NORTH MIAMI BEACH, Fla.--(Business Wire)--
Equity One, Inc. (NYSE:EQY), an owner, developer, and operator of
shopping centers announced today its financial results for the three
months and six months ended June 30, 2008.
Financial Highlights
Funds From Operations (FFO) for the second quarter was $23.3
million, or $0.32 per diluted share, compared to $25.2 million and
$0.34 per diluted share for the same period in 2007. FFO for the six
months ended June 30, 2008 was $55.9 million, or $0.76 per diluted
share, compared to $54.9 million, or $0.74 per diluted share for the
same period in 2007.
Net income for the quarter was $29.4 million, or $0.40 per diluted
share, compared to $12.9 million and $0.17 per diluted share for the
same period in 2007. Net income for the six months ended June 30, 2008
was $50.3 million, or $0.68 per diluted share, compared to $32.9
million, or $0.44 per diluted share for the same period in 2007. Net
income for the three months and six months ended June 30, 2008
included gains on sales of $18.0 million. Net income for the three
months and six months ended June 30, 2007 included gains on sales of
$0.5 million and $3.3 million, respectively.
Operating Highlights
For the three months ended June 30, 2008, same-property net
operating income decreased 2.9% as compared to the same period in
2007. The decrease was primarily due to lower occupancy, lower CAM and
tax recovery income, and the timing of percentage rents. At June 30,
2008, the company's core operating portfolio was 92.8% occupied. On a
same-property basis, occupancy increased by 40 bps as compared to
March 31, 2008 and declined by 110 bps as compared to June 30, 2007.
During the second quarter, the company executed 58 new leases
totaling 255,664 square feet at an average rental rate of $14.79 per
square foot, representing a 17.8% increase over prior rents on a
same-space cash basis. Also during the second quarter, the company
renewed 81 leases for 168,001 square feet for an average rental rate
increase of 8.6% to $18.50 per square foot on a cash basis. In
addition, the company renewed 17 leases for 132,691 square feet
subject to tenant renewal option for an average rental rate increase
of 7.6% to $9.73 per square foot on a cash basis.
"Considering the current state of the retail sector, we are
pleased with our operating activities during the quarter," stated Jeff
Olson, Chief Executive Officer. "Our accomplishments included a 40
basis point improvement in sequential occupancy, healthy rent spreads
and building a strong pipeline of leases under negotiation. While we
are encouraged with our recent leasing activity, we are mindful of the
effects of the economic environment and challenges that contributed to
our lower same-property NOI results. The current environment has
resulted in more tenant turnover but has allowed us to replace weaker
tenants with stronger operators at higher rental rates. We expect our
recent leasing activity will start to impact our same-property cash
NOI later this year and in early 2009 as our new tenants open for
business."
Development and Redevelopment Activities
At June 30, 2008, the company had approximately $58.6 million of
development projects and approximately $22.4 million of redevelopment
projects underway. The estimated remaining cost to complete these
projects was approximately $38.2 million.
Joint Ventures
During the quarter, the company sold seven properties and one
out-parcel to GRI-EQY I, LLC, a joint venture between the company and
Global Retail Investors, LLC, for an aggregate gross sales price of
approximately $176.8 million. The company recognized a gain on the
sale of approximately $18.5 million, net of $2.4 million of costs
incurred in connection with the defeasance of existing mortgage debt
paid by the joint venture. The company expects to sell two additional
properties to the joint venture in the third quarter for $24.4
million, including the assumption of approximately $12.9 million in
debt, and expects to recognize a gain on sale of approximately $2.2
million.
Net proceeds from the sale of properties to GRI-EQY I, LLC of
approximately $132.0 million were used to reduce total debt by
approximately $60.0 million and to purchase $63.0 million in
short-term corporate debt securities, with the balance held in cash.
Balance Sheet Highlights
During the quarter, Equity One repaid or defeased approximately
$56.0 million in mortgage debt, at a weighted-average interest rate of
7.25%. In addition, the company repurchased $10.5 million of its
outstanding unsecured bonds at a yield to maturity of 7.4%. The
company also repaid $24.5 million of borrowings under its unsecured
line of credit. As of June 30, 2008, the company had no outstanding
borrowings under the line.
