,090           4,213          5,900
  Country Club III & IV, Tucson, AZ....................      138,000         2,552            5,495           8,047         11,200
  Oak Creek IX, Tampa, FL..............................       86,000         1,369            2,831           4,200          5,500
  Blue Heron III, West Palm Beach, FL..................       20,000           863            1,035           1,898          2,600
  World Houston 28, Houston, TX........................       59,000           733            1,647           2,380          4,800
  World Houston 29, Houston, TX........................       70,000           849            1,037           1,886          4,800
  World Houston 30, Houston, TX........................       88,000         1,591                -           1,591          5,800
                                                        ----------------------------------------------------------------------------
Total Under Construction...............................      556,000        10,080           14,135          24,215         40,600
                                                        ----------------------------------------------------------------------------
PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
  Tucson, AZ...........................................       70,000        (2,552)             924             417          3,500
  Tampa, FL............................................      249,000        (1,369)             682           3,890         14,600
  Orlando, FL..........................................    1,254,000             -           10,691          14,453         78,700
  West Palm Beach, FL..................................            -          (863)              52               -              -
  Fort Myers, FL.......................................      659,000             -            2,195          15,014         48,100
  Dallas, TX...........................................       70,000             -              570             570          5,000
  El Paso, TX..........................................      251,000             -                -           2,444          9,600
  Houston, TX..........................................    1,064,000        (6,406)           4,643          12,786         68,100
  San Antonio, TX......................................      595,000             -            2,873           5,439         37,500
  Charlotte, NC........................................       95,000             -              995             995          7,100
  Jackson, MS..........................................       28,000             -                1             706          2,000
                                                        ----------------------------------------------------------------------------
Total Prospective Development..........................    4,335,000       (11,190)          23,626          56,714        274,200
                                                        ----------------------------------------------------------------------------
                                                           6,003,000     $       -           66,427         150,354        393,100
                                                        ============================================================================
DEVELOPMENTS COMPLETED AND TRANSFERRED
TO REAL ESTATE PROPERTIES DURING 2008
  Beltway Crossing IV, Houston, TX.....................       55,000     $       -                5           3,365
  Beltway Crossing III, Houston, TX....................       55,000             -               14           2,866
  Southridge XII, Orlando, FL..........................      404,000             -            3,421          18,521
  Arion 18, San Antonio, TX............................       20,000             -              638           2,593
  Southridge VII, Orlando, FL..........................       92,000             -              414           6,500
  Wetmore II, Building C, San Antonio, TX..............       69,000             -              185           3,682
  Interstate Commons III, Phoenix, AZ..................       38,000             -               45           3,093
  SunCoast I, Fort Myers, FL...........................       63,000             -              149           5,225
  World Houston 27, Houston, TX........................       92,000             -            1,765           4,248
  Wetmore II, Building D, San Antonio, TX..............      124,000             -            4,965           7,950
  World Houston 24, Houston, TX........................       93,000             -              739           5,904
  Centennial Park, Denver, CO..........................       68,000             -              690           5,437
  World Houston 25, Houston, TX........................       66,000             -              536           3,730
  Beltway Crossing V, Houston, TX......................       83,000             -              984           4,730
  Wetmore II, Building A, San Antonio, TX..............       34,000             -              576           3,377
  Oak Creek A & B, Tampa, FL...........................       35,000             -               89           3,030
                                                        -------------------------------------------------------------
Total Transferred to Real Estate Properties............    1,391,000     $       -           15,215          84,251  (3)
                                                        =============================================================
</TABLE>

(1) Represents costs transferred from Prospective  Development  (primarily land)
to Under Construction (or subsequently to Lease-up) during the period.
(2) Included in these costs are  development  obligations  of $11.1  million and
tenant improvement obligations of $2.0 million on properties under development.
(3) Represents cumulative costs at the date of transfer.

                                       16

<PAGE>

     Accumulated   depreciation  on  real  estate  and  development   properties
increased $41,219,000 during 2008, primarily due to depreciation expense on real
estate properties,  offset by accumulated depreciation related to North Stemmons
I and Delp Distribution Center III, which were disposed of during the year.
     Mortgage loans  receivable,  net of discount,  (included in Other Assets on
the Consolidated  Balance Sheets)  increased  $4,042,000  during 2008. In August
2008,  EastGroup closed on the sale of the United  Stationers Tampa building and
advanced the buyer  $4,994,000 in a first mortgage  recourse loan. In September,
EastGroup  received a principal  payment of $844,000.  The  mortgage  loan has a
five-year term and calls for monthly interest  payments  (interest  accruals and
payments  begin  January 1, 2009)  through the maturity  date of August 8, 2013,
when a balloon payment for the remaining principal balance of $4,150,000 is due.
At the  inception  of the loan,  EastGroup  recognized a discount on the loan of
$198,000 and recognized amortization of the discount of $117,000 during 2008. In
addition,  EastGroup  received  principal  payments  of  $27,000  on the  second
mortgage loan on the  Madisonville  land in Kentucky,  which the Company sold in
2006.
     A  summary  of  Other  Assets  is  presented  in  Note  5 in the  Notes  to
Consolidated Financial Statements.

LIABILITIES

     Mortgage  notes  payable  increased  $120,446,000  during  the  year  ended
December 31,  2008.  EastGroup  closed on two mortgage  loans during the year: a
$78,000,000  mortgage loan in the first quarter and a $59,000,000  mortgage loan
in the fourth  quarter.  These  increases  were  offset by  regularly  scheduled
principal  payments of  $16,434,000  and mortgage loan premium  amortization  of
$120,000.
     Notes  payable to banks  decreased  $25,558,000  during 2008 as a result of
repayments of $357,202,000  exceeding  advances of  $331,644,000.  The Company's
credit  facilities are described in greater  detail under  Liquidity and Capital
Resources.
     See Note 8 in the Notes to Consolidated  Financial Statements for a summary
of  Accounts  Payable  and  Accrued  Expenses.  See  Note  9  in  the  Notes  to
Consolidated Financial Statements for a summary of Other Liabilities.

STOCKHOLDERS' EQUITY

     During the second quarter,  the Company sold 1,198,700 shares of its common
stock to Merrill Lynch,  Pierce,  Fenner & Smith Incorporated.  The net proceeds
were  $57.2  million.  The  Company  used the  proceeds  to  repay  indebtedness
outstanding  under its revolving credit facility and for other general corporate
purposes.
     On July 2,  2008,  EastGroup  redeemed  all  1,320,000  shares of its 7.95%
Series D Cumulative  Redeemable  Preferred Stock at a redemption price of $25.00
per share plus  accrued and unpaid  dividends  of $.011 per share for the period
from July 1, 2008,  through and including the redemption date, for an aggregated
redemption  price of $25.011 per Series D  Preferred  Share.  Original  issuance
costs of $674,000 and additional redemption costs of $8,000 were charged against
net income  available to common  stockholders in conjunction with the redemption
of these shares.
     Distributions  in excess of earnings  increased  $19,633,000 as a result of
dividends  on  common  and  preferred  stock  of  $53,093,000  and  costs on the
redemption  of Series D Preferred  Shares of $682,000  exceeding  net income for
financial  reporting  purposes  of  $34,142,000.  See  Note 11 in the  Notes  to
Consolidated  Financial  Statements  for  information  related to the changes in
additional paid-in capital resulting from stock-based compensation.

RESULTS OF OPERATIONS

2008 Compared to 2007

     Net income available to common stockholders for 2008 was $32,134,000 ($1.31
per basic share and $1.30 per diluted share) compared to $27,110,000  ($1.15 per
basic share and $1.14 per diluted  share) for 2007.  Diluted  earnings per share
(EPS) for 2008 included a $.10 per share gain on sales of real estate properties
compared to $.15 per share in 2007.
     PNOI  increased  by  $11,796,000,  or  10.8%,  for 2008  compared  to 2007,
primarily due to additional PNOI of $7,966,000 from newly developed  properties,
$3,660,000  from 2007 and 2008  acquisitions  and  $282,000  from same  property
growth.  Expense to revenue ratios were 28.1% in 2008 compared to 27.3% in 2007.
The  Company's  percentage  of leased  square  footage was 94.8% at December 31,
2008,  compared to 96.0% at December 31, 2007.  Occupancy at the end of 2008 was
93.8% compared to 95.4% at the end of 2007.
     During 2008,  EastGroup  purchased a 128,000 square foot warehouse in Tampa
as part of the Orlando  build-to-suit  transaction with United  Stationers.  The
Company  acquired  and then  re-sold  the  building  through  its  taxable  REIT
subsidiary and recognized a gain of $294,000. For the year, EastGroup recognized
gain on sales of  non-operating  real  estate of  $321,000  in 2008  compared to
$2,602,000 in 2007.
     The following  table presents the  components of interest  expense for 2008
and 2007:

                                       17

<PAGE>

<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
                                                                                ---------------------------    Increase
                                                                                    2008            2007      (Decrease)
                                                                                ------------------------------------------
                                                                                 (In thousands, except rates of interest)
                <S>                                                               <C>              <C>            <C>
     Average bank borrowings.......................................             $ 125,647         96,513         29,134
     Weighted average variable interest rates
          (excluding loan cost amortization) ......................                 3.94%          6.36%

     VARIABLE RATE INTEREST EXPENSE
     Variable rate interest (excluding loan cost amortization).....                 4,944          6,139         (1,195)
     Amortization of bank loan costs...............................                   295            353            (58)
                                                                                ------------------------------------------
     Total variable rate interest expense..........................                 5,239          6,492         (1,253)
                                                                                ------------------------------------------

     FIXED RATE INTEREST EXPENSE
     Fixed rate interest (excluding loan cost amortization)........                31,219         26,350          4,869
     Amortization of mortgage loan costs...........................                   680            558            122
                                                                                ------------------------------------------
     Total fixed rate interest expense.............................                31,899         26,908          4,991
                                                                                ------------------------------------------

     Total interest................................................                37,138         33,400          3,738
     Less capitalized interest.....................................                (6,946)        (6,086)          (860)
                                                                                ------------------------------------------

     TOTAL INTEREST EXPENSE........................................             $  30,192         27,314          2,878
                                                                                ==========================================
</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 2008 were lower than in 2007.  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, 2004.............................            6.74%
     December 31, 2005.............................            6.31%
     December 31, 2006.............................            6.21%
     December 31, 2007.............................            6.06%
     December 31, 2008.............................            5.96%
</TABLE>

     The increase in mortgage  interest expense in 2008 was primarily due to the
new mortgages detailed in the table below.
<TABLE>
<CAPTION>
                                                                                                         MATURITY
     NEW MORTGAGES IN 2007 AND 2008                                  INTEREST RATE         DATE            DATE           AMOUNT
     -------------------------------------------------------------------------------------------------------------------------------
            <S>                                                         <C>                <C>              <C>             <C>
     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        09/05/17      $  75,000,000
     Beltway II, III & IV, Eastlake, Fairgrounds I-IV,
       Nations Ford I-IV, Techway Southwest III,
       Westinghouse, Wetmore I-IV and World
       Houston 15 & 22...........................................        5.500%          03/19/08        04/05/15         78,000,000
     Southridge XII, Airport Commerce Center I & II,
       Interchange Park, Ridge Creek III, World Houston 24,
       25 & 27 and Waterford Distribution Center.................        5.750%          12/09/08        01/05/14         59,000,000
                                                                     -------------                                     -------------
       Weighted Average/Total Amount.............................        5.594%                                        $ 212,000,000
                                                                     =============                                     =============
</TABLE>

     Mortgage  principal  payments were  $16,434,000 in 2008 and  $26,963,000 in
2007.  EastGroup had no mortgage maturities in 2008. In 2007, the Company repaid
two  mortgages  totaling  $14,220,000.  These  repayments  were  included in the
mortgage  principal  payments for 2007.  The details of these two  mortgages are
shown in the following table:
<TABLE>
<CAPTION>
                                                             INTEREST          DATE             PAYOFF
     MORTGAGE LOANS REPAID IN 2007                             RATE           REPAID            AMOUNT
     -----------------------------------------------------------------------------------------------------
           <S>                                                <C>              <C>                 <C>
     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....................      7.978%                        $  14,220,000
                                                           ============                     ==============
</TABLE>

                                       19

<PAGE>

     Depreciation   and  amortization   for  continuing   operations   increased
$3,483,000  for 2008 as compared to 2007.  This  increase was  primarily  due to
properties  acquired  and  transferred  from  development  during 2007 and 2008.
Operating property  acquisitions and transferred  developments were $125 million
in 2008 and $127 million in 2007.
     NAREIT has recommended  supplemental  disclosures concerning  straight-line
rent,  capital  expenditures  and  leasing  costs.  Straight-lining  of rent for
continuing  operations  increased  income by  $933,000  in 2008 as  compared  to
$824,000 in 2007.

Capital Expenditures
     Capital  expenditures for operating properties for the years ended December
31, 2008 and 2007 were as follows:
<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                       Estimated    --------------------------
                                                      Useful Life      2008            2007
                                                    ------------------------------------------
                                                                          (In thousands)
            <S>                                           <C>           <C>              <C>
        Upgrade on Acquisitions..................       40 yrs      $       63           141
        Tenant Improvements:
           New Tenants...........................     Lease Life         7,554         7,326
           New Tenants (first generation) (1)....     Lease Life           244           495
           Renewal Tenants.......................     Lease Life         1,504         1,963
        Other:
           Building Improvements.................      5-40 yrs          2,685         1,719
           Roofs.................................      5-15 yrs          1,874         3,273
           Parking Lots..........................       3-5 yrs            907           765
           Other.................................        5 yrs             379           199
                                                                    --------------------------
              Total capital expenditures.........                   $   15,210        15,881
                                                                    ==========================
</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, 2008 and 2007 were as
follows:
<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                       Estimated    --------------------------
                                                      Useful Life      2008            2007
                                                    ------------------------------------------
                                                                          (In thousands)
            <S>                                           <C>           <C>              <C>
        Development..............................     Lease Life      $  3,115         3,108
        New Tenants..............................     Lease Life         2,370         2,805
        New Tenants (first generation) (1).......     Lease Life            58           212
        Renewal Tenants..........................     Lease Life         2,626         2,124
                                                                     -------------------------
              Total capitalized leasing costs....                     $  8,169         8,249
                                                                     =========================

        Amortization of leasing costs (2)........                     $  5,882         5,339
                                                                     =========================
</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 operating  properties sold or held for sale during the periods  reported are
shown under  Discontinued  Operations on the Consolidated  Statements of Income.
During 2008, the Company disposed of two operating  properties (North Stemmons I
and Delp  Distribution  Center III) and recognized  gain on sales of real estate
investments of $2,032,000.
     During 2007, the Company sold one operating  property and recognized a gain
of $603,000.  In addition,  the Company  recognized a deferred  gain of $357,000
from a  previous  sale.  See  Notes  1(f)  and 2 in the  Notes  to  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 operating  properties sold or held for
sale during 2008 and 2007.

