Equity One Reports a 5.4% Increase in Third Quarter 2004 FFO per
Share
NORTH MIAMI BEACH, Fla., Oct. 27 /PRNewswire-FirstCall/ -- Equity One, Inc. (NYSE:EQY), an owner, developer and operator of community and neighborhood
shopping centers located predominantly in high growth markets in the southern
United States and in the Boston, Massachusetts metropolitan area, announced
today its financial results for the three and nine month periods ended
September 30, 2004. The financial highlights are as follows, with all per
share amounts presented on a fully diluted basis: Third Quarter 2004 Highlights
* Increased Funds from Operations ("FFO") 17.2% to $28.1 million in 2004
from $23.9 million in 2003 and increased FFO per diluted share 5.4% to
$0.39 in 2004 from $0.37 in 2003;
* Increased Net Income 78.0% to $30.7 million in 2004 from $17.2 million
in 2003 and increased Net Income per diluted share 59.3% to $0.43 in
2004 from $0.27 in 2003;
* Achieved a 3.3% increase in same property net operating income ("NOI")
and an overall NOI margin of 73.1%;
* Increased the average rental rate by 3.9% to $14.50 per square feet on
105 lease renewals aggregating 201,594 square feet;
* Executed 104 new leases totaling 288,341 square feet at an average
rental rate of $12.31 per square foot, representing a 3.4% spread for
new leases versus lost leases;
* Increased the occupancy rate in the core shopping center portfolio to
93.8% from 92.5% at June 30, 2004; and
* Sold eight properties for $48.9 million and an out parcel for $1.5
million, generating $12.4 million of gains on sale.
YTD 2004 Highlights
* Increased FFO 31.0% to $83.3 million in 2004 from $63.6 million in 2003
and increased FFO per diluted share 7.4% to $1.16 in 2004 from $1.08 in
2003;
* Increased Net Income 51.2% to $69.5 million in 2004 from $45.9 million
in 2003 and increased Net Income per diluted share 24.1% to $0.98 in
2004 from $0.79 in 2003;
* Achieved a 3.5% increase in same property net operating income and an
overall NOI margin of 73.8%;
* Increased the rental rate by 4.2% to $13.59 per square foot on 290 lease
renewals aggregating 653,506 square feet;
* Executed 314 new leases totaling 1.2 million square feet at an average
rental rate of $10.74 per square foot, representing a 0.8% spread for
new leases versus lost leases;
* Increased the occupancy rate in the core shopping center portfolio to
93.8% from 91.6% at December 31, 2003;
* Raised $200 million in an unsecured debt offering in March 2004 with a
yield of 3.902%, of which $100 million was swapped to a floating rate of
6 month LIBOR in arrears plus 0.4375%;
* Acquired ten properties totaling $180.2 million, adding over 1.3 million
square feet of gross leasable area;
* Sold ten properties for $61.5 million and an out parcel for $1.5
million, generating $13.9 million of gains on sale; and
* Completed and leased $41.8 million worth of development projects with an
incremental yield in excess of 10.9% on cost.
"Our third quarter results reflect a continuation of our strong performance in
2004," stated Chaim Katzman, Chairman and Chief Executive Officer of Equity
One. "Since January 1, 2004 and including a series of transactions we
completed in October, we have purchased 16 properties totaling $300 million,
have sold 14 properties for $80 million generating $21 million of gains, and
have completed approximately $42 million of developments and redevelopments.
Very strong leasing and renewals of both anchor and in-line space have resulted
in over 475,000 square feet of net absorption during the first nine months of
2004 and core shopping center portfolio occupancy of 93.8%. We continue to
emphasize a conservative and flexible financial strategy with less than 20%
drawn on our credit facilities, only 18.3% of our debt exposed to floating
rates, a 38.1% debt to total market capitalization ratio and interest coverage
of 3.3 times, all at the end of or for the most recent quarter. Our ongoing
expansion into the Northeast will produce a more diversified portfolio in
markets with greater population density and particularly high barriers to
entry. Overall, we remain optimistic about our future prospects and hope to
deliver superior results for our stockholders, debt providers and other
constituencies." Financial Overview For the three months ended September 30, 2004, FFO increased 17.2% to $28.1
million from $23.9 million for the comparable period in 2003. FFO per diluted
share increased 5.4% to $0.39 in the third quarter of 2004 from $0.37 in the
third quarter of 2003. Net income in the third quarter of 2004 increased 78.0%
to $30.7 million from $17.2 million in the third quarter of 2003. Net income
per diluted share for the third quarter was $0.43 and $0.27 for 2004 and 2003,
respectively. Total rental revenues in the third quarter of 2004 increased
21.1% to $58.2 million from $48.1 million in the third quarter of 2003.
