-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RhlChA/gWKoIz0Q6tN7pMlkrjWjM1jC1c6xIqfYUft18JbVmYibKs8YOrkjcI+Yq 8coyXz/bj7HcZvK3W2NZfA== 0001042810-03-000135.txt : 20030919 0001042810-03-000135.hdr.sgml : 20030919 20030919135802 ACCESSION NUMBER: 0001042810-03-000135 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030919 ITEM INFORMATION: Other events FILED AS OF DATE: 20030919 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY ONE INC CENTRAL INDEX KEY: 0001042810 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 650563410 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13499 FILM NUMBER: 03902391 BUSINESS ADDRESS: STREET 1: 1696 N E MIAMI GARDENS DR SUITE 200 CITY: NORTH MIAMI BEACH STATE: FL ZIP: 33179 MAIL ADDRESS: STREET 1: 1696 N E MIAMI GARDENS DR SUITE 200 CITY: NORTH MIAMI BEACH STATE: FL ZIP: 33179 8-K 1 eqy_acq-9192003.txt =========================================================================== =========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 14, 2003 Equity One, Inc. ----------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation) 001-13499 52-1794271 (Commission File Number) (I.R.S. Employer Identification No.) 1696 N.E. Miami Gardens Drive North Miami Beach, Florida 33179 (Address of principal executive offices) (Zip Code) (305) 947-1664 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) =========================================================================== =========================================================================== Item 5. Other Events We are filing with this Current Report on Form 8-K, the historical statements of Revenues and Certain Operating Expenses for Sheridan Plaza and Presidential Markets for the year ended December 31, 2002 and the six months ended June 30, 2003 and pro forma financial information for Equity One, Inc. (the "Company") for these periods. The Company has acquired the following properties (the "Acquired Properties"): HEB - Spring Shadows On April 3, 2003, the Company acquired HEB - Spring Shadows, an approximately 63,000 square foot shopping center located in Houston, Texas from an unrelated third party entity in an arms length transaction. The property was acquired for cash of approximately $3.5 million. The Company funded the cash from funds on hand. Sheridan Plaza On July 14, 2003, the Company acquired Sheridan Plaza, an approximately 452,000 square foot shopping center located in Hollywood, Florida from an unrelated third party entity in an arms length transaction. The property was acquired for cash of approximately $75.3 million. The Company funded the cash from funds on hand and borrowing under our existing revolving credit facility. Butler Creek On July 15, 2003, the Company acquired Butler Creek, an approximately 96,000 square foot retail property located in Acworth, Georgia in Cobb County, approximately 25 miles northwest of Atlanta, from an unrelated third party entity in an arms length transaction. The property was acquired for cash of approximately $12.1 million. The Company funded the cash from funds on hand and borrowing under our revolving credit facility. Bandera Outparcel On July 28, 2003, the Company acquired Bandera Outparcel, an approximately 6,000 square foot shopping center located in San Antonio, Texas, which is adjacent to our existing Bandera Festival retail center, from an unrelated third party entity in an arms length transaction. The property was acquired for cash of approximately $500,000. The Company funded the cash from funds on hand. Presidential Markets On August 15, 2003, the Company acquired Presidential Markets, an approximately 396,000 square foot shopping center located in Snellville, Georgia, approximately 20 miles east of Atlanta, from an unrelated third party entity in an arms length transaction. The property was acquired for approximately $47.2 million, consisting of $19.7 million in cash and the assumption of a $27.5 million fixed rate mortgage. The cash component of the purchase was funded from funds on hand and borrowings under our existing revolving credit facility. The interest rate on the fixed rate mortgage is 7.65% per annum. In evaluating a potential acquisition and determining the appropriate amount of consideration to be paid for a property, we considered a variety of factors including overall valuation of net rental income, location, demographics, tenant mix, quality of tenants, length of leases, price per square foot, occupancy 2 and the overall rental rates at the shopping center to market rates. We believe that these properties are well located, have acceptable roadway access, attract high-quality tenants, and are well maintained. The properties will be subject to competition from similar shopping centers within their market area, and the economic performance could be affected by changes in local