UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 31, 1998
Commission File No. 0001042810
EQUITY ONE, INC.
----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
1600 N.E. MIAMI GARDENS DRIVE, SUITE 200
N. MIAMI BEACH, FLORIDA 33179
----------------------------------------
(Address of Principal Executive Offices)
(305) 947-1664
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
MARYLAND 52-1794271
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock par value $.01 outstanding was 10,238,528
as of the close of business on June 18, 1998.
<PAGE>
EQUITY ONE, INC.
INDEX TO FORM 10-Q
QUARTER ENDED MARCH 31, 1998
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets-
As of March 31, 1998 (unaudited) and December 31, 1997
Condensed Consolidated Statements of Operations-
For the three months ended March 31, 1998 and 1997 (unaudited)
Condensed Consolidated Statements of Stockholders' Equity
For the three months ended March 31, 1998 and 1997 (unaudited)
Condensed Consolidated Statements of Cash Flows-
For the three months ended March 31, 1998 and 1997 (unaudited)
Notes to the Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
-2-
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
MARCH 31,
ASSETS 1998 DECEMBER 31,
(UNAUDITED) 1997
<S> <C> <C>
Rental Properties:
Land $ 41,814 $ 40,458
Construction in progress 2,538 2,094
Building and improvements 91,011 83,889
---------------- ----------------
135,363 126,441
Accumulated depreciation (7,838) (7,191)
---------------- ----------------
Rental properties, net 127,525 119,250
Cash and cash equivalents 1,656 2,598
Accounts and other receivables, net 670 892
Securities available for sale 38 45
Deposits 1,158 1,339
Prepaid and other assets 1,262 1,252
Deferred expenses, net 1,665 1,527
---------------- ----------------
Total assets $ 133,974 $ 126,903
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 76,266 $ 71,004
Line of credit 2,000 0
Accounts payable and accrued expenses 1,248 1,281
Tenants' security deposits 798 764
Deferred rental income 169 274
---------------- ----------------
Total liabilities 80,481 73,323
---------------- ----------------
Stockholders' equity:
Common stock 69 69
Additional paid-in capital 54,949 55,036
Notes receivable from stock sales (1,525) (1,525)
Retained earnings 0 0
---------------- ----------------
Total stockholders' equity 53,493 53,580
---------------- ----------------
Total liabilities and stockholders' equity $ 133,974 $ 126,903
================ ================
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
-3-
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997
(UNAUDITED)
<S> <C> <C>
REVENUES:
Rental income $ 5,322 $ 4,679
Investment revenue 72 127
------------ -----------
Total revenues 5,394 4,806
------------ -----------
COSTS AND EXPENSES:
Operating expenses 1,177 1,090
Depreciation and amortization 658 584
Interest 1,485 1,493
General and administrative expenses 434 474
------------ -----------
Total costs and expenses 3,754 3,641
------------ -----------
NET INCOME $ 1,640 $ 1,165
============ ===========
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $ 0.24 $ 0.20
============ ===========
NUMBER OF SHARES USED IN COMPUTING
BASIC EARNINGS PER SHARE 6,908 5,766
============ ===========
DILUTED EARNINGS PER SHARE $ 0.23 $ 0.17
============ ===========
NUMBER OF SHARES USED IN COMPUTING
DILUTED EARNINGS PER SHARE 7,247 7,011
============ ===========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
-4-
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NOTES TOTAL
ADDITIONAL RECEIVABLE STOCK-
COMMON PAID-IN FROM RETAINED HOLDERS'
STOCK CAPITAL STOCK SALES EARNINGS EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE,
JANUARY 1, 1998 $ 69 $ 55,036 $ (1,525) $ 53,580
Net income $ 1,640 1,640
Dividends paid (87) (1,640) (1,727)
--------- --------- --------- --------- ---------
BALANCE,
MARCH 31, 1998 (Unaudited) $ 69 $ 54,949 $ (1,525) $ 0 $ 53,493
========= ========= ========= ========= =========
BALANCE,
JANUARY 1, 1997 $ 58 $ 44,562 $ (1,525) $ 43,095
Net income $ 1,165 1,165
Dividends paid (75) (1,165) (1,240)
--------- --------- --------- --------- ---------
BALANCE,
MARCH 31, 1997 (Unaudited) $ 58 $ 44,487 $ (1,525) $ 0 $ 43,020
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
-5-
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
1998 1997
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,640 $ 1,165
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 690 690
Changes in assets and liabilities :
Accounts and other receivables, net 222 206
Deposits (269) (412)
Prepaid and other assets (22) (65)
Accounts payable and accrued expenses (33) 273
Tenants' security deposits 34 15
Deferred rental income (105) (100)
---------- ----------
Net cash provided by operating activities 2,157 1,772
---------- ----------
INVESTING ACTIVITIES:
Acquisition of rental property (6,768) (3,752)
Improvements to rental property (1,710) (188)
Construction costs incurred (444) 0
Purchases of securities 0 (1,300)
Sales and prepayments of securities 7 1,380
Change in deposits for acquisition of rental property 450 0