                                       19

<PAGE>
<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                                         --------------------------
  Discontinued Operations                                                   2008            2007
  -------------------------------------------------------------------------------------------------
                                                                              (In thousands)
         <S>                                                                 <C>            <C>
  Income from real estate operations...............................      $     276          887
  Expenses from real estate operations.............................            (75)        (279)
                                                                         --------------------------
    Property net operating income from discontinued operations.....            201          608

  Depreciation and amortization....................................            (71)        (320)
                                                                         --------------------------

  Income from real estate operations...............................            130          288
      Gain on sales of real estate investments.....................          2,032          960
                                                                         --------------------------

  Income from discontinued operations..............................      $   2,162        1,248
                                                                         ==========================
</TABLE>

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. EPS for 2007 included a $.15
per share gain on sales of real estate properties  compared to $.26 per share in
2006.
     PNOI  increased  by  $13,754,000,  or  14.4%,  for 2007  compared  to 2006,
primarily due to additional PNOI of $5,671,000 from newly developed  properties,
$4,813,000  from 2006 and 2007  acquisitions  and $3,345,000  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.  Expense to revenue  ratios were
27.3% in 2007  compared to 28.0% in 2006.  The  Company's  percentage  of leased
square footage 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.
     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 sales of non-operating real estate of $2,602,000
in 2007 compared to $123,000 in 2006.
     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
          (excluding loan cost amortization) ......................                  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. 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>

                                       20

<PAGE>

     The increase in mortgage  interest expense in 2007 was primarily due to the
new mortgages detailed in the table below.
<TABLE>
<CAPTION>
                                                                                                        MATURITY
     NEW MORTGAGES IN 2006 AND 2007                                  INTEREST RATE         DATE           DATE            AMOUNT
     -------------------------------------------------------------------------------------------------------------------------------
            <S>                                                         <C>                <C>            <C>             <C>
     Huntwood and Wiegman Distribution Centers..................          5.680%         08/08/06       09/05/16      $   38,000,000
     Alamo Downs, Arion 1-15 & 17, Rampart I, II & III,
       Santan 10 and World Houston 16...........................          5.970%         10/17/06       11/05/16          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       09/05/17          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>

     Depreciation   and  amortization   for  continuing   operations   increased
$6,540,000  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  $824,000  in 2007 as  compared  to
$994,000 in 2006.

Capital Expenditures
     Capital  expenditures for operating properties 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:

                                       21

<PAGE>
<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  Statements of Income. During 2007,
the Company sold one operating  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  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 years 2007 and 2006 for the real estate  investments  sold during  2008,
2007 and 2006.
<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                                   --------------------------
Discontinued Operations                                                2007           2006
---------------------------------------------------------------------------------------------
                                                                        (In thousands)
<S>                                                                   <C>             <C>
Income from real estate operations..............................   $     887          3,180
Expenses from real estate operations............................        (279)          (976)
                                                                   --------------------------
  Property net operating income from discontinued operations....         608          2,204

Depreciation and amortization...................................        (320)        (1,019)
                                                                   --------------------------

Income from real estate operations..............................         288          1,185
  Gain on sales of real estate investments......................         960          5,727
                                                                   --------------------------

Income from discontinued operations.............................   $   1,248          6,912
                                                                   ==========================
</TABLE>

NEW ACCOUNTING PRONOUNCEMENTS

     In September 2006, the Financial  Accounting  Standards Board (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.  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  provisions of Statement  157, with the
exception of nonfinancial  assets and liabilities,  were effective for financial
statements  issued for fiscal years  beginning  after  November  15,  2007,  and
interim  periods within those fiscal years.  The application of Statement 157 to
the Company in 2008 had an immaterial  impact on the Company's overall financial
position and results of operations.
     The FASB  deferred  for  one year Statement  157'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
are included in FASB Staff Position (FSP) FAS 157-2 and are effective for fiscal
years  beginning  after November 15, 2008.  The Company has determined  that the
adoption of these  provisions in 2009 had an immaterial  impact on the Company's
overall financial position and 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.  The adoption of Statement 141R in 2009 had an
immaterial  impact on the Company's  overall  financial  position and results of
operations.
     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

                                       22

<PAGE>

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 adoption
of  Statement  160 in 2009 had an  immaterial  impact on the  Company's  overall
financial position and results of operations.
     In March 2008, the FASB issued SFAS No. 161,  Disclosures  about Derivative
Instruments and Hedging Activities,  which is an amendment of FASB Statement No.
133. SFAS No. 161 requires all entities with derivative  instruments to disclose
information regarding how and why the entity uses derivative instruments and how
derivative  instruments  and related hedged items affect the entity's  financial
position,  financial  performance,  and cash flows.  The  Statement is effective
prospectively for periods beginning on or after November 15, 2008.
     During 2008,  the FASB issued FSP FAS 142-3,  which amends the factors that
should be  considered  in developing  renewal or extension  assumptions  used to
determine the useful life of a recognized  intangible asset under FASB Statement
No. 142, Goodwill and Other Intangible  Assets. FSP FAS 142-3 requires an entity
to disclose  information  that enables  financial  statement users to assess the
extent to which the  expected  future cash flows  associated  with the asset are
affected  by  the  entity's  intent  and/or  ability  to  renew  or  extend  the
arrangement.  The intent of this Staff  Position is to improve  the  consistency
between the useful life of a recognized intangible asset under Statement 142 and
the period of  expected  cash flows used to measure  the fair value of the asset
under Statement 141R and other U.S.  generally accepted  accounting  principles.
FSP FAS 142-3 is  effective  for  financial  statements  issued for fiscal years
beginning  after  December 15,  2008,  and interim  periods  within those fiscal
years.  The  adoption of FSP FAS 142-3 in 2009 had an  immaterial  impact on the
Company's overall financial position and results of operations.
     Also in 2008,  the  Emerging  Issues  Task Force  (EITF)  issued EITF 08-6,
Equity  Method  Investment  Accounting  Considerations,  which  applies  to  all
investments  accounted for under the equity method and clarifies the  accounting
for  certain   transactions  and  impairment   considerations   involving  those
investments.  EITF 08-6 is effective for financial  statements issued for fiscal
years  beginning on or after December 15, 2008, and interim periods within those
fiscal years. The adoption of EITF 08-6 in 2009 had an immaterial  impact on the
Company's overall financial position and results of operations.


LIQUIDITY AND CAPITAL RESOURCES

     Net cash  provided by operating  activities  was  $83,610,000  for the year
ended  December  31,  2008.  The  primary  other  sources of cash were from bank
borrowings,  proceeds from mortgage notes, proceeds from common stock offerings,
proceeds from sales of land and real estate investments, and proceeds from sales
of securities.  The Company distributed  $52,192,000 in common and $1,982,000 in
preferred stock dividends  during 2008. Other primary uses of cash were for bank
debt repayments,  construction and development of properties,  purchases of real
estate,  the  redemption of the Company's  Series D Preferred  Stock,  principal
payments on mortgage notes payable,  capital improvements at various properties,
purchases of securities, and advances on mortgage loans receivable.
     Total debt at December 31, 2008 and 2007 is detailed  below.  The Company's
bank credit facilities have certain restrictive  covenants,  such as maintaining
debt service  coverage and leverage ratios and maintaining  insurance  coverage,
and the Company was in compliance with all of its debt covenants at December 31,
2008 and 2007.
<TABLE>
<CAPTION>
                                                                 December 31,
                                                          --------------------------
                                                              2008          2007
                                                          --------------------------
                                                                (In thousands)
             <S>                                              <C>            <C>
        Mortgage notes payable - fixed rate.........      $   585,806       465,360
        Bank notes payable - floating rate..........          109,886       135,444
                                                          --------------------------
           Total debt...............................      $   695,692       600,804
                                                          ==========================
</TABLE>

     EastGroup has a four-year, $200 million unsecured revolving credit facility
with a  group  of  seven  banks  that  matures  in  January  2012.  The  Company
customarily  uses this line of credit for  acquisitions  and  developments.  The
interest  rate on the facility is based on the LIBOR index and varies  according
to total  liability  to total  asset  value  ratios  (as  defined  in the credit
agreement),  with an annual facility fee of 15 to 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  has  an  option  for a  one-year  extension  at the  Company's  request.
Additionally,  there is a provision under which the line may be expanded by $100
million contingent upon obtaining increased commitments from existing lenders or
commitments from additional  lenders. At December 31, 2008, the weighted average
interest rate was 1.23% on a balance of $107,000,000.  At February 25, 2009, the
Company's weighted average interest rate was 1.12% on a balance of $146,000,000.
The Company had an  additional  $54,000,000  remaining on this line of credit on
February 25, 2009.
     The Company also has a four-year,  $25 million  unsecured  revolving credit
facility with PNC Bank,  N.A. that matures in January 2012. This credit facility
is customarily used for working capital needs. 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 (as  defined in the  credit  agreement).  Under this
facility, the Company's current interest rate is LIBOR plus 75 basis points with
no annual  facility fee. At December 31, 2008,  the interest rate was 1.19% on a
balance of  $2,886,000.  At February 25, 2009,  the Company's  interest rate was
1.23% on a balance of  $5,529,000.  The  Company had an  additional  $19,471,000
remaining on this line of credit on February 25, 2009.
     The  current  economic  situation  is  impacting  lenders,  and it is  more
difficult to obtain  financing.  Loan proceeds as a percentage of property value
is decreasing, and long-term interest rates are increasing. The Company believes
that its current  lines of credit  provide the capacity to fund debt  maturities
and the  operations of the Company for 2009 and 2010.  The Company also believes
that it can  still  obtain  mortgage  financing  from  insurance  companies  and
financial institutions.
     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.

                                       23

<PAGE>

     During the first  quarter of 2008,  the  Company  closed on a $78  million,
non-recourse  first  mortgage loan secured by properties  containing 1.6 million
square feet.  The loan has a fixed  interest rate of 5.50%, a 7-year term and an
amortization schedule of 20 years. The proceeds of this note were used to reduce
variable rate bank borrowings.
     During the second  quarter,  EastGroup sold 1,198,700  shares of its common
stock to Merrill Lynch,  Pierce,  Fenner & Smith Incorporated.  The net proceeds
were $57.2 million after deducting the underwriting  discount and other offering
expenses. The Company used the proceeds to repay indebtedness  outstanding under
its revolving credit facility and for other general corporate purposes.
     During the third quarter,  the Company redeemed all 1,320,000 shares of its
7.95% Series D Cumulative  Redeemable Preferred Stock. The redemption took place
on July 2, 2008, at a redemption  price of $25.00 per share  ($33,000,000)  plus
accrued  and unpaid  dividends  of $.011 per share for the  period  from July 1,
2008,  through and including the redemption  date, for an aggregated  redemption
price of $25.011  per  Series D  Preferred  Share.  Original  issuance  costs of
$674,000 and  additional  redemption  costs of $8,000 were  charged  against net
income  available to common  stockholders in conjunction  with the redemption of
these shares.
     During the  fourth  quarter,  EastGroup  closed on a $59  million,  limited
recourse first mortgage loan secured by properties containing 1.3 million square
feet.  The loan has a fixed  interest rate of 5.75%, a 5-year term and a 20-year
amortization  schedule.  The loan has a recourse  liability of $5 million  which
will be released based on the secured  properties  generating  certain base rent
amounts  subsequent to January 1, 2011.  The proceeds of this mortgage loan were
used to reduce variable rate bank borrowings.

Contractual Obligations
     EastGroup's fixed,  non-cancelable obligations as of December 31, 2008 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).......        $     585,806       49,168         102,971          115,349         318,318
        Interest on Fixed Rate Debt...........              120,503       17,811          35,813           32,391          34,488
        Variable Rate Debt Obligations (2)....              109,886            -               -          109,886               -
        Operating Lease Obligations:
           Office Leases......................                1,670          303             714              653               -
           Ground Leases......................               19,432          720           1,440            1,440          15,832
        Development Obligations (3)...........               11,125       11,125               -                -               -
        Tenant Improvements (4)...............                8,169        8,169               -                -               -
        Purchase Obligations (5)..............                4,344        4,344               -                -               -
                                                      ------------------------------------------------------------------------------
           Total..............................        $     860,935       91,640         140,938          259,719         368,638
                                                      ==============================================================================
</TABLE>

(1)  These amounts are included on the Consolidated Balance Sheets. A portion of
     this debt is backed by a letter of credit  totaling  $9,473,000 at December
     31, 2008. The letter of credit  expired in January 2009 in connection  with
     the  repayment  of the  variable  rate demand note on the Tower  Automotive
     Center. A portion of this debt also has a recourse  liability of $5 million
     which will be released based on the secured  properties  generating certain
     base rent amounts subsequent to January 1, 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, 2008, the weighted average interest
     rate was 1.23% on the variable rate debt due in January 2012.
(3)  Represents  commitments on properties under development,  except for tenant
     improvement obligations.
(4)  Represents tenant improvement allowance obligations.
(5)  At December 31, 2008,  EastGroup was under contract to purchase 36 acres of
     developable  land in Orlando,  Florida,  as a second phase of the 2008 Sand
     Lake land acquisition.  This transaction is expected to close in the fourth
     quarter of 2009.

     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 (i) renew leases or re-lease space
as leases expire,  or (ii) lease  development  space.  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>
                                             2009       2010       2011       2012      2013     Thereafter    Total    Fair Value
                                           -----------------------------------------------------------------------------------------
 <S>                                          <C>       <C>         <C>        <C>       <C>         <C>       <C>         <C>
Fixed rate debt (1) (in thousands)....     $ 49,168     18,185     84,786     62,117    53,232     318,318    585,806    555,096 (2)
Weighted average interest rate........        6.50%      5.89%      7.00%      6.61%     5.06%       5.63%      5.96%
Variable rate debt (in thousands).....     $      -          -          -    109,886         -           -    109,886    109,886
Weighted average interest rate........            -          -          -      1.23%         -           -      1.23%
</TABLE>

(1)  The fixed rate debt shown above includes the Tower Automotive mortgage. See
     below for additional information on the Tower mortgage.
(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, 2008, it does not consider those  exposures or positions that could
arise after that date.  If the weighted  average  interest  rate on the variable
rate bank debt as shown above changes by 10% or  approximately  12 basis points,
interest  expense  and cash flows would  increase  or decrease by  approximately
$135,000 annually.
     The Company has an interest  rate swap  agreement  to hedge its exposure to
the variable  interest rate on the Company's  $9,365,000 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  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 12/31/08        at 12/31/07
      -------------------------------------------------------------------------------------------------------------------
                      (In thousands)                                                            (In thousands)
          <S>               <C>             <C>             <C>              <C>             <C>                <C>
          Swap            $9,365         12/31/10      1 month LIBOR       4.03%           ($522)              ($56)
</TABLE>

     On January 2, 2009,  the mortgage  note payable of  $9,365,000 on the Tower
Automotive Center was repaid and replaced with another mortgage note payable for
the same amount. The previous recourse mortgage was a variable rate demand note,
and  EastGroup  had entered into a swap  agreement to fix the LIBOR rate. In the
fourth  quarter of 2008,  the bond spread over LIBOR  required to re-market  the
notes  increased  from a historical  range of 3 to 25 basis points to a range of
100 to 500  basis  points.  Due to the  volatility  of the  bond  spread  costs,
EastGroup redeemed the note and replaced it with a recourse mortgage with a bank
on the same payment terms except for the interest rate.  The effective  interest
rate on the  previous  note was 5.30% until the fourth  quarter of 2008 when the
weighted average rate was 8.02%.  The effective rate on the new note,  including
the swap, is 6.03%.

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,  or  that
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

                                       25

<PAGE>

publicly update or revise any forward-looking statements. See also the Company's
reports  to be  filed  from  time to  time  with  the  Securities  and  Exchange
Commission pursuant to the Securities Exchange Act of 1934.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The  Registrant's  Consolidated  Balance Sheets as of December 31, 2008 and
2007, 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,  2008,  2007  and 2006 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 Consolidated  Financial  Statements are also
incorporated herein by reference.