The quarter ended September 30, 2004 included a $12.2 million gain on the sale
of real estate and approximately $431,000 in hurricane related expenses that
are reflected in property operating expenses, while the quarter ended September
30, 2003 included a $1.2 million gain on the sale of real estate.
For the nine months ended September 30, 2004, FFO increased 31.0% to $83.3
million from $63.6 million for the comparable period of 2003. FFO per diluted
share increased 7.4% to $1.16 in the first nine months of 2004 from $1.08 for
the comparable period in 2003. Net income for the first nine months of 2004
was $69.5 million, or $0.98 per diluted share, compared with $45.9 million in
the first nine months of 2003, or $0.79 per diluted share. Total rental
revenues in the first nine months of 2004 increased 29.0% to $167.2 million
from $129.7 million in the first nine months of 2003.
The nine months ended September 30, 2004 included a $13.8 million gain on sale
of real estate and the aforementioned hurricane expenses, while the nine months
ended September 30, 2003 included a $3.1 million gain on the sale of real
estate. The first nine months of 2003 include the activity of the former IRT
Property Company commencing on February 12, 2003, the date we completed our
merger with IRT.
At September 30, 2004, our fully diluted market capitalization totaled $2.3
billion, comprising 73.2 million shares of common stock and $884.0 million of
total debt (excluding any unamortized fair market premium/discount and net of
cash). Our ratio of net debt to total market capitalization was 38.1%, and our
ratio of net debt to gross real estate cost and securities investments was
47.4%.
Portfolio Overview As of September 30, 2004, our core shopping center portfolio was 93.8%
occupied, up from 92.5% at June 30, 2004, 91.6% at December 31, 2003 and 90.1%
at September 30, 2003. Including the October 2004 sale of three centers and
purchase of a six-property portfolio in the Boston, Massachusetts metropolitan
area, we now own 185 properties consisting of 131 supermarket-anchored shopping
centers, 9 drug store-anchored shopping centers, 40 other retail- anchored
shopping centers, a self-storage facility, an industrial property and three
retail developments, as well as non-controlling interests in two unconsolidated
joint ventures.
At September 30, 2004, the average base rent per leased square foot for our
stabilized core portfolio was $9.91, a 2.1% increase from $9.71 per square foot
at June 30, 2004, a 5.4% increase from $9.40 per square foot at December 31,
2003 and a 7.0% increase from $9.26 on September 30, 2003.
During the third quarter of 2004, we renewed 105 leases aggregating 201,594
square feet and increased the average rental rate 3.9% to $14.50 per square
foot. We also signed 104 new leases aggregating 288,341 square feet at an
average rental rate of $12.31 per square foot. Overall, we gained
approximately $1.2 million of annualized minimum rent in the third quarter of
2004 including renewals, new leases and departing tenants. During the third
quarter of 2004, we achieved a 3.4% overall leasing spread on new leases versus
lost leases and had total net absorption of 82,857 square feet.
Excluding lease termination revenues, our same property net operating income
increased 3.3% in the third quarter of 2004 compared to the third quarter of
2003, comprising 151 properties for which the occupancy rate increased to 93.3%
from 92.3%, respectively.
During the first nine months of 2004, we renewed 290 leases aggregating 653,506
square feet and increased the average rental rate 4.2% to $13.59 per square
foot. We also signed 314 new leases aggregating 1.2 million square feet at an
average rental rate of $10.74 per square foot. Overall, we gained
approximately $5.5 million of annualized minimum rent in the first nine months
of 2004 including renewals, new leases and departing tenants. During the first
nine months of 2004, we achieved a 76.7% spread on 351,469 square feet of net
new leases versus lost leases of 10,000 square feet or above, and had total net
absorption of 476,125 square feet.
Excluding lease termination revenues, our same property net operating income
increased 3.5% for the nine months ended September 30, 2004 compared to the
nine months ended September 30, 2003, comprising 67 properties for which the
occupancy rate increased to 95.1% from 93.9%, respectively.
