2016 CITI GLOBAL PROPERTY CEO CONFERENCE MARCH 14-16, 2016

Transcription

1 2016 CITI GLOBAL PROPERTY CEO CONFERENCE MARCH 14-16, 2016

2 OUR COMPANY 1

3 OUR PURPOSE EQUITY ONE SEEKS TO PRODUCE SUSTAINABLE INVESTOR RETURNS THROUGH THE ACTIVE OPERATION AND REDEVELOPMENT OF HIGH QUALITY SHOPPING CENTERS IN SUPPLY CONSTRAINED MARKETS. THE RESILIENCE OF OUR BUSINESS IS A PRODUCT OF OUR CREATIVE APPROACH, OUR STRONG PORTFOLIO, OUR $1 BILLION REDEVELOPMENT PIPELINE, AND OUR STRONG RELATIONSHIPS WITH KEY CONSTITUENTS RANGING FROM EMPLOYEES, RETAILERS, MUNICIPALITIES, AND THE ENVIRONMENT ITSELF. 2

4 OUR COMPANY Total GLA = 15.1M Total Prop. = 115 $21 $19 $17 $15 $13 $11 $9 $7 $5 ABR/SF - All Spaces $19.48 $ S.C. REITS 97% 96% 95% 94% 93% 92% 91% 90% 89% 88% 87% Occupancy 96.0% 95.2% S.C. REITS Fixed Charge Coverage S.C. REITS 3

5 OUR STORY We have a business plan that is positioned to produce both short and enduring long term returns: SHORT TERM: LONG TERM: EQY s portfolio remains under-occupied, providing + As core NOI growth moderates because of ongoing operational upside higher occupancy, over the next several years redevelopment should ramp = 8-10% EQUITY RETURN 4

6 STRONG SHORT TERM RESULTS

7 STRONG NOI GROWTH SHOULD CONTINUE 6% SS NOI Growth % (1) 98% Consolidated Occupancy (2) $22 Average Base Rent (2) 5% 4% Including redevelopments 4.2% Excluding redevelopments 3.8% 97% 96% 95% 96.0% $20 $18 $ % 94% $16 2% 93% $14 92% 1% 91% $12 0% 90% $10 Strong Operating Cash Flow Growth. While dramatically improving portfolio quality 6

8 STRONG NOI GROWTH SHOULD CONTINUE 7% 6% 5% 4% 3% 2% Change in Small Shop Occupancy 4Q13-4Q15 94% 92% 90% 88% 86% Small Shop Occupancy 4Q15 1% 84% 0% 82% -1% 80% -2% EQY KIM BRX REG WRI DDR FRT AKR 78% BRX DDR EQY KIM AKR WRI FRT REG Strong portfolio, streamlined operations, and healthy fundamentals generated the largest increase in occupancy in our peer group But shop occupancy remains well below the peer group, suggesting room for ongoing NOI growth. 7

9 WHY STRONG NOI GROWTH SHOULD CONTINUE Historical Occupancy 99.6% 96.0% 88.7% 100.0% 97.5% 95.0% 92.5% 90.0% 87.5% 85.0% 82.5% 80.0% 77.5% 75.0% 72.5% 70.0% 56% 54% 52% 50% 48% 46% 44% 42% 40% % Portfolio Represented by Anchors 68% 67% 66% 65% 64% 63% 62% 61% 60% 59% 58% 2Q03 3Q04 4Q05 1Q07 2Q08 3Q09 4Q10 1Q12 2Q13 3Q14 4Q15 Small Shop Anchor Overall % of GLA % of ABR Shop occupancy last peaked around 95% range in 2007, with lower quality portfolio And with excess shop vs. anchor space 8

10 QUANTIFYING SHOP OCCUPANCY OPPORTUNITIES 9

11 RE/DEVELOPMENT PIPELINE RELOADED ($ In Millions) $175 Active Projects Balance to Complete Trend Line (3) $150 $148 $125 $100 $75 $50 $25 $0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 10