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,
2008, 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, 2008
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  ("2009 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 27, 2009. The 2009
Proxy  Statement  will be filed  within 120 days after the end of the  Company's
fiscal year ended December 31, 2008.
     The information  regarding  executive  officers is  incorporated  herein by
reference from the section entitled  "Executive  Officers" in the Company's 2009
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  2009  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 2009 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

     The information included under the following captions in the Company's 2009
Proxy Statement is incorporated  herein by reference:  "Compensation  Discussion
and Analysis,"  "Summary  Compensation  Table," "Grants of Plan-Based  Awards in
2008,"  "Outstanding  Equity Awards at 2008 Fiscal Year-End,"  "Option Exercises
and Stock Vested in 2008,"  "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 2009 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 2009 Proxy Statement.
     The following  table  summarizes  the Company's  equity  compensation  plan
information as of December 31, 2008.
<TABLE>
<CAPTION>
                                               Equity Compensation Plan Information
                                  (a)                            (b)                    (c)
        Plan category             Number of securities to be     Weighted-average       Number of securities remaining
                                  issued upon exercise of        exercise price of      available for future issuance
                                  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                  93,686                        $21.65                       1,723,558
        Equity compensation
          plans not approved
          by security holders                    -                             -                               -
                                  ------------------------------------------------------------------------------------------
        Total                               93,686                        $21.65                       1,723,558
                                  ==========================================================================================
</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 2009 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 2009 Proxy Statement.

                                       27

<PAGE>

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Index to Financial Statements:
<TABLE>
<S>                                                                                                                          <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, 2008 and 2007                                                             32
        Consolidated Statements of Income - Years ended December 31, 2008, 2007 and 2006                                     33
        Consolidated Statements of Changes in Stockholders' Equity - Years ended December 31, 2008, 2007 and 2006            34
        Consolidated Statements of Cash Flows - Years ended December 31, 2008, 2007 and 2006                                 35
        Notes to Consolidated Financial Statements                                                                           36
    (2) Consolidated Financial Statement Schedules:
        Schedule III - Real Estate Properties and Accumulated Depreciation                                                   53
        Schedule IV - Mortgage Loans on Real Estate                                                                          60
</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  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 10, 2008).
               (c)  Articles  Supplementary  of  the  Company  relating  to  the
                    reclassification  of the  Series C  Preferred  Stock and the
                    7.95% Series D Cumulative  Redeemable Preferred Stock to the
                    Company's common stock (incorporated by reference to Exhibit
                    3.2 to the Company's Form 8-K filed December 10, 2008).

          (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)  Amendment No. 2 to the 2005 Directors  Equity Incentive Plan
                    (incorporated  by reference to Exhibit 10.1 to the Company's
                    Form 8-K filed June 3, 2008).*
               (k)  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 7,
                    2009).*
               (l)  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 7, 2009).*
               (m)  Compensation  Program for Non-Employee  Directors (a written
                    description  thereof  is  set  forth  in  Item  5.02  of the
                    Company's Form 8-K filed June 3, 2008).*
               (n)  Annual  Cash  Bonus  and  2008  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 3,
                    2008).*
               (o)  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).*
               (p)  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, 2008 and
2007,   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, 2008. 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, 2008 and 2007,  and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period ended  December 31, 2008, in conformity  with U.S.  generally
accepted accounting principles.
     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, 2008, 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 26, 2009,  expressed an unqualified  opinion on the effectiveness
of the Company's internal control over financial reporting.


                                        /s/ KPMG LLP

Jackson, Mississippi
February 26, 2009

                                       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, 2008.

                                        /s/ EASTGROUP PROPERTIES, INC.


Jackson, Mississippi
February 26, 2009




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, 2008, 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,  2008,  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, 2008
and  2007,  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,  2008,  and our report  dated  February  26,  2009,
expressed an unqualified opinion on those consolidated financial statements.

                                        /s/ KPMG LLP

Jackson, Mississippi
February 26, 2009

                                       31

<PAGE>

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                ---------------------------------------------------
                                                                                          2008                       2007
                                                                                ---------------------------------------------------
                                                                                (In thousands, except for share and per share data)
 <S>                                                                                      <C>                         <C>
ASSETS
  Real estate properties....................................................... $      1,252,282                   1,114,966
  Development..................................................................          150,354                     152,963
                                                                                ---------------------------------------------------
                                                                                       1,402,636                   1,267,929
    Less accumulated depreciation..............................................         (310,351)                   (269,132)
                                                                                ---------------------------------------------------
                                                                                       1,092,285                     998,797

  Unconsolidated investment....................................................            2,666                       2,630
  Cash.........................................................................              293                         724
  Other assets.................................................................           60,961                      53,682
                                                                                ---------------------------------------------------
    TOTAL ASSETS............................................................... $      1,156,205                   1,055,833
                                                                                ===================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Mortgage notes payable....................................................... $        585,806                     465,360
  Notes payable to banks.......................................................          109,886                     135,444
  Accounts payable & accrued expenses..........................................           32,838                      34,179
  Other liabilities............................................................           14,299                      16,153
                                                                                ---------------------------------------------------
                                                                                         742,829                     651,136
                                                                                ---------------------------------------------------


                                                                                ---------------------------------------------------
  Minority interest in joint ventures..........................................            2,536                       2,312
                                                                                ---------------------------------------------------

STOCKHOLDERS' EQUITY
  Series C Preferred Shares; $.0001 par value; no shares authorized at
    December 31, 2008 and 600,000 shares authorized at December 31, 2007;
    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
    at December 31, 2007; stated liquidation preference of $33,000 at
    December 31, 2007; redeemed July 2, 2008...................................                -                      32,326
  Common shares; $.0001 par value; 70,000,000 shares authorized at
    December 31, 2008 and 68,080,000 at December 31, 2007; 25,070,401
    shares issued and outstanding at December 31, 2008 and
    23,808,768 at December 31, 2007............................................                3                           2
  Excess shares; $.0001 par value; 30,000,000 shares authorized;
    no shares issued...........................................................                -                           -
  Additional paid-in capital on common shares..................................          528,452                     467,573
  Distributions in excess of earnings..........................................         (117,093)                    (97,460)
  Accumulated other comprehensive loss.........................................             (522)                        (56)
                                                                                ---------------------------------------------------
                                                                                         410,840                     402,385
                                                                                ---------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................................... $      1,156,205                   1,055,833
                                                                                ===================================================
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       32

<PAGE>


CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                                              Years Ended December 31,
                                                                                ----------------------------------------------------
                                                                                     2008              2007               2006
                                                                                ----------------------------------------------------
                                                                                       (In thousands, except per share data)
<S>                                                                                  <C>                <C>                 <C>
REVENUES
  Income from real estate operations......................................      $   168,327           150,083            132,417
  Other income............................................................              248                92                182
                                                                                ----------------------------------------------------
                                                                                    168,575           150,175            132,599
                                                                                ----------------------------------------------------
EXPENSES
  Expenses from real estate operations....................................           47,374            40,926             37,014
  Depreciation and amortization...........................................           51,221            47,738             41,198
  General and administrative..............................................            8,547             8,295              7,401
                                                                                ----------------------------------------------------
                                                                                    107,142            96,959             85,613
                                                                                ----------------------------------------------------

OPERATING INCOME..........................................................           61,433            53,216             46,986

OTHER INCOME (EXPENSE)
  Equity in earnings of unconsolidated investment.........................              316               285                287
  Gain on sales of non-operating real estate..............................              321             2,602                123
  Gain on sales of securities.............................................              435                 -                  -
  Interest income.........................................................              293               306                142
  Interest expense........................................................          (30,192)          (27,314)           (24,616)
  Minority interest in joint ventures.....................................             (626)             (609)              (600)
                                                                                ----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS.........................................           31,980            28,486             22,322
                                                                                ----------------------------------------------------

DISCONTINUED OPERATIONS
  Income from real estate operations......................................              130               288              1,185
  Gain on sales of real estate investments................................            2,032               960              5,727
                                                                                ----------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS ......................................            2,162             1,248              6,912
                                                                                ----------------------------------------------------

NET INCOME................................................................           34,142            29,734             29,234

  Preferred dividends-Series D............................................            1,326             2,624              2,624
  Costs on redemption of Series D preferred shares........................              682                 -                  -
                                                                                ----------------------------------------------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS...............................      $    32,134            27,110             26,610
                                                                                ====================================================

BASIC PER COMMON SHARE DATA
  Income from continuing operations.......................................      $      1.22              1.10                .88
  Income from discontinued operations.....................................              .09               .05                .31
                                                                                ----------------------------------------------------
  Net income available to common stockholders.............................      $      1.31              1.15               1.19
                                                                                ====================================================

  Weighted average shares outstanding.....................................           24,503            23,562             22,372
                                                                                ====================================================

DILUTED PER COMMON SHARE DATA
  Income from continuing operations.......................................      $      1.21              1.09                .87
  Income from discontinued operations.....................................              .09               .05                .30
                                                                                ----------------------------------------------------
  Net income available to common stockholders.............................      $      1.30              1.14               1.17
                                                                                ====================================================

  Weighted average shares outstanding.....................................           24,653            23,781             22,692
                                                                                ====================================================

Dividends declared per common share.......................................      $      2.08              2.00               1.96
                                                                                ====================================================
</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, 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
9,392 shares withheld to satisfy tax withholding
  obligations in connection with the vesting of
  restricted stock................................         -        -        (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
Comprehensive income
  Net income......................................         -        -           -          34,142               -           34,142
  Net unrealized change in fair value of
    interest rate swap............................         -        -           -               -            (466)            (466)
                                                                                                                         -----------
    Total comprehensive income....................                                                                          33,676
                                                                                                                         -----------
Common dividends declared - $2.08 per share.......         -        -           -         (51,767)              -          (51,767)
Preferred dividends declared - $1.0048 per share..         -        -           -          (1,326)              -           (1,326)
Redemption of 1,320,000 shares of Series D
  preferred stock.................................   (32,326)       -           -            (682)              -          (33,008)
Stock-based compensation, net of forfeitures......         -        -       3,176               -               -            3,176
Issuance of 1,198,700 shares of common stock,
  common stock offering, net of expenses..........         -        1      57,178               -               -           57,179
Issuance of 25,720 shares of common stock,
  options exercised...............................         -        -         526               -               -              526
Issuance of 6,627 shares of common stock,
  dividend reinvestment plan......................         -        -         281               -               -              281
7,150 shares withheld to satisfy tax withholding
  obligations in connection with the vesting of
  restricted stock ...............................         -        -        (282)              -               -             (282)
                                                   ---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2008........................ $       -        3     528,452        (117,093)           (522)         410,840
                                                   =================================================================================
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


                                       34

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                    Years Ended December 31,
                                                                                           -----------------------------------------
                                                                                               2008           2007         2006
                                                                                           -----------------------------------------
                                                                                                        (In thousands)
<S>                                                                                            <C>           <C>           <C>
OPERATING ACTIVITIES
  Net income..........................................................................     $   34,142         29,734       29,234
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization from continuing operations..........................         51,221         47,738       41,198
    Depreciation and amortization from discontinued operations........................             71            320        1,019
    Minority interest depreciation and amortization...................................           (201)          (174)        (151)
    Amortization of mortgage loan premiums............................................           (120)          (117)        (403)
    Gain on sales of land and real estate investments.................................         (2,353)        (3,562)      (5,850)
    Gain on sales of securities.......................................................           (435)             -            -
    Amortization of discount on mortgage loan receivable..............................           (117)             -            -
    Stock-based compensation expense..................................................          2,265          2,220        2,125
    Equity in earnings of unconsolidated investment, net of distributions.............            (36)           (35)          23
    Changes in operating assets and liabilities:
      Accrued income and other assets.................................................           (787)         3,506       (4,603)
      Accounts payable, accrued expenses and prepaid rent.............................            (40)         6,709        4,141
                                                                                           -----------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES.............................................         83,610         86,339       66,733
                                                                                           -----------------------------------------

INVESTING ACTIVITIES
  Real estate development.............................................................        (85,441)      (112,960)     (77,666)
  Purchases of real estate............................................................        (46,282)       (57,838)     (19,539)
  Real estate improvements............................................................        (15,210)       (15,881)     (13,470)
  Proceeds from sales of land and real estate investments.............................         11,728          6,357       38,412
  Advances on mortgage loans receivable...............................................         (4,994)             -         (185)
  Repayments on mortgage loans receivable.............................................            871             30           23
  Purchases of securities.............................................................         (7,534)             -            -
  Proceeds from sales of securities...................................................          7,969              -            -
  Changes in other assets and other liabilities.......................................        (13,289)        (3,786)      (2,792)
                                                                                           -----------------------------------------
NET CASH USED IN INVESTING ACTIVITIES.................................................       (152,182)      (184,078)     (75,217)
                                                                                           -----------------------------------------

FINANCING ACTIVITIES
  Proceeds from bank borrowings.......................................................        331,644        332,544      191,689
  Repayments on bank borrowings.......................................................       (357,202)      (226,166)    (279,387)
  Proceeds from mortgage notes payable................................................        137,000         75,000      116,000
  Principal payments on mortgage notes payable........................................        (16,434)       (26,963)     (45,071)
  Debt issuance costs.................................................................         (2,372)          (701)      (1,048)
  Distributions paid to stockholders..................................................        (54,174)       (50,680)     (47,843)
  Redemption of Series D preferred shares.............................................        (33,008)             -            -
  Proceeds from common stock offerings................................................         57,179              -       68,112
  Proceeds from exercise of stock options.............................................            526          1,475        2,154
  Proceeds from dividend reinvestment plan............................................            281            279          305
  Other...............................................................................          4,701         (7,265)       2,598
                                                                                           -----------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES.............................................         68,141         97,523        7,509
                                                                                           -----------------------------------------

DECREASE IN CASH AND CASH EQUIVALENTS.................................................           (431)          (216)        (975)
  CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................................            724            940        1,915
                                                                                           -----------------------------------------
  CASH AND CASH EQUIVALENTS AT END OF YEAR............................................     $      293            724          940
                                                                                           =========================================

SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid for interest, net of amount capitalized of $6,946, $6,086 and $4,336
    for 2008, 2007 and 2006, respectively.............................................     $   29,573         25,838       23,870
  Fair value of common stock awards issued to employees and directors, net of
    forfeitures.......................................................................          1,255          1,443        3,234
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       35

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008, 2007 AND 2006

(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, 2008,
2007 and 2006, 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 2008,  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 ended 2008, 2007 and 2006.

