SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) AUGUST 26, 1999
EQUITY ONE, INC.
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(Exact name of registrant as specified in its charter)
MARYLAND
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(State or other jurisdiction of incorporation)
001-13499 52-1794271
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(Commission File Number) (IRS Employer Identification No.)
1600 N.E. MIAMI GARDENS DRIVE, SUITE 200
NORTH MIAMI BEACH, FLORIDA 33179
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 947-1664
NOT APPLICABLE
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 26, 1999, Equity One, Inc. (the "Company"), through a
wholly-owned subsidiary, acquired a supermarket anchored shopping center known
as Pine Island Plaza, and an adjacent shopping center known as Ridge Plaza from
Pine Island Commons, Ltd., an unrelated third party, for an aggregate purchase
price of approximately $32.4 million. Pine Island Plaza consists of
approximately 24.5 acres of land with approximately 255,000 square feet of gross
leasable area, and is anchored by a Publix supermarket and Home Depot Expo.
Ridge Plaza consists of approximately 16.3 acres of land with approximately
155,000 square feet of gross leasable area, and is anchored by an AMC Theaters
and the administrative offices of Republic Security Bank. Pine Island Plaza and
Ridge Plaza are located on Pine Island Road and Interstate 595 in Davie, Broward
County, Florida. As of the date of the acquisition, Pine Island Plaza and Ridge
Plaza were 93.8% leased.
The purchase price consisted of (i) a cash deposit in the amount
of $500,000, (ii) a cash payment of approximately $5.7 million and (iii) the
assumption of a first mortgage in favor of Banc One Mortgage Capital Markets
LLC, now known as Orix Capital, in the amount of $26.2 million. The Company
funded the cash portion of the consideration through borrowings under its
acquisition line of credit. The assumed mortgage bears interest at an annual
rate of 6.91%, and matures in June 2009. Pursuant to the terms of the mortgage,
the Company is required to maintain a $1.4 million letter of credit to guarantee
certain maintenance and repair obligations at the two properties.
Material factors that were considered by the Company in accessing
the acquisition of Pine Island Plaza and Ridge Plaza Shopping Centers (the
"Properties") included the following: (1) leases expiring over the next 36
months with below market rental rates, (2) the centers have combined occupancy
of approximately 94%, (3) the quality of anchor tenants at the centers,
including Publix Supermarket and Home Depot Expo Center, with long-term leases
maturing in the years 2013 and 2014, respectively, (4) strong demographic
factors, including a population of 100,000 within a three-mile radius with
higher than average household income of $56,000, and in excess of two thousand
homes to be built within a two and a half mile radius, (5) a prime location
generating consistent traffic counts of 133,000 and 28,000 vehicles
respectively, and (6) maintenance expenses are that consistent with other
comparable properties.
Reference is made to the Agreement for Purchase and Sale, a copy
of which is filed as an exhibit hereto, for additional information concerning
the terms and conditions of the Company's purchase of the Properties.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Report of Independent Auditors.
Combined Statement of Revenues and Certain Expenses of Pine Island
Plaza and Ridge Plaza.
Notes to the Combined Statement of Revenues and Certain Expenses.
(B) PRO FORMA FINANCIAL INFORMATION
Pro Forma Statement of Operations (Unaudited) for the year ended
December 31, 1998.
Pro Forma Statement of Operations (Unaudited) for the six months ended
June 30, 1999.
Pro Forma Balance Sheet (Unaudited) at June 30, 1999.
(C) EXHIBITS
10.35 Agreement for Purchase and Sale, dated as of
June 8, 1999, by and between Equity One
Properties, Inc. and Pine Island Commons, Ltd.,
as reinstated by the Reinstatement Agreement for
Purchase and Sale, dated August 9, 1999.(1)
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(1) Incorporated by reference to the Registrant's Current Report on Form 8-K.
