EX-99.3 6 ex99_3.htm EXHIBIT 99.3 Exhibit 99.3


Exhibit 99.3
 
 
 
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
 

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 Pavilion Shopping Center, Village Center at Southlake, Creekside Plaza, Sparkleberry Square, Venice Shopping Center, Windy Hill Shopping Center, Medical & Merchants at San Pablo, Westgate Marketplace and the Boston Properties (collectively the “Acquired Properties”).
 
The unaudited consolidated pro forma balance sheet at June 30, 2004 has been prepared to reflect the subsequent acquisition of the Boston Properties as if the acquisition had occurred on June 30, 2004. The unaudited consolidated pro forma statements of operations for the year ended December 31, 2003 and the six months ended June 30, 2004 have been prepared to present the results of operations of the Company as if the acquisition of the Acquired Properties had occurred at the beginning of the periods presented.
 
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 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 2003 Consolidated Financial Statements and the Notes thereto that are included in the Company’s Annual Report on Form 10-K filed on March 15, 2004, the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2004, and the Statements 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 have been made.
 
 
 





  
     
 

EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2004
(Amounts in thousands)
 
   
Historical
(A)
  
Pro Forma Adjustments (B)
  
Pro Forma Consolidated
  
ASSETS
              
PROPERTIES:
              
Income producing
  
$
1,780,145
  
$
119,800
  
$
1,899,945
  
Less: accumulated depreciation
    
(78,492
)
  
-
    
(78,492
)
                     
     
1,701,653
    
119,800
    
1,821,453
  
                     
Construction in progress and land held for development
    
38,803
    
-
    
38,803
  
Properties held for sale
    
44,185
    
-
    
44,185
  
                     
Properties, net
    
1,784,641
    
119,800
    
1,904,441
  
                     
CASH AND CASH EQUIVALENTS
    
-
    
-
    
-
  
                     
CASH HELD IN ESCROW
    
5,814
    
(5,814
)
  
-
  
                     
ACCOUNTS AND OTHER RECEIVABLES, NET
    
9,403
    
-
    
9,403
  
-
                    
SECURITIES AVAILABLE FOR SALE
    
18,287
    
-
    
18,287
  
                     
INVESTMENTS IN AND ADVANCES TO JOINT VENTURES
    
2,833
    
-
    
2,833
  
                     
GOODWILL
   
14,477
    
-
    
14,477
  
                     
OTHER ASSETS
    
44,125
    
-
    
44,125
  
                     
TOTAL
  
$
1,879,580
  
$
113,986
  
$
1,993,566
  
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY
                    
                     
LIABILITIES:
                    
                     
NOTES PAYABLE
                    
Mortgage notes payable
  
$
497,741
  
$
12,092
  
$
509,833
  
Unsecured revolving credit facilities
    
80,541
    
100,594
    
181,135
  
Unsecured senior notes payable
    
350,000
    
-
    
350,000
  
Margin payable for securities available for sale
    
11,075
    
-
    
11,075
  
                     
     
939,357
    
112,686
    
1,052,043
  
                     
Unamortized net premium on notes payable
    
21,585
    
1,300
    
22,885
  
                     
Total notes payable
    
960,942
    
113,986
    
1,074,928
  
                     
OTHER LIABILITIES
                    
Accounts payable and accrued expenses
    
39,638
    
-
    
39,638
  
Tenant security deposits
    
8,358
    
-
    
8,358
  
Other liabilities
    
4,196
    
-
    
4,196
  
                     
Total liabilities
    
1,013,134
    
113,986
    
1,127,120
  
                     
MINORITY INTEREST
    
12,400
    
-
    
12,400
  
                     
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, 70,755 shares issued and outstanding
    
708
    
-
    
708
  
Additional paid-in capital
    
867,154
    
-
    
867,154
  
Retained earnings
    
-
    
-
    
-
  
Accumulated other comprehensive gain
    
(4,970
)
  
-
    
(4,970
)
Unamortized restricted stock compensation
    
(8,258
)
  
-
    
(8,258
)
Notes receivable from issuance of common stock
    
(588
)
  
-
    
(588
)
                     
Total stockholders’ equity
    
854,046
    
-
    
854,046
  
                     
TOTAL
  
$
1,879,580
  
$
113,986
  
$
1,993,566
  
                     
See accompanying notes to unaudited consolidated pro forma balance sheet.