Federal Income Tax Treatment of Share Distributions
<TABLE>
<CAPTION>
                                                                                        Years Ended December 31,
                                                                                -----------------------------------------
                                                                                    2008           2007         2006
                                                                                -----------------------------------------
          <S>                                                                        <C>            <C>          <C>
        Common Share Distributions:
          Ordinary income.......................................                $   2.0758         1.7449       1.3660
          Return of capital.....................................                         -          .1273            -
          Unrecaptured Section 1250 long-term capital gain......                     .0042          .0236        .4160
          Other long-term capital gain..........................                         -          .1042        .1780
                                                                                -----------------------------------------
        Total Common Distributions..............................                $   2.0800         2.0000       1.9600
                                                                                =========================================

        Series D Preferred Share Distributions:
          Ordinary income.......................................                $   1.0024         1.8608       1.3852
          Unrecaptured Section 1250 long-term capital gain......                     .0024          .0234        .4220
          Other long-term capital gain..........................                         -          .1034        .1804
                                                                                -----------------------------------------
        Total Preferred D Distributions.........................                $   1.0048         1.9876       1.9876
                                                                                =========================================
</TABLE>

     EastGroup   adopted   Financial    Accounting    Standards   Board   (FASB)
Interpretation  No. 48 (FIN 48),  Accounting for Uncertainty in Income Taxes, an
Interpretation  of FASB  Statement  No.  109,  on  January  1,  2007.  With  few
exceptions,  the Company's 2004 and earlier tax years are closed for examination
by U.S.  federal,  state and  local  tax  authorities.  In  accordance  with the
provisions of FIN 48, the Company had no significant  uncertain tax positions as
of December 31, 2008 and 2007.
     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,  (5) mortgage loans having a different basis for
tax and financial  reporting  purposes,  thereby producing  different gains upon
collection of these loans,  and (6)  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
straight-line  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.
     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

                                       36

<PAGE>

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.
     The Company  recognizes  interest  income on mortgage  loans on the accrual
method unless a significant  uncertainty of collection  exists. If a significant
uncertainty  exists,  interest  income is recognized as collected.  Discounts on
mortgage  loans  receivable  are  amortized  over the lives of the loans using a
method that does not differ  materially  from the interest  method.  The Company
evaluates the collectability of both interest and principal on each of its loans
to determine whether the loans are impaired. A loan is considered to be impaired
when, based on current  information and events,  it is probable that the Company
will be unable to collect all amounts due according to the existing  contractual
terms.  When a loan  is  considered  to be  impaired,  the  amount  of  loss  is
calculated  by comparing  the recorded  investment  to the value  determined  by
discounting the expected future cash flows at the loan's effective interest rate
or  to  the  fair  value  of  the   underlying   collateral   (if  the  loan  is
collateralized)  less costs to sell. As of December 31, 2008 and 2007, there was
no  significant  uncertainty  of  collection;  therefore,  interest  income  was
recognized,  and the discount on mortgage loans  receivable  was  amortized.  In
addition,  the Company  determined that no allowance for  collectability  of the
mortgage notes receivable was necessary.

(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  (including
estimated future  expenditures  necessary to  substantially  complete the asset)
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.  As of December  31, 2008 and 2007,  the
Company  determined  that no  impairment  charges on the  Company's  real estate
properties  were necessary.  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 $42,166,000, $39,688,000 and $35,428,000 for 2008, 2007 and 2006,
respectively.

(e) Development
     During  the  period  in  which  a  property  is  under  development,  costs
associated with development (i.e., land,  construction costs,  interest expense,
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,  costs  are
capitalized  only for the portion of the building that remains vacant.  When the
property  becomes  80%  occupied  or one  year  after  completion  of the  shell
construction  (whichever  comes  first),  capitalization  of  development  costs
ceases.  The properties  are then  transferred  to real estate  properties,  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
meets the criteria established under SFAS No. 144, Accounting for the Impairment
or  Disposal  of  Long-Lived  Assets,  including  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  Statements of Income.  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 on the  Consolidated  Balance Sheets 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  over the term of each
loan  using  the  effective  interest  method.  Amortization  of loan  costs for
continuing  operations  was $975,000,  $911,000 and $819,000 for 2008,  2007 and
2006, respectively.

                                       37

<PAGE>

     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 $5,882,000,  $5,339,000 and $4,304,000 for 2008,
2007 and 2006, 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.
     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 $3,244,000,
$3,031,000 and $2,485,000 for 2008, 2007 and 2006, 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, 2008 is as follows:
<TABLE>
<CAPTION>
                 Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
            <S>                                               <C>
        2009......................................      $     1,990
        2010......................................            1,157
        2011......................................              614
        2012......................................              313
        2013......................................              150
</TABLE>

     During 2008,  EastGroup purchased five operating  properties,  one property
for  re-development, and 125 acres of developable  land.  The Company  purchased
these  real  estate  investments  for a total  cost  of  $58,202,000,  of  which
$39,018,000  was  allocated  to  real  estate   properties  and  $17,144,000  to
development.  In accordance with SFAS No. 141,  intangibles  associated with the
purchase of real estate were allocated as follows:  $2,143,000 to in-place lease
intangibles,  $252,000 to above market leases (both  included in Other Assets on
the  Consolidated  Balance Sheets) and $355,000 to below market leases (included
in Other  Liabilities  on the  Consolidated  Balance  Sheets).  These  costs are
amortized over the remaining lives of the associated leases in place at the time
of acquisition.
     Also in 2008, EastGroup acquired one non-operating  property as part of the
Orlando build-to-suit transaction with United Stationers.  The Company purchased
and then sold this building through its taxable REIT subsidiary and recognized a
gain of $294,000.
     The  total  cost of the seven  operating  properties  acquired  in 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,
$246,000 to above market  leases and $613,000 to below  market  leases.  Also in
2007,  EastGroup  acquired one property  for  re-development  and 140.6 acres of
developable land for $16,405,000.
     The Company  periodically  reviews the recoverability of goodwill (at least
annually) and the recoverability of other intangibles (on a quarterly basis) for
possible impairment. In management's opinion, no material impairment of goodwill
and other intangibles existed at December 31, 2008 and 2007.

(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

                                       38

<PAGE>

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 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)  Risks and Uncertainties
     The state of the overall  economy can  significantly  impact the  Company's
operational  performance  and  thus,  impact  its  financial  position.   Should
EastGroup  experience a significant decline in operational  performance,  it may
affect the  Company's  ability to make  distributions  to its  shareholders  and
service debt or meet other financial obligations.

(o) New Accounting Pronouncements
     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.  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  provisions of Statement 157, with the exception of
nonfinancial  assets and  liabilities,  were effective for financial  statements
issued for fiscal years  beginning  after November 15, 2007, and interim periods
within those fiscal years.  The  application  of Statement 157 to the Company in
2008 had an immaterial impact on the Company's  overall  financial  position and
results of operations.
     The FASB  deferred  for one year  Statement  157'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
are included in FASB Staff Position (FSP) FAS 157-2 and are effective for fiscal
years  beginning  after November 15, 2008.  The Company has determined  that the
adoption of these  provisions in 2009 had an immaterial  impact on the Company's
overall financial position and 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.  The adoption of Statement 141R in 2009 had an
immaterial  impact on the Company's  overall  financial  position and results of
operations.
     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  adoption  of  Statement  160 in 2009 had an
immaterial  impact on the Company's  overall  financial  position and results of
operations.
     In March 2008, the FASB issued SFAS No. 161,  Disclosures  about Derivative
Instruments and Hedging Activities,  which is an amendment of FASB Statement No.
133. SFAS No. 161 requires all entities with derivative  instruments to disclose
information regarding how and why the entity uses derivative instruments and how
derivative  instruments  and related hedged items affect the entity's  financial
position,  financial  performance,  and cash flows.  The  Statement is effective
prospectively for periods beginning on or after November 15, 2008.
     During 2008,  the FASB issued FSP FAS 142-3,  which amends the factors that
should be  considered  in developing  renewal or extension  assumptions  used to
determine the useful life of a recognized  intangible asset under FASB Statement
No. 142, Goodwill

                                       39

<PAGE>

and Other  Intangible  Assets.  FSP FAS  142-3  requires  an entity to  disclose
information that enables financial statement users to assess the extent to which
the  expected  future cash flows  associated  with the asset are affected by the
entity's intent and/or ability to renew or extend the arrangement. The intent of
this Staff Position is to improve the  consistency  between the useful life of a
recognized  intangible asset under Statement 142 and the period of expected cash
flows used to measure the fair value of the asset under Statement 141R and other
U.S. generally accepted  accounting  principles.  FSP FAS 142-3 is effective for
financial  statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years.  The adoption of FSP FAS 142-3 in
2009 had an immaterial impact on the Company's  overall  financial  position and
results of operations.
     Also in 2008,  the  Emerging  Issues  Task Force  (EITF)  issued EITF 08-6,
Equity  Method  Investment  Accounting  Considerations,  which  applies  to  all
investments  accounted for under the equity method and clarifies the  accounting
for  certain   transactions  and  impairment   considerations   involving  those
investments.  EITF 08-6 is effective for financial  statements issued for fiscal
years  beginning on or after December 15, 2008, and interim periods within those
fiscal years. The adoption of EITF 08-6 in 2009 had an immaterial  impact on the
Company's overall financial position and results of operations.

(p) Reclassifications
     Certain  reclassifications have been made in the 2007 and 2006 consolidated
financial statements to conform to the 2008 presentation.


(2) REAL ESTATE OWNED

     The Company's real estate  properties at December 31, 2008 and 2007 were as
follows:
<TABLE>
<CAPTION>
                                                                               December 31,
                                                                    --------------------------------
                                                                          2008             2007
                                                                    --------------------------------
                                                                              (In thousands)
              <S>                                                          <C>               <C>
        Real estate properties:
          Land..................................................    $    187,617          175,496
          Buildings and building improvements...................         867,506          763,980
          Tenant and other improvements.........................         197,159          175,490
        Development.............................................         150,354          152,963
                                                                    --------------------------------
                                                                       1,402,636        1,267,929
          Less accumulated depreciation.........................        (310,351)        (269,132)
                                                                    --------------------------------
                                                                    $  1,092,285          998,797
                                                                    ================================
</TABLE>

     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 2008
were $6,946,000 compared to $6,086,000 for 2007 and $4,336,000 for 2006.
     Total capital investment for development during 2008 was $85,441,000, which
primarily  consisted  of costs of  $81,642,000  as detailed  in the  development
activity  table  and  costs  of  $4,116,000  for  improvements  on  developments
transferred  to Real Estate  Properties  during the  12-month  period  following
transfer.
<TABLE>
<CAPTION>
                                                                                       Costs Incurred
                                                                         ------------------------------------------
                                                                            Costs          For the       Cumulative
                                                                         Transferred      Year Ended       as of        Estimated
                                                              Size       in 2008 (1)       12/31/08       12/31/08   Total Costs (2)
                                                         ---------------------------------------------------------------------------
DEVELOPMENT                                                (Unaudited)                                                 (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                          (Square feet)                     (In thousands)
<S>                                                             <C>            <C>             <C>           <C>             <C>
LEASE-UP
  40th Avenue Distribution Center, Phoenix, AZ.........         89,000   $       -            1,392          6,539           6,900
  Wetmore II, Building B, San Antonio, TX..............         55,000           -              750          3,633           3,900
  Beltway Crossing VI, Houston, TX.....................        128,000           -            2,084          5,607           6,700
  Oak Creek VI,  Tampa, FL.............................         89,000           -            1,682          5,587           6,100
  Southridge VIII, Orlando, FL.........................         91,000           -            1,961          6,001           6,900
  Techway SW IV, Houston, TX...........................         94,000           -            2,875          4,843           6,100
  SunCoast III, Fort Myers, FL.........................         93,000           -            2,543          6,718           8,400
  Sky Harbor, Phoenix, AZ..............................        264,000           -            8,821         22,829          25,100
  World Houston 26, Houston, TX........................         59,000       1,110            1,708          2,818           3,300
  12th Street Distribution Center, Jacksonville, FL....        150,000           -            4,850          4,850           4,900
                                                         ---------------------------------------------------------------------------
Total Lease-up.........................................      1,112,000       1,110           28,666         69,425          78,300
                                                         ---------------------------------------------------------------------------
</TABLE>

                                       40

<PAGE>
<TABLE>
<CAPTION>
                                                                                       Costs Incurred
                                                                         ------------------------------------------
                                                                            Costs          For the       Cumulative
                                                                         Transferred      Year Ended       as of        Estimated
                                                              Size       in 2008 (1)       12/31/08       12/31/08   Total Costs (2)
                                                         ---------------------------------------------------------------------------
DEVELOPMENT                                                (Unaudited)                                                 (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                          (Square feet)                     (In thousands)
<S>                                                             <C>            <C>             <C>           <C>             <C>
UNDER CONSTRUCTION
  Beltway Crossing VII, Houston, TX....................         95,000       2,123            2,090          4,213           5,900
  Country Club III & IV, Tucson, AZ....................        138,000       2,552            5,495          8,047          11,200
  Oak Creek IX, Tampa, FL..............................         86,000       1,369            2,831          4,200           5,500
  Blue Heron III, West Palm Beach, FL..................         20,000         863            1,035          1,898           2,600
  World Houston 28, Houston, TX........................         59,000         733            1,647          2,380           4,800
  World Houston 29, Houston, TX........................         70,000         849            1,037          1,886           4,800
  World Houston 30, Houston, TX........................         88,000       1,591                -          1,591           5,800
                                                         ---------------------------------------------------------------------------
Total Under Construction...............................        556,000      10,080           14,135         24,215          40,600
                                                         ---------------------------------------------------------------------------

PROSPECTIVE DEVELOPMENT (PRIMARILY LAND)
  Tucson, AZ...........................................         70,000      (2,552)             924            417           3,500
  Tampa, FL............................................        249,000      (1,369)             682          3,890          14,600
  Orlando, FL..........................................      1,254,000           -           10,691         14,453          78,700
  West Palm Beach, FL..................................              -        (863)              52              -               -
  Fort Myers, FL.......................................        659,000           -            2,195         15,014          48,100
  Dallas, TX...........................................         70,000           -              570            570           5,000
  El Paso, TX..........................................        251,000           -                -          2,444           9,600
  Houston, TX..........................................      1,064,000      (6,406)           4,643         12,786          68,100
  San Antonio, TX......................................        595,000           -            2,873          5,439          37,500
  Charlotte, NC........................................         95,000           -              995            995           7,100
  Jackson, MS..........................................         28,000           -                1            706           2,000
                                                         ---------------------------------------------------------------------------
Total Prospective Development..........................      4,335,000     (11,190)          23,626         56,714         274,200
                                                         ---------------------------------------------------------------------------
                                                             6,003,000   $       -           66,427        150,354         393,100
                                                         ===========================================================================

DEVELOPMENTS COMPLETED AND TRANSFERRED
TO REAL ESTATE PROPERTIES DURING 2008
  Beltway Crossing IV, Houston, TX.....................         55,000   $       -                5          3,365
  Beltway Crossing III, Houston, TX....................         55,000           -               14          2,866
  Southridge XII, Orlando, FL..........................        404,000           -            3,421         18,521
  Arion 18, San Antonio, TX............................         20,000           -              638          2,593
  Southridge VII, Orlando, FL..........................         92,000           -              414          6,500
  Wetmore II, Building C, San Antonio, TX..............         69,000           -              185          3,682
  Interstate Commons III, Phoenix, AZ..................         38,000           -               45          3,093
  SunCoast I, Fort Myers, FL...........................         63,000           -              149          5,225
  World Houston 27, Houston, TX........................         92,000           -            1,765          4,248
  Wetmore II, Building D, San Antonio, TX..............        124,000           -            4,965          7,950
  World Houston 24, Houston, TX........................         93,000           -              739          5,904
  Centennial Park, Denver, CO..........................         68,000           -              690          5,437
  World Houston 25, Houston, TX........................         66,000           -              536          3,730
  Beltway Crossing V, Houston, TX......................         83,000           -              984          4,730
  Wetmore II, Building A, San Antonio, TX..............         34,000           -              576          3,377
  Oak Creek A & B, Tampa, FL...........................         35,000           -               89          3,030
                                                         -----------------------------------------------------------
Total Transferred to Real Estate Properties............      1,391,000   $       -           15,215         84,251  (3)
                                                         ===========================================================
</TABLE>
(1)  Represents costs transferred from Prospective  Development (primarily land)
     to Under Construction (or subsequently to Lease-up) during the period.
(2)  Included in these costs are  development  obligations  of $11.1 million and
     tenant  improvement   obligations  of  $2.0  million  on  properties  under
     development.
(3)  Represents cumulative costs at the date of transfer.

     In 2008,  two  operating  properties,  North  Stemmons I in Dallas and Delp
Distribution  Center III in Memphis,  were  transferred  to real estate held for
sale and were then disposed of.
     Also during 2008,  EastGroup  acquired one non-operating  property (128,000
square  feet)  as part of the  Orlando  build-to-suit  transaction  with  United
Stationers. The Company purchased and then sold the building through its taxable
REIT subsidiary and recognized a gain of $294,000.  In addition,  EastGroup sold
41 acres of residential land in San Antonio, Texas, for $841,000 with no gain or
loss. This property was acquired as part of the Company's Alamo Ridge industrial
land acquisition in September 2007.