economic conditions. Separate independent appraisals were not obtained in connection with the acquisitions. The Company, after investigation of the properties, is not aware of any material factors, other than those enumerated above, that would cause the financial information reported, where available, to not be necessarily indicative of future operating results. Item 7. Financial Statements, ProForma Financial Information and Exhibits (a) Financial statements of business acquired: (3) Financial Statements specified by Rule 3-14 of Regulation S-X (b) Pro Forma financial information Exhibit Name --------------------------------------------------- 23.1 Independent Auditors' Consent 23.2 Independent Auditors' Consent 99.1 Statement of Revenues and Certain Operating Expenses of Sheridan Plaza 99.2 Statement of Revenues and Certain Operating Expenses of Presidential Markets 99.3 Unaudited Consolidated Pro Forma Financial Information --------------------------------------------------------------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: September 19, 2003 EQUITY ONE, INC. By: /s/ Howard Sipzner ------------------------ Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Document ---------- -------- 23.1 Independent Auditors' Consent 23.2 Independent Auditors' Consent 99.1 Statement of Revenues and Certain Operating Expenses of Sheridan Plaza 99.2 Statement of Revenues and Certain Operating Expenses of Presidential Markets 99.3 Unaudited Consolidated Pro Forma Financial Information 4 EX-23 3 exh231.txt EXHIBIT 23.1 Exhibit 23.1 ------------ INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 333-81216, 333-98775 and 333-106909 of Equity One, Inc. on Forms S-3, and in Registration Statement Nos. 333-99577 and 333-103368 of Equity One, Inc. on Form S-8 of our report dated September 19, 2003, on the Statement of Revenues and Certain Operating Expenses of Sheridan Plaza for the year ended December 31, 2002, appearing in this Current Report on Form 8-K of Equity One, Inc. dated September 19, 2003. Deloitte & Touche LLP Miami, Florida September 19, 2003 EX-23 4 exh232.txt EXHIBIT 23.2 Exhibit 23.2 ------------ INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 333-81216, 333-98775 and 333-106909 of Equity One, Inc. on Forms S-3 and in Registration Statement Nos. 333-99577 and 333-103368 of Equity One, Inc. on Form S-8 of our report dated September 19, 2003, on the Statement of Revenues and Certain Operating Expenses of Presidential Markets for the year ended December 31, 2002, appearing in this Current Report on Form 8-K of Equity One, Inc. dated September 19, 2003. Deloitte & Touche LLP Miami, Florida September 19, 2003 EX-99 5 exh991.txt EXHIBIT 99.1 Exhibit 99.1 ------------ INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF EQUITY ONE, INC. North Miami Beach, Florida: We have audited the accompanying statement of revenues and certain operating expenses (the "Statement") of Sheridan Plaza (the "Property") for the year ended December 31, 2002. This Statement is the responsibility of the management of Equity One, Inc. (the "Company"). Our responsibility is to express an opinion on the Statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the filing of a Form 8-K of the Company) as described in Note 1 to the Statement, and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, such Statement presents fairly, in all material respects, the revenues and certain operating expenses described in Note 1 to the Statement of Sheridan Plaza for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Certified Public Accountants Miami, Florida September 19, 2003 F-1 SHERIDAN PLAZA STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (Amounts in thousands)
Six Months Ended June 30, 2003 Year Ended (unaudited) December 31, 2002 ------------------- ------------------- REVENUES: Minimum rental...................................... $ 2,779 $ 5,506 Percentage rent payments............................ 283 49 Expense recoveries.................................. 951 1,817 Other property revenues............................. 6 107 ------------------- ------------------- Total revenues.................................. 4,019 7,479 ------------------- ------------------- CERTAIN OPERATING EXPENSES: Property Operating Expenses: Real estate taxes................................. 631 1,220 Maintenance and repairs........................... 367 587 Utilities......................................... 94 187 Insurance......................................... 85 135 Other operating................................... 358 660 ------------------- ------------------- Total certain operating expenses................ 1,535 2,789 ------------------- ------------------- EXCESS OF REVENUES OVER CERTAIN OPERATING EXPENSES..... $ 2,484 $ 4,690 =================== ===================
