Equity One (EQY) 10-Q 2012 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

Commission file number 001-13499

EQUITY ONE, INC.

(Exact name of Registrant as specified in its charter)

Maryland	52-1794271
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1600 N.E. Miami Gardens Drive North Miami Beach, FL	33179
(Address of principal executive offices)	(Zip code)

(305) 947-1664

Registrant’s telephone number, including area code

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨    No  x

As of May 3, 2012, the number of outstanding shares of Common Stock, par value $0.01 per share, of the Registrant was 114,765,235.

EQUITY ONE, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED MARCH 31, 2012

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2012 and December 31, 2011		2
	Condensed Consolidated Statements of Income (unaudited) for the three months ended March  31, 2012 and 2011		3
	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2012 and 2011		4
	Condensed Consolidated Statement of Equity (unaudited) for the three months ended March 31, 2012		5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March  31, 2012 and 2011		6
	Notes to Condensed Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Item 3.	Quantitative and Qualitative Disclosures about Market Risks		54
Item 4.	Controls and Procedures		55
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		56
Item 1A.	Risk Factors		56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		56
Item 3.	Defaults Upon Senior Securities		56
Item 4.	Mine Safety Disclosures		56
Item 5.	Other Information		56
Item 6.	Exhibits		57
	Signatures		58

1

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

March 31, 2012 and December 31, 2011

(Unaudited)

(In thousands, except share par value amounts)

	March 31, 2012			December 31, 2011
ASSETS
Properties:
Income producing	$	3,106,668		$	2,955,605
Less: accumulated depreciation		(309,214	)		(299,106	)
Income producing properties, net		2,797,454			2,656,499
Construction in progress and land held for development		125,199			104,792
Properties held for sale or properties sold in a disposal group		11,901			46,655
Properties, net		2,934,554			2,807,946
Cash and cash equivalents		15,610			10,963
Cash held in escrow and restricted cash		1,716			92,561
Accounts and other receivables, net		8,777			17,790
Investments in and advances to unconsolidated joint ventures		54,963			50,158
Mezzanine loans receivable, net		64,710			45,279
Goodwill		8,401			8,406
Other assets		208,782			189,468
TOTAL ASSETS(including $109,000 and $109,200 of consolidated variable interest entities, at March 31, 2012 and December 31, 2011, respectively*)	$	3,297,513		$	3,222,571
LIABILITIES AND EQUITY
Liabilities:
Notes payable:
Mortgage notes payable	$	468,485		$	471,754
Unsecured senior notes payable		681,136			691,136
Term loan		200,000			—
Unsecured revolving credit facilities		42,000			138,000
		1,391,621			1,300,890
Unamortized premium on notes payable, net		7,384			8,181
Total notes payable		1,399,005			1,309,071
Other liabilities:
Accounts payable and accrued expenses		42,921			50,514
Tenant security deposits		8,757			8,496
Deferred tax liability		14,608			14,709
Other liabilities		186,844			164,188
Liabilities associated with assets held for sale or sold in a disposal group		—			27,587
Total liabilities (including $61,500 and $61,900 of consolidated variable interest entities, at March 31, 2012 and December 31, 2011, respectively*)		1,652,135			1,574,565
Redeemable noncontrolling interests		22,726			22,804
Commitments and contingencies		—			—
Stockholders’ Equity:
Preferred stock, $0.01 par value – 10,000 shares authorized but unissued		—			—
Common stock, $0.01 par value – 150,000 shares authorized, 112,692 and 112,599 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively		1,127			1,126
Additional paid-in capital		1,590,257			1,587,874
Distributions in excess of earnings		(176,619	)		(170,530	)
Accumulated other comprehensive loss		(69	)		(1,154	)
Total stockholders’ equity of Equity One, Inc.		1,414,696			1,417,316
Noncontrolling interests		207,956			207,886
Total equity		1,622,652			1,625,202
TOTAL LIABILITIES AND EQUITY	$	3,297,513		$	3,222,571

* The assets of these entities can only be used to settle obligations of the variable interest entities and the liabilities include third party liabilities of the variable interest entities for which the creditors or beneficial interest holders do not have recourse against us other than for customary environmental indemnifications and non-recourse carve-outs.

See accompanying notes to the condensed consolidated financial statements.

2

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended March 31, 2012 and 2011

(Unaudited)

(In thousands, except per share data)