                                       41

<PAGE>

     In 2007, one Memphis property,  Delp Distribution Center I, was transferred
to real estate held for sale and was  subsequently  sold.  Also during 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.
     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  Statements of Income.  No interest  expense was
allocated  to the  properties  that are held  for sale or whose  operations  are
included  under  Discontinued  Operations.  A  summary  of gain on sales of real
estate for the years ended December 31, 2008, 2007 and 2006 follows:

Gain on Sales of Real Estate
<TABLE>
<CAPTION>
                                                                                   Net               Discount
                                                                       Date       Sales              on Note    Deferred  Recognized
     Real Estate Properties            Location           Size         Sold       Price    Basis    Receivable    Gain       Gain
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  (In thousands)
<S>                                       <C>              <C>         <C>         <C>      <C>         <C>         <C>       <C>
2008
North Stemmons I...................  Dallas, TX        123,000 SF    05/12/08   $ 4,633     2,684           -          -      1,949
United Stationers Tampa Building...  Tampa, FL         128,000 SF    08/08/08     5,717     5,225         198          -        294
Delp Distribution Center III.......  Memphis, TN        20,000 SF    08/20/08       589       506           -          -         83
Alamo Ridge residential land.......  San Antonio, TX   41.0 Acres    09/08/08       762       762           -          -          -
Deferred gain recognized from
    previous sales.................                                                                                              27
                                                                                ----------------------------------------------------
                                                                                $11,701     9,177         198          -      2,353
                                                                                ====================================================
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
                                                                                ====================================================
</TABLE>
     The following schedule indicates approximate future minimum rental receipts
under  non-cancelable  leases for real estate  properties by year as of December
31, 2008:

Future Minimum Rental Receipts Under Non-cancelable Leases
<TABLE>
<CAPTION>
                  Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
             <S>                                             <C>
        2009......................................      $    127,090
        2010......................................           102,816
        2011......................................            77,383
        2012......................................            56,227
        2013......................................            37,855
        Thereafter................................            67,833
                                                        --------------
           Total minimum receipts.................      $    469,204
                                                        ==============
</TABLE>

Ground Leases
     As of December 31, 2008, 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, 2008,  2007 and 2006 were
$717,000, $708,000 and $707,000, 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

                                       42

<PAGE>

date or the Consumer Price Index  percentage  increase since the base rent date.
The following schedule  indicates  approximate future minimum lease payments for
these properties by year as of December 31, 2008:

Future Minimum Ground Lease Payments
<TABLE>
<CAPTION>
                  Years Ending December 31,             (In thousands)
        --------------------------------------------------------------
            <S>                                              <C>
        2009......................................      $       720
        2010......................................              720
        2011......................................              720
        2012......................................              720
        2013......................................              720
        Thereafter................................           15,832
                                                        --------------
           Total minimum payments.................      $    19,432
                                                        ==============
</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 $2,666,000  at December 31, 2008.  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  25-year  term and an
interest  rate of 5.31%  through June 30, 2015,  when the rate will adjust on an
annual basis according to the "A" Moody's Daily  Long-Term  Corporate Bond Yield
Average.  The  lender  has the  option  to call  the  note  on  June  30,  2015.
EastGroup's  share of this  mortgage  was  $6,159,000  at December  31, 2008 and
$6,309,000 at December 31, 2007.

(4) MORTGAGE LOANS RECEIVABLE

     In connection with the sale of a property in 2008,  EastGroup  advanced the
buyer  $4,994,000 in a first  mortgage  recourse  loan. In September,  EastGroup
received a principal payment of $844,000. The mortgage loan has a five-year term
and calls for monthly interest  payments  (interest  accruals and payments begin
January 1, 2009)  through the  maturity  date of August 8, 2013,  when a balloon
payment  for the  remaining  principal  balance  of  $4,150,000  is due.  At the
inception of the loan,  EastGroup  recognized a discount on the loan of $198,000
and recognized  amortization of the discount of $117,000  during 2008.  Mortgage
loans  receivable,  net  of  discount,  are  included  in  Other  Assets  on the
Consolidated Balance Sheets.

(5) OTHER ASSETS

     A summary of the Company's Other Assets follows:
<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                      --------------------------
                                                                                         2008            2007
                                                                                      --------------------------
                                                                                            (In thousands)
        <S>                                                                              <C>             <C>
     Leasing costs (principally commissions), net of accumulated amortization....     $  20,866         18,693
     Straight-line rent receivable, net of allowance for doubtful accounts.......        14,914         14,016
     Accounts receivable, net of allowance for doubtful accounts.................         4,094          3,587
     Acquired in-place lease intangibles, net of accumulated amortization
       of $5,626 and $5,308 for 2008 and 2007, respectively......................         4,369          5,303
     Mortgage  loans  receivable,  net of discount of $81 and $0 for 2008 and
       2007, respectively........................................................         4,174            132
     Loan costs, net of accumulated amortization.................................         4,246          2,848
     Goodwill....................................................................           990            990
     Prepaid expenses and other assets...........................................         7,308          8,113
                                                                                      --------------------------
                                                                                      $  60,961         53,682
                                                                                      ==========================
</TABLE>

                                       43

<PAGE>

(6) NOTES PAYABLE TO BANKS

     The  Company has a  four-year,  $200  million  unsecured  revolving  credit
facility with a group of seven banks that matures in January  2012.  The Company
customarily  uses this line of credit for  acquisitions  and  developments.  The
interest rate on this facility is based on the LIBOR index and varies  according
to total  liability  to total  asset  value  ratios  (as  defined  in the credit
agreement),  with an annual facility fee of 15 to 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  has  an  option  for a  one-year  extention  at the  Company's  request.
Additionally,  there is a provision under which the line may be expanded by $100
million contingent upon obtaining increased commitments from existing lenders or
commitments from additional  lenders. At December 31, 2008, the weighted average
interest  rate was  1.23% on a balance  of  $107,000,000.   The  Company  had an
additional $93,000,000 remaining on this line of credit at that date.
     The Company also has a four-year,  $25 million  unsecured  revolving credit
facility  with PNC Bank,  N.A.  that matures in January  2012.  This facility is
customarily  used for working  capital needs.  The interest rate on this working
cash line is based on LIBOR and varies  according  to total  liability  to total
asset value ratios (as defined in the credit  agreement).  Under this  facility,
the Company's current interest rate is LIBOR plus 75 basis points with no annual
facility fee. At December 31, 2008,  the interest rate was 1.19% on a balance of
$2,886,000.  The Company had an additional $22,114,000 remaining on this line of
credit at that date.
     Average bank borrowings  were  $125,647,000 in 2008 compared to $96,513,000
in 2007 with weighted  average interest rates of 3.94% in 2008 compared to 6.36%
in 2007.  Weighted average  interest rates including  amortization of loan costs
were  4.17% for 2008 and 6.73% for  2007.  Amortization  of bank loan  costs was
$295,000, $353,000 and $355,000 for 2008, 2007 and 2006, respectively.
     The Company's bank credit  facilities have certain  restrictive  covenants,
such as maintaining debt service  coverage and leverage ratios,  and the Company
was in compliance with all of its debt covenants at December 31, 2008.
     The Company has an interest  rate swap  agreement  to hedge its exposure to
the variable  interest rate on the Company's  $9,365,000 Tower Automotive Center
recourse  mortgage (See Notes 7 and 19). 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 12/31/08        at 12/31/07
        ----------------------------------------------------------------------------------------------------------------------
                        (In thousands)                                                                (In thousands)
             <S>             <C>                <C>               <C>            <C>              <C>                <C>
            Swap          $9,365 (1)          12/31/10       1 month LIBOR       4.03%          ($522)              ($56)
</TABLE>
(1)  This  mortgage  is  backed by a letter of  credit  totaling  $9,473,000  at
     December  31,  2008.  The  letter  of credit  expired  in  January  2009 in
     connection with the repayment of the variable rate demand note on the Tower
     Automotive Center (See Note 19).

                                       44

<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, 2008   2008       2007
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          (In thousands)
<S>                                                           <C>           <C>       <C>           <C>                <C>     <C>
Dominguez, Kingsview, Walnut, Washington,
  Industry Distribution Center I and Shaw...............      6.800%     358,770    03/01/09 (1)  $   52,025      31,716     33,787
Oak Creek Distribution Center I.........................      8.875%      52,109    09/01/09           5,477         452      1,010
Tower Automotive Center (recourse) (2)..................      6.030%  Semiannual    01/15/11           8,897       9,365      9,710
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          40,687      38,549     39,615
America Plaza, Central Green and World Houston 3-9......      7.920%     191,519    05/10/11          24,568      23,873     24,264
University Business Center (120 & 130 Cremona)..........      6.430%      81,856    05/15/12           9,166       4,483      5,154
University Business Center (125 & 175 Cremona)..........      7.980%      88,607    06/01/12          12,581       9,738     10,012
Oak Creek Distribution Center IV........................      5.680%      31,253    06/01/12           6,267       3,990      4,134
Airport Distribution, Southpointe, Broadway I, III  &
  IV, Southpark, 51st Avenue, Chestnut, Main Street,
  Interchange Business Park, North Stemmons I land
  and World Houston 12 & 13.............................      6.860%     279,149    09/01/12          38,892      35,289     36,184
Interstate Distribution Center - Jacksonville...........      5.640%      31,645    01/01/13           6,213       4,612      4,724
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          42,350      39,839     41,028
Southridge XII, Airport Commerce Center I & II,
  Interchange Park, Ridge Creek III, World Houston 24,
  25 & 27 and Waterford Distribution Center (3).........      5.750%     414,229    01/05/14          71,844      59,000          -
Kyrene Distribution Center I............................      9.000%      11,246    07/01/14           2,209         591        669
World Houston 17, Kirby, Americas Ten I, Shady Trail,
  Palm River North I, II & III and Westlake I & II (4)..      5.680%     175,479    10/10/14          27,982      29,415     29,837
Beltway II, III & IV, Eastlake, Fairgrounds I-IV,
  Nations Ford I-IV, Techway Southwest III,
  Westinghouse, Wetmore I-IV and World Houston 15 & 22..      5.500%     536,552    04/05/15          76,133      76,544          -
Country Club I, Lake Pointe, Techway Southwest II and
  World Houston 19 & 20.................................      4.980%     256,952    12/05/15          21,784      35,316     36,605
Huntwood and Wiegman Distribution Centers...............      5.680%     265,275    09/05/16          22,730      35,546     36,676
Alamo Downs, Arion 1-15 & 17, Rampart I, II & III,
  Santan 10 and World Houston 16........................      5.970%     557,467    11/05/16          58,999      73,502     75,731
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          60,118      72,354     74,485
Blue Heron Distribution Center II.......................      5.390%      16,176    02/29/20           5,172       1,632      1,735
                                                                                                  ----------------------------------
                                                                                                  $  594,094     585,806    465,360
                                                                                                  ==================================
</TABLE>

(1)  This mortgage was repaid on February 13, 2009.
(2)  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  resulted
     in an  effective  interest  rate of 5.30% until the fourth  quarter of 2008
     when the  weighted  average  rate  was  8.02%  (See  Note  19).  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.
(3)  This mortgage has a recourse liability of $5 million which will be released
     based on the  secured  properties  generating  certain  base  rent  amounts
     subsequent to January 1, 2011.
(4)  Interest only was paid on this note until November 2006.

     The Company's  mortgage notes payable have certain  restrictive  covenants,
such as maintaining  debt service  coverage and leverage  ratios and maintaining
insurance  coverage,  and the  Company  was in  compliance  with all of its debt
covenants at December 31, 2008.
     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, 2008 are as follows:

                                       45

<PAGE>
<TABLE>
<CAPTION>
                Years Ending December 31,            (In thousands)
        ------------------------------------------------------------
          <S>                                             <C>
        2009......................................    $    49,168
        2010......................................         18,185
        2011......................................         84,786
        2012......................................         62,117
        2013......................................         53,232
</TABLE>

(8) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     A summary of the Company's Accounts Payable and Accrued Expenses follows:
<TABLE>
<CAPTION>
                                                                     December 31,
                                                               ------------------------
                                                                  2008          2007
                                                               ------------------------
                                                                    (In thousands)
         <S>                                                      <C>           <C>
        Property taxes payable............................     $   11,136       9,744
        Development costs payable.........................          7,127      13,022
        Interest payable..................................          2,453       2,689
        Dividends payable.................................          1,257       2,337
        Other payables and accrued expenses...............         10,865       6,387
                                                               ------------------------
                                                               $   32,838      34,179
                                                               ========================
</TABLE>
(9) OTHER LIABILITIES

     A summary of the Company's Other Liabilities follows:
<TABLE>
<CAPTION>
                                                                     December 31,
                                                               ------------------------
                                                                  2008          2007
                                                               ------------------------
                                                                    (In thousands)
            <S>                                                   <C>            <C>
        Security deposits.................................     $    7,560       7,529
        Prepaid rent and other deferred income............          5,430       6,911
        Other liabilities.................................          1,309       1,713
                                                               ------------------------
                                                               $   14,299      16,153
                                                               ========================
</TABLE>

(10) COMMON STOCK ACTIVITY

     The following  table presents the common stock activity for the three years
ended December 31, 2008:
<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                                               ------------------------------------------------
                                                                    2008              2007            2006
                                                               ------------------------------------------------
                                                                                Common Shares
            <S>                                                      <C>               <C>             <C>
        Shares outstanding at beginning of year...........        23,808,768        23,701,275     22,030,682
        Common stock offerings............................         1,198,700                 -      1,437,500
        Stock options exercised...........................            25,720            67,150        118,269
        Dividend reinvestment plan........................             6,627             6,281          6,236
        Incentive restricted stock granted................            35,222            44,646        118,334
        Incentive restricted stock forfeited..............            (2,520)           (2,250)        (3,756)
        Director common stock awarded.....................             5,034             3,048          3,402
        Restricted stock withheld for tax obligations.....            (7,150)          (11,382)        (9,392)
                                                               ------------------------------------------------
        Shares outstanding at end of year.................        25,070,401        23,808,768     23,701,275
                                                               ================================================
</TABLE>

Common Stock Issuances
     During the second quarter of 2008,  EastGroup sold 1,198,700  shares of its
common stock to Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated.  The net
proceeds were $57.2 million after deducting the underwriting  discount and other
offering  expenses.   The  Company  used  the  proceeds  to  repay  indebtedness
outstanding  under its revolving credit facility and for other general corporate
purposes.
     During the third quarter of 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 $68.1 million after deducting the underwriting  discount and other offering
expenses.

                                       46

<PAGE>

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.

Shareholder Rights Plan
     In December  1998,  EastGroup  adopted a Shareholder  Rights Plan. The Plan
expired on December 3, 2008.