---------- ----------
Net cash used in investing activities (8,465) (3,860)
---------- ----------
FINANCING ACTIVITIES:
Repayments of mortgage notes payable (2,438) (13,569)
Borrowings under mortgage notes payable 7,700 16,148
Borrowings under line of credit 2,000 0
Cash dividends paid to stockholders (1,727) (1,240)
Deferred expenses, net (169) (22)
---------- ----------
Net cash provided by financing activities 5,366 1,317
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (942) (771)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,598 1,951
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,656 $ 1,180
========== ==========
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest, net of amount capitalized $ 1,429 $ 1,364
========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
-6-
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Equity One,
Inc. and subsidiaries (collectively, the "Company") as of March 31, 1998
and 1997 and for the three months then ended, have been prepared by the
Company which is responsible for their integrity and objectivity and should
be read in conjunction with the Company's December 31, 1997 annual
consolidated financial statements and the related notes.
To the best of management's knowledge and belief, the statements and
related information were prepared in conformity with generally accepted
accounting principles and are based on recorded transactions and
management's best estimates and judgments. The interim results of
operations are not necessarily indicative of the results which may be
expected for the full year.
The financial statements as of March 31, 1998 and 1997 and for the three
months then ended, include, in the opinion of management, all adjustments
(which are normal recurring adjustments) necessary for a fair presentation
of the financial condition and results of operations of the Company for the
periods indicated.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of the
condensed consolidated financial statements are identical to those applied
in the preparation of the most recent annual consolidated financial
statements.
3. EARNINGS PER SHARE
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" which requires a dual presentation of basic and diluted earnings per
share on the face of the statement of operations. The Company adopted SFAS
No. 128 during the year ended December 31, 1997. Basic earnings per share
is computed by dividing earnings attributable to common stockholders by the
weighted-average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock
that then shared in the earnings of the Company. Earnings per share for all
prior periods presented has been restated to conform with SFAS No. 128.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following should be read in conjunction with the Condensed
Consolidated Financial Statements of Equity One, Inc., including the notes
thereto, which are included elsewhere herein.
The Company receives income primarily from rental revenue (including
recoveries from tenants) from its existing property portfolio. As a result of
the Company's acquisition and redevelopment programs, the financial data shows
increases in total revenue from period to period, largely attributable to the
acquisition of properties placed into operation either during the period or
during the preceeding year and the benefit of a full period of rental and other
revenue for properties acquired or placed into operation in the preceding year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Total revenues increased by approximately $600,000, or 12.2%, to $5.4
million for the three months ended March 31, 1998 from $4.8 million for the
comparable period of 1997. The increase resulted primarily from the acquisition
of a new supermarket anchored shopping center located in Lantana, Florida in
January, 1998 ("Lantana Village"), a new supermarket anchored shopping center
located in Jacksonville, Florida in January, 1997 ("Monument Pointe"), and a
redevelopment property located in North Miami Beach, Florida in August, 1997
("Sky Lake").
Operating expenses increased by approximately $100,000, or 8.0%, to
$1.2 million for the three months ended March 31, 1998 from $1.1 million for the
comparable period of 1997. The increase resulted primarily from an increase in
real estate taxes of $68,000 and an increase in utility costs of $16,000 related
to the Company's acquisition of Lantana Village in January 1998, Monument Pointe
in January 1997 and Sky Lake in August 1997.
Depreciation and amortization expense increased by $74,000, or 12.7%,
to $658,000 for the three months ended March 31, 1998, from $584,000 for the
comparable period of 1997. The increase resulted primarily from the acquisition
of Lantana Village in January 1998, Monument Pointe in January 1997 and Sky Lake
in August 1997.
Interest expense decreased by $8,000, or 0.5%, for the three months
ended March 31, 1998, compared to the three months ended March 31, 1997
primarily as a result of the Company's use of proceeds from its issuance of
capital stock during 1997 to reduce mortgage indebtedness.