	Three Months Ended March 31,
	2012			2011
REVENUE:
Minimum rent	$	60,818		$	53,171
Expense recoveries		17,939			15,748
Percentage rent		1,954			1,454
Management and leasing services		804			466
Total revenue		81,515			70,839
COSTS AND EXPENSES:
Property operating		22,130			20,574
Rental property depreciation and amortization		21,715			18,766
General and administrative		11,560			11,977
Total costs and expenses		55,405			51,317
INCOME BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		26,110			19,522
OTHER INCOME AND EXPENSE:
Investment income		1,445			693
Equity in (loss) income of unconsolidated joint ventures		(188	)		366
Other income		141			129
Interest expense		(17,369	)		(17,551	)
Amortization of deferred financing fees		(593	)		(539	)
Gain on bargain purchase		—			30,561
(Loss) gain on extinguishment of debt		(93	)		42
INCOME FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		9,453			33,223
Income tax benefit of taxable REIT subsidiaries		46			133
INCOME FROM CONTINUING OPERATIONS		9,499			33,356
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		(141	)		3,589
Gain on disposal of income producing properties		14,269			—
Impairment loss on income producing properties sold or held for sale		(1,932	)		—
Income tax benefit of taxable REIT subsidiaries		—			432
INCOME FROM DISCONTINUED OPERATIONS		12,196			4,021
NET INCOME		21,695			37,377
Net income attributable to noncontrolling interests - continuing operations		(2,713	)		(2,400	)
Net loss attributable to noncontrolling interests - discontinued operations		—			17
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	18,982		$	34,994
EARNINGS PER COMMON SHARE - BASIC:
Continuing operations	$	0.06		$	0.29
Discontinued operations		0.11			0.04
	$	0.16	*	$	0.33
Number of Shares Used in Computing Basic Earnings per Share		112,649			106,254
EARNINGS PER COMMON SHARE - DILUTED:
Continuing operations	$	0.06		$	0.28
Discontinued operations		0.11			0.03
	$	0.16	*	$	0.32	*
Number of Shares Used in Computing Diluted Earnings per Share		112,820			117,258

* Note: Basic and Diluted EPS for the three months ended March 31, 2012 and Diluted EPS for the three months ended March 31, 2011 does not foot due to the rounding of the individual calculations.

See accompanying notes to the condensed consolidated financial statements.

3

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2012 and 2011

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2012			2011
NET INCOME	$	21,695		$	37,377
OTHER COMPREHENSIVE INCOME:
Net amortization of interest rate contracts included in net income		16			16
Net unrealized gain on interest rate swap (1)		1,069			81
Other comprehensive income adjustment		1,085			97
COMPREHENSIVE INCOME		22,780			37,474
Comprehensive income attributable to noncontrolling interests		(2,713	)		(2,383	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	20,067		$	35,091

⁽¹⁾  For the three months ended March 31, 2012, and March 31, 2011, this amount includes our share of an unconsolidated joint venture’s unrealized gains of $94 and $81, respectively.

See accompanying notes to the condensed consolidated financial statements.

4

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

For the three months ended March 31, 2012

(Unaudited)

(In thousands)

	Common Stock				Additional Paid-In Capital			Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity of Equity One, Inc.			Noncontrolling Interests			Total Equity
	Shares		Amount
BALANCE, DECEMBER 31, 2011		112,599	$	1,126	$	1,587,874		$	(170,530	)	$	(1,154	)	$	1,417,316		$	207,886		$	1,625,202
Issuance of common stock, net of withholding taxes		93		1		257			—			—			258			—			258
Stock issuance costs		—		—		(39	)		—			—			(39	)		—			(39	)
Share-based compensation expense		—		—		2,165			—			—			2,165			—			2,165
Net income		—		—		—			18,982			—			18,982			2,490			21,472
Net loss attributable to redeemable noncontrolling interest		—		—		—			—			—			—			223			223
Dividends paid on common stock		—		—		—			(25,071	)		—			(25,071	)		—			(25,071	)
Distributions to noncontrolling interests		—		—		—			—			—			—			(2,643	)		(2,643	)
Other comprehensive income adjustment		—		—		—			—			1,085			1,085			—			1,085
BALANCE, MARCH 31, 2012		112,692	$	1,127	$	1,590,257		$	(176,619	)	$	(69	)	$	1,414,696		$	207,956		$	1,622,652

See accompanying notes to the condensed consolidated financial statements.

5

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2012 and 2011

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2012			2011
OPERATING ACTIVITIES:
Net income	$	21,695		$	37,377
Adjustments to reconcile net income to net cash provided by operating activities:
Straight line rent adjustment		(1,024	)		(902	)
Accretion of below market lease intangibles, net		(2,948	)		(2,043	)
Equity in loss (income) of unconsolidated joint ventures		188			(634	)
Gain on bargain purchase		—			(30,561	)
Income tax benefit of taxable REIT subsidiaries		(46	)		(565	)
Provision for losses on accounts receivable		211			1,033
Amortization of discount on notes payable, net		(784	)		236
Amortization of deferred financing fees		595			543
Depreciation and amortization		22,607			23,771
Share-based compensation expense		1,980			1,579
Amortization of derivatives		16			16
Gain on sale of real estate		(14,269	)		—
Loss (gain) on extinguishment of debt		809			(42	)
Operating distributions from joint venture		724			226
Impairment loss		1,932			—
Changes in assets and liabilities, net of effects of acquisitions and disposals:
Accounts and other receivables		8,615			5,113
Other assets		(11,099	)		(902	)
Accounts payable and accrued expenses		(5,762	)		377
Tenant security deposits		261			141
Other liabilities		105			416
Net cash provided by operating activities	$	23,806		$	35,179
INVESTING ACTIVITIES:
Acquisition of income producing properties		(153,750	)		(45,472	)
Additions to income producing properties		(4,908	)		(2,896	)
Additions to construction in progress		(19,583	)		(3,135	)
Proceeds from sale of real estate and rental properties		33,166			—
Decrease in cash held in escrow		90,845			—
Increase in deferred leasing costs and lease intangibles		(1,340	)		(1,320	)
Investment in joint ventures		(6,572	)		(500	)
Repayments from joint ventures		381			—
Distributions from joint ventures		567			—
Investment in mezzanine loan		(19,258	)		—
Net cash used in investing activities	$	(80,452	)	$	(53,323	)

(Continued)

See accompanying notes to the condensed consolidated financial statements.

