INVESTOR PRESENTATION NOVEMBER 2011

Transcription

1 INVESTOR PRESENTATION NOVEMBER 2011

2 Forward Looking Statements 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 macroeconomic 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 timing and costs associated with development or redevelopment projects; the effects of natural and other disasters; the ability of Equity One to successfully integrate the operations and systems of acquired companies and properties; the ability and timing to consummate the sale transaction of 36 shopping centers announced on September 26, 2011; and other risks, which are described in Equity One s filings with the Securities and Exchange Commission ( SEC ). 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 1

3 Corporate Mission 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. Approximately 75% of our portfolio value is derived from South Florida, San Francisco, Los Angeles, North Atlanta, and the Washington DC to Boston corridor. (1) (1) Portfolio values represent estimated fair values as of 9/30/11 with pro-forma effect of Blackstone disposition and all other acquisitions and dispositions currently under contract. Does not include unconsolidated JV properties. 2

4 Corporate Overview 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 202 properties in 14 states. (1) Our largest markets are: South Florida (30%), California (22%), North Florida (12%), Northeast (19%) and Atlanta (9%). (2) On January 4, 2011, we closed on the acquisition of Capital & Counties, one of the largest owners of retail real estate in the San Francisco Bay Area. Total equity capitalization / total enterprise value as of 9/30/11: $2.0 billion / $3.4 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: 52.4% (3) Management team has over 80 years of collective experience. (1) As of 9/30/11 and includes acquisitions under contract. Additionally, we had joint venture interests in sixteen shopping centers and two office buildings totaling approximately 2.7 million square feet. (2) Ranked by percentage of total estimated fair value as of 9/30/11 with pro-forma effect of Blackstone disposition and all other acquisitions and dispositions currently under contract. Does not include unconsolidated JV properties. (3) Beneficial ownership of current executive officers and directors as of 11/8/11 in accordance with rules of the SEC and including options exercisable within 60 days. Beneficial ownership: Chaim Katzman 47.3%, Nathan Hetz 1.4% and Jeff Olson 2.0%, on a fully diluted basis including shares issuable to Liberty. 3

5 Our portfolio is focused on necessity-based consumer spending Our properties are primarily found in infill markets and well-located mature trade areas with healthy demographics (1) : 3-Mile average population density:133,866 3-Mile average household income: $88,230 ($54,719 national average (2) ) Portfolio positioned to generate stable cash flows in a difficult operating environment: Our top three tenants are grocers and represent over 16% of our AMR. Percentage rent accounts for less than 1% of our rental income. Occupancy as of September 30, 2011 was 90.6%. Portfolio quality creates redevelopment opportunities. Portfolio has been significantly strengthened via acquisition activity: Diversified geographic exposure to West Coast and Northeast. Increased tenant credit profile via high quality assets in infill markets. Enhanced portfolio quality creates more redevelopment opportunities. Stability and growth of cash flows improved due to supply constraints within target markets. (1) Demographics as of September 30, Includes acquisitions currently under contract. Excludes EQY development/redevelopments, non-retail properties, land held, and joint venture properties. Figures are computed based on weighted average estimated fair values. (2) Source: SNL. 4

6 Significant Investment Activity is Transforming the Portfolio Approximately $1.3B of acquisitions completed since 2009 in our target markets Over $820M of assets in West Coast markets Added $360M of premium quality assets in Northeast portfolio Invested more than $143M of assets to densely populated Florida markets, primarily in Dade County. Sold or under contract to sell $664M of assets of non-strategic/non-core assets $473M sale of 36 non-core retail assets to Blackstone; expected to close December 2011 $191M asset dispositions related to non-retail CapCo assets; all sales closed 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 5

7 Asset Disposition Improves Portfolio Demographics Pro-forma for the effect of the Blackstone sale, the following portfolio demographics will be attributable to our remaining assets (1) : Pre Asset Sale Post Asset Sale 3-Mile average population density: 134, ,622 3-Mile average household income: $87,811 $89,044 Grocer sales per square foot: $478 $492 (1) Demographic data computed based on weighted average estimated fair values of retail assets excluding redevelopments, land held and joint venture properties. 6