See accompanying notes to the statement of revenues and certain operating expenses. F-2 SHERIDAN PLAZA NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (Dollars in thousands) 1. ORGANIZATION AND BASIS FOR PRESENTATION The accompanying statement of revenues and certain operating expenses (the "Statement") relate to Sheridan Plaza (the "Property"), an approximately 452,000 square foot shopping center located in Hollywood, Florida. The Property was acquired effective July 14, 2003 by Equity One, Inc. (the "Company"). The Property was acquired for cash of approximately $75,300. The cash consideration was funded from cash on hand and the Company's existing revolving credit facility. The Statement is prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the Statement is not representative of the actual operations of the Property for the periods presented as revenues and certain operating expenses, which may not be directly attributable to the revenues and operating expenses expected to be incurred in future operations of the Property, have been excluded. Revenues and expenses not directly attributable to the future operations of the Property have been excluded. Such items include depreciation, amortization, interest expense, and interest income. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Rental income comprises minimum rents, expense reimbursements and percentage rent payments. Rental income is recognized as earned. Expense reimbursements are recognized in the period that the applicable costs are incurred. The Property accounts for these leases as operating leases as the Property has retained substantially all risks and benefits of property ownership. Percentage rent is recognized when the tenant's reported sales have reached certain levels specified in the respective lease. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the six-month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the full year. F-3 SHERIDAN PLAZA NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (Dollars in thousands) 3. LEASING ACTIVITIES The Property has noncancellable operating leases with tenants requiring monthly payments of specified minimum rent. A majority of the leases require reimbursement by the tenant of substantially all operating expenses of the Property. Future minimum rental commitments under the noncancellable operating leases at December 31, 2002 are as follows: Year Ending December 31, 2003............................. $ 5,572 2004............................. 5,573 2005............................. 5,227 2006............................. 4,853 2007............................. 3,823 Thereafter....................... 12,770 ------------- $ 37,818 ============= F-4 EX-99 6 exh992.txt EXHIBIT 99.2 Exhibit 99.2 ------------ INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF EQUITY ONE, INC. North Miami Beach, Florida: We have audited the accompanying statement of revenues and certain operating expenses (the "Statement") of Presidential Markets (the "Property") for the year ended December 31, 2002. This Statement is the responsibility of the management of Equity One, Inc. (the "Company"). Our responsibility is to express an opinion on the Statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the filing of a Form 8-K of the Company) as described in Note 1 to the Statement, and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, such Statement presents fairly, in all material respects, the revenues and certain operating expenses described in Note 1 to the Statement Presidential Markets for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Certified Public Accountants Miami, Florida September 19, 2003 F-5 PRESIDENTIAL MARKETS STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (Amounts in thousands)
Six Months Ended June 30, 2003 Year Ended (unaudited) December 31, 2002 -------------------- ------------------- REVENUES: Minimum rental...................................... $ 2,019 $ 3,871 Expense recoveries.................................. 468 869 -------------------- ------------------- Total revenues.................................. 2,487 4,740 -------------------- ------------------- CERTAIN OPERATING EXPENSES: Property operating expenses: Real estate taxes................................. 277 460 Maintenance and repairs........................... 112 302 Utilities......................................... 22 51 Insurance......................................... 35 29 Other operating................................... 111 228 -------------------- ------------------- Total certain operating expenses................ 557 1,070 -------------------- ------------------- EXCESS OF REVENUES OVER CERTAIN OPERATING EXPENSES..... $ 1,930 $ 3,670 ==================== =================== See accompanying notes to the statement of revenues and certain operating expenses.