6

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2012 and 2011

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2012			2011
FINANCING ACTIVITIES:
Repayments of mortgage notes payable	$	(3,269	)	$	(119,439	)
Net (repayments) borrowings under revolving credit facilities		(96,000	)		113,500
Repayment of senior debt		(10,000	)		—
Proceeds from issuance of common stock		258			37
Borrowings under term loan		200,000			—
Payment of deferred financing costs		(1,943	)		(252	)
Stock issuance costs		(39	)		(124	)
Dividends paid to stockholders		(25,071	)		(23,694	)
Distributions to noncontrolling interests		(2,643	)		(2,415	)
Net cash provided by (used in) financing activities		61,293			(32,387	)
Net increase (decrease) in cash and cash equivalents		4,647			(50,531	)
Cash and cash equivalents obtained through acquisition		—			23,412
Cash and cash equivalents at beginning of the period		10,963			38,333
Cash and cash equivalents at end of the period	$	15,610		$	11,214
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (net of capitalized interest of $1.1 million and $498 in 2012 and 2011, respectively)	$	17,923		$	20,653
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in unrealized holding gain on securities	$	—		$	16
We acquired upon acquisition of certain income producing properties:
Income producing properties	$	166,150		$	61,179
Intangible and other assets		13,196			5,000
Intangible and other liabilities		(25,596	)		(9,604	)
Assumption of mortgage notes payable		—			(11,103	)
Cash paid for income producing properties	$	153,750		$	45,472
Net cash paid for the acquisition of C&C (US) No. 1 is as follows:
Income producing properties	$	—		$	471,219
Intangible and other assets		—			113,484
Intangible and other liabilities		—			(35,898	)
Assumption of mortgage notes payable		—			(261,813	)
Issuance of Equity One common stock		—			(73,698	)
Noncontrolling interest in C&C (US) No. 1		—			(206,145	)
Gain on bargain purchase		—			(30,561	)
Cash acquired upon acquisition of C&C (US) No. 1		—			23,412
Net cash paid for acquisition of C&C (US) No. 1	$	—		$	—
Net cash paid for acquisition of income producing properties	$	153,750		$	45,472

(Concluded)

See accompanying notes to the condensed consolidated financial statements.

7

EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2012

(Unaudited)

1. Organization and Basis of Presentation

Organization

We are a real estate investment trust, or REIT, that owns, manages, acquires, develops and redevelops shopping centers located primarily in supply constrained suburban and urban communities. We were organized as a Maryland corporation in 1992, completed our initial public offering in May 1998, and have elected to be taxed as a REIT since 1995.

As of March 31, 2012, our consolidated property portfolio comprised 164 properties totaling approximately 16.9 million square feet of gross leasable area, or GLA, and included 143 shopping centers, ten development or redevelopment properties, five non-retail properties and six land parcels. As of March 31, 2012, our core portfolio was 91.2% leased and included national, regional and local tenants. Additionally, we had joint venture interests in 17 shopping centers and two office buildings totaling approximately 2.8 million square feet of GLA.

In January 2011, we closed on the acquisition of C&C (US) No. 1, Inc., which we refer to as CapCo, through a joint venture with Liberty International Holdings Limited, or LIH. At the time of acquisition, CapCo owned a portfolio of 13 properties in California totaling approximately 2.6 million square feet of GLA. The results of CapCo have been included in our financial statements as of the date of acquisition. In December 2011, we sold 36 shopping centers, comprising 3.9 million square feet of GLA, predominantly located in the Atlanta, Tampa and Orlando markets, with additional properties located in the states of North Carolina, South Carolina, Alabama, Tennessee and Maryland. The results of operations of these properties are reflected in discontinued operations for the three months ended March 31, 2011.

Basis of Presentation

The condensed consolidated financial statements include the accounts of Equity One, Inc. and its wholly-owned subsidiaries and those other entities where we have a controlling financial interest including where we have been determined to be a primary beneficiary of a variable interest entity (“VIE”) in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Equity One, Inc. and its subsidiaries are hereinafter referred to as “the consolidated companies”, the “Company”, “we”, “our”, “us” or similar terms. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior-period data have been reclassified to conform to the current period presentation. Certain operations have been classified as discontinued and associated results of operations and financial position are separately reported for all periods presented. Information in these notes to the condensed consolidated financial statements, unless otherwise noted, does not include the accounts of discontinued operations.

The condensed consolidated financial statements included in this report are unaudited. In our opinion, all adjustments considered necessary for a fair presentation have been included, and all such adjustments are of a normal recurring nature. The results of operations for the three month periods ended March 31, 2012 and 2011 are not necessarily indicative of the results that may be expected for a full year.

Our unaudited condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions of Form 10-Q. Accordingly, these unaudited condensed consolidated financial statements do not contain certain information included in our annual financial statements and notes. The condensed consolidated balance sheet as of December 31, 2011 was derived from audited financial statements included in our 2011 Annual Report on Form 10-K, but does not include all disclosures required under GAAP. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission (the “SEC”) on February 29, 2012.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

8

Properties

Income producing properties are stated at cost, less accumulated depreciation and amortization. Costs include those related to acquisition, development and construction, including tenant improvements, interest incurred during development, costs of predevelopment and certain direct and indirect costs of development. Costs related to business combinations are expensed as incurred, and are included in general and administrative expenses in our condensed consolidated statements of income.

Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements that improve or extend the useful lives of assets are capitalized.

Business Combinations

We allocate the purchase price of acquired properties to land, building, improvements and intangible assets and liabilities in accordance with the Business Combinations Topic of the FASB ASC. We allocate the initial purchase price of assets acquired (net tangible and identifiable intangible assets) and liabilities assumed based on their fair values at the date of acquisition. Upon acquisition of real estate operating properties, we estimate the fair value of acquired tangible assets (consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships), assumed debt and redeemable units issued at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these estimates, we allocate the estimated fair value to the applicable assets and liabilities. Fair value is determined based on an exit price approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If, up to one year from the acquisition date, information regarding fair value of the assets acquired and liabilities assumed is received and estimates are refined, appropriate adjustments are made to the purchase price allocation on a retrospective basis. There are four categories of intangible assets and liabilities to be considered: (1) in-place leases; (2) above and below-market value of in-place leases; (3) lease origination costs and (4) customer relationships. The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases, including fixed rate renewal options, to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to depreciation expense over the estimated remaining term of the respective leases. The value of above-market and below-market in-place leases is amortized to rental revenue over the estimated remaining term of the leases. If a lease terminates prior to its stated expiration, all unamortized amounts relating to that lease are written off.

In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate renewal options, to be paid pursuant to the leases and management’s estimate of the market lease rates and other lease provisions (i.e., expense recapture, base rental changes, etc.) measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market intangible is amortized to rental income over the estimated remaining term of the respective lease, which includes the expected renewal option period.

The results of operations of acquired properties are included in our financial statements as of the dates they are acquired. The intangible assets and liabilities associated with property acquisitions are included in other assets and other liabilities in our condensed consolidated balance sheets.

Construction in Progress and Land Held for Development

Properties also include construction in progress and land held for development. These properties are carried at cost and no depreciation is recorded. Properties undergoing significant renovations and improvements are considered under development. All direct and indirect costs related to development activities are capitalized into construction in progress and land held for development on our condensed consolidated balance sheets, except for certain demolition costs, which are expensed as incurred. Costs incurred include predevelopment expenditures directly related to a specific project including development and construction costs, interest, insurance and real estate taxes. Indirect development costs include employee salaries and benefits, travel and other related costs that are directly associated with the development of the property. Our method of calculating capitalized interest is based upon applying our weighted average borrowing rate to the actual costs incurred. The capitalization of such expenses ceases when the property is ready for its intended use, but no later than one-year from substantial completion of major construction activity. If we determine that a project is no longer viable, all predevelopment project costs are immediately expensed. Similar costs related to properties not under development are expensed as incurred.

9

Long-lived Assets

We evaluate the carrying value of long-lived assets, including definite-lived intangible assets, when events or changes in circumstances indicate that the carrying value may not be recoverable in accordance with the Property, Plant and Equipment Topic of the FASB ASC. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. For long-lived assets to be held and used, the fair value of fixed (tangible) assets and definite-lived intangible assets is determined primarily using either internal projected cash flows discounted at a rate commensurate with the risk involved or an external appraisal. For long-lived assets to be disposed of by sale or other than by sale, fair value is determined in a similar manner or based on actual sales prices as determined by executed sales contracts, except that fair values are reduced for disposal costs.

Properties Held for Sale

The application of current accounting principles that govern the classification of any of our properties as held-for-sale on the condensed consolidated balance sheet, or the presentation of results of operations and gains or losses on the sale of these properties as discontinued, requires management to make certain significant judgments. In evaluating whether a property meets the criteria set forth by the Property, Plant and Equipment Topic of the FASB ASC, we make a determination as to the point in time that it is probable that a sale will be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other matters critical to the final sale, such as financing arrangements often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period, or may not close at all. Therefore, any properties categorized as held-for-sale represent only those properties that management has determined are probable to close within the requirements set forth in the Property, Plant and Equipment Topic of the FASB ASC. Prior to sale, we evaluate the extent of involvement with, and the significance to us of cash flows from a property subsequent to its sale, in order to determine if the results of operations and gain or loss on sale should be reflected as discontinued. Consistent with the Property, Plant and Equipment Topic of the FASB ASC, any property sold in which we have significant continuing involvement or cash flows (most often sales to co-investment partnerships) is not considered to be discontinued. In addition, any property which we sell to an unrelated third party, but in which we retain a property or asset management function, is not considered discontinued. Therefore, based on our evaluation of the Property, Plant and Equipment Topic of the FASB ASC only properties sold, or to be sold, to unrelated third parties where we will have no significant continuing involvement or significant cash flows are classified as discontinued operations. Certain prior year amounts have been reclassified to conform to the current year presentation.

Cash and Cash Equivalents

We consider liquid investments with a purchase date life to maturity of three months or less to be cash equivalents.

Cash Held in Escrow

Cash held in escrow represents the cash proceeds of property sales that are being held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Internal Revenue Code (the “Code”).

Accounts Receivable

Accounts receivable includes amounts billed to tenants and accrued expense recoveries due from tenants. We make estimates of the uncollectability of our accounts receivable using the specific identification method. We analyze accounts receivable and historical bad debt levels, tenant credit-worthiness, payment history and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Accounts receivable are written-off when they are deemed to be uncollectable and we are no longer actively pursuing collection. Our reported net income is directly affected by management’s estimate of the collectability of accounts receivable.