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Equity One, Inc.:
We have audited the combined statement of revenues and certain expenses of Pine
Island Plaza and Ridge Plaza (the "Properties") for the year ended December 31,
1998. Pine Island Plaza and Ridge Plaza have been acquired by Equity One (Pine
Island), Inc., a wholly-owned subsidiary of Equity One, Inc. and were under
common ownership and management prior to the acquisition. This combined
financial statement is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined financial statement. An audit also
includes assessing the accounting principles used and the significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the filing of Form 8-K/A of
Equity One, Inc. Material amounts, described in Note 1 to the combined statement
of revenues and certain expenses, that would not be comparable to those
resulting from future operations of the acquired property are excluded, and the
statement is not intended to be a complete presentation of the acquired
property's revenues and expenses.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the combined revenues and certain expenses of
Pine Island Plaza and Ridge Plaza for the year ended December 31, 1998 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Miami, Florida
September 27, 1999
F-1
<PAGE>
PINE ISLAND PLAZA AND RIDGE PLAZA
COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES (IN THOUSANDS)
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<TABLE>
<CAPTION>
SIX MONTHS IN THE
PERIOD ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
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(UNAUDITED)
<S> <C> <C>
REVENUES:
Rental income............................. $ 1,547 $ 2,873
Recoverable expenses...................... 651 994
Other income.............................. 16 44
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Total revenues.......................... 2,214 3,911
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CERTAIN EXPENSES:
Property operating........................ 241 513
Real estate taxes......................... 376 415
Management fees........................... 81 185
Insurance................................. 21 150
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Total certain expenses.................. 719 1,263
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REVENUES IN EXCESS OF CERTAIN EXPENSES....... $ 1,495 $ 2,648
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</TABLE>
See notes to the combined statement of revenues and certain expenses.
F-2
<PAGE>
PINE ISLAND PLAZA AND RIDGE PLAZA
NOTES TO THE COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
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1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Pine Island Plaza and Ridge Plaza (the "Properties") are both located
in Davie, Broward County, Florida, and were acquired by Equity One
(Pine Island), Inc. (the "Company") on August 26, 1999, a wholly-owned
subsidiary of Equity One, Inc. The combined statement of revenues and
certain expenses includes information related to the operations of the
Properties for the period from January 1, 1998 through December 31,
1998 as recorded by the previous owner, Pine Island Commons, Ltd.
The accompanying historical combined financial statement information is
presented in conformity with Rule 3-14 of the Securities and Exchange
Commission. Accordingly, the combined financial statement is not
representative of the actual operations for the year ended December 31,
1998 as certain expenses, which may not be comparable to the expenses
expected to be incurred in the future operations of the acquired
property, have been excluded. Expenses excluded consist of interest,
income taxes, depreciation and amortization, and other costs not
directly related to the future operations of the acquired property.
The Company is not aware of any material factor relating to the
Properties that would cause the reported combined financial information
not to be necessarily indicative of future operating results. The
combined statement of revenues and certain expenses for the six months
in the period ended June 30, 1999 has not been audited. In the opinion
of management, all adjustments consisting solely of normal recurring
adjustments necessary for the fair presentation of the combined
statement of revenues and certain expenses for the interim period have
been included. The current period's results of operations are not
necessarily indicative of results which ultimately may be achieved for
the year.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
RENTAL INCOME - Rental income is recognized on a straight-line basis
over the terms of the related leases.
PROPERTY OPERATING EXPENSES - Property operating expenses consist
primarily of utilities, repairs and maintenance, security and safety,
cleaning, and other administrative expenses.
F-3
<PAGE>
MANAGEMENT FEES - For the year ended December 31, 1998, the Properties
were managed by Gumberg Asset Management for a property management fee
paid monthly based on an annual rate of 4% of total rental income.
INCOME TAX STATUS - Equity One, Inc., the Company's parent company, has
claimed a special Real Estate Investment Trust ("REIT") tax status
effective January 1, 1995 and has met all of the eligibility
requirements for REIT tax status for the year ended December 31, 1998.
Accordingly, the Company has not recorded any provision for federal
income tax at December 31, 1998.
2. OPERATING LEASES
Operating revenue is principally obtained from tenant rentals under
noncancelable operating lease agreements. The future minimum rentals
under noncancelable operating lease agreements of the Properties as of
December 31, 1998 are as follows:
YEAR ENDING DECEMBER 31, AMOUNT
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1999.................................................. $ 2,654
2000.................................................. 2,551
2001.................................................. 2,417
2002.................................................. 2,262
2003.................................................. 1,891
Thereafter............................................ 10,166
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Total................................................. $ 21,941
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F-4
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
During 1998 and 1999, the Company purchased certain commercial real
estate properties. The 1998 purchases were funded from the proceeds of the
Company's May 19, 1998 initial public offering, whereas the 1999 acquisitions
were funded from other financing sources. These acquisitions included: Beauclerc
Village Shopping Center (June 1998), Summerlin Square Shopping Center (May
1998), Restaurant Property (May 1998), Walden Woods Shopping Center (January
1999), Park Promenade Shopping Center (February 1999), K-Mart lease at Lantana
Village Shopping Center (April 1999) and Pine Island Plaza and Ridge Plaza
Shopping Center (August 1999) (collectively, the "Property Acquisitions").