OTHER ACQUISITIONS AND DISPOSITIONS During the nine months ended September 30, 2004, we acquired eight shopping
centers and two parcels of land as follows: Purchase
Square Price
Feet/ (in
Shopping Center Location Acres thousands) Bluebonnet - out parcel Baton Rouge, LA 0.9 acres $500
Pavilion Naples, FL 168,005 24,200
Village Center Southlake, TX 118,092 17,475
Creekside Plaza Arlington, TX 101,016 14,025
Sparkleberry Square Columbia, SC 339,051 45,150
Venice Shopping Center Venice, FL 111,934 6,447
Windy Hill N. Myrtle Beach, SC 64,465 2,895
Hamilton Ridge -
out parcel Buford, GA 0.64 acres 425
Medical & Merchants Jacksonville, FL 152,761 21,980
Westgate Marketplace Houston, TX 298,354 47,100 Total $180,197 During the nine months ended September 30, 2004, we sold ten shopping centers
and an out parcel as follows: Sales
Square Price
Feet/ (in
Shopping Center Location Acres thousands) Southwest Walgreens Phoenix, AZ 93,402 $6,650
Watson Central Warner Robbins, GA 227,747 6,000
Plaza Del Rey Miami, FL 50,146 9,000
Forrest Gallery Tullahoma, TN 214,450 10,500
Epsilon (Clematis) West Palm Beach, FL 18,707 2,650
Miramar - out parcel Miramar, FL 2.0 acres 1,500
Millervillage Baton Rouge, LA 94,559 2,700
Plymouth Park
(4 centers) Irving, TX 728,566 24,000 $63,000
As of September 30, 2004, we had four properties and a joint venture interest
held for sale, of which three of the properties were sold in October 2004. In
October 2004, we also completed the purchase of a six-property portfolio in the
Boston, Massachusetts metropolitan area for $119.8 million.
INVESTMENT IN CEDAR SHOPPING CENTERS (NYSE:CDR) As of September 30, 2004, we owned approximately 1.5 million shares of Cedar
Shopping Centers, Inc. common stock representing approximately 9.0% of Cedar's
total outstanding shares of common stock, and 220,000 shares, representing a
9.4% stake, of Cedar's 8.875% Series A Cumulative Redeemable Preferred Stock.
Cedar is a self-managed REIT engaged in the ownership, development and
management of community and neighborhood shopping centers anchored by
supermarkets, drug stores and other retailers, with a geographic concentration
in Pennsylvania and certain neighboring states. We are holding both the common
and preferred shares for investment purposes.
DEVELOPMENTS AND REDEVELOPMENTS As of September 30, 2004, we had over 20 development and redevelopment projects
underway or in the planning stage totaling approximately $64.0 million of asset
value, and, based on current plans and estimates, requiring approximately $19.4
million of additional capital to complete beyond the $44.7 million already
invested. These include: * CVS Plaza in Miami, Florida where we are completing the lease up of the local
space at a new 29,204 square foot drug store-anchored shopping center that we
built across the street from our recently completed Publix supermarket-anchored
Plaza Alegre shopping center; * Shops at Skylake in North Miami Beach, Florida, where we are in the process
of adding 29,000 square feet of retail and office space; * Bandera Festival in San Antonio, Texas; Centre Pointe Plaza in Smithfield,
North Carolina; Eustis Square in Eustis, Florida; Oakbrook Square in Palm Beach
Gardens, Florida and Venice Plaza in Venice, Florida, where we have
reconfigured and redeveloped previously vacant anchor and other space and are
completing the associated lease-up; * Ambassador Row Courtyard in Lafayette, Louisiana where we are reconfiguring a
portion of the center and adding an out parcel; and * The development of two supermarket-anchored shopping centers, one in
Homestead, Florida and the other in McDonough, Georgia, both on parcels of land
we currently own.
These developments and redevelopments are scheduled for completion between the
fourth quarter of 2004 and mid 2006. Year to date though September 30, 2004,
we have completed and leased a total of $41.8 million of development projects
resulting in incremental net operating income of approximately $4.6 million on
an annualized basis.