Investments in Joint Ventures

We analyze our joint ventures under the FASB ASC Topics of Consolidation and Real Estate-General in order to determine whether the entity should be consolidated. If it is determined that these investments do not require consolidation because the entities are not VIEs in accordance with the Consolidation Topic of the FASB ASC, we are not considered the primary beneficiary of the entities determined to be VIEs, we do not have voting control, and/or the limited partners (or non-managing members) have substantive participatory rights, then the selection of the accounting method used to account for our investments in unconsolidated joint ventures is generally determined by our voting interests and the degree of influence we have over the

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entity. Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling interest in, an entity in which we have a variable interest. Factors considered in determining whether we have the power to direct the activities that most significantly impact the entity’s economic performance include risk and reward sharing, experience and financial condition of the other partners, voting rights, involvement in day-to-day capital and operating decisions and the extent of our involvement in the entity.

We use the equity method of accounting for investments in unconsolidated joint ventures when we own 20% or more of the voting interests and have significant influence but do not have a controlling financial interest, or if we own less than 20% of the voting interests but have determined that we have significant influence. Under the equity method, we record our investments in and advances to these entities in our condensed consolidated balance sheets and our proportionate share of earnings or losses earned by the joint venture is recognized in equity in income (loss) of unconsolidated joint ventures in the accompanying condensed consolidated statements of income. We derive revenue through our involvement with unconsolidated joint ventures in the form of management and leasing services and interest earned on loans and advances. We account for these revenues gross of our ownership interest in each respective joint venture and record our proportionate share of related expenses in equity in income (loss) of unconsolidated joint ventures.

The cost method of accounting is used for unconsolidated entities in which we do not have the ability to exercise significant influence and we have virtually no influence over partnership operating and financial policies. Under the cost method, income distributions from the partnership are recognized in investment income. Distributions that exceed our share of earnings are applied to reduce the carrying value of our investment and any capital contributions will increase the carrying value of our investment. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

These joint ventures typically obtain non-recourse third-party financing on their property investments, thus contractually limiting our exposure to losses to the amount of our equity investment, and, due to the lender’s exposure to losses, a lender typically will require a minimum level of equity in order to mitigate its risk. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments.

On a periodic basis, we evaluate our investments in unconsolidated entities for impairment in accordance with the Investments-Equity Method and Joint Ventures Topic of the FASB ASC. We assess whether there are any indicators, including underlying property operating performance and general market conditions, that the value of our investments in unconsolidated joint ventures may be impaired. An investment in a joint venture is considered impaired only if we determine that its fair value is less than the net carrying value of the investment in that joint venture on an other-than-temporary basis. Cash flow projections for the investments consider property level factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary. These factors include age of the venture, our intent and ability to retain our investment in the entity, financial condition and long-term prospects of the entity and relationships with our partners and banks. If we believe that the decline in the fair value of the investment is temporary, no impairment charge is recorded. If our analysis indicates that there is an other-than-temporary impairment related to the investment in a particular joint venture, the carrying value of the venture will be adjusted to an amount that reflects the estimated fair value of the investment.

Mezzanine Loans Receivable

Mezzanine loans receivable are classified as held to maturity and are recorded at the stated principal amount plus allowable deferred loan costs or fees which are amortized as an adjustment of the loans’ yields over the terms of the related loans. We evaluate the collectability of both interest and principal on the loans periodically to determine whether they are impaired. A loan is considered to be impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the proportionate value of the underlying collateral asset if applicable. Interest income on performing loans is accrued as earned.

Goodwill

Goodwill reflects the excess of the fair value of the acquired business over the fair value of net identifiable assets acquired in various business acquisitions. We account for goodwill in accordance with the Intangibles – Goodwill and Other Topic of the FASB ASC.

We perform annual, or more frequently in certain circumstances, impairment tests of our goodwill. We have elected to test for goodwill impairment in November of each year. The goodwill impairment test is a two-step process that requires us to make decisions in determining appropriate assumptions to use in the calculation. The first step consists of estimating the fair value of

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each reporting unit and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment, if any, by determining an “implied fair value” of goodwill. The determination of each reporting unit’s (each property is considered a reporting unit) implied fair value of goodwill requires us to allocate the estimated fair value of the reporting unit to its assets and liabilities. Any unallocated fair value represents the implied fair value of goodwill which is compared to its corresponding carrying amount.

Deposits

Deposits included in other assets comprise funds held by various institutions for future payments of property taxes, insurance, improvements, utility and other service deposits.

Deferred Costs and Intangibles

Deferred costs, intangible assets included in other assets, and intangible liabilities included in other liabilities consist of loan origination fees, leasing costs and the value of intangible assets and liabilities when a property was acquired. Loan and other fees directly related to rental property financing with third parties are amortized over the term of the loan using the effective interest method. Direct salaries, third-party fees and other costs incurred by us to originate a lease are capitalized and are amortized against the respective leases using the straight-line method over the term of the related leases. Intangible assets consist of in-place lease values, tenant origination costs and above-market rents that were recorded in connection with the acquisition of the properties. Intangible liabilities consist of below-market rents that are also recorded in connection with the acquisition of properties. Both intangible assets and liabilities are amortized and accreted using the straight-line method over the term of the related leases. When a lease is terminated early, any remaining unamortized or unaccreted balances under lease intangible assets or liabilities are charged to earnings. The useful lives of amortizable intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life.