Included in investment in securities at June 30, 2008 is
approximately $63.0 million of short-term, investment-grade corporate
debt securities. These bonds mature in 2009 and are intended to serve
as one source of repayment for a portion of the company's $198.5
million of bonds due April 15, 2009. In addition, the company held
$20.3 million in cash at June 30, 2008.
At June 30, 2008, the company's total market capitalization
equaled $2.5 billion, comprising 73.5 million shares of common stock
(on a diluted basis) valued at $1.5 billion, and $1.0 billion of net
debt (excluding any unamortized fair market premium/discount and net
of cash). Its ratio of net debt to total market capitalization was
40.4% and its ratio of net debt to gross real estate and securities
investments was 48.9%. On a trailing four quarter basis, the company's
interest coverage ratio was 2.6 times.
FFO and Earnings Guidance
The company is updating its 2008 FFO and earnings guidance. FFO
per diluted share is expected to be $1.36 to $1.40 for the year ending
December 31, 2008, and net income per diluted share is expected to be
$1.03 to $1.05. This compares to our previous FFO guidance of $1.40 -
$1.45 per diluted share and our previous earnings guidance of $0.79 to
$0.82 per diluted share, respectively. The primary reason for the
lower FFO guidance is that 2008 annual same-property NOI growth is
expected to be 0-1% as compared to a prior expectation of 2-3%. The
following table provides the reconciliation of the range of estimated
net income available to common stockholders per diluted share to
estimated FFO per diluted share for the full year 2008:
-0-
*T
Low High
-------------
Estimated net income per diluted share (1) $1.03 $1.05
Adjustments:
Rental property depreciation and amortization 0.61 0.61
Pro rata share of JV property depreciation and
amortization 0.00 0.01
Minority interest 0.00 0.00
Gain on sales of depreciable real estate (0.28) (0.27)
------ ------
Estimated Funds From Operations (FFO) per diluted
share $1.36 $1.40
====== ======
(1) Excluding future gains on sale of real estate not under contract.
*T
ACCOUNTING AND OTHER DISCLOSURES
We believe Funds from Operations ("FFO") (combined with the
primary GAAP presentations) is a useful, supplemental measure of our
operating performance that is a recognized metric used extensively by
the real estate industry, particularly REITs. The National Association
of Real Estate Investment Trusts ("NAREIT") stated in its April 2002
White Paper on Funds from Operations, "Historical cost accounting for
real estate assets implicitly assumes that the value of real estate
assets diminishes predictably over time. Since real estate values
instead have historically risen or fallen with market conditions, many
industry investors have considered presentations of operating results
for real estate companies that use historical cost accounting to be
insufficient by themselves."
FFO, as defined by NAREIT, is "net income (computed in accordance
with GAAP), excluding gains (or losses) from sales of depreciable
property, plus depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures." NAREIT states
further that "adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect funds from operations on the
same basis." We believe that financial analysts, investors and
stockholders are better served by the presentation of comparable
period operating results generated from our FFO measure. Our method of
calculating FFO may be different from methods used by other REITs and,
accordingly, may not be comparable to such other REITs.
FFO is presented to assist investors in analyzing our operating
performance. FFO (i) does not represent cash flow from operations as
defined by GAAP, (ii) is not indicative of cash available to fund all
cash flow needs, including the ability to make distributions, (iii) is
not an alternative to cash flow as a measure of liquidity, and (iv)
should not be considered as an alternative to net income (which is
determined in accordance with GAAP) for purposes of evaluating our
operating performance. We believe net income is the most directly
comparable GAAP measure to FFO.
CONFERENCE CALL/WEB CAST INFORMATION
We will host a conference call on Wednesday, July 30, 2008, at
9:00 a.m. EST to review the 2008 second quarter earnings and operating
results. Stockholders, analysts and other interested parties can
access the earnings call by dialing 888-680-0878 (U.S./Canada) or
617-213-4885 (international) using pass code 77236100. The call will
also be web cast and can be accessed in a listen-only mode at Equity
One's web site at www.equityone.net.
If you are unable to participate during the call, a replay will be
available on Equity One's web site for future review. You may also
access the replay by dialing 888-286-8010 (U.S./Canada) or
617-801-6888 (international) using pass code 77510142 through August
6, 2008.
FOR ADDITIONAL INFORMATION
For a copy of our second quarter supplemental information package,
please access the "Financial Reports" section in our web site at
www.equityone.net. To be included in our e-mail distributions for
press releases and other company notices, please send your e-mail
address to Feryal Akin at fakin@equityone.net.