12 RE/DEVELOPMENT PIPELINE RELOADED Projects at December 31, 2015 (4) Project State Gross Budget Balance to Complete Serramonte Expansion Project CA $109.1 $103.0 Pablo Plaza FL $18.0 $16.8 Countryside Shops FL $16.4 $15.9 Lake Mary Centre FL $17.3 $5.9 Broadway Plaza NY $73.8 $ th Avenue NY $14.1 $1.2 Cashmere Corners FL $1.6 $0.8 Medford MA TBD TBD North Bay Village FL TBD TBD Total Active Projects $250.3 $147.6 Projects pending stabilization $42.9 $2.9 Total Dev / Redev $293.2 $150.5 Target Cash on cost yields 7-8% 11

13 SERRAMONTE CENTER REDEVELOPMENT 2Q15, announced Daly City approval of $109M, 247k gross (209k net) sf expansion of center; Expected yield of 7-8% New entertainment wing, retail buildings/ restaurants, interior renovations, and ~1,000 stall parking deck; draw shoppers from much larger trade area 12

14 BARNEYS/101 7 th AVE REDEVELOPMENT Purchased asset in 2012 with an underperforming Loehmann s store expiring in 2019 at $25/sf rent. Upon Loehmann s bankruptcy, signed new 20 year Barneys lease at $80/sf and $14m incremental investment. 13

15 PABLO PLAZA REDEVELOPMENT Transformation of Jacksonville Beach shopping center through lease with Whole Foods, which will replace Office Depot in

16 PABLO PLAZA REDEVELOPMENT Replace 43,000 sq/ft of poorly formatted inline space with new anchors/shops: $18MM expenditure, 7-8% yield on costs Before After 15

17 ACHIEVED WITH LOW LEVERAGE Debt Service Coverage (5) Total Coverage (5) Net Debt to EBITDA (6) 4.0x 3.8x 1.50x 8.0x 3.5x 3.0x 1.25x 1.29x 7.0x 6.0x 5.7x 2.5x 1.00x 5.0x 2.0x 0.75x 4.0x 1.5x 1.0x 0.50x 3.0x 2.0x 0.5x 0.25x 1.0x 0.0x 12/31/11 12/31/12 12/31/13 12/31/14 12/31/ x 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 0.0x 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Significant improvement in portfolio quality and redevelopment spending have been achieved while lowering leverage 16

18 SUSTAINABLE LONG TERM GROWTH 17

19 SUSTAINABLE GROWTH PLAN Our 10-year business plan is based on: Sustainable same + Redevelopment + Stable 3+% store NOI growth spending of $100- dividend yield of 3+% 150MM annually = 8-10% TARGET SHAREHOLDER RETURNS 18

20 SAME STORE NOI GROWTH IS THE FOUNDATION TARGET 3.0% - 3.5% LT GROWTH 3.5% 3.0% ~ 20 bps 2.5% bps 2.0% 1.5% 1.0% 0.5% 0.0% bps bps bps ~ 40 bps Anchor contractual rent bumps Anchor option spreads Anchor releasing spreads Shop contractual rent bumps Shop spreads (option and releasing) Occupancy gains (primarily shop) Improvement of large assets and the high quality of the portfolio should allow for enduring 3+% same store NOI growth. 19

21 50 TH BIRTHDAY OF GROCERY SHOPPING CENTERS 4,000,000 3,500,000 3,000,000 2,500,000 Golden Age 49% Anchors Last Expiration Property NOI 2,000,000 Shop Rent / CPI 1,500,000 Anchor Rent 1,000, ,000 $28M NOI Uplift Mark-to-Mkt Anchor leases signed decades ago have had flat rents for many years Expiration presents opportunity to mark to market; significant NOI upside ~50% of EQY s anchors expire in the next 15 years 20

22 $1 BILLION REDEVELOPMENT OPPORTUNITY 21

23 $1 BILLION REDEVELOPMENT OPPORTUNITY Anchor leases prevented redevelopment for decades, so many of our centers are the last remaining low density sites in high density areas 22

24 $1 BILLION REDEVELOPMENT OPPORTUNITY 12 opportunities to spend $1 billion over the next decade Non-retail components represent value and potential funding 23