Noncontrolling Interests

Noncontrolling interests generally represent the portion of equity that we do not own in those entities that we consolidate. We account for and report our noncontrolling interests in accordance with the provisions required under the Consolidation Topic of the FASB ASC.

We identify our noncontrolling interests separately within the equity section on the condensed consolidated balance sheets. Noncontrolling interests also include amounts related to joint venture units issued by consolidated subsidiaries or VIEs in connection with certain property acquisitions. Joint venture units which are redeemable for cash at the holder’s option or upon a contingent event outside of our control are classified as redeemable noncontrolling interests pursuant to the Distinguishing Liabilities from Equity Topic of the FASB ASC and are presented at redemption value in the mezzanine section between total liabilities and stockholders’ equity on the condensed consolidated balance sheets. The amounts of consolidated net income (loss) attributable to Equity One, Inc. and to the noncontrolling interests are presented on the condensed consolidated statements of income.

Derivative Instruments and Hedging Activities

At times, we may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative instruments for speculative purposes. The interest rate swaps associated with our cash flow hedges are recorded at fair value on a recurring basis. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into interest expense as interest is incurred on the related variable rate debt. Within the next 12 months, we expect to reclassify $1.6 million as an increase to interest expense. Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, we evaluate the default risk of the counterparty by monitoring the credit worthiness of the counterparty. When ineffectiveness exists, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected. Hedge ineffectiveness has not impacted earnings in 2012, and we do not anticipate it will have a significant effect in the future. Derivative instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges. These judgments determine if the changes in fair value of the derivative instruments are reported in the condensed consolidated statements of income as a component of net income or as a component of comprehensive income and as a component of stockholders’ equity of Equity One, Inc. on the condensed consolidated balance sheets. While management believes its judgments are reasonable, a change in a derivative’s effectiveness as a hedge could materially affect expenses, net income and equity. See Note 10 for further detail on derivative activity.

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Revenue Recognition

Revenue includes minimum rents, expense recoveries, percentage rental payments and management and leasing services. Minimum rents are recognized on an accrual basis over the terms of the related leases on a straight-line basis. As part of the leasing process, we may provide the lessee with an allowance for the construction of leasehold improvements. Leasehold improvements are capitalized and recorded as tenant improvements and depreciated over the shorter of the useful life of the improvements or the lease term. If the allowance represents a payment for a purpose other than funding leasehold improvements, or in the event we are not considered the owner of the improvements, the allowance is considered a lease incentive and is recognized over the lease term as a reduction to revenue. Factors considered during this evaluation include, among others, the type of improvements made, who holds legal title to the improvements, and other controlling rights provided by the lease agreement. Lease revenue recognition commences when the lessee is given possession of the leased space, when the asset is substantially complete in the case of leasehold improvements, and there are no contingencies offsetting the lessee’s obligation to pay rent.

Many of the lease agreements contain provisions that require the payment of additional rents based on the respective tenants’ sales volume (contingent or percentage rent) and substantially all contain provisions that require reimbursement of the tenants’ allocable real estate taxes, insurance and common area maintenance costs (“CAM”). Revenue based on percentage of tenants’ sales is recognized only after the tenant exceeds its sales breakpoint. Revenue from tenant reimbursements of taxes, CAM and insurance is recognized in the period that the applicable costs are incurred in accordance with the lease agreements.

We recognize gains or losses on sales of real estate in accordance with the Property, Plant and Equipment Topic of the FASB ASC. Profits are not recognized until (a) a sale has been consummated; (b) the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property; (c) our receivable, if any, is not subject to future subordination; and (d) we have transferred to the buyer the usual risks and rewards of ownership, and we do not have a substantial continuing involvement with the property. The sales of income producing properties where we do not have a continuing involvement are presented in the discontinued operations section of our condensed consolidated statements of income.

We are engaged by certain joint ventures to provide asset management, property management, leasing and investing services for such venture’s respective assets. We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received, and recognize these fees as the services are rendered.

Share-Based Payment

Share-based compensation expense charged against earnings is summarized as follows:

	Three Months Ended March 31,
	2012			2011
	(In thousands)
Restricted stock expense	$	1,863		$	1,289
Stock option expense		299			336
Employee stock purchase plan discount		3			4
Total equity-based expense		2,165			1,629
Restricted stock classified as a liability		(103	)		6
Total expense		2,062			1,635
Less amount capitalized		(82	)		(56	)
Net share-based compensation expense	$	1,980		$	1,579

Earnings Per Share

Under the Earnings Per Share Topic of the FASB ASC, unvested share-based payment awards that entitle their holders to receive non-forfeitable dividends, such as our restricted stock awards, are classified as “participating securities.” As participating securities, our shares of restricted stock will be included in the calculation of basic and diluted earnings per share. Because the awards are considered participating securities under provisions of the Earnings Per Share Topic of the FASB ASC, we are required to apply the two-class method of computing basic and diluted earnings per share. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that would otherwise have been available to common stockholders. Under the two-class method, earnings for the period are allocated between common stockholders and other security holders, based on their respective rights to receive dividends.

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Segment Information

We invest in retail shopping centers through direct ownership or through joint ventures. It is our intent that all retail shopping centers will be owned or developed for investment purposes; however, we may decide to sell all or a portion of a development upon completion. Our revenue and net income are generated from the operation of our investment property. We also earn fees from third parties for services provided to manage and lease retail shopping centers owned through joint ventures or by third parties.

