Bringing them up to market "won't happen overnight," he acknowledged, but the situation demonstrates significant upside potential. He estimated that net operating income could increase by $50 million as rents are lifted to market rates.
When a Wall Street analyst questioned the timeline on existing leases, Olson said some anchor options are in place for as long as 15 to 20 years, "but the probability of all going to full term is unlikely," which is why the 2007 guidance calls for 3% to 4% net operating income property growth.
New and renewed leases during the first quarter numbered 180 for an aggregate of 604,000 sf at an average increase of 9.4% on a cash basis. The average base rent of the full portfolio is $11.14 per sf, according to Jeffrey Stauffer, COO, which is 4.5% more than the first prior-year quarter.
The company plans to dispose of $250 million in non-core properties during the next two years, with $150 million up for sale in 2007, as GlobeSt.com previously reported. It has also identified 28 properties for future redevelopment activity. Redevelopment is currently taking place at four properties, including Mandarin Landing in Jacksonville, where a new Whole Foods is under construction, and Chapel Trail in Pembroke Pines, where an LA Fitness is under contract.
Olson came to Equity One from Kimco as president and director in September and was named CEO in December to replace Chiam Katzman, who resigned. Stauffer came from Pan Pacific in November, following Doron Valero's resignation. Both Katzman and Valero remain on the board of directors.
Shares of EQY were at $28.09 in early trading on the NYSE after release of the first-quarter financials. This compares with a 52-week high of $28.84 a share on Feb. 9, and a 52-week low of $20.25 a share on June 28, 2006.
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