8 Pro-forma Concentration of Assets Post Sale of 36 Assets Estimated FMV: $473M % of FV: 15% Estimated FMV: $187M % of FV: 6% Region $ (M) % South Florida $930 30% Washington DC to Boston $577 19% San Francisco $473 15% North Florida $380 12% Atlanta $283 9% Other $234 8% Los Angeles $187 6% Charlotte/Raleigh/Durham $37 1% TOTAL $3, % Estimated fair market values are as of 9/30/11 and include acquisitions and dispositions currently under contract. Estimated FMV: $380M % of FV: 12% Estimated FMV: $283M % of FV: 9% Estimated FMV: $577M % of FV: 19% Estimated FMV: $37M % of FV: 1% Estimated FMV: $930M % of FV: 30% 7

9 2011 Strategic Goals Operating Fundamentals Acquisitions / Dispositions Development / Redevelopment Focused on Execution Goal Increase same property occupancy to 90.5% Generate same property NOI growth of 0.5% Maximize value of assets via cost containment measures and prudent tenanting Acquire $100M - $200M of shopping centers in target markets Sell majority of non-retail Capital & Counties assets ($125M - $150M) Sell $50M- $75M of core assets located in secondary markets Recycle capital from dispositions into target markets Execute at least four anchor leases at The Gallery at Westbury Plaza 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 Current Status Expecting 0 to 50 BPS Increase Expecting +1% to 2% growth Cost reductions realized in Q1 through Q3 $155M acquired through 9/30/11 All targeted assets sold as of 10/31/11 Under contract on $473M disposition Acquisition pipeline is good Signed Trader Joe s, Saks OFF 5TH, Nordstrom Rack, The Container Store, ULTA and Shake Shack On target to achieve Serramonte redevelopment plans being prepared Balance Sheet Management 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 Quality metrics intact Net Debt to gross RE = 43.6% on 9/30/11 6.7X as of 9/30/ years as of 9/30/11 Multiple sources available 8

10 I. Operating Fundamentals Anchor activity remains strong. Big-box retailers continue to seek expansion opportunities in our target markets. Most challenged centers newer centers in path of growth markets / unanchored strips Consolidation of shop space - regional presidents are exploring all opportunities to eliminate shop space by adding pads & reconfiguring centers to accommodate junior boxes. Tenant interest in newly acquired centers is strong. For example, the Capital & Counties retail portfolio is now 96% leased versus 83% when announced. Expense control program continues to result in consolidation of vendors, reduced costs and improved service quality. Active tenants where we are seeing increased deal activity include: Aldi Dollar Tree Marshall's T-Mobile AT&T Wireless Edible Arrangements Panera Bread TD Bank Beall's Outlet Store Forever 21 Pet Supermarket Tijuana Flats Burlington Coat Factory Hair Cuttery Publix T.J. Maxx Chase hhgregg Ross ULTA Chipotle Jo-Ann Stores Save-A-Lot UPS Store Dick's Sporting Goods LA Fitness Starbucks Verizon 9

11 II. Acquisitions/Dispositions Recent acquisitions contain all the key criteria we consider when looking for new assets: Strong demographics average 3-mile populations of nearly 200,000 as compared to EQY s historical portfolio average of approximately 80,000. Minimal competition due to scarcity of land and strict zoning restrictions targeting high barrier to entry markets such as San Francisco, Long Beach, New York, Connecticut and Miami. High tenant sales productive anchor sales volumes with average grocer generating nearly $700/sf. Below market anchor rents average anchor tenant pays $16/sf, about 40% of market. Redevelopment and densification opportunities including The Gallery at Westbury Plaza, Serramonte Shopping Center, Willows Shopping Center and Gateway Plaza at Aventura. 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. 10