F-6 PRESIDENTIAL MARKETS NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (Dollars in thousands) 1. ORGANIZATION AND BASIS FOR PRESENTATION The accompanying statement of revenues and certain operating expenses (the "Statement") relate to Presidential Markets (the "Property"), an approximately 396,000 square foot shopping center located in Snellville, Georgia, approximately 20 miles east of Atlanta. The Property was acquired effective August 19, 2003 by Equity One, Inc. (the "Company"). The Property was acquired for approximately $47,200, consisting of $19,698 in cash and the assumption of a $27,502 fixed rate mortgage. The interest rate on the first rate mortgage is 7.65% per annum. The cash consideration was funded from cash on hand and the Company's existing revolving credit facility. The Statement is prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the Statement is not representative of the actual operations of the Property for the periods presented as revenues and certain operating expenses, which may not be directly attributable to the revenues and operating expenses expected to be incurred in future operations of the Property, have been excluded. Revenues and expenses not directly attributable to the future operations of the Property have been excluded. Such items include depreciation, amortization, interest expense, and interest income. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Rental income comprises minimum rents, expense reimbursements and percentage rent payments. Rental income is recognized as earned. Expense reimbursements are recognized in the period that the applicable costs are incurred. The Property accounts for these leases as operating leases as the Property has retained substantially all risks and benefits of property ownership. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the six-month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the full year. F-7 PRESIDENTIAL MARKETS STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (Amounts in thousands) 3. LEASING ACTIVITIES The Property has noncancellable operating leases with tenants requiring monthly payments of specified minimum rent. A majority of the leases require reimbursement by the tenant of substantially all operating expenses of the Property. Future minimum rental commitments under the noncancellable operating leases at December 31, 2002 are as follows: Year Ending December 31, 2003........................... $ 4,045 2004........................... 3,935 2005........................... 3,308 2006........................... 2,760 2007........................... 2,878 Thereafter..................... 8,106 ------------ $ 25,032 ============ F-8 EX-99 7 exh993.txt EXHIBIT 99.3 Exhibit 99.3 ------------ EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (Dollars in thousands) Management has prepared the following unaudited consolidated pro forma financial statements which are based on the historical consolidated financial statements of Equity One, Inc. and subsidiaries (the "Company") and adjusted to give effect to the acquisitions of Sheridan Plaza, Butler Creek, Presidential Markets, Bandera Outparcel, and HEB-Spring Shadows (the "Acquired Properties") and IRT Property Company ("IRT"). The unaudited consolidated pro forma balance sheet at June 30, 2003 has been prepared to reflect the subsequent acquisition of the Acquired Properties as if the acquisitions had occurred on June 30, 2003. The unaudited consolidated pro forma statements of operations for the year ended December 31, 2002 and the six months ended June 30, 2003 have been prepared to present the results of operations of the Company as if the subsequent acquisition of the Acquired Properties had occurred at the beginning of the periods presented. On February 12, 2003, the Company completed a statutory merger with IRT. As a result of the merger, the Company acquired 93 properties that comprise an aggregate of approximately 10 million square feet of gross leasable area. The IRT pro forma adjustment is presented to reflect the effects of the IRT acquisitions and related transactions, and the impact on the Company's results, as if the transactions had occurred at the beginning of the periods presented. The pro forma information includes the acquisition of IRT, the issuance of common stock related to the IRT transaction, the private placement of common stock and the borrowing under the revolving credit facility. The unaudited consolidated pro forma financial statements neither purport to represent what the consolidated results of operations actually would have been had the Acquired Properties, IRT and related transactions occurred at the beginning of the periods presented, nor does it purport to project the consolidated operations for any future period. The following unaudited consolidated pro forma financial statements should be read in conjunction with the 2002 Consolidated Financial Statements and the Notes thereto that are included in the Company's Current Report on Form 8-K dated September 19, 2003, the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2003, the 2002 Consolidated Financial Statements and the Notes thereto of IRT that are included in the Company's Current Report on Form 8-K dated May 13, 2003, and the Statement of Revenues and Certain Operating Expenses and related Notes thereto included elsewhere in this Form 8-K. In the Company's opinion, all significant adjustments necessary to reflect the effects of the Acquired Properties and IRT have been made. 1 Exhibit 99.3 ------------ EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET AS OF JUNE 30, 2003 (In thousands)