(11) STOCK-BASED COMPENSATION

     The Company  adopted  SFAS No. 123R 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.  This plan  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  1,686,723;  1,715,523;  and 1,751,796 at December 31, 2008, 2007
and 2006,  respectively.  Typically,  the  Company  issues new shares to fulfill
stock grants or upon the exercise of stock options.
     Stock-based  compensation  was  $2,931,000,  $3,043,000  and $2,788,000 for
2008, 2007 and 2006, respectively, of which $866,000, $978,000 and $768,000 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 generally 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 certain
annual  performance  goals and multi-year market conditions as determined by the
Compensation  Committee.  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 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 2008,  the Company  granted  shares to  executive
officers  contingent  upon the attainment of certain annual  performance  goals.
These goals are for the period ended  December  31,  2008,  and any shares to be
issued upon  attainment of these goals will be  determined  by the  Compensation
Committee in the first quarter of 2009.  The number of shares to be issued could
range from zero to 44,802.  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.  The  weighted  average  grant date fair value for these  shares is
$47.65.
     In March 2008,  34,668 shares were awarded  based on the  attainment of the
2007 annual  performance  goals at a weighted  average  grant date fair value of
$49.14 per share.  These shares  vested 20% on March 6, 2008,  and will vest 20%
per year on  January  1,  2009,  2010,  2011 and  2012.  Also  during  2008,  an
additional  554 shares  were  awarded to  non-executive  officers  at a weighted
average  grant date fair  value of $29.73.  These  shares  are  subject  only to
continued  service  as of the  vesting  date and vest 50% per year on January 1,
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.  The number of shares to be
issued  could range from zero to 40,314.  These shares will vest over four years
following  evaluation of the  three-year  performance  measurement  period ended
December 31, 2008.

                                       47

<PAGE>

     During 2008, the  Compensation  Committee  approved the full vesting of the
restricted  shares of the Company's  President and CEO, David H. Hoster II, upon
his retirement on or after January 1, 2012, to the extent the performance period
has been completed as of such retirement date.
     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, 2008,  there was $3,462,000 of  unrecognized  compensation  cost
related to  nonvested  restricted  stock  compensation  that is  expected  to be
recognized over a weighted average period of 3.06 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 2008,  2007 and 2006. The table does not include the
shares  granted  in 2008 or 2006 that are  contingent  on  performance  goals or
market  conditions.  Of the shares  that  vested in 2008,  2007 and 2006,  7,150
shares,  11,382  shares and 9,392  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 2008, 2007 and 2006 was
$1,720,000,  $1,961,000 and $4,511,000 respectively. As of the vesting date, the
fair value of shares  that vested  during  2008,  2007 and 2006 was  $3,343,000,
$4,350,000, and $4,849,000, respectively.
<TABLE>
<CAPTION>
Restricted Stock Activity:                                        Years Ended December 31,
---------------------------------------------------------------------------------------------------------------------
                                                 2008                      2007                       2006
                                       ------------------------------------------------------------------------------
                                                     Weighted                  Weighted                    Weighted
                                                      Average                   Average                     Average
                                          Shares    Grant Date     Shares     Grant Date      Shares      Grant Date
                                                    Fair Value                Fair Value                  Fair Value
                                       ------------------------------------------------------------------------------
<S>                                         <C>         <C>          <C>          <C>           <C>           <C>
Nonvested at beginning of year....       144,089    $   31.65      196,671    $   28.66        177,444    $   23.01
Granted (1).......................        35,222        48.83       44,646        43.93        118,334        38.12
Forfeited.........................        (2,520)       26.51       (2,250)       23.52         (3,756)       22.07
Vested............................       (89,106)       33.37      (94,978)       31.42        (95,351)       30.15
                                       -----------               -----------               --------------
Nonvested at end of year..........        87,685        36.95      144,089        31.65        196,671        28.66
                                       ===========               ===========               ==============
</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,
2008:
<TABLE>
<CAPTION>
Nonvested Shares Vesting Schedule              Number of Shares
----------------------------------------------------------------
<S>                                                  <C>
2009......................................              49,629
2010......................................              16,957
2011......................................              14,169
2012......................................               6,930
                                               -----------------
Total Nonvested Shares....................              87,685
                                               =================
</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 2008,  2007 and 2006 was $585,000,
$1,492,000 and  $3,641,000,  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 2008, 2007 and 2006.
<TABLE>
<CAPTION>
Stock Option Activity:                                                   Years Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                                 2008                            2007                              2006
                                       ---------------------------------------------------------------------------------------------
                                                         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....      76,656        $   20.49         135,056       $   21.10          251,075      $     19.80
Exercised...........................     (21,220)           20.43         (58,400)          21.89         (116,019)           18.29
                                       -----------                      -----------                     ------------
Outstanding at end of year..........      55,436            20.51          76,656           20.49          135,056            21.10
                                       ===========                      ===========                     ============

Exercisable at end of year..........      55,436        $   20.51      76,656           $   20.49          135,056      $     21.10
</TABLE>
<TABLE>
<CAPTION>
Employee outstanding stock options at December 31, 2008, 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            55,436         0.7 years               $ 20.51          $835,000
</TABLE>

                                       48

<PAGE>

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 5,034 shares, 3,048 shares and 3,402 shares of common
stock for 2008, 2007 and 2006, respectively. In addition, in 2005, 481 shares of
restricted  stock at $41.57 were granted,  of which 360 shares were vested as of
December 31, 2008. The restricted stock vests 25% per year for four years. As of
December 31, 2008, there was $2,500 of unrecognized compensation cost related to
nonvested restricted stock compensation that is expected to be recognized over a
weighted  average period of 0.50 years.  There were 36,835 shares  available for
grant under the 2005 Plan at December 31, 2008.
     Stock-based  compensation expense for directors was $200,000,  $155,000 and
$105,000 for 2008, 2007 and 2006, respectively.  The intrinsic value realized by
directors  from the exercise of options was  $120,000,  $218,000 and $70,000 for
2008, 2007 and 2006, 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 2008, 2007 and
2006.
<TABLE>
<CAPTION>
Stock Option Activity:                                                   Years Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                                 2008                            2007                              2006
                                       ---------------------------------------------------------------------------------------------
                                                         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....      42,750        $   23.01          51,500      $    22.93           53,750      $     22.58
Exercised...........................      (4,500)           20.63          (8,750)          22.49           (2,250)           14.58
                                       -----------                      -----------                     ------------
Outstanding at end of year..........      38,250            23.29          42,750           23.01           51,500            22.93
                                       ===========                      ===========                     ============

Exercisable at end of year..........      38,250        $   23.29          42,750      $    23.01           51,500      $     22.93
</TABLE>
<TABLE>
<CAPTION>
Director outstanding stock options at December 31, 2008, all exercisable:
----------------------------------------------------------------------------------------------
                                      Weighted Average      Weighted Average      Intrinsic
Exercise Price Range     Number          Remaining           Exercise Price         Value
                                      Contractual Life
----------------------------------------------------------------------------------------------
<S>                        <C>              <C>                    <C>               <C>
$  20.25-26.60           38,250          2.7 years               $ 23.29          $470,000
</TABLE>


(12) REDEMPTION OF SERIES D PREFERRED SHARES

     On July 2,  2008,  EastGroup  redeemed  all  1,320,000  shares of its 7.95%
Series D Cumulative  Redeemable  Preferred Stock at a redemption price of $25.00
per share ($33,000,000) plus accrued and unpaid dividends of $.011 per share for
the period from July 1, 2008,  through and including the redemption date, for an
aggregated  redemption price of $25.011 per Series D Preferred  Share.  Original
issuance  costs of  $674,000  and  additional  redemption  costs of $8,000  were
charged against net income available to common  stockholders in conjunction with
the redemption of these shares.
     The Company declared  dividends of $1.0048 per Series D Preferred share for
2008 and $1.9876 per share for the years 2007 and 2006.

(13) COMPREHENSIVE INCOME

     Comprehensive  income is comprised of net income plus all other  changes in
equity from non-owner sources. The components of accumulated other comprehensive
income  (loss)  for  2008,   2007  and  2006  are  presented  in  the  Company's
Consolidated  Statements of Changes in  Stockholders'  Equity and are summarized
below.
<TABLE>
<CAPTION>
                                                                            ----------------------------------
                                                                               2008        2007        2006
                                                                            ----------------------------------
                                                                                      (In thousands)
           <S>                                                                 <C>           <C>         <C>
        ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
        Balance at beginning of year.....................................   $    (56)        314         311
            Change in fair value of interest rate swap...................       (466)       (370)          3
                                                                            -----------------------------------
        Balance at end of year...........................................   $   (522)        (56)        314
                                                                            ===================================
</TABLE>
                                       49

<PAGE>

(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>
                                                                            ----------------------------------
                                                                               2008        2007        2006
                                                                            ----------------------------------
                                                                                      (In thousands)
             <S>                                                               <C>          <C>         <C>
        BASIC EPS COMPUTATION
          Numerator-net income available to common stockholders..........   $   32,134      27,110     26,610
          Denominator-weighted average shares outstanding................       24,503      23,562     22,372
        DILUTED EPS COMPUTATION
          Numerator-net income available to common stockholders..........   $   32,134      27,110     26,610
          Denominator:
            Weighted average shares outstanding..........................       24,503      23,562     22,372
            Common stock options.........................................           54          87        143
            Nonvested restricted stock...................................           96         132        177
                                                                            ----------------------------------
               Total Shares..............................................       24,653      23,781     22,692
                                                                            ==================================
</TABLE>


(15) QUARTERLY RESULTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
                                                             2008 Quarter Ended (1)                  2007 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...............................     $ 40,833     41,564    43,426    44,117    35,977    37,078    39,137    41,176
        Expenses...............................      (32,824)   (33,808)  (35,644)  (35,684)  (29,467)  (30,992)  (31,811)  (32,612)
                                                    --------------------------------------------------------------------------------
        Income from continuing operations......        8,009      7,756     7,782     8,433     6,510     6,086     7,326     8,564
        Income from discontinued operations....           82      1,990        90         -        77        46       388       737
                                                    --------------------------------------------------------------------------------
        Net income.............................        8,091      9,746     7,872     8,433     6,587     6,132     7,714     9,301
        Preferred dividends - Series D.........         (656)      (656)      (14)        -      (656)     (656)     (656)     (656)
        Costs on redemption of Series D
           Preferred shares....................            -          -      (682)        -         -         -         -         -
                                                    --------------------------------------------------------------------------------
        Net income available to common
           stockholders........................     $  7,435      9,090     7,176     8,433     5,931     5,476     7,058     8,645
                                                    ================================================================================
        BASIC PER SHARE DATA(2)
        Net income available to common
           stockholders........................     $    .31        .37       .29       .34       .25       .23       .30       .37
                                                    ================================================================================
        Weighted average shares outstanding....       23,684     24,488    24,908    24,923    23,531    23,550    23,562    23,605
                                                    ================================================================================
        DILUTED PER SHARE DATA(2)
        Net income available to common
           stockholders........................     $    .31        .37       .29       .34       .25       .23       .30       .36
                                                    ================================================================================
        Weighted average shares outstanding....       23,829     24,647    25,069    25,059    23,769    23,776    23,778    23,819
                                                    ================================================================================
</TABLE>

(1)  Certain  reclassifications  have been made to the quarterly data previously
     disclosed  due to the disposal of properties in 2008 and 2007 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.

(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 $467,000, $429,000
and $378,000 for 2008, 2007 and 2006, respectively.

                                       50

<PAGE>

(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

     SFAS No. 157, Fair Value Measurements, defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction  between market  participants at the measurement  date. SFAS No. 157
also  provides  guidance  for using fair value to measure  financial  assets and
liabilities.  The  Statement  requires  disclosure  of the level within the fair
value  hierarchy  in  which  the  fair  value   measurements   fall,   including
measurements  using  quoted  prices in active  markets for  identical  assets or
liabilities  (Level 1), quoted prices for similar  instruments in active markets
or quoted  prices for identical or similar  instruments  in markets that are not
active (Level 2), and  significant  valuation  assumptions  that are not readily
observable in the market (Level 3). The Company's interest rate swap is reported
at fair  value  and is shown on the  Consolidated  Balance  Sheets  under  Other
Liabilities.  The  fair  value  of the  interest  rate  swap  is  determined  by
estimating  the  expected  cash  flows  over  the  life of the  swap  using  the
mid-market  rate and price  environment  as of the last trading day of the year.
This market  information  is  considered  a Level 2 input as defined by SFAS No.
157.
     The following table presents the carrying amounts and estimated fair values
of the  Company's  financial  instruments  in  accordance  with  SFAS  No.  107,
Disclosures About Fair Value of Financial Instruments,  at December 31, 2008 and
2007.
<TABLE>
<CAPTION>
                                            --------------------------------------------------
                                                        2008                     2007
                                            --------------------------------------------------
                                               Carrying      Fair       Carrying      Fair
                                                Amount       Value       Amount       Value
                                            --------------------------------------------------
                                                                  (In thousands)
            <S>                                   <C>        <C>           <C>         <C>
        Financial Assets
          Cash and cash equivalents......   $      293          293          724         724
          Mortgage loans receivable,
            net of discount..............        4,174        4,189          132         133
        Financial Liabilities
          Mortgage notes payable.........      585,806      555,096      465,360     470,335
          Notes payable to banks.........      109,886      101,484      135,444     135,444
</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 the 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.
Mortgage  loans  receivable,  net of  discount:  The fair value is  estimated by
discounting the future cash flows using the current rates at which similar loans
would  be made  to  borrowers  with  similar  credit  ratings  and for the  same
remaining maturities.
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:  For 2008, the fair value of the Company's notes payable
to banks is  estimated  by  discounting  expected  cash flows at current  market
rates.  For 2007,  the  carrying  amounts  approximate  fair value  because  the
associated credit spread approximates market.

(19) SUBSEQUENT EVENTS

     On January 2, 2009,  the mortgage  note payable of  $9,365,000 on the Tower
Automotive Center was repaid and replaced with another mortgage note payable for
the same amount. The previous recourse mortgage was a variable rate demand note,
and  EastGroup  had entered into a swap  agreement to fix the LIBOR rate. In the
fourth  quarter of 2008,  the bond spread over LIBOR  required to re-market  the
notes  increased  from a historical  range of 3 to 25 basis points to a range of
100 to 500  basis  points.  Due to the  volatility  of the  bond  spread  costs,
EastGroup redeemed the note and replaced it with a recourse mortgage with a bank
on the same payment terms except for the interest rate.  The effective  interest
rate on the  previous  note was 5.30% until the fourth  quarter of 2008 when the
weighted average rate was 8.02%.  The effective rate on the new note,  including
the swap, is 6.03%.
     During  the  fourth  quarter  of 2008,  EastGroup  acquired  94.3  acres of
developable  land in Orlando for $9.1  million.  The Company is currently  under
contract  to  purchase  an  additional  36.0  acres  in a  second  phase of this
acquisition  for $5 million.  This  transaction  is expected to close during the
fourth quarter of 2009.

                                       51

<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 26, 2009,  we reported on the  consolidated  balance
sheets of EastGroup  Properties,  Inc. and  subsidiaries as of December 31, 2008
and  2007,  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, 2008,  which are included in the 2008 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.