FFO AND EARNINGS GUIDANCE Based on current plans and assumptions and subject to the risks and
uncertainties more fully described in Equity One's reports filed with the
Securities and Exchange Commission, we are maintaining our guidance for
calendar year 2004 FFO per diluted share to be in a range of $1.56 to $1.59. We
are providing preliminary guidance for 2005 FFO per diluted share to be in a
range of $1.64 to $1.70. We currently anticipate that the growth in our FFO in
2005 will come from a combination of internal growth from increased rents and
the continued lease-up of vacant space, as well as incremental income from
property acquisitions, developments and redevelopments offset by our ongoing
asset sales program. This guidance is provided for information purposes and is
subject to change. The following is a reconciliation of the calculation of FFO
per diluted share and earnings per diluted share: Guidance for 2004 Range
Earnings per share $1.35 to $1.37
Less: gain on sale of real estate (0.29) (0.29)
Plus: real estate depreciation 0.50 0.51
FFO per diluted share $1.56 to $1.59
Guidance for 2005 Range
Earnings per share $1.13 to $1.17
Plus: real estate depreciation 0.51 0.53
FFO per diluted share $1.64 to $1.70 For guidance purposes, we have assumed no additional gains from the sale of
real estate beyond those already reported through October 27, 2004.
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 and in
particular, 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 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 clearer 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 Thursday, October 28, 2004 at 1:00 p.m. EDT
to discuss our performance for the three and nine-month periods ended September
30, 2004. The call will be web-cast and can be accessed in a listen- only mode
at Equity One's web site atwww.equityone.net. Investors may also join the call
by dialing 877-531-9985 (U.S./Canada) or 706-679-3073 (international). No
passcode is required.
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 800-642-1687 (U.S./Canada) or 706-645-9291 (international) using
passcode 1036055. The telephone replay will be available through November 12,
2004.
FOR ADDITIONAL INFORMATION For a copy of our third 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 future press releases and other
company notices, please send your e-mail address to Barbara Abreu .
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 are 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 Florida, Texas,
Georgia, Massachusetts and the other 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.
EQUITY ONE, INC. UNAUDITED SUMMARY FINANCIAL INFORMATION
(In thousands, except per share data) For the three For the nine
months ended months ended
September 30, September 30,
Operating Data 2004 2003 2004 2003
Total Revenues $58,208 $48,067 $167,237 $129,673
Net Income $30,701 $17,249 $69,475 $45,945
Earnings per share
(basic) $0.43 $0.27 $1.00 $0.80
Earnings per share
(diluted) $0.43 $0.27 $0.98 $0.79 Number of shares used
in computing earnings
per share:
Basic 70,626 63,777 69,820 57,348
Diluted 72,327 65,523 71,525 58,977
Reconciliation of Net Income to Funds from Operations
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 to net income, the most
directly comparable GAAP measure, for the periods presented: For the three For the nine
months ended months ended
September 30, September 30,
2004 2003 2004 2003 Net income $30,701 $17,249 $69,475 $45,945
Adjustments:
Rental property
depreciation and
amortization 9,276 7,574 26,798 19,706
Gain on sale of real
estate (12,215) (1,209) (13,767) (3,083)
Minority interest 223 227 596 606
Other items:
Interest on
convertible
partnership units -- -- -- 43
Pro-rata share of
real estate
depreciation from
joint ventures $65 $83 $197 $383 Funds from operations 28,050 23,924 83,299 63,600
EQUITY ONE, INC. UNAUDITED SUMMARY FINANCIAL INFORMATION
(In thousands) Reconciliation of Earnings per Diluted Share to Funds from Operations per
Diluted Share 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: For the three For the nine
months ended months ended
September 30, September 30,
2004 2003 2004 2003 Earnings per diluted share* $0.43 $0.27 $0.98 $0.79
Adjustments:
Depreciation and
amortization related
to rental properties 0.13 0.12 0.37 0.33
Gain on sale of real estate (0.17) (0.02) (0.19) (0.05)
Other items:
Pro-rata share of real
estate depreciation from
joint ventures -- -- -- 0.01 Funds from operations
per diluted share $0.39 $0.37 $1.16 $1.08 * Earnings per diluted share reflect the add-back of interest on convertible
partnership units and the minority interest(s) which are convertible to shares
of our common stock.
September 30, December 31,
Balance Sheet 2004 2003 Investments in real estate
(before accumulated depreciation) $1,834,667 $1,683,705 Total assets $1,875,256 $1,677,386 Mortgage notes payable $480,739 $ 459,103 Revolving credit facilities $64,000 $162,000 Unsecured senior notes payable $350,000 $150,000 Total liabilities before minority interests $969,614 $834,162 Stockholders' equity $904,254 $830,552 Total liabilities, minority
interests and stockholders' equity $1,875,256 $1,677,386
DATASOURCE: Equity One, Inc.
CONTACT: Howard Sipzner, EVP and CFO, Equity One, Inc., +1-305-947-1664; or, media, David Schull, +1-305-446-2700, for Equity One, Inc. Web site: http://www.equityone.net/
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