12 Capital & Counties - Update Retail Assets CapCo retail portfolio occupancy increased from 83% at 6/30/10 to 96% at 9/30/11 The average population density within a 3-mile ring of the retail properties is 178,819 people and the average household income is $87,735 Serramonte mall average retail sales increased to approximately $450/sf as of 9/30/11 Serramonte Mall provides tremendous redevelopment opportunity Currently has 818,000 sq. feet of GLA on 80 acres, no structured parking Site is highly sought after by big box retailers given density, supply constraints and incredible highway access Hired Jeff Mooallem to lead redevelopment effort (1) Capital Shopping Centres may redeem its units in the joint venture for Equity One common stock on a one-for-one basis, or cash, at Equity One s option. 11

13 California Expansion Serramonte Shopping Center Plaza Escuela The Marketplace Shopping Center 12

14 New York Metropolitan Expansion 13

15 South Florida Expansion Gateway of Aventura and Aventura Square 14

16 South Florida Expansion Country Walk Plaza 15

17 Disposition Update- CapCo Non-Core Assets Assets Targeted for Sale in 2011 Total Sq. Ft. Location Debt ($M) Ownership Status (1) Trio Apartments 284,989 Pasadena, CA $ % Sold in 3Q 2011 for $112.2M Park Plaza 72,649 Sacramento, CA $ % Sold in 4Q 2011 for $12.7M Pacific Financial 212,933 Los Angeles, CA $ % Sold in 3Q 2011 for $49.5M 595 Colorado Blvd 85,860 Pasadena, CA $ % Sold in 4Q 2011 for $16.7M The Senator 171,822 Sacramento, CA $38.3 $ % Foreclosure process completed 3Q 2011 (1) Sale prices noted are gross proceeds before JV interest and if any, costs to sell 16

18 Disposition Plans for Secondary Center Centers Entered into contract to sell 36 shopping centers to Blackstone Real Estate Partners VII for $473 million. 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. 17

19 Development / Redevelopment Update 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, ULTA, and Shake Shack. Construction has commenced with targeted completion by Fall of CAPEX expected to be $40M - $50M Serramonte Feasibility / architectural review in 2011 Assess best / highest use and initial Phase I in 1Q 2012 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 expected CAPEX is approximately $4.5M-$5.0M for Boca Village and $2.5M-$3.0M 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 18

20 We maintain modest leverage, ample liquidity, and investment-grade metrics Key leverage ratios: Net Debt to Total Market Cap as of 9/30/11: 41.9% Net Debt to Gross Real Estate & Securities as of 9/30/11: 43.6%. Net Debt to Adjusted EBITDA of 6.7X as of 9/30/11. (1) Adjusted EBITDA to interest expense coverage of 2.5X as of 9/30/11. (1) Adjusted EBITDA to fixed charges of 2.1X as of 9/30/11. Weighted average term to maturity for our total debt of 4.4 years as of 9/30/ % Q Leverage (Total Debt + Preferred / Gross Assets) 50.0% 45.0% 40.0% 35.0% 30.0% EQY (BBB-/Baa3) FRT (BBB+/Baa1) KIM (BBB+/Baa1) REG (BBB/NR) WRI (BBB/Baa2) Source: Company filings and SNL financial. Credit ratings from S&P and Moody's. (1) Based on net debt as of 9/30/11 and Adjusted EBITDA (excluding gains/losses on property sales, debt extinguishment, impairments, and other non-recurring items) calculated by annualizing 3Q11 numbers as reported in the 9/30/11 supplement. 19

21 Current Liquidity Position We maintain a manageable debt maturity schedule with maturities through In Millions Debt Maturity Schedule $400 $350 $300 $250 $200 $150 $100 $50 $ Growing unencumbered asset base through maturing low LTV secured debt. Increased unencumbered cash NOI to approximately 65% at 9/30/11 (versus 58% at Q4 2009). Strong lending relationships with both traditional banks and life insurance companies. Demonstrated access to the public markets. Note: Debt maturity schedule as of 9/30/11. Includes scheduled principal amortization. Credit facilities are shown as due on the initial maturity dates, though certain extension options may be available. 20

