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| 8-K - 8-K - EQUITY ONE, INC. | d313782d8k.htm |
 INVESTOR PRESENTATION
MARCH 2012 |
 Forward
Looking Statements 1
Certain matters discussed by Equity One in this presentation 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 the states in which Equity One owns properties; the continuing financial
success of Equity One’s current and prospective tenants; the risks that Equity One may
not be able to proceed with or obtain necessary approvals for development or
redevelopment projects or that it may take more time to complete such projects or incur
costs greater than anticipated; the availability of properties for acquisition; the extent to
which continuing supply constraints occur in geographic markets where Equity One
owns properties; the success of its efforts to lease up vacant space; the effects of
natural and other disasters; the ability of Equity One to successfully integrate the
operations and systems of acquired companies and properties; changes in Equity One’s
credit ratings; and other risks, which are described in Equity One’s filings with the
Securities and Exchange Commission. This presentation
also contains non-GAAP financial measures, including Funds from Operations, or FFO.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP
measures can be found in Equity One’s quarterly supplemental information package and in
filings made with the SEC which are available on its website at www.equityone.net. |
 Corporate Mission
2
Our mission is to be the leading owner, operator, developer and
asset manager of neighborhood and community shopping centers
in the most supply constrained markets of the United States.
|
 Corporate Overview
3
(1)
As of 12/31/11 and includes acquisitions & dispositions under contract as of
03/01/12. Additionally, we had joint venture interests in seventeen shopping centers and
two office buildings totaling approximately 2.8 million square feet.
(2)
Ranked by percentage of total estimated fair value as of 12/31/11 inclusive of all
acquisitions and dispositions currently under contract as of 03/01/12. Does not include
unconsolidated JV properties.
(3)
•
Equity One specializes in the acquisition, asset management, development and
redevelopment of quality retail properties primarily located in the
coastal markets across the United States •
We
own
167
properties
in
13
states
(1)
•
Our largest markets as measured by approximate fair market values are: South
Florida (30%), California (23%),
Northeast
(21%)
,
North
Florida
(10%),
and
Atlanta
(8%)
(2)
•
Total equity capitalization / total enterprise value as of 12/31/11: $2.1 billion /
$3.3 billion •
Investment grade credit ratings (Baa3/BBB-) from both Moody’s and S&P
with recently revised outlooks (positive and stable, respectively)
•
Management and board have substantial ownership stake and experience:
–
Beneficial ownership: 51.8%
(3)
–
Management team has over 80 years of collective experience
Beneficial ownership of current executive officers and directors as of 3/5/12
in accordance with rules of the SEC and including options exercisable within 60 days. Beneficial
ownership: Chaim Katzman 47.2%, Jeff Olson 2.0% and Nathan Hetz 1.4% on a fully diluted basis
including shares issuable to Liberty. |
 Equity
One is on the move… Then vs. Now
4
Asset
Composition
by
Region
(1)
As of Dec 31, 2011
As of Dec 31, 2008
# Properties
Fair Value
($M)
% FV
# Properties
Fair Value
($M)
% FV
South Florida
52
$1,004
30%
50
$1,007
43%
California
10
$750
23%
0
$0
0%
Northeast
19
$720
21%
8
$168
7%
North Florida
30
$343
10%
41
$525
22%
Atlanta
22
$275
8%
21
$297
13%
Other
28
$229
7%
36
$316
13%
Charlotte/Raleigh/Durham
6
$37
1%
6
$52
2%
Total
167
$3,358
100%
162
$2,365
100%
Demographic Quality of Assets
(2)
As of Dec 31, 2011
As of Dec 31, 2008
3-mile population
152,839
82,368
3-mile household income
$93,069
$72,878
Grocery sales per sq.ft
$507
$406
(1)
Data includes acquisitions & dispositions under contract as of 03/01/12
(2)
Demographic data weighted on estimated fair market value of assets
|
 Significant Investment Activity is Transforming the Portfolio
5
(1)
As of Dec 31, 2011. Includes closed acquisitions and dispositions as of Dec
31, 2011. Includes Joint Venture Properties. Figures are computed based on
weighted average estimated fair values.