                                      /s/ KPMG LLP

Jackson, Mississippi
February 26, 2009

                                       52

<PAGE>

                                  SCHEDULE III
               REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION
                        DECEMBER 31, 2008 (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    Acquisition   Land  Improvements   Total  Dec. 31, 2008   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     1,550          1989          1978
   Phillips               -      1,375     2,961        3,471       1,375      6,432     7,807     3,079          1994       1984/95
   Lake Pointe (l)   15,946      3,442     6,450        4,629       3,442     11,079    14,521     6,111          1993       1986/87
   Ellis                  -        540     7,513          901         540      8,414     8,954     2,608          1997          1977
   Westside               -      1,170    12,400        3,933       1,170     16,333    17,503     5,964          1997          1984
   Beach                  -        476     1,899          559         476      2,458     2,934       796          2000          2000
   Interstate Dist.   4,612      1,879     5,700          298       1,879      5,998     7,877     1,664          2005          1990
  Orlando
   Chancellor             -        291     1,711           97         291      1,808     2,099       731       1996/97       1996/97
   Exchange I             -        603     2,414        1,563         603      3,977     4,580     2,083          1994          1975
   Exchange II            -        300       945           73         300      1,018     1,318       381          2002          1976
   Exchange III           -        320       997           17         320      1,014     1,334       379          2002          1980
   Sunbelt
    Center (j)        7,525      1,474     5,745        4,502       1,474     10,247    11,721     4,954    1989/97/98 1974/87/97/98
   John Young I           -        497     2,444          622         497      3,066     3,563     1,066       1997/98       1997/98
   John Young II          -        512     3,613          138         512      3,751     4,263     1,516          1998          1999
   Altamonte I            -      1,518     2,661        1,195       1,518      3,856     5,374     1,917          1999       1980/82
   Altamonte II           -        745     2,618          550         745      3,168     3,913       876          2003          1975
   Sunport I              -        555     1,977          595         555      2,572     3,127       886          1999          1999
   Sunport II             -        597     3,271        1,115         597      4,386     4,983     2,208          1999          2001
   Sunport III            -        642     3,121          451         642      3,572     4,214     1,256          1999          2002
   Sunport IV             -        642     2,917          593         642      3,510     4,152       776          1999          2004
   Sunport V              -        750     2,509        1,854         750      4,363     5,113     1,083          1999          2005
   Sunport VI             -        672         -        3,306         672      3,306     3,978       387          1999          2006
   Southridge I           -        373         -        4,445         373      4,445     4,818       965          2003          2006
   Southridge II          -        342         -        4,147         342      4,147     4,489       516          2003          2007
   Southridge III         -        547         -        4,899         547      4,899     5,446       295          2003          2007
   Southridge IV          -        506         -        4,327         506      4,327     4,833       465          2003          2006
   Southridge V           -        382         -        4,152         382      4,152     4,534       682          2003          2006
   Southridge VI          -        571         -        4,753         571      4,753     5,324       318          2003          2007
   Southridge VII         -        520         -        5,995         520      5,995     6,515       227          2003          2008
   Southridge
    XII (p)          15,115      2,025         -       16,825       2,025     16,825    18,850       374          2005          2008
  Tampa
   56th Street            -        843     3,567        2,451         843      6,018     6,861     3,496          1993    1981/86/97
   Jetport                -      1,575     6,591        3,007       1,575      9,598    11,173     4,922       1993-99       1974-85
   Westport               -        980     3,800        2,108         980      5,908     6,888     2,886          1994       1983/87
   Benjamin I & II        -        843     3,963          597         883      4,520     5,403     2,063          1997          1996
   Benjamin III           -        407     1,503          298         407      1,801     2,208     1,101          1999          1988
   Palm River
    Center                -      1,190     4,625        1,227       1,190      5,852     7,042     2,689       1997/98    1990/97/98
   Palm River
    North I & III (k) 5,486      1,005     4,688        1,644       1,005      6,332     7,337     2,136          1998          2000
   Palm River
    North II (k)      5,035        634     4,418          339         634      4,757     5,391     1,739       1997/98          1999
   Palm River
    South I               -        655     3,187          348         655      3,535     4,190       748          2000          2005
   Palm River
    South II              -        655         -        4,264         655      4,264     4,919       804          2000          2006
   Walden I               -        337     3,318          307         337      3,625     3,962     1,234       1997/98          2001
   Walden II              -        465     3,738          541         465      4,279     4,744     1,635          1998          1998
   Oak Creek I          452      1,109     6,126          229       1,109      6,355     7,464     1,987          1998          1998
   Oak Creek II           -        647     3,603          451         647      4,054     4,701     1,110          2003          2001
   Oak Creek III          -        439         -        3,150         556      3,033     3,589       324          2005          2007
   Oak Creek IV       3,990        805     6,472           (2)        805      6,470     7,275     1,008          2005          2001
   Oak Creek V            -        724         -        5,610         916      5,418     6,334       268          2005          2007
   Oak Creek A            -        185         -        1,230         185      1,230     1,415         -          2005          2008
   Oak Creek B            -        227         -        1,388         227      1,388     1,615         -          2005          2008
   Airport Commerce       -      1,257     4,012          698       1,257      4,710     5,967     1,566          1998          1998
   Westlake (k)       6,990      1,333     6,998        1,001       1,333      7,999     9,332     3,204          1998       1998/99
   Expressway II          -      1,013     3,247          175       1,013      3,422     4,435     1,007          2003          2001
   Expressway I           -        915     5,346          343         915      5,689     6,604     1,385          2002          2004
  Fort Myers
   SunCoast I             -        911         -        4,422         928      4,405     5,333       157          2005          2008
   SunCoast II            -        911         -        4,729         928      4,712     5,640       303          2005          2007
  Fort Lauderdale/
   Pompano Beach area
   Linpro                 -        613     2,243        1,157         616      3,397     4,013     1,869          1996          1986
   Cypress Creek          -          -     2,465        1,303           -      3,768     3,768     1,635          1997          1986
   Lockhart               -          -     3,489        1,936           -      5,425     5,425     2,204          1997          1986
   Interstate Commerce    -        485     2,652          439         485      3,091     3,576     1,351          1998          1988
   Sample 95              -      2,202     8,785        2,107       2,202     10,892    13,094     4,257       1996/98       1990/99
   Blue Heron             -        975     3,626        1,619         975      5,245     6,220     1,811          1999          1986
   Blue Heron II      1,632      1,385     4,222          756       1,385      4,978     6,363     1,191          2004          1988
   Executive Airport      -      1,991     4,857        4,758       1,991      9,615    11,606     1,919          2001       2004/06
NORTH CAROLINA
  Charlotte
   NorthPark (f)     18,241      2,758    15,932          148       2,758     16,080    18,838     2,579          2006       1987-89
   Westinghouse (o)   4,674        765     4,303          290         765      4,593     5,358       403          2007          1983
   Lindbergh              -        470     3,401          118         470      3,519     3,989       435          2007       2001/03
   Nations
    Ford (o)         17,670      3,924    16,171          163       3,924     16,334    20,258     2,545          2007       1989/94
   Airport
    Commerce (p)      9,315      1,454    10,136           26       1,454     10,162    11,616       361          2008       2001/02
   Interchange
    Park (p)          7,169        986     7,949            5         986      7,954     8,940       297          2008          1989
   Ridge Creek (p)   11,605      1,284    13,163           25       1,284     13,188    14,472       317          2008          2006
   Waterford (p)      3,247        654     3,392            3         654      3,395     4,049        84          2008          2000
CALIFORNIA
  San Francisco area
   Wiegman (m)       13,356      2,197     8,788        1,042       2,308      9,719    12,027     3,311          1996       1986/87
   Huntwood (m)      22,190      3,842    15,368          771       3,842     16,139    19,981     5,967          1996          1988
   San Clemente           -        893     2,004           92         893      2,096     2,989       652          1997          1978
   Yosemite               -        259     7,058          827         259      7,885     8,144     2,480          1999       1974/87
  Los Angeles area
   Kingsview (e)      1,460        643     2,573           30         643      2,603     3,246       861          1996          1980
   Dominguez (e)      5,023      2,006     8,025        1,135       2,006      9,160    11,166     3,688          1996          1977
   Main Street (i)    3,938      1,606     4,103          537       1,606      4,640     6,246     1,658          1999          1999
   Walnut (e)         3,808      2,885     5,274          306       2,885      5,580     8,465     2,072          1996       1966/90
   Washington (e)     3,172      1,636     4,900          515       1,636      5,415     7,051     1,805          1997       1996/97
   Ethan Allen (f)   12,408      2,544    10,175           95       2,544     10,270    12,814     3,620          1998          1980
   Industry I (e)    10,622     10,230    12,373        1,008      10,230     13,381    23,611     4,595          1998          1959
   Industry III           -          -     3,012         (214)          -      2,798     2,798       662          2007          1992
   Chestnut (i)       3,325      1,674     3,465          134       1,674      3,599     5,273     1,066          1998          1999
   Los Angeles
    Corporate Center      -      1,363     5,453        1,951       1,363      7,404     8,767     2,782          1996          1986
  Santa Barbara
   University Bus.
    Center           14,221      5,517    22,067        3,316       5,520     25,380    30,900     9,153          1996       1987/88
   Castilian              -      2,719     1,410        4,825       2,719      6,235     8,954       238          2005          2007
  Fresno
   Shaw (e)           7,631      2,465    11,627        2,872       2,465     14,499    16,964     5,457          1998    1978/81/87
  San Diego
   Eastlake (o)       9,771      3,046     6,888        1,267       3,046      8,155    11,201     2,960          1997          1989
TEXAS
  Dallas
   Interstate
    I & II (h)        4,651      1,746     4,941        1,781       1,746      6,722     8,468     4,103          1988          1978
   Interstate
    III (h)           1,761        519     2,008          680         519      2,688     3,207     1,020          2000          1979
   Interstate IV          -        416     2,481          126         416      2,607     3,023       610          2004          2002
   Venture (h)        3,760      1,452     3,762        1,633       1,452      5,395     6,847     3,059          1988          1979
   Stemmons
    Circle (h)        1,484        363     2,014          323         363      2,337     2,700     1,091          1998          1977
   Ambassador Row         -      1,156     4,625        1,587       1,156      6,212     7,368     3,110          1998       1958/65
   North
    Stemmons II           -        150       583          183         150        766       916       271          2002          1971
   North
    Stemmons III          -        380     2,066            2         380      2,068     2,448       124          2007          1974
   Shady Trail (k)    3,116        635     3,621          469         635      4,090     4,725       861          2003          1998
  Houston
   Northwest
    Point (j)         6,243      1,243     5,640        2,841       1,243      8,481     9,724     4,017          1994       1984/85
   Lockwood (j)       5,146        749     5,444        1,822         749      7,266     8,015     2,403          1997       1968/69
   West Loop (h)      3,776        905     4,383        1,587         905      5,970     6,875     2,475     1997/2000          1980
   World Houston
    1 & 2 (f)         7,339        660     5,893        1,026         660      6,919     7,579     2,750          1998          1996
   World Houston
    3, 4 & 5 (g)      4,811      1,025     6,413          328       1,025      6,741     7,766     2,777          1998          1998
   World
    Houston 6 (g)     2,179        425     2,423           62         425      2,485     2,910       937          1998          1998
   World Houston
    7 & 8 (g)         5,537        680     4,584        3,305         680      7,889     8,569     3,120          1998          1998
   World
    Houston 9 (g)     4,811        800     4,355        1,460         800      5,815     6,615     1,489          1998          1998
   World
    Houston 10 (j)    3,852        933     4,779          287         933      5,066     5,999     1,282          2001          1999
   World
    Houston 11 (j)    3,323        638     3,764          773         638      4,537     5,175     1,338          1999          1999
   World
    Houston 12 (i)    1,864        340     2,419          198         340      2,617     2,957       834          2000          2002
   World
    Houston 13 (i)    1,926        282     2,569          203         282      2,772     3,054     1,328          2000          2002
   World
    Houston 14 (j)    2,406        722     2,629          397         722      3,026     3,748     1,033          2000          2003
   World
    Houston 15 (o)    5,560        731         -        5,643         731      5,643     6,374       707          2000          2007
   World
    Houston 16 (n)    4,654        519     4,248          159         519      4,407     4,926       977          2000          2005
   World
    Houston 17 (k)    2,723        373     1,945          758         373      2,703     3,076       451          2000          2004
   World
    Houston 18            -        323     1,512           27         323      1,539     1,862       278          2005          1995
   World
    Houston 19 (l)    3,710        373     2,256          750         373      3,006     3,379     1,026          2000          2004
   World
    Houston 20 (l)    4,493      1,008     1,948        1,136       1,008      3,084     4,092       826          2000          2004
   World
    Houston 21 (f)    3,786        436         -        3,474         436      3,474     3,910       277       2000/03          2006
   World
    Houston 22 (o)    4,052        436         -        4,209         436      4,209     4,645       301          2000          2007
   World
    Houston 23 (f)    7,684        910         -        7,026         910      7,026     7,936       469          2000          2007
   World
    Houston 24 (p)    4,864        837         -        5,229         837      5,229     6,066       197          2005          2008
   World
    Houston 25 (p)    3,303        508         -        3,611         508      3,611     4,119        58          2005          2008
   World
    Houston 27 (p)    4,382        837         -        4,627         837      4,627     5,464        44          2005          2008
   America Plaza (g)  3,449        662     4,660          463         662      5,123     5,785     1,943          1998          1996
   Central Green (g)  3,086        566     4,031           97         566      4,128     4,694     1,505          1999          1998
   Glenmont (h)       4,685        936     6,161        1,434         937      7,594     8,531     2,702          1998     1999/2000
   Techway I (j)      3,804        729     3,765        1,431         729      5,196     5,925     1,430          2000          2001
   Techway II (l)     4,999        550     3,689          314         550      4,003     4,553     1,102          2000          2004
   Techway III (o)    5,038        597         -        5,178         751      5,024     5,775       570          1999          2006
   Beltway I (j)      4,646        458     5,712        1,066         458      6,778     7,236     1,997          2002          2001
   Beltway II (o)     2,761        415         -        2,750         415      2,750     3,165       211          2005          2007
   Beltway III  (o)   2,990        460         -        2,968         460      2,968     3,428       170          2005          2008
   Beltway IV  (o)    3,004        460         -        2,984         460      2,984     3,444       285          2005          2008
   Beltway V              -        701         -        4,106         701      4,106     4,807        71          2005          2008
   Kirby (k)          3,058        530     3,153          297         530      3,450     3,980       568          2004          1980
   Clay Campbell          -        742     2,998          304         742      3,302     4,044       784          2005          1982
  El Paso
   Butterfield
    Trail (h)        14,798          -    22,144        4,800           -     26,944    26,944    11,845     1997/2000       1987/95
   Rojas (h)          3,634        900     3,659        2,058         900      5,717     6,617     3,207          1999          1986
   Americas
    Ten I (k)         3,007        526     2,778        1,052         526      3,830     4,356     1,256          2001          2003
  San Antonio
   Alamo Downs (n)    7,768      1,342     6,338          541       1,342      6,879     8,221     2,028          2004     1986/2002
   Arion (n)         35,171      4,143    31,432        1,649       4,143     33,081    37,224     7,996          2005  1988-2000/06
   Arion 14 (n)       3,486        423         -        3,266         423      3,266     3,689       339          2005          2006
   Arion 16 (f)       3,775        427         -        3,472         427      3,472     3,899       209          2005          2007
   Arion 17 (n)       3,671        616         -        3,269         616      3,269     3,885       290          2005          2007
   Arion 18               -        418         -        2,205         418      2,205     2,623        90          2005          2008
   Wetmore (o)       11,956      1,494    10,804        1,409       1,494     12,213    13,707     2,618          2005       1998/99
   Wetmore Phase II,
    Building A            -        412         -        2,965         412      2,965     3,377       119          2006          2008
   Wetmore Phase II,
    Building C            -        546         -        3,158         546      3,158     3,704        47          2006          2008
   Wetmore Phase II,
    Building D            -      1,056         -        7,019       1,056      7,019     8,075       111          2006          2008
   Fairgrounds (o)    9,068      1,644     8,209          542       1,644      8,751    10,395       847          2007       1985/86
ARIZONA
  Phoenix area
   Broadway I (i)     3,016        837     3,349          597         837      3,946     4,783     1,658          1996          1971
   Broadway II            -        455       482          125         455        607     1,062       300          1999          1971
   Broadway III (i)   1,635        775     1,742           76         775      1,818     2,593       728          2000          1983
   Broadway IV (i)    1,424        380     1,652          226         380      1,878     2,258       717          2000          1986
   Broadway V (j)       972        353     1,090           71         353      1,161     1,514       405          2002          1980
   Broadway VI (f)    2,755        599     1,855          391         599      2,246     2,845       748          2002          1979
   Kyrene               591        850     2,044          378         850      2,422     3,272     1,063          1999          1981
   Kyrene II              -        640     2,409          577         640      2,986     3,626     1,120          1999          2001
   Metro                  -      1,927     7,708        4,385       1,927     12,093    14,020     4,555          1996       1977/79
   35th Avenue (j)    1,922        418     2,381          194         418      2,575     2,993       841          1997          1967
   Estrella               -        628     4,694          820         628      5,514     6,142     1,594          1998          1988
   51st Avenue (i)    1,763        300     2,029          467         300      2,496     2,796       922          1998          1987
   East University
    I and II (f)      5,818      1,120     4,482          407       1,120      4,889     6,009     1,879          1998       1987/89
   55th Avenue (f)    5,177        912     3,717          717         917      4,429     5,346     1,637          1998          1987
   Interstate
    Commons I             -        798     3,632          434         798      4,066     4,864     1,536          1999          1988
   Interstate
    Commons II            -        320     2,448          268         320      2,716     3,036       822          1999          2000
   Interstate
    Commons III           -        242         -        2,866         242      2,866     3,108        85          2000          2008
   Southpark (i)      2,664        918     2,738          570         918      3,308     4,226       939          2001          2000
   Airport Commons        -      1,000     1,510          393       1,000      1,903     2,903       563          2003          1971
   Santan 10 I (n)    3,526        846     2,647          239         846      2,886     3,732       772          2001          2005
   Santan 10 II (f)   5,371      1,088         -        4,459       1,088      4,459     5,547       437          2004          2007
  Tucson
   Country Club I (l) 6,168        506     3,564        1,547         506      5,111     5,617     1,313     1997/2003     1994/2003
   Country Club II        -        442     3,381            3         442      3,384     3,826       209          2007          2000
   Airport Dist. (i)  4,471      1,103     4,672        1,317       1,103      5,989     7,092     2,076          1998          1995
   Southpointe (i)    4,371          -     3,982        2,950           -      6,932     6,932     2,231          1999          1989
   Benan                  -        707     1,842          394         707      2,236     2,943       656          2005          2001
TENNESSEE
  Memphis
   Air Park I             -        250     1,916          718         250      2,634     2,884       809          1998          1975
LOUISIANA
  New Orleans
   Elmwood                -      2,861     6,337        2,773       2,861      9,110    11,971     4,728          1997          1979
   Riverbend              -      2,592    17,623        2,037       2,592     19,660    22,252     7,896          1997          1984
COLORADO
  Denver
   Rampart I (n)      5,437      1,023     3,861          870       1,023      4,731     5,754     2,526          1988          1987
   Rampart II (n)     3,869        230     2,977          888         230      3,865     4,095     2,011       1996/97       1996/97
   Rampart III (n)    5,920      1,098     3,884        1,283       1,098      5,167     6,265     1,853       1997/98          1999
   Concord                -      1,050     4,774           17       1,050      4,791     5,841       320          2007          2000
   Centennial             -        750     3,319        1,597         750      4,916     5,666        91          2007          1990
OKLAHOMA
  Oklahoma City
   Northpointe            -        777     3,113          670         998      3,562     4,560     1,055          1998       1996/97
  Tulsa
   Braniff                -      1,066     4,641        2,045       1,066      6,686     7,752     3,098          1996          1974
MISSISSIPPI
   Interchange (i)    4,533        343     5,007        1,840         343      6,847     7,190     2,921          1997          1981
   Tower              9,365          -     9,958        1,189          17     11,130    11,147     2,250          2001          2002
   Metro Airport I        -        303     1,479          914         303      2,393     2,696       726          2001          2003
                  ---------------------------------------------------------------------------------------
                    585,447    186,719   747,993      317,570     187,617  1,064,665 1,252,282   310,243
                  ---------------------------------------------------------------------------------------
Industrial
 Development (d):
FLORIDA
 12th Street
  (redevelopment)         -        841     2,974        1,035         841      4,009     4,850         -          2008          1985
 Oak Creek VI             -        642         -        4,945         812      4,775     5,587        60          2005           n/a
 Oak Creek IX             -        618         -        3,582         781      3,419     4,200         -          2005           n/a
 Oak Creek land           -      1,946         -        1,944       2,374      1,516     3,890         -          2005           n/a
 Southridge VIII          -        531         -        5,470         531      5,470     6,001         -          2003           n/a
 Southridge land          -      1,395         -        3,530       1,395      3,530     4,925         -          2003           n/a
 Sand Lake
  Phase I land            -      9,111         -          417       9,111        417     9,528         -          2008           n/a
 Blue Heron III           -        450         -        1,448         450      1,448     1,898         -          2004           n/a
 SunCoast III             -      1,720         -        4,998       1,767      4,951     6,718         -          2006           n/a
 SunCoast land            -     10,926         -        4,088      11,180      3,834    15,014         -          2006           n/a
NORTH CAROLINA
 Airport Comm.
  Center                  -        855         -          140         855        140       995         -          2008           n/a
TEXAS
 North Stemmons
  land (i)              359        537         -           33         537         33       570         -          2001           n/a
 Techway IV               -        535         -        4,308         674      4,169     4,843         -          1999           n/a
 World
  Houston 26              -        445         -        2,373         445      2,373     2,818         -          2005           n/a
 World
  Houston 28              -        550         -        1,830         550      1,830     2,380         -          2005           n/a
 World
  Houston 29              -        782         -        1,104         782      1,104     1,886         -          2007           n/a
 World
  Houston 30              -        981         -          610         981        610     1,591         -          2007           n/a
 Beltway VI               -        618         -        4,989         618      4,989     5,607         -          2005           n/a
 Beltway VII              -        765         -        3,448         765      3,448     4,213         -          2005           n/a
 World
  Houston land            -      3,636         -        1,041       3,636      1,041     4,677         - 2000/05/06/08           n/a
 Beltway land             -        721         -          246         721        246       967         -          2005           n/a
 Beltway
  Phase II land           -      1,841         -          468       1,841        468     2,309         -          2007           n/a
 Lee Road land            -      4,214         -          619       4,214        619     4,833         -          2007           n/a
 Americas Ten
  II & III                -      1,365         -        1,079       1,365      1,079     2,444         -          2001           n/a
 Wetmore Phase II,
  Building B              -        505         -        3,128         505      3,128     3,633        34          2006           n/a
 Alamo Ridge land         -      2,288         -          881       2,288        881     3,169         -          2007           n/a
 Thousand Oaks land       -      2,173         -           97       2,173         97     2,270         -          2008           n/a
ARIZONA
 40th Street              -        703         -        5,836         703      5,836     6,539        14          2004           n/a
 Sky Harbor land          -      5,840         -       16,989       5,840     16,989    22,829         -          2006           n/a
 Airport Dist. II         -        300         -          117         300        117       417         -          2000           n/a
 Country Club III & IV    -      1,407         -        6,640       1,407      6,640     8,047         -          2007           n/a
MISSISSIPPI
 Metro Airport II         -        307         -          399         307        399       706         -          2001           n/a
                  ---------------------------------------------------------------------------------------
                        359     59,548     2,974       87,832      60,749     89,605   150,354       108
                  ---------------------------------------------------------------------------------------
Total real estate
  owned (a)(b)     $585,806    246,267   750,967      405,402     248,366  1,154,270 1,402,636   310,351
                  =======================================================================================
</TABLE>
<PAGE>