The unaudited pro forma consolidated balance sheet of Equity One, Inc.
and Subsidiaries (the "Company") as of June 30, 1999 is presented as if those
acquisitions occurring after June 30, 1999 all had occurred on June 30, 1999.
The unaudited pro forma consolidated statements of operations for the six months
in the period ended June 30, 1999 and for the year ended December 31, 1998 are
presented as if the Property Acquisitions, had occurred on January 1, 1998.
The unaudited pro forma consolidated financial statements should be
read in conjunction with and are based upon the historical consolidated
financial statements of the Company, including the notes thereto. The unaudited
pro forma consolidated financial statements do not purport to represent the
Company's actual financial position as of June 30, 1998, or the actual results
of operations for the six months in the period ended June 30, 1999 and or for
the year ended December 31, 1998 had the pro forma adjustments and the Property
Acquisitions occurred on January 1, 1998, or to project the Company's financial
position or results of operations as of any future date or for any future
period.
F-5
<PAGE>
EQUITY ONE, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS (2)
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1998 1999
HISTORICAL ACQUISITIONS ACQUISITIONS PRO FORMA
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<S> <C> <C> <C> <C>
REVENUES:
Rental income $22,598 $826 F $6,083 I $29,507
Investment income 396 396
Gain on sale of real estate 2,632 2,632
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Total revenues 25,626 826 6,083 32,535
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COSTS AND EXPENSES:
Operating expenses 5,965 218 F 1,871 I 8,054
Depreciation and amortization 2,881 130 F 817 I 3,828
Interest 5,014 (575) G 2,864 J 7,303
Put option expense 1,320 (1,320) H -
General and administrative expenses 1,381 1,381
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Total costs and expenses 16,561 (1,547) 5,552 20,566
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Net income $9,065 $2,373 $531 $11,946
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EARNINGS PER SHARE:
Basic earnings per share $1.01 $1.17
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Number of shares used in computing
basic earnings per share 8,979 1,260 M 10,239
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Diluted earnings per share $1.00 $1.15
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Number of shares used in computing
diluted earnings per share 9,074 1,260 M 94 N 10,428
================================= ================= =================
</TABLE>
The accompany notes are an integral part of these pro forma consolidated
statements.
F-6
<PAGE>
EQUITY ONE, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS IN THE PERIOD ENDED JUNE 30,1999
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS (2) PRO FORMA
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<S> <C> <C> <C>
REVENUES:
Rental income $12,241 $2,391 K $14,632
Investment income 182 182
Gain on sale of property
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Total revenues 12,423 2,391 14,814
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COSTS AND EXPENSES:
Operating expenses 3,220 758 K 3,978
General and administrative 871 289 K 1,160
Interest 2,111 1,258 L 3,369
Put option expense 47 47
General and administrative expenses 1,620 1,620
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Total costs and expenses 7,869 2,315 10,174
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Net income $4,554 $86 $4,640
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EARNINGS PER SHARE:
Basic earnings per share $0.44 $0.44
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Number of shares used in computing
basic earnings per share 10,455 10,455
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Diluted earnings per share $0.43 $0.44
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Number of shares used in computing
diluted earnings per share 10,628 10,628
================ =================
</TABLE>
The accompany notes are an integral part of these pro forma consolidated
statements.