ABOUT EQUITY ONE, INC.
As of June 30, 2008, the Company owned or had interests in 162
properties, consisting of 145 shopping centers comprising
approximately 15.9 million square feet, seven projects in
development/redevelopment, six non-retail properties, and four parcels
of land. Additionally, we own a 10% interest in the GRI Venture which
owns eight neighborhood shopping centers totaling approximately 1.2
million square feet of GLA as of June 30, 2008.
FORWARD LOOKING STATEMENTS
Certain matters discussed by Equity One in this press release
constitute forward-looking statements within the meaning of the
federal securities laws. Although Equity One believes that the
expectations reflected in such forward-looking statements is based
upon reasonable assumptions, it can give no assurance that these
expectations will be achieved. Factors that could cause actual results
to differ materially from current expectations include changes in
macro-economic conditions and the demand for retail space in the
states in which Equity One owns properties; the continuing financial
success of Equity One's current and prospective tenants; continuing
supply constraints in its geographic markets; the availability of
properties for acquisition; the success of its efforts to lease up
vacant space; the effects of natural and other disasters; the ability
of Equity One successfully to integrate the operations and systems of
acquired companies and properties; and other risks, which are
described in Equity One's filings with the Securities and Exchange
Commission.
-0-
*T
EQUITY ONE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 2008 and December 31, 2007
(In thousands, except per share data)
(Unaudited)
June 30, December 31,
2008 2007
---------- ------------
ASSETS
Properties:
Income producing $1,878,248 $ 2,047,993
Less: accumulated depreciation (179,515) (172,651)
---------- ------------
Income-producing property, net 1,698,733 1,875,342
Construction in progress and land held for
development 63,124 81,574
Properties held for sale 32,565 323
---------- ------------
Properties, net 1,794,422 1,957,239
Cash and cash equivalents 20,290 1,313
Cash held in escrow - 54,460
Accounts and other receivables, net 10,879 14,148
Investment and advances in real estate
joint ventures 7,661 -
Securities 119,874 72,299
Goodwill 12,385 12,496
Other assets 60,478 62,429
---------- ------------
TOTAL ASSETS $2,025,989 $ 2,174,384
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes Payable
Mortgage notes payable $ 324,552 $ 397,112
Mortgage notes payable related to
properties held for sale 13,670 -
Unsecured revolving credit facilities - 37,000
Unsecured senior notes payable 706,645 744,685
---------- ------------
1,044,867 1,178,797
Unamortized premium/discount on notes
payable 6,973 10,042
---------- ------------
Total notes payable 1,051,840 1,188,839
Other liabilities
Accounts payable and accrued expenses 35,957 30,499
Tenant security deposits 9,025 9,685
Other liabilities 17,883 28,440
---------- ------------
Total liabilities 1,114,705 1,257,463
---------- ------------
Minority interest 989 989
---------- ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value -
10,000 shares authorized but unissued - -
Common stock, $0.01 par value - 100,000
shares authorized 73,416 and 73,300
shares issued and outstanding as of
June 30, 2008 and December 31, 2007,
respectively 734 733
Additional paid-in capital 909,729 906,174
Retained earnings 23,858 17,987
Accumulated other comprehensive loss (24,026) (8,962)
---------- ------------
Total stockholders' equity 910,295 915,932
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,025,989 $ 2,174,384
========== ============
*T
-0-
*T
EQUITY ONE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2008 and 2007
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
REVENUE:
Minimum rent $ 46,815 $ 47,979 $ 94,816 $ 94,325
Expense recoveries 13,101 14,026 26,769 26,949
Percentage rent 164 373 1,613 1,633
Management and leasing
services 814 149 997 986
--------- --------- --------- ---------
Total revenue 60,894 62,527 124,195 123,893
--------- --------- --------- ---------
COSTS AND EXPENSES:
Property operating 16,032 15,112 32,102 29,841
Rental property depreciation
and amortization 11,667 11,618 23,434 22,544
General and administrative 7,553 6,826 14,355 16,630
