EastGroup Acquires Tulloch Industrial Portfolio in Northern California

Mississippi-based EastGroup Properties continues to expand its holdings in California, acquiring this month a portfolio of 14 fully leased industrial properties encompassing 1.7M SF of space in San Francisco and Sacramento from Tulloch Corp.

The portfolio from California-based Tulloch also includes two parcels of land totaling 10.5 acres, which EastGroup will use to develop a 215K SF warehouse.

According to EastGroup’s announcement of the acquisition, the portfolio was acquired for 1.87 million shares of EastGroup stock at $190 per share. EastGroup said it also will be assuming a $60M loan as part of the deal.

With the Tulloch deal, EastGroup’s portfolio in California now totals an estimated 7.6M SF.

“The Tulloch family, over three generations, built a very strong portfolio in terms of location, building quality and tenant quality. Within our own portfolio, San Francisco has historically been one of our strongest markets and also one where we’ve been under allocated, capital-wise,” EastGroup CEO Marshall Loeb said, in a release.

Eastgroup said the properties it is acquiring from Tulloch are 100% leaded to 37 tenants with an average remaining lease term of less than three years. At the time of the acquisition, the annualized net operating income generated by the properties is approximately $17M, EastGroup said.

Despite recent uncertainty resulting from Amazon’s announcement that it has overextended its distribution network and will be culling some of its leased industrial space, Loeb expressed confidence that record demand in the industrial sector will continue this year.

“Given recent headlines and resulting levels of concern, we’re pleased to continue seeing strong levels of tenant demand across our portfolio as evidenced by our month-end results,” Loeb said, in the company’s release.

Based in Ridgeland, MS, EastGroup Properties is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sun Belt markets, including Florida, Texas, Arizona and North Carolina, as well as California.

The REIT’s overall portfolio now totals an estimated 54M SF, primarily in properties in the 15K SF to 75K SF range.

According to the REIT’s website, EastGroup’s strategy involves the acquisition of distribution facilities clustered near major transportation outlets in supply-constrained markets.

In a Q1 earnings statement, Loeb said “our team and our portfolio came out of the gate with a very strong start to 2022. We continue to see strength in the industrial market and a favorable supply/demand balance in our markets.”

“As a result, we remain bullish on the continued growth prospects for our shallow bay, last-mile Sun Belt market portfolio,” Loeb said.