22 Summary A management team who has proven to be effective allocators of capital 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 21

23 Reconciliation of Adjusted EBITDA EQUITY ONE, INC. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION and AMORTIZATION - (ADJUSTED EBITDA) For the three and nine months ended September 30, 2011 and 2010 (unaudited) (in thousands) Three months ended Nine months ended Sept 30, 2011 Sept 30, 2010 Sept 30, 2011 Sept 30, 2010 Net income attributable to Equity One, Inc. $ (4,657) $ 5,133 $ 37,323 $ 16,804 Rental property depreciation and amortization* 21,985 16,906 69,952 50,037 Other depreciation and amortization Interest expense* 21,050 19,117 64,141 58,360 Amortization of deferred financing fees* ,668 1,379 Gain on extinguishment of debt - - (255) (63) Acquisition/Disposition costs (1) 3,498 2,120 6,970 7,117 Impairment loss* 55, , Gain on sale of depreciable real estate* (3,465) - (4,395) - Income tax benefit of taxable REIT subsidiaries (36,815) (690) (37,933) (2,684) Gain on bargain purchase - - (30,561) - Equity in (income) loss in unconsolidated joint ventures (4,587) 64 (5,398) 146 Adjusted EBITDA $ 52,954 $ 43,308 $ 158,651 $ 131,628 Interest expense* $ 21,050 $ 19,117 $ 64,141 $ 58,360 Adjusted EBITDA to interest expense* Fixed charges Interest expense* $ 21,050 $ 19,117 $ 64,141 $ 58,360 Scheduled principal amortization (2) 3,871 3,191 11,752 10,307 Total fixed charges $ 24,921 $ 22,308 $ 75,893 $ 68,667 Adjusted EBITDA to fixed charges* Net debt to Adjusted EBITDA (3) Total market capitalization (see page 7) $ 3,388,549 $ 2,826,141 $ 3,388,549 $ 2,826,141 * The indicated line item includes amounts reported in discontinued operations. (1) Amounts include external costs associated with acquired and disposed properties and acquisition/disposition related expenses during the period. For the three and nine month periods in 2011, amounts include $0.1 million and $0.9 million, respectively, in severance costs associated with the acquisition of Capital & Counties. (2) Excludes balloon payments upon maturity. (3) Adjusted EBITDA for the period has been annualized. 22

24 Appendix Loehmann s- 107 Seventh Avenue Metropolitan (Queens, NY) Westbury Properties Aerial The Gallery at Westbury Plaza Serramonte Shopping Center Plaza Escuela Willows Shopping Center Davis Marketplace The Circle Centers 23

25 Loehmann s- 107 Seventh Avenue Property Overview 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. 24

26 90-30 Metropolitan (Queens, NY) Acquisition Overview 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 25

27 Westbury Properties 26

28 The Gallery at Westbury Plaza Property Overview 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

29 Serramonte Shopping Center - Ideally Positioned for Further Development Property Profile GLA (sf) (sf) 818,192817,899 Year Built 1968 Year Built 1968 Site Area (acres) 80 Site Area (acres) 80 Occupancy (as of 9/30/11) 96% Population Occupancy (trade (as area) of 12/31/10) 97% (1) 1,135,023 Average Population HH income (trade (trade area) area) (1) (1) $105,275 1,135,023 Average HH income (trade area) (1) $105,275 (1) Trade area includes Daly City and the surrounding areas (Colma, Pacifica, South San Francisco, San Bruno, Brisbane and San Francisco). 28

30 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 29

31 Willows Shopping Center Concord, CA Property Profile GLA (SF) 256,086 Year Built 1977 Site Area (acres) 24.9 Occupancy (as of 9/30/11) 94% Population (3 miles) 136,366 Average HH income (3 miles) $82,236 Sunvalley Mall Chevron Office Park Chevron Office Park I

32 Davis Marketplace Defensive Asset in High Barrier to Entry Market 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 Hwy

33 The Circle Centers, Long Beach, CA 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 32