EGP – Market expectations are for Uniform ROA to reach all-time highs, but management may have concerns about the Houston market, their retention rates, and rent collection

• EastGroup Properties, Inc. (EGP:USA) currently trades well above corporate averages relative to UAFRS-based (Uniform) earnings, with a 53.5x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about the Houston market, their retention rates, and their ability to collect rent
  
  

• Specifically, management may lack confidence in their ability to maintain above
  peer-average retention rates, sustain their occupancy and rolling rates in Houston, and mitigate downward rent pressures. In addition, they may have concerns about the exposure of their Houston tenants to oil price volatility and the ability of their tenants to acquire a Small Business Administration (SBA) loan to pay rent. Additionally, management may lack confidence in their ability to continue to have the most diversified rent roll in the sector, collect outstanding rent payments, and only provide rent relief to tenants in need. Finally, they may be concerned about speculative development, the quality of their virtual customer interactions, and the need for increased reserves for uncollectable rent