UPS 2026 Q1 Progress on Cost Cuts and Network Changes

EGP Development Leasing Activity Trends (Q1 2026)

1) “Same trend as Q4” and progress versus prior year

• Management said development leasing continued to follow the same trend as the fourth quarter. ¹
• Year-to-date development leasing reached 54% of last year’s total by the first quarter. ¹

Interpretation: This suggests Q1 2026 was not an inflection-point quarter in volume, but it did show measurable cumulative progress against the prior year benchmark. ¹

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2) Pace described as “more measured,” but demand improving

• Management indicated the development pipeline continued to lease at a more measured pace while maintaining projected yields. ¹
• They also said they were encouraged by continued demand in development properties, but headline volatility and extended decision cycles were still slowing actions. ¹
• Management further noted that as markets experience positive absorption and because new development starts remain limited, users may increasingly be required to accelerate decision-making. ¹

Interpretation: The trend is consistent with improving demand conditions, but leasing throughput is still constrained by tenant decision latency rather than by a lack of interest. ¹

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3) Leasing momentum improved during Q1 (especially after early February)

• In the Q&A, analysts referenced a “significant ramp” in development leasing activity since early February. ²
• The company responded on gestation/implementation dynamics (permitting and readiness), implying the improved leasing flow supports project progression once approvals are in place. ³
• Separately, management emphasized that their occupancy guide is intended as a floor and cited that “thus far in April” they were outperforming projections, reinforcing that leasing progress was continuing after Q1. ⁴

Interpretation: Even if Q1’s cumulative percentage is only 54% of last year’s total, the underlying trend appears to be accelerating within the quarter and carrying forward into April. ²⁴

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4) Construction starts were tied to development leasing and pre-leasing quality

• In Q1, EGP commenced construction on 4 projects totaling 586,000 square feet, with 27% pre-leased. ¹
• Management also stated they seek to keep product coming as demand pulls it out, and they aim to start the next phase as quickly as possible after the lease that fills the current vacancy (or provides confidence to break ground) is in hand. ^{5 3}

Interpretation: The company’s development leasing trend translates directly into earlier starts and phase sequencing, but with pre-leasing still meaningfully imperfect—consistent with decision-cycle delays. ¹⁵³

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5) Signed vs speculative development leasing: speculative is still being ramped later in the year

EGP quantified how development leasing progressed relative to guidance:

• They said most of the improvement from initial guidance moved from speculative leasing to signed leases due to work done over recent months. ⁶
• For the year, management indicated the $0.07 initial guidance portion had moved into actual signed leases for development NOI, while $0.04 remains speculative leasing. ⁶
• They further clarified they are not assuming any speculative development leasing in Q2, with it ramping in Q3 and Q4 for a total of $0.04 for the year. ⁷
• Management characterized this $0.04 speculative development leasing as an opportunity contingent on maintaining strong and steady development leasing pace “over the last couple of months.” ⁷

Interpretation: Q1’s trend is consistent with continued signed leasing progress, but speculative conversion is still expected later, indicating development leasing is improving but not yet fully fast enough to eliminate all speculative backlog by mid-year. ⁶⁷

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6) Breadth of development leasing remains a key feature

• Management stated development leasing has been in 9 different markets, and EGP currently has projects active in 13 different markets. ⁸
• They said they were excited to see demand has been broad-based across markets. ⁸

Interpretation: The trend is not just stronger leasing in one geography; the company’s pipeline and execution appear diversified, supporting more stable development leasing progress even while timing is slower. ⁸

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Bottom Line (Trend Summary)

In Q1 2026, EGP’s development leasing:

• Tracked the Q4 pattern but progressed to 54% of last year’s full-year development leasing YTD by quarter end. ¹
• Was described as more measured due to extended tenant decision cycles, even while demand remained encouraging and the company expected tenants to accelerate decisions as absorption stays positive and supply of new starts remains limited. ¹
• Showed in-quarter improvement (referenced “ramp” since early February) and was supported by a pipeline that translated leasing into construction starts (4 projects totaling 586k SF, 27% pre-leased). ²¹
• Maintained a split between signed vs speculative leasing, with no speculative assumption in Q2 and a Q3/Q4 ramp of $0.04 in speculative development NOI. ⁷
• Remained broad-based across multiple markets, with 9 markets represented in development leasing and 13 active markets in the project base. ⁸

If you interpret “activity trends” narrowly as signed leasing momentum, the evidence points to improvement and conversion from speculative to signed leases during recent months. ⁶ If you interpret it as overall leasing throughput including speculative, the company’s own guidance framing indicates the Q2 period is lighter for speculative leasing, with the heavier contribution expected later. ⁷