--------- --------- --------- ---------
Total costs and expenses 35,252 33,556 69,891 69,015
--------- --------- --------- ---------
INCOME BEFORE OTHER INCOME AND
EXPENSE, MINORITY INTEREST AND
DISCONTINUED OPERATIONS 25,642 28,971 54,304 54,878
OTHER INCOME AND EXPENSE:
Investment income 672 547 6,862 6,753
Equity in income in
unconconsolidated joint
ventures 170 - 170 -
Other income 45 58 88 240
Interest expense (15,413) (17,046) (31,395) (32,626)
Amortization of deferred
financing fees (420) (422) (849) (809)
Loss on sale of fixed assets - (283) - (283)
Gain on sale of real estate 18,499 518 18,457 1,585
Gain on extinguishment of
debt 696 - 3,076 -
--------- --------- --------- ---------
INCOME BEFORE MINORITY INTEREST
AND DISCONTINUED OPERATIONS 29,891 12,343 50,713 29,738
Minority interest (28) (28) (56) (56)
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS 29,863 12,315 50,657 29,682
--------- --------- --------- ---------
DISCONTINUED OPERATIONS:
Operations of income-
producing properties sold or
held for sale 38 565 98 1,485
(Loss) gain on disposal of
income-producing properties (483) (12) (483) 1,720
--------- --------- --------- ---------
(Loss) income from
discontinued operations (445) 553 (385) 3,205
--------- --------- --------- ---------
NET INCOME $ 29,418 $ 12,868 $ 50,272 $ 32,887
========= ========= ========= =========
EARNINGS PER COMMON SHARE -
BASIC:
Continuing operations $ 0.41 $ 0.17 $ 0.69 $ 0.41
Discontinued operations (0.01) 0.01 (0.01) 0.04
--------- --------- --------- ---------
$ 0.40 $ 0.18 $ 0.68 $ 0.45
========= ========= ========= =========
Number of Shares Used in
Computing Basic Earnings per
Share 73,408 73,101 73,366 73,038
EARNINGS PER COMMON SHARE -
DILUTED:
Continuing operations $ 0.41 $ 0.16 $ 0.69 $ 0.40
Discontinued operations (0.01) 0.01 (0.01) 0.04
--------- --------- --------- ---------
$ 0.40 $ 0.17 $ 0.68 $ 0.44
========= ========= ========= =========
Number of Shares Used in
Computing Diluted Earning
per Share 73,541 74,128 73,503 74,056
*T
-0-
*T
EQUITY ONE, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Funds from Operations
Reconciliation of Earnings per Diluted Share to Funds from Operations
per Diluted Share
The following table reflects the reconciliation of FFO to net income,
the most directly comparable GAAP measure, for the periods presented:
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------------- ------------------
2008 2007 2008 2007
------------------ ------------------
(In thousands) (In thousands)
Net income $ 29,418 $12,868 $ 50,272 $32,887
Adjustments:
Rental property depreciation
and amortization,
including discontinue
operations 11,696 12,010 23,493 23,383
Gain on disposal of
depreciable real estate (18,016) - (18,016) (1,720)
Loss on sale of fixed assets - 283 - 283
Pro rata share of real estate
depreciation from
unconsolidated JV 138 - 138 -
Minority interest 28 28 56 56
---------- ------- --------- --------
Funds from operations $ 23,264 $25,189 $ 55,943 $54,889
========== ======= ========= ========
----------------------------------------------------------------------
Funds from Operations is a non-GAAP financial measure. We believe
that FFO, as defined by NAREIT, is a widely used and appropriate
supplemental measure of operating performance for REITs, and that it
provides a relevant basis for comparison among REITs.
The following table reflects the reconciliation of FFO per diluted
share to earnings per diluted share, the most directly comparable
GAAP measure, for the periods presented:
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------------- ------------------
2008 2007 2008 2007
------------------ ------------------
Earnings per diluted share $ 0.40 $ 0.17 $ 0.68 $ 0.44
Adjustments:
Rental property depreciation
and amortization,
including discontinue
operations 0.16 0.17 0.32 0.32
Gain on disposal of
depreciable real estate (0.24) - (0.24) (0.02)
Loss on sale of fixed assets - 0.00 - 0.00
Pro rata share of real estate
depreciation from
unconsolidated JV 0.00 - 0.00 -
Minority interest 0.00 0.00 0.00 0.00
---------- ------- --------- --------
Funds from operations per diluted
share $ 0.32 $ 0.34 $ 0.76 $ 0.74
========== ======= ========= ========
*T
Equity One, Inc., North Miami Beach
Greg Andrews, EVP and Chief Financial Officer,
305-947-1664
Copyright Business Wire 2008