•
Approximately
$1.4B
of
acquisitions
completed
between
2009
and
2011
in
our
target
markets
(1)
–
Approximately $800M of assets in West Coast markets
–
Added $360M of premium quality assets in Northeast portfolio
•
Sold approximately over $800M of non-strategic/non-core assets since 2009,
the most prominent being –
$473M sale of 36 non-strategic retail assets to Blackstone closed in December
2011 –
$191M asset dispositions related to non-retail CapCo assets
•
Seeded new joint venture with New York Common Retirement Fund
–
Institutional
JV
partner
seeking
to
acquire
high
quality
grocery
anchored
centers
–
Provides attractive source of capital that can help us leverage our platform
|
 2012
Strategic Goals 6
Operating
Fundamentals
Goal
Increase same property occupancy by 50 basis points
Generate same property NOI growth of 1.5% to 2.5%
Maximize value of assets via cost containment measures and prudent tenanting
Balance Sheet
Management
Portfolio
Quality
Value
Creation
Acquire $200M -
$300M of shopping centers in target markets
Sell $50M -
$75M of assets located in secondary markets
Recycle capital from dispositions into major urban markets
Execute plans to launch redevelopment at Serramonte
Build pipeline of urban infill development and redevelopment properties that
represents 10% of total asset value
Increase ownership concentration in targeted markets through accretive development
projects Maintain quality balance sheet / financial discipline
Keep targeted leverage ratio of 40-45%
Net Debt to EBITDA goal of 6.5X
Extend debt maturity profile
Maintain access to multiple sources of capital
Focused on Execution |
 Operating Fundamentals
7
•
2012 goal to increase same property NOI by 1.5% to 2.5% focused on the
following –
Increase occupancy with an emphasis on small shop space
–
Increase rent spreads particularly on lease renewals
–
Continue implementation of cost containment initiatives within property
operations –
Reduce concentration of assets in secondary markets
–
Expand
tenant
relations
and
marketing
efforts
with
national
and
regional
retailers |
 Portfolio Quality
8
•
We plan to further diversify our portfolio into supply constrained, urban
markets •
Recent acquisitions in California and Connecticut highlight our focused approach on
properties which meet the following key criteria aimed at enhancing the
quality and performance of our overall portfolio: –
Strong
demographics
–
average
3-mile
populations
of
nearly
200,000
as
compared
to
EQY’s
historical
portfolio average of approximately 80,000
–
Strong barriers to entry due to scarcity of land and strict zoning
restrictions –
Highly productive anchor sales volumes
–
Below market anchor rents
–
Redevelopment and densification opportunities
•
These acquisitions have enabled us to diversify our portfolio into higher quality
centers in major MSAs which will ultimately result in greater stability and
higher internal growth |
 Disposition
Plans for Secondary Center Centers
9
•
We plan to sell at least $50-$75 million of our existing assets located in
secondary markets annually
•
The average three mile population density of most centers targeted for disposition
is 40-70K people
•
Ultimate
size
of
disposition
pool
for
2012
dependent
on
expected
pricing
–
we
would
be more aggressive if pricing is attractive |
 Development / Redevelopment Update
10
•
The Gallery at Westbury Plaza
•
Tenant interest remains strong
•
Anchor leases now signed with The Container Store, Trader Joe’s, Nordstrom
Rack, Saks OFF 5TH, SA Elite, Bloomingdale’s Outlet, Verizon Wireless,
ULTA, and Shake Shack •
Construction has commenced with targeted opening by Fall of 2012
•
2012
CAPEX
expected
to
be
$55M
-
$65M
•
Serramonte