-8-
<PAGE>
General and administrative expenses decreased by $40,000, or 8.4%, to
$434,000 for the three months ended March 31, 1998 from $474,000 for the
comparable period of 1997. The decrease resulted primarily from a decrease in
expenses of $29,000 in connection with the management of the Company's
properties and a decrease in consulting fees of $11,000. General and
administrative expenses as a percentage of total revenue decreased to 8.0% for
the three months ended March 31, 1998 from 9.9% for the comparable period of
1997 due to efficiencies based in part on owning more properties in a
concentrated area.
As a result of the foregoing, net income increased by approximately
$500,000, or 40.8%, to $1.6 million for the three months ended March 31, 1998
compared to $1.1 million for the comparable period of 1997.
FUNDS FROM OPERATIONS
In March, 1995, the National Association of Real Estate Investment
Trusts ("NAREIT") adopted the NAREIT White Paper on Funds from Operations (the
"White Paper") which provided additional guidance on the calculation of funds
from operations. The White Paper defines funds from operations as net income
(loss) (computed in accordance with generally accepted accounting principles
("GAAP")), excluding gains (or losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures ("FFO").
Management believes FFO is a helpful measure of the performance of an equity
real estate investment trust ("REIT") because, along with cash flows from
operating activities, investing activities and financing activities, it provides
an understanding of the ability of the Company to incur and service debt and
make capital expenditures. The Company computes FFO in accordance with standards
established by the White Paper, which may differ from the methodology for
calculating FFO utilized by other equity REIT's, and accordingly, may not be
comparable to such other REIT's. Further, FFO does not represent amounts
available for management's discretionary use because of needed capital
replacement or expansion, debt service obligations, or other commitments and
uncertainties. The Company believes that in order to facilitate a clear
understanding of the consolidated historical operating results of the Company,
FFO should be examined in conjunction with the net income as presented in the
condensed consolidated financial statements and information included elsewhere
herein. FFO should not be considered as an alternative to net income (determined
in accordance with GAAP) as an indication of the Company's financial performance
or to cash flows from operating activities (determined in accordance with GAAP)
as a measure of the Company's liquidity, nor is it indicative of funds available
to fund the Company's cash needs, including its ability to make distributions.
-9-
<PAGE>
The following table illustrates the calculation of FFO for the three months
ended March 31, 1998 and 1997 (unaudited), respectively:
THREE MONTHS ENDED MARCH 31, 1998 1997
- -----------------------------------------------------------------------------
Net income $1,640 $1,165
Depreciation of real estate assets 646 572
Amortization of leasing costs 13 9
Loan pre-payment penalty 21
Write-off of unamortized loan costs related to
repayment of mortgage indebtedness 76
Lease termination fees (34) (10)
- --------------------------------------------------------------------------------
FUNDS FROM OPERATIONS $2,265 $1,833
- --------------------------------------------------------------------------------
FUNDS FROM OPERATIONS PER SHARE $0.31 $0.26
- --------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 7,247 7,011
- --------------------------------------------------------------------------------
FFO increased by approximately $500,000, or 23.6%, to $2.3 million for the three
months ended March 31, 1998 from $1.8 million for the comparable period of 1997.
The increase resulted primarily from the acquisition of Lantana Village in
January 1998, Monument Pointe in January 1997, and Sky Lake in August 1997, as
well as a reduction in the Company's outstanding mortgage indebtedness.
PRO FORMA RESULTS OF OPERATIONS
The Company completed an initial public offering of an aggregate of
4,700,000 shares of common stock, par value $0.01 per share, on May 19, 1998. Of
the 4,700,000 shares of common stock sold in the offering, 3,330,398 shares,
generating net proceeds of approximately $33.5 million, were sold by the Company
and 1,369,602 shares were sold by a stockholder of the Company.
The following pro forma results of operations for the three months
ended March 31, 1998 and 1997, respectively, gives effect to the initial public
offering as if it had occurred at the beginning of each period. Pro forma
adjustments assume application of the net proceeds of the offering to purchase
properties, retire mortgage indebtedness and other related adjustments. The
following pro forma financial information is not necessarily indicative of the
results of operations which would have been reported if the offering had
occurred on the dates or for the periods indicated.
