Exhibit 99.3
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
Management has prepared the following unaudited consolidated pro forma financial statements which are based on the historical consolidated financial statements of Equity One, Inc. and subsidiaries (the “Company”) and adjusted to give effect to the acquisitions of Pavilion Shopping Center, Village Center at Southlake, Creekside Plaza, Sparkleberry Square, Venice Shopping Center, Windy Hill Shopping Center, Medical & Merchants at San Pablo, Westgate Marketplace and the Boston Properties (collectively the “Acquired Properties”).
The unaudited consolidated pro forma balance sheet at June 30, 2004 has been prepared to reflect the subsequent acquisition of the Boston Properties as if the acquisition had occurred on June 30, 2004. The unaudited consolidated pro forma statements of operations for the year ended December 31, 2003 and the six months ended June 30, 2004 have been prepared to present the results of operations of the Company as if the acquisition of the Acquired Properties had occurred at the beginning of the periods presented.
The unaudited consolidated pro forma financial statements neither purport to represent what the consolidated results of operations actually would have been had the Acquired Properties and related transactions occurred at the beginning of the periods presented, nor does it purport to project the consolidated operations for any future period.
The following unaudited consolidated pro forma financial statements should be read in conjunction with the 2003 Consolidated Financial Statements and the Notes thereto that are included in the Company’s Annual Report on Form 10-K filed on March 15, 2004, the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2004, and the Statements of Revenues and Certain Operating Expenses and related Notes thereto included elsewhere in this Form 8-K. In the Company’s opinion, all significant adjustments necessary to reflect the effects of the Acquired Properties have been made.
EQUITY ONE, INC.AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2004
(Amounts in thousands)
Historical (A) | Pro Forma Adjustments (B) | Pro Forma Consolidated | ||||||||
ASSETS | ||||||||||
PROPERTIES: | ||||||||||
Income producing | $ | 1,780,145 | $ | 119,800 | $ | 1,899,945 | ||||
Less: accumulated depreciation | (78,492 | ) | - | (78,492 | ) | |||||
1,701,653 | 119,800 | 1,821,453 | ||||||||
Construction in progress and land held for development | 38,803 | - | 38,803 | |||||||
Properties held for sale | 44,185 | - | 44,185 | |||||||
Properties, net | 1,784,641 | 119,800 | 1,904,441 | |||||||
CASH AND CASH EQUIVALENTS | - | - | - | |||||||
CASH HELD IN ESCROW | 5,814 | (5,814 | ) | - | ||||||
ACCOUNTS AND OTHER RECEIVABLES, NET | 9,403 | - | 9,403 | |||||||
- | ||||||||||
SECURITIES AVAILABLE FOR SALE | 18,287 | - | 18,287 | |||||||
INVESTMENTS IN AND ADVANCES TO JOINT VENTURES | 2,833 | - | 2,833 | |||||||
GOODWILL | 14,477 | - | 14,477 | |||||||
OTHER ASSETS | 44,125 | - | 44,125 | |||||||
TOTAL | $ | 1,879,580 | $ | 113,986 | $ | 1,993,566 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
LIABILITIES: | ||||||||||
NOTES PAYABLE | ||||||||||
Mortgage notes payable | $ | 497,741 | $ | 12,092 | $ | 509,833 | ||||
Unsecured revolving credit facilities | 80,541 | 100,594 | 181,135 | |||||||
Unsecured senior notes payable | 350,000 | - | 350,000 | |||||||
Margin payable for securities available for sale | 11,075 | - | 11,075 | |||||||
939,357 | 112,686 | 1,052,043 | ||||||||
Unamortized net premium on notes payable | 21,585 | 1,300 | 22,885 | |||||||
Total notes payable | 960,942 | 113,986 | 1,074,928 | |||||||
OTHER LIABILITIES | ||||||||||
Accounts payable and accrued expenses | 39,638 | - | 39,638 | |||||||
Tenant security deposits | 8,358 | - | 8,358 | |||||||
Other liabilities | 4,196 | - | 4,196 | |||||||
Total liabilities | 1,013,134 | 113,986 | 1,127,120 | |||||||
MINORITY INTEREST | 12,400 | - | 12,400 | |||||||
COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||
Preferred stock, $0.01 par value - 10,000 shares authorized but unissued | - | - | - | |||||||
Common stock, $0.01 par value - 100,000 shares authorized, 70,755 shares issued and outstanding | 708 | - | 708 | |||||||
Additional paid-in capital | 867,154 | - | 867,154 | |||||||
Retained earnings | - | - | - | |||||||
Accumulated other comprehensive gain | (4,970 | ) | - | (4,970 | ) | |||||
Unamortized restricted stock compensation | (8,258 | ) | - | (8,258 | ) | |||||
Notes receivable from issuance of common stock | (588 | ) | - | (588 | ) | |||||
Total stockholders’ equity | 854,046 | - | 854,046 | |||||||
TOTAL | $ | 1,879,580 | $ | 113,986 | $ | 1,993,566 | ||||
See accompanying notes to unaudited consolidated pro forma balance sheet.