•
Feasibility / architectural review underway
•
Actively discussing tenanting options –
big box retail, entertainment, value/convenience retail
•
No significant redevelopment CAPEX expected in 2011 or 2012
•
Boca Village / Pine Ridge
•
Addresses layout / structural design weakness
•
Reduces shop tenant exposure
•
Target stabilization late 2013 / early 2014
•
2012 expected CAPEX is approximately $4.5M-$5.0M for Boca Village and less
than $2.5M for Pine Ridge
•
Boynton Plaza
•
Public expansion (from 39K sq ft to 54K sq ft)
•
Reduce small shop exposure
•
Expected to increase occupancy from 86% to more than 96%
•
2012 expected CAPEX is approximately $3.0M |
 Pro-forma Concentration of Assets As of Dec 31, 2011
Estimated FMV:
$720M
% of FV: 21%
Estimated FMV:
$37M
% of FV: 1%
Estimated FMV:
$275M
% of FV: 8%
Estimated FMV:
$1,004M
% of FV: 30%
Estimated FMV:
$343M
% of FV: 10%
11
Estimated FMV:
$556M
% of FV: 17%
Estimated FMV:
$194M
% of FV: 6%
(1) Estimated fair market values are as of 12/31/11 and include acquisitions and
dispositions currently under contract as of 03/01/12. Region
$(M)
%
South Florida
1,004
30%
Washington DC to Boston
720
21%
San Francisco
556
17%
North Florida
343
10%
Atlanta
275
8%
Other
229
7%
Los Angeles
194
6%
Charlotte/Raleigh/Durham
37
1%
Grand Total
3,358
100% |
 Benefits of EQY’s Portfolio Concentration
12
•
Increase in our overall portfolio value through strategic acquisitions in key, high
value markets and disposition of our non-core assets in secondary
markets •
“Fewer
but
better
assets”
–
17%
of
our
assets
(28/167)
account
for
approximately
50%
of
our
value
•
80% of these 28 assets have been acquired since November 2009 signifying execution
of our stated vision
•
Assets are concentrated in 12 important retail markets with an average value of
$60M+ and 97% occupancy
•
Generally the acquired assets are the most dominant assets in their respective
markets and provide significant future redevelopment potential
•
Concentration of fewer, higher value assets provides opportunities to streamline
and increase efficiencies
in
operations
and
management.
For
example,
these
28
assets
account
for
25%
of
our
leases yet 50% of our asset value. |
 Balance Sheet Discipline –
Maintained During Portfolio Transformation
13
•
Key leverage ratios:
–
Net Debt to Total Market Cap as of 12/31/11: 36.7%
–
Net Debt to Gross Real Estate & Securities as of 12/31/11: 39.4%
–
Net
Debt
to
Adjusted
EBITDA
of
5.6X
as
of
12/31/11
(1)
–
Adjusted
EBITDA
to
interest
expense
coverage
of
2.6X
as
of
12/31/11
(1)
–
Adjusted EBITDA to fixed charges of 2.2X as of 12/31/11
–
Weighted average term to maturity for our total debt of 4.4 years as of
12/31/11 (1)
Based
on
net
debt
as
of
12/31/11
and
Adjusted
EBITDA
(excluding
gains/losses
on
property
sales,
debt
extinguishment,
impairments,
and
other
non-recurring
items)
calculated
by
annualizing
4Q11
numbers
as
reported
in
the
12/31/11
supplement.
Q4 2011 Leverage (Total Debt + Preferred / Gross Assets)
Source: Company filings and SNL financial. Credit ratings from S&P and
Moody's. 30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
EQY (BBB-/Baa3)
KIM (BBB+/Baa1)
FRT (BBB+/Baa1)
REG (BBB/NR)
WRI (BBB/Baa2) |
 Current Liquidity Position
14
•
Cash and cash equivalents amounted to $103.5M as of Dec 31, 2011
•
Total available undrawn capacity on line of credit of $447M at Dec 31, 2011
•
We maintain a manageable debt maturity schedule with maturities through 2017:
Note: Cash includes 92.5M in Escrow account
Debt maturity schedule as of 12/31/11. Includes scheduled principal
amortization. Credit facilities are shown as due on the initial maturity dates, though certain
extension options may be available.