F-7
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30,1999
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS (1) PRO FORMA
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<S> <C> <C> <C>
ASSETS
Rental Properties:
Land, building and equipment $ 152,313 $ 32,747 A $ 185,060
Building improvements 6,644 6,644
Land held for development 2,769 2,769
Construction in progress 10,662 10,662
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172,388 32,747 205,135
Accumulated depreciation (11,059) (11,059)
----------------------------------------------------
Rental properties, net 161,329 32,747 194,076
Cash and cash equivalents 2,414 2,414
Accounts and other receivables, net 993 245 B 1,238
Securities available for sale 1,647 1,647
Deposits 1,552 239 B 1,791
Prepaid and other assets 1,173 1,173
Deferred expenses, net 1,242 136 B 1,378
----------------------------------------------------
Total assets $ 170,350 $ 33,367 $ 203,717
====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage payable $ 72,701 $ 26,234 C $ 98,935
Note payable 6,569 6,569
Accounts payable and accrued expenses 2,196 613 D 2,809
Put option liability 2,127 2,127
Tenants' security deposits 983 198 D 1,181
Deferred rental income 97 97
Minority interest in equity of
consolidated subsidiaries 988 988
----------------------------------------------------
Total liabilities 85,661 27,045 112,706
----------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 108 1 E 109
Additional paid-in capital 85,196 6,321 E 91,517
Accumulated other comprehensive income (70) (70)
Notes receivable from stock sales (545) (545)
----------------------------------------------------
Total stockholders' equity 84,689 6,322 91,011
----------------------------------------------------
Total liabilities and stockholders' equity $ 170,350 $ 33,367 $ 203,717
====================================================
</TABLE>
The accompany notes are an integral part of these pro forma consolidated
statements.
F-8
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
(UNAUDITED)
1. ADJUSTMENTS TO THE PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma adjustments to the pro forma consolidated balance sheet
of Equity One, Inc. and Subsidiaries (the "Company") as of June 30,
1999 reports the acquisition of Pine Island Plaza and Ridge Plaza on
August 26, 1999 as follows:
(A) Reflects property acquisition cost as follows:
Building $ 20,304
Land 12,443
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$ 32,747
========
(B) Reflects the acquisition of accounts and other receivables, net,
deposits and deferred expenses, net.
(C) Reflects the assumption of the existing mortgage notes payable.
(D) Reflects the assumption of accounts payable and accrued expenses
and tenants' security deposits.
(E) Reflects cash paid for the acquisition of the property.
2. ADJUSTMENTS TO THE PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma adjustments to the pro forma consolidated statements of
operations for the year ended December 31, 1998 and for the six months
in the period ended June 30, 1999 are as follows:
(F) Reflects the pro forma net effect of a full year of operations of
Beauclerc Village Shopping Center, Summerlin Square Shopping Center
and the ground lease on the Restaurant Property:
Rental income $ 826
Operating expenses (218)
Depreciation and amortization (130)
F-9
<PAGE>
(G) Reflects the effect on interest expense for the pro forma net
effect of a full year of operations of Beauclerc Village Shopping
Center, Summerlin Square Shopping Center and the ground lease on
the Restaurant Property and the decrease in interest expense
including amortization of deferred financing costs, resulting from
the repayment of mortgage notes payable from the proceeds of the
Company's initial public offering completed on May 19, 1998.
(H) To exclude the 1998 non-recurring put option expense.
(I) Reflects the pro forma net effect of a full year of operations of
Walden Woods Shopping Center, Park Promenade Shopping Center,
K-Mart lease at Lantana Village Shopping Center and Pine Island
Plaza and Ridge Plaza.
Rental income $ 6,083
Operating expenses (1,871)
Depreciation and amortization (817)
(J) Reflects the effect on interest expense for the pro forma net
effect for the purchase of and the full year of operations of
Walden Woods Shopping Center, Park Promenade Shopping Center,
K-Mart lease at Lantana Village Shopping Center and Pine Island
Plaza and Ridge Plaza.
(K) Reflects the pro forma net effect for the six months in the period
ended June 30, 1999 of the operations of Walden Woods Shopping
Center, Park Promenade Shopping Center, K-Mart lease at Lantana
Village Shopping Center and Pine Island Plaza and Ridge Plaza.
Rental income $ 2,391
Operating expenses (758)
Depreciation and amortization (289)
(L) Reflects the effect on interest expense for the pro forma net
effect for the purchase of and the operations for the six months in
the period ended June 30, 1999 of Walden Woods Shopping Center,
Park Promenade Shopping Center, K-Mart lease at Lantana Village
Shopping Center and Pine Island Plaza and Ridge Plaza.
(M) Reflects the weighted average shares outstanding during 1998,
assuming the Company's initial public offering had occurred on
January 1, 1998.
(N) Reflects the Company's contribution of 93,656 shares of common
stock for its equity interest in Walden Woods Village, Ltd. These
shares are only included in computing diluted earnings per share.
F-10
<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.
November 8, 1999 By: /s/ CHAIM KATZMAN
----------------------------------------------
Chaim Katzman
President, Chief Executive Officer and
Chairman of the Board