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We have aggregated our operating segments into six reportable segments based primarily upon our method of internal reporting which classifies our operations by geographical area. Our reportable segments by geographical area are as follows: (1) South Florida – including Miami-Dade, Broward and Palm Beach Counties; (2) North Florida – including all of Florida north of Palm Beach County; (3) Southeast - including Georgia, Louisiana, Alabama, Mississippi, North Carolina, South Carolina and Tennessee; (4) Northeast – including Connecticut, Maryland, Massachusetts, New York and Virginia; (5) West Coast – including California and Arizona; and (6) Other/Non-retail – which is comprised of our non-retail assets. Our segments as reported in this Quarterly Report on Form 10-Q for the period ended March 31, 2012 are not consistent with our segments as reported in our Annual Report on Form 10-K for the year ended December 31, 2011. We have divided our previously combined North Florida and Southeast region into two separate regions in this Quarterly Report on Form 10-Q for the period ended March 31, 2012, as a result of a change in management responsibilities for the North Florida region during the period and corresponding changes in our internal reporting. These changes have been reflected in our segment disclosures for all periods presented herein.

Concentration of Credit Risk

A concentration of credit risk arises in our business when a national or regionally based tenant occupies a substantial amount of space in multiple properties owned by us. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to us, exposing us to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, we do not obtain security from our nationally-based or regionally-based tenants in support of their lease obligations to us. We regularly monitor our tenant base to assess potential concentrations of credit risk. As of March 31, 2012, Publix Super Markets is our largest tenant and accounted for approximately 1.9 million square feet, or approximately 10.4% of our gross leasable area, and approximately $14.8 million, or 6.4%, of our annual minimum rent. As of March 31, 2012, we had outstanding receivables from Publix Super Markets of approximately $202,000. No other tenant accounted for over 5% of our annual minimum rent.

Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRSs”).” The guidance under ASU 2011-04 amends certain accounting and disclosure requirements related to fair value measurements to ensure that fair value has the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements are the same. This guidance contains certain updates to the measurement guidance as well as enhanced disclosure requirements. The most significant change in disclosures is an expansion of the information required for “Level 3” measurements including enhanced disclosure for: (1) the valuation processes used by the reporting entity and (2) the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any. This guidance is effective for interim and annual periods beginning on or after December 15, 2011. We have incorporated the required disclosures within this Quarterly Report on Form 10-Q where deemed applicable and the adoption and implementation of this ASU did not have a material impact on our financial position or results of operations.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” which revises the manner in which companies present comprehensive income. Under ASU No. 2011-05, companies may present comprehensive income, which is net income adjusted for the components of other comprehensive income, either in a single continuous statement of comprehensive income or by using two separate but consecutive statements. Regardless of the alternative chosen, companies must display adjustments for items reclassified from other comprehensive income into net income within the presentation of both net income and other comprehensive income. ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011, on a retrospective basis. In December 2011, the FASB issued ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in

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ASU 2011-05.” ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. Reclassifications out of accumulated other comprehensive income are to be presented either on the face of the financial statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. Reclassification adjustments into net income need not be presented during the deferral period. This action does not affect the requirement to present items of net income, other comprehensive income and total comprehensive income in a single continuous or two consecutive statements. We have incorporated the required disclosures within this Quarterly Report on Form 10-Q where deemed applicable and the adoption and implementation of this ASU did not have an impact on our financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment (the revised standard)”. Under ASU No. 2011-08 companies have the option to perform a qualitative assessment that may allow them to skip the annual two-step test and reduce costs. The guidance is effective for fiscal years beginning after December 15, 2011 and earlier adoption is permitted. The adoption and implementation of this ASU did not have a material impact on our condensed consolidated results of operations and financial condition.

In December 2011, the FASB issued ASU No. 2011-10, “Derecognition of in Substance Real Estate”. The amendments in ASU 2011-10 resolve the diversity in practice about whether the guidance in Subtopic 360-20 applies to the derecognition of in substance real estate when the parent ceases to have a controlling financial interest (as described in Subtopic 810-10) in a subsidiary that is in substance real estate because of a default by the subsidiary on its nonrecourse debt. The guidance emphasizes that the accounting for such transactions is based on their substance rather than their form. The amendments in the ASU should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. We do not believe that the adoption of this ASU will have a material impact on our condensed consolidated results of operations and financial condition.

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities”. Under ASU 2011-11 disclosures are required to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the ASU requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. We do not believe that the adoption of this ASU will have a material impact on our condensed consolidated results of operations and financial condition.

3. Acquisitions

The following table provides a summary of income producing property acquisition activity during the three months ended March 31, 2012:

Date Purchased	Property Name	City	State	Square Feet		Purchase Price
						(in thousands)
March 1, 2012	Potrero Center(1)	San Francisco	CA		226,699	$	110,750
March 1, 2012	Compo Acres (1)	Westport	CT		43,107		30,300
March 1, 2012	Post Road Plaza (1)	Darien	CT		20,005		12,700
Total						$	153,750

⁽¹⁾ The purchase price has been preliminarily allocated to real estate assets and liabilities. The purchase price and related accounting will be finalized after our valuation studies are complete.