•
Increased unencumbered Cash NOI to approximately 70.7% at 12/31/11 (versus 64.6% at
Q4 2010) •
Strong lending relationships with both traditional banks and life insurance
companies •
Demonstrated access to the public markets
$0
$50
$100
$150
$200
$250
$300
$350
2012
2013
2014
2015
2016
2017
Debt Maturity Schedule |
 Investment Thesis
15
A management
team
who
has
proven
to
execute
a
stated
strategy
of
significant
portfolio improvement while maintaining financial discipline
A management
team
who
has
proven
to
execute
a
stated
strategy
of
significant
portfolio improvement while maintaining financial discipline
Well-located, high quality, and productive grocery-anchored shopping centers
with an intensive focus on asset management
Investment strategy focused on identified core markets leading to an upgrade
in portfolio quality and further geographic diversity
A healthy financial structure including a strong balance sheet, modest leverage
and ample liquidity
We are a premier operator positioned for growth
We are a premier operator positioned for growth |
 Appendix
16
•Potrero Center
•Culver Center
•Gateway of Aventura/ Aventura Square
•Loehmann’s-
107 Seventh Avenue
•90-30 Metropolitan (Queens, NY)
•Westbury Properties Aerial
•The Gallery at Westbury Plaza
•Serramonte Shopping Center
•Plaza Escuela
•Davis Marketplace
•The Circle Centers |
 Potrero Center, San Francisco, CA
17 |
 Culver
Center, Los Angeles, CA 18 |
 Gateway of Aventura and Aventura Square
19 |
 20
Loehmann’s-
107 Seventh Avenue
•
56,870 sf retail property in
the heart of the Chelsea
neighborhood in New York
City.
•
Loehmann’s currently
occupies the entire space.
•
Prime Manhattan location
which attracts heavy foot
traffic from surrounding Meat
Packing District, Chelsea
Market and The High Line
Park.
•
Google’s New York
Headquarters is one block
west of the site.
•
Significantly below market
rent.
Property Overview |
 21
90-30 Metropolitan (Queens, NY)
•
60,000 sf two-level retail
building located in Forest
Hills, NY.
•
94% occupied and
anchored by Trader Joe’s,
Staples and Michaels.
•
Situated in one of the most
affluent and dense
neighborhoods in Queens,
NY with nearly 1 million
people living within a 3-Mile
radius.
•
Queens is one of the most
under-retailed areas in the
country (estimated at 9 sf of
retail space per capita or 1/3
average for the U.S.
(1)
).
(1)
Source –
Eastdil Secured
Acquisition Overview |
 22
Westbury Properties |
 23
The Gallery at Westbury Plaza
•
The Gallery at Westbury
Plaza sits at the center of
Nassau County, one of the
most affluent and densely
populated regions in the
nation.
•
Development site is located
in one of the strongest retail
corridors between Roosevelt
Field Mall and Westbury
Plaza.
•
Current plan anticipates
330,000 sf of retail GLA.
•
Anchor leases now signed
with The Container Store,
Trader Joe’s, ULTA, Saks
OFF 5TH, Nordstroms Rack
and Shake Shack.
•
Targeted opening date –
Fall 2012.
Property Overview |
  Serramonte Shopping Center -
Ideally Positioned for Further Development
24
(1)
Trade
area
includes
Daly
City
and
the
surrounding
areas
(Colma,
Pacifica,
South
San
Francisco,
San
Bruno,
Brisbane
and
San
Francisco).
Property Profile
GLA (sf)
818,192
Year Built
1968
Site Area (acres)
80
Occupancy (as of 9/30/11)
96%
Population (trade area)
(1)
1,135,023
Average HH income (trade area)
(1)
$105,275 |
  25
Plaza Escuela –
Centrally Located in a Prime, High-End Retail Market
Property Profile
GLA (SF)
151,499
Year Built
2002
Site Area (acres)
5.2
Occupancy (as of 9/30/11)
99%
Population (3 miles)
92,265
Average HH income (3 miles)
$110,797 |
  26
Davis Marketplace –
Defensive Asset in High Barrier to Entry Market
Hwy
113
Property Profile
GLA (SF)
111,156
Year Built
1990
Site Area (acres)
9.7
Occupancy (as of 9/30/11)
93%
Population (3 miles)
59,258
Average HH income (3 miles)
$84,132 |
 The
Circle Centers, Long Beach, CA 27
Property Overview
•
GLA : 273,000 SF (95%
Occupied)
•
Purchase Price: $72.0M
•
Anchors: Vons, Ross, Rite
Aid, Ralphs, Marshalls
•
3-mile demographics
•
Population: 259,624
•
Average HH income:
$70,401
•
Investment Highlights:
•
Situated in one of our
seven target markets.
•
Severe supply
constraints.
•
Strong tenant sales
•
Below market anchor
rents with short-term
lease expirations.
•
Visible growth in net
operating income.
(1)
Vons Circle Center
(2)
Ralphs Circle Center
(3)
Circle Center West |