"Much has changed in the marketplace over the quarter," Equity One CEO Jeffrey Olson said during yesterday's third-quarter earnings call. "However, our strategy remains the same. We plan to continue improving our core operations."
Part of the company's strategy in recent years is to sell off non-core assets. Late in 2006, the company announced plans to sell $250 million of properties over two years, $150 million in 2007 and $100 million in 2008.
Equity One reported funds from operations for the third quarter of $22.2 million, or 30 cents per diluted share. For the same period last year, FFO was $25.5 million or 35 cents per share. FFO for the nine months ending Sept. 30 was $77.1 million or $1.04 per diluted share versus $90.2 million or $1.20 per share for the same time period in 2006.
Net income for the third quarter was $10.7 million or 14 cents per diluted share, compared to $14.1 million or 19 cents per share for Q3 2006. Net income for the nine months ending Sept. 30 was $43.6 million or 59 cents per diluted share versus $147.8 million or $1.97 per share for the first nine months of 2006.
In addition to shedding properties in non-core markets, Equity's other corporate strategies in recent years include investing capital in assets with development or redevelopment potential, pushing for occupancy and rent increases in existing properties, upgrading technology and investing in its employees.
The company reported that, during the third quarter, 39 new leases, totaling 241,195 sf, were executed. Leases with a new tenant replacing a prior tenant accounted for 34 of the leases and 219,718 sf. On average, rents on the new leases are 30.5% higher than prior rents on a GAAP basis and 18.3% higher than prior rents on a cash basis.
As of Sept. 30, Equity's portfolio was 93.5% occupied, which is lower than it's been in recent times. Olson attributed the drop to the emphasis on replacing tenants. "We've been replacing existing weaker tenants with stronger tenants that can pay market rents," he says.
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