Equity One Puts Faith in Grocer-Anchored Centers

NORTH MIAMI BEACH, FL-Locally based Equity One Inc. saw a significant drop in year-over-year funds from operations in 2008, but the retail REIT is positive about the upcoming year as its shopping centers are mainly grocer-anchored. According to the company’s latest earnings report, funds from operations in 2008 totaled $60.5 million versus $98.4 million in 2007. Investment sales activity was also off by 75%.

“The good news is we saw revenue increased by 3.3% primarily as a result of built-in rental increases, higher recoveries and positive re-leasing strives,” CEO Jeff Olson said during the REIT’s fourth quarter earnings call on Thursday. Equity also announced that it had acquired a controlling interest, 75%, in DIM Vastgoed, a Dutch real estate company that owns 21 shopping centers totaling 2.6 million square feet on the east coast. The properties have a total value of approximately $400 million with $260 million of mortgage debt. Calls for additional information were not returned by deadline.

The company’s portfolio occupancy ended the year at 92.1%, unchanged on a same-property basis as compared to the third quarter and down 90 basis points on a same-property basis as compared to year-end 2007. Looking forward, executives indicated that they are expecting some decline in occupancy for 2009. “Probably in the neighborhood of 150 to 250 basis points, and we think rent growth is going to be very modest,” said Olson. However, the REIT remains confident in its holdings because of the strength of its grocer-anchored centers.