25 NOI CONCENTRATED IN HIGH QUALITY ASSETS Our 12 Largest Assets 12 Redevelopment Opportunities % of Future NOI ~40% Of the Total Portfolio NOI ~20% NOI TODAY Redevelopment and enhanced 3+% same store growth should generates growth in EQY s overall NOI 24

26 HOW WE GET THERE OTHER EXISTING DEV/REDEV REDEVELOPMENT $19 $88 $235 M $400 M NOI $36 $235 NOI SHOPS $22 ANCHORS Core operations and investment in redevelopment should yield a 70% expansion in total NOI 25

27 REDEVELOPMENT IMPROVES PORTFOLIO 26

28 8-10% RETURNS WITH LOW LEVERAGE 275% 250% 225% Expected NAV Growth With 3+% Dividend ~10% CAGR ~7% CAGR 200% 175% 150% 125% 100% 75% 50% NAV today Redevelopment Activity (Net of funding, and at current cap rates) Same Store NOI Growth (levered) Cap Rate Compression from Redevelopment Asset Improvement Combining sustainable same store NOI growth of 3%, redevelopment spending of $ MM annually and a stable 3+% dividend results in 8-10 shareholder returns 27

29 8-10% RETURNS WITH LOW LEVERAGE 8 Leverage and Coverage Q11 4Q12 4Q13 4Q14 4Q Net Debt / EBITDA Fixed Charge Coverage Accomplished at low/stable leverage levels - 28

30 RELATIONSHIP + OPPORTUNITY = SUCCESS ENVIRONMENT EMPLOYEES LOCAL COMMUNITY BUSINESS OPPORTUNITY Sustainable growth is about more than just operations and redevelopment, it depends on healthy relationships with many constituents 29

31 LEASING UPDATE Anchor Leasing Anchor occupancy consistently near 100%, still significant upgrade activity 4 new anchor leases since 12/31/15: 2 Ross Dress for Less (Serramonte and Countryside), Burlington (Point Royale), Cost Plus World Market (Buckhead Station) No sign of significant change in small shop or anchor leasing momentum Sports Authority Closing locations are in properties with very attractive demographics, easing the replacement process Relatively new leases and larger sizes (15-30ksf) Expect blended weighted average new lease rate to be similar to old rates Property Avg 3-mi Population Avg 3-mi HH Income Plaza Escuela Walnut Creek, CA 98,512 $ 118,847 The Gallery Garden City, NY 165,091 $ 107,642 Broadway Plaza Bronx, NY 938,461 $ 52,073 Average 257,675 $ 102,666 30

32 FOOTNOTES (1) NOI growth is presented on a same property cash basis for each respective period end. Beginning 1Q15, SS NOI was reported including and excluding redevelopments. (2) Occupancy is for the consolidated shopping center portfolio as of each respective period end, and excludes development and redevelopment properties, and non-retail assets. Average Base Rent is for the consolidated shopping center portfolio, and beginning 1Q15 includes development and redevelopment properties. (3) Represents the total budgeted cost of development and redevelopment projects less costs incurred through each respective period end. (4) Amounts as of 12/31/2015 and in millions (5) Debt Service Coverage is Adjusted EBITDA to Fixed Charges as reported in the Supplemental Information Package. Total Coverage ratio includes dividends paid. (6) Annual EBITDA for year-ended periods. Calculated as reported in the Supplemental Information Package. 31

33 FORWARD-LOOKING STATEMENTS Certain matters discussed by Equity One in this presentation constitute forwardlooking statements within the meaning of the federal securities laws. Forwardlooking statements can be identified by the use of forward-looking terminology such as may, will, might, would, expect, anticipate, estimate, could, should, believe, intend, project, forecast, target, plan, or continue or the negative of these words or other variations or comparable terminology. 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 and actual results could differ materially from current expectations. Factors that could cause actual results to differ from expectations 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 32

34 MATTHEW OSTROWER Chief Financial Officer Equity One Inc. 410 Park Avenue, Suite 1220 New York, NY EQUITYONE.COM