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2004
(Amounts in thousands)
A) | Reflects the Company’s unaudited historical consolidated balance sheet as of June 30, 2004. The historical balance sheet for the Company includes all of the Acquired Properties except the Boston Properties. |
B) | Represents management’s estimate of the allocation of the Company’s aggregate purchase price and closing costs for the acquisitions of the Boston Properties, totaling $119,800. Based on management’s preliminary analysis, no significant intangibles were acquired in connection with the Boston Properties. |
Represents assumption of a mortgage note of $12,092 related to the Boston Properties, bearing a fixed interest rate of 8.69%, maturing in February 2016. The fair value adjustment results in a premium on the note of $1,300, to be amortized over the remaining term of the loan. Also, represents additional borrowings on the Company’s revolving credit facility of $100,594, and the utilization of the proceeds in escrow.
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(Amounts in thousands except per share amounts)
Historical (A) | Acquired Properties (B) | Pro Forma Consolidated (C) | ||||||||
RENTAL INCOME: | ||||||||||
Minimum rents | $ | 84,615 | $ | 7,556 | $ | 92,171 | ||||
Expense recoveries | 22,871 | 1,048 | 23,919 | |||||||
Percentage rent payments | 1,617 | - | 1,617 | |||||||
Termination fees | 407 | - | 407 | |||||||
Total rental revenue | 109,510 | 8,604 | 118,114 | |||||||
COSTS AND EXPENSES: | ||||||||||
Property operating expenses | 28,387 | 1,368 | 29,755 | |||||||
Rental property depreciation and amortization | 17,010 | 1,681 | 18,691 | |||||||
General and administrative expenses | 7,261 | - | 7,261 | |||||||
Total costs and expenses | 52,658 | 3,049 | 55,707 | |||||||
INCOME BEFORE OTHER INCOME & EXPENSES, DISCONTINUED OPERATIONS AND MINORITY INTEREST | 56,852 | 5,555 | 62,407 | |||||||
OTHER INCOME AND EXPENSES: | ||||||||||
Interest expense | (21,984 | ) | (4,638 | ) | (26,622 | ) | ||||
Amortization of deferred financing fees | (610 | ) | - | (610 | ) | |||||
Investment income | 402 | - | 402 | |||||||
Other income | 123 | - | 123 | |||||||
Equity in loss of joint ventures | (28 | ) | - | (28 | ) | |||||
INCOME FROM CONTINUING OPERATIONS | $ | 34,755 | $ | 917 | $ | 35,672 | ||||
EARNINGS PER SHARE: | ||||||||||
BASIC EARNINGS PER SHARE | ||||||||||
Income from continuing operations | $ | 0.50 | $ | 0.51 | ||||||
NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE | 69,413 | 69,413 | ||||||||
DILUTED EARNINGS PER SHARE | ||||||||||
Income from continuing operations | $ | 0.49 | $ | 0.50 | ||||||
NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE | 71,211 | 71,211 | ||||||||
See accompanying notes to unaudited consolidated pro forma statement of operations.