 
     
 

 
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2004
(Amounts in thousands)
 

A)   Reflects the Company’s unaudited historical consolidated balance sheet as of June 30, 2004. The historical balance sheet for the Company includes all of the Acquired Properties except the Boston Properties.
 
B)   Represents management’s estimate of the allocation of the Company’s aggregate purchase price and closing costs for the acquisitions of the Boston Properties, totaling $119,800. Based on management’s preliminary analysis, no significant intangibles were acquired in connection with the Boston Properties.
 
Represents assumption of a mortgage note of $12,092 related to the Boston Properties, bearing a fixed interest rate of 8.69%, maturing in February 2016. The fair value adjustment results in a premium on the note of $1,300, to be amortized over the remaining term of the loan. Also, represents additional borrowings on the Company’s revolving credit facility of $100,594, and the utilization of the proceeds in escrow.
 

  
     
 

EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(Amounts in thousands except per share amounts)
 

   
Historical
(A)
  
Acquired Properties
(B)
  
Pro Forma Consolidated (C)
  
               
RENTAL INCOME:
              
Minimum rents
  
$
84,615
  
$
7,556
  
$
92,171
  
Expense recoveries
    
22,871
    
1,048
    
23,919
  
Percentage rent payments
    
1,617
    
-
    
1,617
  
Termination fees
    
407
    
-
    
407
  
                     
Total rental revenue
    
109,510
    
8,604
    
118,114
  
                     
COSTS AND EXPENSES:
                    
Property operating expenses
    
28,387
    
1,368
    
29,755
  
Rental property depreciation and amortization
    
17,010
    
1,681
    
18,691
  
General and administrative expenses
    
7,261
    
-
    
7,261
  
                     
Total costs and expenses
    
52,658
    
3,049
    
55,707
  
                     
INCOME BEFORE OTHER INCOME & EXPENSES, DISCONTINUED OPERATIONS AND MINORITY INTEREST
    
56,852
    
5,555
    
62,407
  
                     
OTHER INCOME AND EXPENSES:
                    
                     
Interest expense
    
(21,984
)
  
(4,638
)
  
(26,622
)
Amortization of deferred financing fees
    
(610
)
  
-
    
(610
)
Investment income
    
402
    
-
    
402
  
Other income
    
123
    
-
    
123
  
Equity in loss of joint ventures
    
(28
)
  
-
    
(28
)
                     
INCOME FROM CONTINUING OPERATIONS
  
$
34,755
  
$
917
  
$
35,672
  
                     
EARNINGS PER SHARE:
                    
                     
BASIC EARNINGS PER SHARE
                    
Income from continuing operations
  
$
0.50
        
$
0.51
  
NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE
    
69,413
          
69,413
  
                     
DILUTED EARNINGS PER SHARE
                    
Income from continuing operations
  
$
0.49
        
$
0.50
  
NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE
    
71,211
          
71,211
  
                     
 
   See accompanying notes to unaudited consolidated pro forma statement of operations.

  
     
 

 
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(Amounts in thousands except per share amounts)


A)   Represents the Company’s unaudited historical consolidated statement of operations for the six months ended June 30, 2004, including the results of operations for Pavilion Shopping Center, Village Center at Southlake, Creekside Plaza, Sparkleberry Square, Venice Shopping Center, Windy Hill Shopping Center, Medical & Merchants at San Pablo, and Westgate Marketplace from the date of acquisition through June 30, 2004.
 