Pro Forma Historical Adjustments Pro Forma (A) (B) Consolidated --------------- ------------- --------------- ASSETS PROPERTIES: Income producing....................................................$ 1,414,908 $ 138,542 $ 1,553,450 Less: accumulated depreciation...................................... (52,059) - (52,059) --------------- -------------- -------------- 1,362,849 138,542 1,501,391 Construction in progress and land held for development.............. 42,104 - 42,104 Properties held for sale............................................ 1,210 - 1,210 --------------- ------------- -------------- Properties, net.................................................. 1,406,163 138,542 1,544,705 CASH AND CASH EQUIVALENTS.............................................. 2,119 - 2,119 CASH HELD IN ESCROW.................................................... 3,381 - 3,381 ACCOUNTS AND OTHER RECEIVABLES, NET.................................... 11,964 - 11,964 INVESTMENTS IN AND ADVANCES TO JOINT VENTURES.......................... 8,503 - 8,503 GOODWILL .............................................................. 22,535 - 22,535 OTHER ASSETS........................................................... 27,841 - 27,841 --------------- ------------- -------------- TOTAL..................................................................$ 1,482,506 $ 138,542 $ 1,621,048 =============== ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: NOTES PAYABLE Mortgage notes payable..............................................$ 420,265 $ 27,502 $ 447,767 Revolving credit facilities......................................... 98,931 106,724 205,655 Unsecured senior notes payable...................................... 150,000 - 150,000 --------------- ------------- -------------- 669,196 134,226 803,422 Unamortized premium on notes payable................................... 20,945 3,181 24,126 --------------- ------------- -------------- Total notes payable............................................. 690,141 137,407 827,548 --------------- ------------- -------------- OTHER LIABILITIES Accounts payable and accrued expenses............................... 25,416 864 26,280 Tenant security deposits............................................ 6,678 271 6,949 Other liabilities................................................... 2,895 - 2,895 --------------- ------------- -------------- Total liabilities................................................ 725,130 138,542 863,672 --------------- ------------- -------------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES......................... 15,763 - 15,763 --------------- ------------- -------------- COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value - 10,000 shares authorized but unissued............................................................ Common stock, $0.01 par value - 100,000 shares authorized, 63,517 shares issued and outstanding.................................... 635 - 635 Additional paid-in capital.......................................... 749,327 - 749,327 Retained earnings................................................... 1,451 - 1,451 Accumulated other comprehensive gain................................ 1 - 1 Unamortized restricted stock compensation........................... (6,194) - (6,194) Notes receivable from issuance of common stock...................... (3,607) - (3,607) --------------- ------------- -------------- Total stockholders' equity....................................... 741,613 - 741,613 --------------- ------------- -------------- TOTAL..................................................................$ 1,482,506 $ 138,542 $ 1,621,048 =============== ============= ==============
2 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET AS OF JUNE 30, 2003 (In thousands) A) Reflects the Company's unaudited historical consolidated balance sheet as of June 30, 2003. The historical balance sheet for the Company includes IRT and HEB - Spring Shadows. B) Represents management's estimate of the allocation of the Company's aggregate purchase price and closing costs for the acquisitions of the Acquired Properties, excluding HEB - Spring Shadows, totaling $138,542. Based on management's preliminary analysis, no significant assets or liabilities related to above or below market leases were acquired in connection with the Acquired Properties. Represents assumption of a mortgage note of $27,502 related to Presidential Markets, bearing a fixed interest rate of 7.65%, maturing in 2011. There is a premium on the note of $3,181, to be amortized over the remaining life of the loan. Also, represents other liabilities assumed on the acquisition of the properties and additional borrowings on the Company's revolving credit facility of $106,724. 3 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (In thousands except per share amounts)