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(Amounts in thousands except per share amounts)
A) | Represents the Company’s unaudited historical consolidated statement of operations for the six months ended June 30, 2004, including the results of operations for Pavilion Shopping Center, Village Center at Southlake, Creekside Plaza, Sparkleberry Square, Venice Shopping Center, Windy Hill Shopping Center, Medical & Merchants at San Pablo, and Westgate Marketplace from the date of acquisition through June 30, 2004. |
B) | Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the six months ended June 30, 2004 (excluding the operations included in the historical results of the Company), including the pro forma adjustments detailed below: |
(1) | Depreciation and amortization expenses totaling $1,681 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. No significant intangibles were acquired in connection with the acquisitions. |
(2) | Additional interest expense totaling $4,638, assumes the borrowing of $241,882 on the revolving credit facility at a rate of 2.08% (the Company’s effective borrowing rate for the period) and amortization of interest premium or discount relating to the assumption of mortgage notes on purchase of the Acquired Properties. |
C) | Represents the Company’s consolidated pro forma statement of operations including pro forma basic and diluted earnings per share from continuing operations as well as the pro forma weighted average shares outstanding for the six months ended June 30, 2004. |
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(Amounts in thousands except per share amounts)
Historical (A) | Acquired Properties (B) | Pro Forma Consolidated (C) | ||||||||
RENTAL INCOME: | ||||||||||
Minimum rental | $ | 144,997 | $ | 20,110 | $ | 165,107 | ||||
Expense recoveries | 41,740 | 2,654 | 44,394 | |||||||
Termination fees | 1,382 | 66 | 1,448 | |||||||
Percentage rent payments | 1,857 | 427 | 2,284 | |||||||
Total rental revenue | 189,976 | 23,257 | 213,233 | |||||||
COSTS AND EXPENSES: | ||||||||||
Property operating expenses | 54,866 | 4,631 | 59,497 | |||||||
Rental property depreciation and amortization | 27,598 | 4,684 | 32,282 | |||||||
General and administrative expenses | 11,046 | - | 11,046 | |||||||
Total costs and expenses | 93,510 | 9,315 | 102,825 | |||||||
INCOME BEFORE OTHER INCOME AND EXPENSES, DISCONTINUED OPERATIONS AND MINORITY INTEREST | 96,466 | 13,942 | 110,408 | |||||||
OTHER INCOME AND EXPENSES: | ||||||||||
Interest Expense | (37,826 | ) | (11,412 | ) | (49,238 | ) | ||||
Amortization of deferred financing fees | (1,111 | ) | - | (1,111 | ) | |||||
Investment income | 1,089 | - | 1,089 | |||||||
Other income | 687 | - | 687 | |||||||
Equity in loss of joint ventures | (126 | ) | - | (126 | ) | |||||
Loss on extinguishment of debt | (623 | ) | - | (623 | ) | |||||
INCOME FROM CONTINUING OPERATIONS | $ | 58,556 | $ | 2,530 | $ | 61,086 | ||||
EARNINGS PER SHARE: | ||||||||||
BASIC EARNINGS PER SHARE | ||||||||||
Income from continuing operations | $ | 0.96 | $ | 1.00 | ||||||
NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE | 59,998 | 59,998 | ||||||||
DILUTED EARNINGS PER SHARE | ||||||||||
Income from continuing operations | $ | 0.95 | $ | 0.99 | ||||||
NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE | 61,665 | 61,665 | ||||||||
See accompanying notes to unaudited consolidated pro forma statement of operations.
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(Amounts in thousands except per share amounts)
A) | Represents the Company's unaudited historical consolidated statement of operations for the year ended December 31, 2003. |
B) | Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the year ended December 31, 2003, including the pro forma adjustments detailed below: |
(1) | Depreciation and amortization expenses totaling $4,684 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. No significant intangibles were acquired in connection with the acquisitions. |
(2) | Additional interest expense totaling $11,412, assumes the borrowing up to $241,882 on the revolving credit facility at a rate of 2.18% (the Company’s effective borrowing rate for the period), interest on the assumption of mortgage notes payable and amortization of interest premium or discount relating to the assumption of mortgage notes on the purchase of the Acquired Properties. |
D) | Represents the Company's consolidated pro forma statement of operations including pro forma basic and diluted earnings per share from continuing operations as well as the pro forma weighted average shares outstanding for the year ended December 31, 2003. |