B)   Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the six months ended June 30, 2004 (excluding the operations included in the historical results of the Company), including the pro forma adjustments detailed below:
 
(1)   Depreciation and amortization expenses totaling $1,681 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. No significant intangibles were acquired in connection with the acquisitions.
 
(2)   Additional interest expense totaling $4,638, assumes the borrowing of $241,882 on the revolving credit facility at a rate of 2.08% (the Company’s effective borrowing rate for the period) and amortization of interest premium or discount relating to the assumption of mortgage notes on purchase of the Acquired Properties.
 
C)   Represents the Company’s consolidated pro forma statement of operations including pro forma basic and diluted earnings per share from continuing operations as well as the pro forma weighted average shares outstanding for the six months ended June 30, 2004.
 


  
     
 

EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(Amounts in thousands except per share amounts)
 

 
   
Historical
(A)
  
Acquired Properties
(B)
  
Pro Forma Consolidated (C)
  
               
RENTAL INCOME:
              
Minimum rental
  
$
144,997
  
$
20,110
  
$
165,107
  
Expense recoveries
    
41,740
    
2,654
    
44,394
  
Termination fees
    
1,382
    
66
    
1,448
  
Percentage rent payments
    
1,857
    
427
    
2,284
  
                     
Total rental revenue
    
189,976
    
23,257
    
213,233
  
                     
COSTS AND EXPENSES:
                    
Property operating expenses
    
54,866
    
4,631
    
59,497
  
Rental property depreciation and amortization
    
27,598
    
4,684
    
32,282
  
General and administrative expenses
    
11,046
    
-
    
11,046
  
                     
Total costs and expenses
    
93,510
    
9,315
    
102,825
  
                     
INCOME BEFORE OTHER INCOME AND EXPENSES, DISCONTINUED OPERATIONS AND MINORITY INTEREST
    
96,466
    
13,942
    
110,408
  
                     
OTHER INCOME AND EXPENSES:
                    
                     
Interest Expense
    
(37,826
)
  
(11,412
)
  
(49,238
)
Amortization of deferred financing fees
    
(1,111
)
  
-
    
(1,111
)
Investment income
    
1,089
    
-
    
1,089
  
Other income
    
687
    
-
    
687
  
Equity in loss of joint ventures
    
(126
)
  
-
    
(126
)
Loss on extinguishment of debt
    
(623
)
  
-
    
(623
)
 
                    
INCOME FROM CONTINUING OPERATIONS
  
$
58,556
  
$
2,530
  
$
61,086
  
                     
EARNINGS PER SHARE:
                    
                     
BASIC EARNINGS PER SHARE
                    
Income from continuing operations
  
$
0.96
        
$
1.00
  
NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE
    
59,998
          
59,998
  
                     
DILUTED EARNINGS PER SHARE
                    
Income from continuing operations
  
$
0.95
        
$
0.99
  
NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE
    
61,665
          
61,665
  
                     
 
See accompanying notes to unaudited consolidated pro forma statement of operations.

  
     
 

 
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(Amounts in thousands except per share amounts)
 
 
 
A)   Represents the Company's unaudited historical consolidated statement of operations for the year ended December 31, 2003.
   
B)   Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the year ended December 31, 2003, including the pro forma adjustments detailed below:

(1)   Depreciation and amortization expenses totaling $4,684 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. No significant intangibles were acquired in connection with the acquisitions.
 
(2)   Additional interest expense totaling $11,412, assumes the borrowing up to $241,882 on the revolving credit facility at a rate of 2.18% (the Company’s effective borrowing rate for the period), interest on the assumption of mortgage notes payable and amortization of interest premium or discount relating to the assumption of mortgage notes on the purchase of the Acquired Properties.
 
D)   Represents the Company's consolidated pro forma statement of operations including pro forma basic and diluted earnings per share from continuing operations as well as the pro forma weighted average shares outstanding for the year ended December 31, 2003.