IRT Pro Forma Acquired Pro Forma Historical Adjustments Properties Consolidated (A) (B) (C) (D) -------------- --------------- --------------- --------------- RENTAL INCOME: Minimum rental.............................. $ 66,602 $ 8,371 $ 5,431 $ 80,404 Expense recoveries.......................... 18,599 2,037 1,458 22,094 Termination fees............................ 497 - - 497 Percentage rent payments.................... 1,476 77 283 1,836 -------------- --------------- --------------- --------------- Total rental revenue..................... 87,174 10,485 7,172 104,831 INVESTMENT INCOME............................... 874 - - 874 OTHER INCOME.................................... 90 - 9 99 -------------- --------------- --------------- --------------- Total revenues............................ 88,138 10,485 7,181 105,804 -------------- --------------- --------------- --------------- COSTS AND EXPENSES: Property operating expenses.................. 24,360 2,945 2,209 29,514 Interest expense............................. 18,307 3,158 2,326 23,791 Amortization of deferred financing fees...... 595 - - 595 Rental property depreciation and amortization................................. 12,099 1,741 940 14,780 General and administrative expenses.......... 5,520 189 - 5,709 -------------- --------------- --------------- --------------- Total costs and expenses.................. 60,881 8,033 5,475 74,389 -------------- --------------- --------------- --------------- INCOME BEFORE EQUITY IN INCOME OF JOINT VENTURES, LOSS ON EXTINGUISHMENT OF DEBT, AND MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.................................. 27,257 2,452 1,706 31,415 EQUITY IN INCOME OF JOINT VENTURES............... 260 - - 260 LOSS ON EXTINGUISHMENT OF DEBT................... (623) - - (623) -------------- --------------- --------------- --------------- INCOME BEFORE MINORITY INTEREST IN EARNINGS OF CONSOLIDATED SUBSIDIARIES..................... 26,894 2,452 1,706 31,052 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.. (379) (92) - (471) -------------- --------------- --------------- --------------- INCOME FROM CONTINUING OPERATIONS............... $ 26,515 $ 2,360 $ 1,706 $ 30,581 ============== =============== =============== =============== EARNINGS PER SHARE: BASIC EARNINGS PER SHARE Income from continuing operations............ $ 0.49 $ 0.51 ============== =============== NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE............................ 54,080 5,796 59,876 ============== =============== =============== DILUTED EARNINGS PER SHARE Income from continuing operations............ $ 0.48 $ 0.50 ============== =============== NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE........................... 55,671 5,971 61,642 ============== =============== ===============
4 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (In thousands except per share amounts) A) Represents the Company's unaudited historical consolidated statement of operations for the six months ended June 30, 2003, including the results of operations for IRT for the period February 12, 2003 to June 30, 2003 and HEB - Spring Shadows from April 3, 2003 to June 30, 2003. B) On February 12, 2003, the Company completed a statutory merger with IRT Property Company ("IRT"). As a result of the merger, the Company acquired 93 properties that comprise an aggregate of approximately 10,041 square feet of gross leasable area. The IRT pro forma adjustment is presented to reflect the effects of the IRT acquisitions and related transactions, and the impact on the Company's results, as if the transactions had occurred at the beginning of the period. The pro forma information includes the acquisition of IRT, the issuance of common stock related to the IRT transaction, the private placement of common stock and the borrowing under the revolving credit facility. C) Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the six months ended June 30, 2003 (excluding the operations included in the historical results of the Company), including the following pro forma adjustments detailed below: (1) Depreciation and amortization expenses totaling $940 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. (2) Additional interest expense totaling $1,265, assumes the borrowing of $106,724 on the revolving credit facility at a rate of 2.71% (the Company's effective borrowing rate for the period) and amortization of interest premium relating to the assumption of a mortgage note on purchase of Presidential Markets. D) Represents the Company's consolidated pro forma statement of operations including pro forma basic and diluted earnings per share as well as the pro forma weighted average shares outstanding for the six months ended June 30, 2003. 5
