Equity One Inc. (EQY), a real estate investment trust (:REIT) that owns, manages and develops neighborhood and community shopping centers in the U.S., has recently been accredited for two key transactions that improved the overall quality of its portfolio and extended its footprint in two of the most vital markets in the country – New York and San Francisco.
The San Francisco Business Times awarded Equity One with ‘The Retail Deal of the Year’ for the $600-million acquisition of Capital and Counties USA. The transaction was completed in 2011 and enabled Equity One to strengthen its presence in California, which presently represents nearly 25% of its portfolio value. Besides diversifying the company's geographic and tenant base, the acquisition expanded its asset base in one of the most densely populated and supply constrained markets in the country.
Equity One was also adjudged as the winner of ‘2011 Top Commercial Development Project’ by the Long Island Business News for ‘The Gallery at Westbury Plaza’ project in Westbury, New York. Spanning 330,000 square feet of retail space, ‘The Gallery at Westbury Plaza’ is in the final stages of completion and is anchored by leading retail stores like Nordstrom Rack, Bloomingdale’s Outlet, Saks Off Fifth, SA Elite, Old Navy, and Shake Shack. The property is strategically located at the center of Nassau County, New York, which presently represents nearly 20% of the portfolio value of Equity One.
The strategic decision to acquire the shopping centers was part of the long-term ploy of the company to reposition its portfolio by divesting non-strategic assets and investing in higher growth markets, which would thereby enable it to upgrade its overall portfolio. Equity One is currently focusing on the urban retail markets of New York, Miami, Boston, San Francisco and Los Angeles.
As of December 30, 2011, Equity One owned 165 wholly owned properties spanning 17.2 million square feet of retail space. The majority of the shopping centers owned by Equity One are anchored by pharmacies and large retail stores. The company has a diverse tenant mix – a hedge against tenant concentration risk, thereby ensuring a steady source of income.
Bulk of the company’s portfolio is located in some of the most densely populated and high growth areas of the country with high barriers to entry. These include the metropolitan areas around Miami, Fort Lauderdale, West Palm Beach, Jacksonville, Orlando, Atlanta, Georgia, Boston and New York. Consequently, the shopping centers generate relatively strong sales backed by solid trade area demographics.
We have a ‘Neutral’ rating on Equity One, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ rating. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Regency Centers Corporation (REG), one of the competitors of Equity One.
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