(a) Changes in Real Estate Properties follow:
<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                             ---------------------------------------------
                                                                  2008           2007            2006
                                                             ---------------------------------------------
                                                                           (In thousands)
          <S>                                                     <C>             <C>             <C>
     Balance at beginning of year..........................  $  1,267,929      1,088,896       1,021,841
     Purchase of real estate properties....................        44,030         54,543          18,690
     Development of real estate properties.................        85,441        112,960          77,666
     Improvements to real estate properties................        15,210         15,881          13,470
     Carrying amount of investments sold...................       (10,385)        (3,791)        (42,485)
     Write-off of improvements.............................           411           (560)           (213)
     Other.................................................             -              -             (73)
                                                             ---------------------------------------------
     Balance at end of year (1) ...........................  $  1,402,636      1,267,929       1,088,896
                                                             =============================================
</TABLE>

(1)  Includes 20% minority  interests in Castilian Research Center of $1,791,000
     at December 31, 2008 and  $1,784,000 at December 31, 2007 and in University
     Business Center of $6,180,000 and $6,031,000, respectively.

Changes in the accumulated depreciation on real estate properties follow:
<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                             ---------------------------------------------
                                                                  2008           2007            2006
                                                             ---------------------------------------------
                                                                           (In thousands)
          <S>                                                      <C>             <C>             <C>
     Balance at beginning of year..........................  $    269,132        231,106         206,427
     Depreciation expense..................................        42,166         39,688          35,428
     Accumulated depreciation on assets sold...............        (1,358)        (1,102)        (10,630)
     Other.................................................           411           (560)           (119)
                                                             ---------------------------------------------
     Balance at end of year ...............................  $    310,351        269,132         231,106
                                                             =============================================
</TABLE>

(b) The estimated  aggregate cost of real estate properties at December 31, 2008
for  federal  income  tax  purposes  was  approximately   $1,347,885,000  before
estimated  accumulated tax depreciation of $197,050,000.  The federal income tax
return for the year ended December 31, 2008 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  $31,716,000   non-recourse   first  mortgage  loan  with
Metropolitan Life secured by Dominguez,  Kingsview, Walnut, Washington, Industry
Distribution Center I and Shaw.

(f) EastGroup has a $72,354,000 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 $23,873,000  non-recourse  first mortgage loan with New York
Life secured by America Plaza, Central Green and World Houston 3-9.

(h)  EastGroup  has  a  $38,549,000   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  $35,289,000   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 land and World Houston 12 & 13.

(j) EastGroup has a $39,839,000 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 $29,415,000  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 $35,316,000 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 $35,546,000 non-recourse first mortgage loan with Prudential
Life secured by Huntwood and Wiegman.

(n) EastGroup has a $73,502,000 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.

                                       52

<PAGE>

(o) EastGroup has a $76,544,000 non-recourse first mortgage loan with Prudential
Life secured by Beltway II, III & IV, Eastlake,  Fairgrounds I-IV,  Nations Ford
I-IV, Techway Southwest III,  Westinghouse,  Wetmore I-IV and World Houston 15 &
22.

(p)  EastGroup  has a  $59,000,000  limited  recourse  first  mortgage loan with
Prudential  Life secured by  Southridge  XII,  Airport  Commerce  Center I & II,
Interchange  Park,  Ridge Creek III,  World  Houston  24, 25 & 27 and  Waterford
Distribution  Center. The loan has a recourse liability of $5 million which will
be released based on the secured properties generating certain base rent amounts
subsequent to January 1, 2011.


                                       53

<PAGE>

                                   SCHEDULE IV
                          MORTGAGE LOANS ON REAL ESTATE
                                DECEMBER 31, 2008
<TABLE>
<CAPTION>
                                           Number of      Interest      Maturity                   Periodic
                                             Loans          Rate          Date                   Payment Terms
                                           -------------------------------------------------------------------------------
         <S>                                  <C>           <C>            <C>                       <C>

First mortgage loan:                                                                   Interest accrued and due monthly
  United Stationers Tampa Building,                                                  (beginning 01/01/09); balloon payment
    Florida                                    1           6.0% (e)      08/2013         of $4,150,000 due at maturity
Second mortgage loan:
  Madisonville land, Kentucky                  1           7.0%          01/2012       Principal and interest due monthly
                                           ---------
Total mortgage loans (c)                       2
                                           =========
</TABLE>
<TABLE>
<CAPTION>
                                                                                              Principal
                                            Face Amount        Carrying                    Amount of Loans
                                            of Mortgages       Amount of                Subject to Delinquent
                                           Dec. 31, 2008       Mortgages              Principal or Interest (d)
                                           ------------------------------------------------------------------------
                                                                        (In thousands)
<S>                                             <C>              <C>                               <C>
First mortgage loan:
  United Stationers Tampa Building,
    Florida                                $    4,150           4,069                              -
Second mortgage loan:
  Madisonville land, Kentucky                     105             105                              -
                                           ------------------------------------------------------------------------
Total mortgage loans                       $    4,255           4,174  (a)(b)                      -
                                           ========================================================================
</TABLE>


(a) Changes in mortgage loans follow:
<TABLE>
<CAPTION>
                                                                        Years Ended December 31,
                                                              ----------------------------------------
                                                                   2008          2007          2006
                                                              ----------------------------------------
                                                                             (In thousands)
<S>                                                                  <C>         <C>            <C>
Balance at beginning of year...............................   $       132          162             -
Advances on mortgage notes receivable......................         4,994            -           185
Payments on mortgage notes receivable......................          (871)         (30)          (23)
Discount on mortgage note receivable.......................          (198)           -             -
Amortization of discount on mortgage note receivable.......           117            -             -
                                                              ----------------------------------------
Balance at end of year.....................................   $     4,174          132           162
                                                              ========================================
</TABLE>

(b) The  aggregate  cost  for  federal  income  tax  purposes  is  approximately
$4,150,000.  The federal income tax return for the year ended December 31, 2008,
has not been filed and,  accordingly,  the income tax basis of mortgage loans as
of December 31, 2008, is based on preliminary data.

(c)  Reference  is made to  allowance  for  possible  losses on  mortgage  loans
receivable 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.

(e)  This  mortgage  loan has a stated  interest  rate of 6.0% and an  effective
interest  rate of 6.5%. A discount on mortgage  note  receivable of $198,000 was
recognized  at the  inception  of the loan and is shown in the table in footnote
(a) above.

                                       54

<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 26, 2009

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, 2009                                February 26, 2009

*                                                *
-------------------------------                  -------------------------------
Hayden C. Eaves III, Director                    Fredric H. Gould, Director
February 26, 2009                                February 26, 2009

*                                                *
-------------------------------                  -------------------------------
Mary Elizabeth McCormick, Director               David M. Osnos, Director
February 26, 2009                                February 26, 2009

*                                                /s/ N. KEITH MCKEY
-------------------------------                  -------------------------------
Leland R. Speed, Chairman of the Board           * By N. Keith McKey
(Principal Executive Officer)                    Attorney-in-fact
February 26, 2009                                February 26, 2009

/s/ BRUCE CORKERN
-------------------------------
Bruce Corkern, Sr. Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)
February 26, 2009

/s/ N. KEITH MCKEY
-------------------------------
N. Keith McKey, Executive Vice-President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial Officer)
February 26, 2009

                                       59

<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 10, 2008).
          (c)  Articles   Supplementary   of  the   Company   relating   to  the
               reclassification  of the Series C  Preferred  Stock and the 7.95%
               Series D Cumulative  Redeemable  Preferred Stock to the Company's
               common  stock  (incorporated  by  reference to Exhibit 3.2 to the
               Company's Form 8-K filed December 10, 2008).

     (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)  Amendment  No.  2 to the 2005  Directors  Equity  Incentive  Plan
               (incorporated  by reference to Exhibit 10.1 to the Company's Form
               8-K filed June 3, 2008).*
          (k)  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 7, 2009).*
          (l)  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 7, 2009).*
          (m)  Compensation  Program  for  Non-Employee   Directors  (a  written
               description  thereof  is set forth in Item 5.02 of the  Company's
               Form 8-K filed June 3, 2008).*
          (n)  Annual Cash Bonus and 2008 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 3, 2008).*
          (o)  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).*

                                       60

<PAGE>

          (p)  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

                                       61