-10-
<PAGE>
The three months ended March 31, 1998 and 1997 pro forma results of operations
would have been as follows :
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997
UNAUDITED
<S> <C> <C>
REVENUES:
Rental Income $5,778 $5,135
Investment revenue 117 139
------ ------
Total revenues 5,895 5,274
------ ------
COSTS AND EXPENSES:
Operating expenses 1,272 1,188
Depreciation and amortization 729 655
Interest 1,242 1,286
General and administrative expenses 434 474
------ ------
Total costs and expenses 3,677 3,603
------ ------
NET INCOME $2,218 $1,671
====== ======
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $0.22 $0.18
===== =====
NUMBER OF SHARES USED IN COMPUTING BASIC
EARNINGS PER SHARE 10,239 9,097
====== =====
DILUTED EARNINGS PER SHARE $0.21 $0.17
===== =====
NUMBER OF SHARES USED IN COMPUTING DILUTED 10,504 9,640
EARNINGS PER SHARE ====== =====
</TABLE>
-11-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the principal sources of funding for the Company's
operations, including the renovation, expansion, development and acquisition of
shopping centers, have been operating cash flows, the issuance of equity
securities and mortgage loans. The Company's principal demands for liquidity are
maintenance, repair and tenant improvements of existing properties, acquisitions
and development activities, debt service and repayment obligations and
distributions to its stockholders.
As of March 31, 1998, the Company had total indebtedness of
approximately $78.3 million, substantially all of which was fixed rate mortgage
indebtedness bearing interest at a weighted average rate of 8.0% and
collateralized by 17 of the Company's existing properties. Future scheduled
annual maturities of mortgage notes payable for the periods ending March 31 are
as follows: 1999 - $5.0 million, 2000 - $1.2 million, 2001 - $859,000, 2002 -
$3.8 million and 2003 - $9.2 million. The Company also has provided a $1.5
million letter of credit to secure certain obligations in connection with the
acquisition of one of the Company's properties. This letter of credit is
collateralized by a mixed-use property located in West Palm Beach, Florida.
The Company has a $2.5 million line of credit (the "Line of Credit")
with a financial institution which is currently due on demand, and is
collateralized by the Company's principal office building located in Miami
Beach, Florida. The Line of Credit bears interest at 0.50% over the Citibank,
N.A. prime rate . The purpose of the Line of Credit is to provide working
capital to the Company. As of March 31, 1998 and June 18, 1998 respectively,
$2.0 million and $0 was outstanding under the Line of Credit.
The Company has received a commitment for a $35.0 million revolving
line of credit from the same financial institution providing the Line of Credit,
which will be used to fund property acquisition and development activities (the
"Acquisition Line of Credit") secured by certain of the Company's unencumbered
properties. Advances under the Acquisition Line of Credit will bear interest at
225 basis points over LIBOR and will mature three years after the execution of a
definitive loan document.
The Company has one major redevelopment project under construction that
will add an additional 240,000 square feet of retail space to the Company's
portfolio. This project is expected to be completed during 1999. It is
anticipated that future funding required for this project is estimated to be
$15.0 million and will come from the proposed Acquistion Line of Credit.
Management expects this development to have a positive effect on cash generated
by operating activities and Funds from Operations.
The Company believes, based on currently proposed plans and assumptions
relating to its operations, that the proceeds of its initial public offering and
the Company's existing financial arrangements, together with cash flow from
operations will be sufficient to satisfy its cash requirements for a period of
at least 12 months. In the event that the Company's plans change, its
assumptions change or prove to be inaccurate or the proceeds from the initial
public offering or available financing arrangements prove to be insufficient to
fund the Company's expansion and development efforts, the Company would be
required to seek additional sources of financing. There can be no assurance that
any additional financing will be available to the Company on acceptable terms,
or at all. If adequate funds are not available, the Company's business
operations could be materially adversely affected.
-12-
<PAGE>
During the three months ended March 31, 1998, the Company declared a
dividend of $0.25 per share. The dividend was paid on March 24, 1998 to
stockholders of record on March 24, 1998.
YEAR 2000 COSTS
The Company, like most owners of computer software, will be required to
modify certain portions of its software so that it will function properly in the
year 2000. Maintenance or modification costs will be expensed as incurred, while
the costs of any new software will be capitalized and amortized over the
software's useful life. Management believes these "year 2000" costs will be
immaterial.
INFLATION
Most of the Company's leases contain provisions designed to partially
mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rents based on tenant's gross sales
above predetermined levels, which rents generally increase as prices rise, or
escalation clauses which are typically related to increases in the Consumer
Price Index or similar inflation indices. Most of the Company's leases require
the tenant to pay its share of operating expenses, including common area
maintenance, real estate taxes and insurance, thereby reducing the Company's
exposure to increases in costs and operating expenses resulting from inflation.
