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 completed its secondary offering of 4.1 million common shares, which included an additional 1 million shares sold by one of its stockholders. Barclays Capital Inc., the investment banking division of Barclays PLC (BCS), acted as the sole book-running manager for the equity offer.
Equity One raised net proceeds of approximately $65.2 million from the program, while the selling stockholder raised another $21.0 million. However, Equity One did not receive any of the proceeds from its selling stockholder with respect to the shares sold. The company intends to utilize the proceeds to repay debt under its unsecured revolving credit facility and for general corporate purposes.
Equity One had an unsecured revolving credit facility worth $575.0 million from a syndicate of banks. As of June 30, 2012, the company had drawn approximately $101.0 million against the facility with an annual interest of 1.80%. In addition, the company had an additional $15.0 million unsecured credit facility, under which it had no outstanding debt.
As of June 30, 2012, Equity One owned 165 properties spanning 16.8 million square feet of space. These included 142 shopping centers, 11 development/redevelopment properties, seven land parcels, and five non-retail properties.
The majority of the shopping centers owned by Equity One are anchored by leading supermarkets, 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.
In addition, the bulk of the company's portfolio is located in some of the most densely populated and highest 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 with solid trade area demographics.
We have a Neutral rating on Equity One, which presently has a Zacks #3 Rank that translates into a short-term Hold rating.