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Equity One Inc. Reports Operating Results (10-Q/A)
Posted by: gurufocus (IP Logged)
Date: November 23, 2011 04:33PM

Equity One Inc. (EQY) filed Amended Quarterly Report for the period ended 2011-03-31. Equity One Inc. has a market cap of $1.82 billion; its shares were traded at around $15.89 with a P/E ratio of 17 and P/S ratio of 6.4. The dividend yield of Equity One Inc. stocks is 5.5%. Equity One Inc. had an annual average earning growth of 2.7% over the past 5 years.



Highlight of Business Operations:

The effect on the condensed consolidated balance sheet at March 31, 2011 is a decrease to total stockholders’ equity of Equity One, Inc. of $26.4 million to $1.4 billion and an increase to noncontrolling interests of $26.4 million to $210.1 million. For the three months ended March 31, 2011, the effects on the condensed consolidated statement of income are a decrease to the gain on bargain purchase of $26.4 million to $27.1 million, which decreases net income attributable to Equity One, Inc. by the same amount to $32.1 million. Basic and diluted earnings per share for the three months ended March 31, 2011 have been restated to $0.30 and $0.29, respectively, from $0.54 and $0.51, respectively, as a result of this error.

We allocate the purchase price of acquired properties to land, building, improvements and intangible assets in accordance with the Business Combinations Topic of the FASB ASC. We allocate the initial purchase price of assets acquired (net tangible and identifiable intangible assets) and liabilities assumed based on their relative fair values at the date of acquisition. There are four categories of intangible assets to be considered: (1) in-place leases; (2) above and below-market value of in-place leases; (3) lease origination costs and (4) customer relationships. The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to depreciation expense over the estimated remaining term of the respective leases. The value of above-market and below-market in-place leases is amortized to rental revenue over the estimated remaining term of the leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.

A concentration of credit risk arises in our business when a national or regionally based tenant occupies a substantial amount of space in multiple properties owned by us. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to us, exposing us to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, we do not obtain security from our nationally-based or regionally-based tenants in support of their lease obligations to us. We regularly monitor our tenant base to assess potential concentrations of credit risk. As of March 31, 2011, Publix Super Markets is our largest tenant and accounted for approximately 2.8 million square feet, or approximately 14.0% of our gross leasable area, and approximately $23.8 million, or 10.3%, of our annual minimum rent for the three months ended March 31, 2011. As of March 31, 2011, we had outstanding receivables from Publix Super Markets of approximately $852,000. No other tenant accounted for over 4.0% of our annual minimum rent.

The joint venture shares received by LIH are redeemable for cash or, solely at our option, our common stock on a one-for-one basis, subject to certain adjustments. LIH’s ability to participate in earnings of CapCo is limited to their right to receive distributions payable on their joint venture shares. These non-elective distributions are designed to mirror dividends paid on our common stock. As such, earnings attributable to the noncontrolling interest as reflected in our condensed consolidated statement of income will be limited to distributions made to LIH on its joint venture shares. Distributions to LIH in the three months ended March 31, 2011 were $2.4 million which was equivalent to the per share dividends declared on our common stock.

The joint venture shares received by LIH are redeemable for cash or, solely at our option, our common stock on a one-for-one basis, subject to certain adjustments. LIH’s ability to participate in earnings of CapCo is limited to their right to receive distributions payable on their joint venture shares. These non-elective distributions are designed to mirror dividends paid on our common stock. As such, earnings attributable to the noncontrolling interest as reflected in our condensed consolidated statement of income will be limited to distributions made to LIH on their joint venture shares. Distributions to LIH in the three months ended March 31, 2011 were $2.4 million which was equivalent to the per share dividends declared on our common stock.

Read the The complete Report



Stocks Discussed: EQY,
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