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Equity One To Push Rents to Market Rate

NORTH MIAMI BEACH-In Q1, new and renewal tenants' rent rates increased 9.4%, and the new management team sees significant upside potential.

By Marita Thomas | Updated on May 02, 2007

NORTH MIAMI BEACH-During the first quarter of this year and the first full quarter under a new management team, Equity One Inc. sets its sights on bringing rent rates up to market pricing, disposing of non-core smaller assets and redeveloping others. During a conference call, Jeffrey Olson, CEO, said anchor tenant rates in the portfolio are, on average, 30% below market rate, and smaller store rates are between 15% and 20% below market.

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.

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