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 announced a secondary offering of 3.1 million common shares to increase its liquidity. In addition, one of the stockholders of the company has also decided to sell another 1 million shares. The company, along with the selling stock, will further grant the underwriters an option to purchase an additional 465,000 shares and 150,000 shares, respectively, to cover any over-allotments.
Barclays Capital Inc., the investment banking division of Barclays PLC (BCS), is acting as the sole book-running manager for the offering. Equity One intends to utilize the net proceeds from the secondary offering to repay debt under its unsecured revolving credit facility and for general corporate purposes.
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 translating into a short-term Hold rating, and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1-3 months.