IRT Pro Forma Acquired Pro Forma Historical Adjustments Properties Consolidated (A) (B) (C) (D) -------------- -------------- ------------- ------------- RENTAL INCOME: Minimum rental.............................. $ 72,536 $ 71,044 $ 10,761 $ 154,341 Expense recoveries.......................... 22,983 17,126 2,791 42,900 Termination fees............................ 2,235 1,172 - 3,407 Percentage rent payments.................... 1,507 783 49 2,339 -------------- -------------- ------------- ------------- Total rental revenue...................... 99,261 90,125 13,601 202,987 INVESTMENT INCOME............................... 1,632 413 - 2,045 OTHER INCOME.................................... 1,085 - 88 1,173 -------------- -------------- ------------- ------------- Total revenues............................ 101,978 90,538 13,689 206,205 -------------- -------------- ------------- ------------- COSTS AND EXPENSES: Property operating expenses.................. 30,023 23,486 4,115 57,624 Interest expense............................. 22,368 21,890 5,546 49,804 Amortization of deferred financing fees...... 884 1,130 - 2,014 Rental property depreciation and amortization................................. 13,533 11,551 1,907 26,991 Litigation settlement........................ 2,067 - - 2,067 General and administrative expenses.......... 6,649 4,199 - 10,848 -------------- -------------- ------------- ------------- Total costs and expenses................ 75,524 62,256 11,568 149,348 -------------- -------------- ------------- ------------- INCOME BEFORE EQUITY IN INCOME OF JOINT VENTURES, LOSS ON EXTINGUISHMENT OF DEBT, GAIN ON SALE OF PROPERTIES AND OUTPARCEL, AND MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES................................. 26,454 28,282 2,121 56,857 EQUITY IN INCOME OF JOINT VENTURES.............. 549 - - 549 GAIN (LOSS) ON EXTINGUISHMENT OF DEBT........... 1,520 (156) - 1,364 GAIN ON SALE OF PROPERTIES AND OUTPARCEL........ - 1,101 - 1,101 -------------- -------------- ------------- ------------- INCOME BEFORE MINORITY INTEREST IN EARNINGS OF CONSOLIDATED SUBSIDIARIES.................... 28,523 29,227 2,121 59,871 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES. (101) (559) - (660) -------------- -------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS............... $ 28,422 $ 28,668 $ 2,121 $ 59,211 ============== ============== ============= ============= EARNINGS PER SHARE: BASIC EARNINGS PER SHARE Income from continuing operations............ $ 0.87 $ 1.04 ============== ============= NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE............................ 32,662 24,401 57,063 ============== ============== ============= DILUTED EARNINGS PER SHARE Income from continuing operations............ $ 0.86 $ 1.02 ============== ============= NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE 33,443 25,426 58,869 ============== ============== =============
6 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002 (In thousands except per share amounts) A) Represents the Company's unaudited historical consolidated statement of operations for the year ended December 31, 2002. B) On February 12, 2003, the Company completed a statutory merger with IRT Property Company ("IRT"). As a result of the merger, the Company acquired 93 properties that comprise an aggregate of approximately 10,041 square feet of gross leasable area. The IRT pro forma adjustment is presented to reflect the effects of the IRT acquisitions and related transactions, and the impact on the Company's results, as if the transactions had occurred at the beginning of the period. The pro forma information includes the acquisition of IRT, the issuance of common stock related to the IRT transaction, the private placement of common stock and the borrowing under the revolving credit facility. C) Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the year ended December 31, 2002, including the following pro forma adjustments detailed below: (1) Depreciation and amortization expenses totaling $1,907 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. (2) Additional interest expense totaling $3,392, assumes the borrowing of $106,724 on the revolving credit facility at a rate of 3.51% (the Company's effective borrowing rate for the period) and amortization of interest premium relating to the assumption of a mortgage note on the purchase of Presidential Markets. D) Represents the Company's consolidated pro forma statement of operations including pro forma basic and diluted earnings per share as well as the pro forma weighted average shares outstanding for the year ended December 31, 2002. 7 -----END PRIVACY-ENHANCED MESSAGE-----