The Company's financial results are affected by general economic
conditions in the markets in which its properties are located. An economic
recession, or other adverse changes in general or local economic conditions,
could result in the inability of some existing tenants of the Company to meet
their lease obligations and could otherwise adversely affect the Company's
ability to attract or retain tenants. The properties are typically anchored by
supermarkets, drug stores and other consumer necessity and service retailers
which typically offer day-to-day necessities rather than luxury items. These
types of tenants, in the experience of the Company, generally maintain more
consistent sales performance during periods of adverse economic conditions.
CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS.
The foregoing Management's Discussion and Analysis contains various
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, which represent the Company's expectations or beliefs concerning
future events, including, but not limited to, statements regarding growth in
rental revenues and the sufficiency of the Company's cash flow for its future
liquidity and capital resource needs. These forward looking statements are
further qualified by important factors that could cause actual events to differ
materially from those in such forward looking statements. These factors include,
without limitation, increased competition, dependence on key tenants, geographic
concentration, lack of development experience, reliance on key personnel and
maintaining its REIT status. Results actually achieved may differ materially
from expected results included in these forward looking statements as a result
of these or other factors.
-13-
<PAGE>
OTHER INFORMATION
Item 1. Legal Proceedings
On February 26, 1998, Albertsons, Inc.("Albertsons") commenced
an action against a subsidiary of the Company (the
"Subsidiary") in the Circuit Court for the Eleventh Judicial
District in and for Miami-Dade County, Florida, alleging
breach of a letter agreement and seeking injunctive relief and
the payment of damages in excess of $10,000,000 representing
lost profits and other damages. This action was commenced in
response to the Subsidiary's entering into a lease agreement
with Publix Supermarkets Inc.("Publix") respecting Publix's
lease of anchor space at Sky Lake. The complaint alleged that
Albertsons and the Subsidiary entered into a letter agreemenet
which the parties intended to be memorialized into a formal
lease agreement and as to which the parties intended to be
bound. The complaint further alleged that representatives of
the Subsidiary had on several occasions verbally assured
Albertsons that they had an agreement with respect to the
lease of space at Sky Lake and that the Subsidiary was not
negotiating with any other prospective tenant for the lease of
the space to be occupied by Albertsons. The complaint also
alleged that Albertsons incurred considerable expenses in
connection with, among other things, the preparation of site
evaluations, construction plans and surveys of the subject
property. On March 18, 1998, the Company filed a motion to
dismiss the complaint based upon various procedural grounds
(the "Motion"). As set forth in the Motion, the Subsidiary
asserted that it did not execute any lease agreement and that
although the parties engaged in a series of negotiations there
was never an offer and acceptance or a "meeting of the minds"
respecting the lease of space at Sky Lake. At a hearing on the
Motion held on March 26, 1998, the court dismissed with
prejudice Albertsons' claim for specific performance upon
finding that no written lease existed which could be
specifically enforced. A ruling on the remaining issues raised
in the Motion was deferred until a future date. In June 1998,
Albertsons'filed an Amended Complaint which omitted its claim
for specific performance, which claim had been previously
dismissed by the court, and its claim for lost profits. The
Company believes it has meritorious defenses to the remaining
claims and intends to defend the action fully and vigorously.
However, no assurance can be given with respect to the outcome
of this action or its effect on the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
27.1 - Financial Data Schedule
(B) Report on Form 8-K
None
-14-
<PAGE>
SIGNATURES
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 thereunto duly authorized.
Equity One, Inc.
Date: June 18, 1998 /S/ CHAIM KATZMAN
--------------------------
Chaim Katzman
Chief Executive Officer
(Principal Executive Officer)
/S/ DAVID N. BOOKMAN
-------------------------
David N. Bookman
Vice President and Chief Financial Officer
(Principal Accounting Financial Officer)
-15-
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,656,000
<SECURITIES> 38,000
<RECEIVABLES> 670,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 135,363,000
<DEPRECIATION> 7,838,000
<TOTAL-ASSETS> 133,974,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 69,000
<OTHER-SE> 53,424,000
<TOTAL-LIABILITY-AND-EQUITY> 133,974,000
<SALES> 5,322,000
<TOTAL-REVENUES> 5,394,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,269,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,485,000
<INCOME-PRETAX> 1,640,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,640,000
<EPS-PRIMARY> .24
<EPS-DILUTED> .23
</TABLE>