During the three months ended March 31, 2012, we did not recognize any material measurement period adjustments related to prior year acquisitions. The purchase price and related accounting for Aventura Square, Culver Center, Danbury Green and Southbury Green are still within the measurement period and will be finalized after our valuation studies are complete.

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In conjunction with the acquisition of Compo Acres, we entered into a reverse Section 1031 like-kind exchange agreement with a third party intermediary which is for a maximum of 180 days and allows us, for tax purposes, to defer gains on the sale of other properties identified and sold within this period. Until the earlier of termination of the exchange agreement or 180 days after the acquisition date, the third party intermediary is the legal owner of the property; however, we control the activities that most significantly impact the property and retain all of the economic benefits and risks associated with the property. Therefore, at the date of acquisition, we determined that we were the primary beneficiary of this VIE and consolidated the property and its operations as of the acquisition date noted above. As of March 31, 2012, legal ownership had been transferred to us by the qualified intermediary.

During the three months ended March 31, 2012 and 2011, we expensed approximately $1.0 million and $2.3 million, respectively, of transaction-related costs in connection with completed or pending property acquisitions which are included in general and administrative costs in the condensed consolidated statements of income. The purchase price related to the 2012 acquisitions listed in the above table was funded by the use of our line of credit, cash on hand, proceeds from the term loan and proceeds from dispositions.

4. Dispositions

The following table provides a summary of disposition activity during the three months ended March 31, 2012:

Date Sold	Property Name	City	State	Square Feet/Acres			Gross Sales Price
							(in thousands)
Income producing property sold
March 30, 2012	Laurel Walk Apartments	Charlotte	NC		106,480		$	6,000
March 30, 2012	Commerce Crossing	Commerce	GA		100,668			600
March 15, 2012	222 Sutter Street	San Francisco	CA		128,595			53,829	(2)
								60,429
Outparcels sold
February 27, 2012	Market Place - IHOP	Norcross	GA		0.35	(1)		885
January 20, 2012	Grand Marche (ground lease)	Lafayette Parish	LA		200,585			775
								1,660
Total							$	62,089

⁽¹⁾ In acres.

⁽²⁾ Includes $27.2 million of mortgage debt repaid by the buyer at closing.

As part of our strategy to upgrade and diversify our portfolio and recycle our existing capital, we evaluate opportunities to sell assets or otherwise contribute assets to existing or new joint ventures with third parties. If the market values of these assets are below their carrying values, it is possible that the disposition or contribution of these assets could result in impairments or other losses. Depending on the prevailing market conditions and historical carrying values, these impairments and losses could be material.

Discontinued Operations

We report as discontinued operations, properties held-for-sale and operating properties sold in the current period. The results of these discontinued operations are included in a separate component of income/loss on the condensed consolidated statements of income under the caption discontinued operations. This reporting has resulted in certain reclassifications of financial statement amounts.

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The components of income and expense relating to discontinued operations for the three months ended March 31, 2012 and 2011 are shown below. These include the results of operations through the date of each respective sale for properties sold during 2012 and 2011 and the operations for the applicable period for those assets classified as held for sale as of March 31, 2012:

	Three Months Ended March 31,
	2012			2011
	(In thousands)
Rental revenue	$	1,552		$	15,950
Expenses:
Property operating expenses		552			4,269
Rental property depreciation and amortization		84			4,328
General and administrative expenses		13			16
Operations of income producing property		903			7,337
Interest expense		(327	)		(4,014	)
Equity in income in unconsolidated joint ventures		—			268
Gain on disposal of income producing properties		14,269			—
Impairment loss on income producing properties held for sale or sold		(1,932	)		—
Loss on extinguishment of debt		(716	)		—
Income tax benefit		—			432
Other expense		(1	)		(2	)
Income from discontinued operations	$	12,196		$	4,021
Net loss attributable to noncontrolling interests - discontinued operations		—			17
Income from discontinued operations attributable to Equity One, Inc.	$	12,196		$	4,038

Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. The sale or disposal of a “component of an entity” is treated as discontinued operations. The operating properties sold by us typically meet the definition of a component of an entity and as such the revenues and expenses associated with sold properties are reclassified to discontinued operations for all periods presented. During the three months ended March 31, 2012, we recognized an impairment loss of $1.9 million related to a property held for sale based on a letter of intent executed on March 31, 2012. We did not recognize any impairment loss during the three months ended March 31, 2011.

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5. Investments in and Advances to Unconsolidated Joint Ventures

As of March 31, 2012, our investments in and advances to unconsolidated joint ventures in the condensed consolidated balance sheets were composed of the following:

						Investment Balance
Joint Venture(1)	Number of Properties	Location	Ownership			March 31, 2012		December 31, 2011
						(In thousands)
Investments in unconsolidated joint ventures:
GRI-EQY I, LLC(2)	10	GA, SC, FL		10.0	%	$	7,771	$	7,705
G&I Investment South Florida Portfolio, LLC	3	FL		20.0	%		3,578		3,215
Madison 2260 Realty LLC	1	NY		8.6	%		635		1,066
Madison 1235 Realty LLC	1	NY		20.1	%		1,000		1,000
Talega Village Center JV, LLC(3)	1	CA		50.5	%		3,394		3,620
Vernola Marketplace JV, LLC(3)	1	CA		50.5	%		7,311		7,433
Parnassus Heights Medical Center	1	CA		50.0	%		13,493		13,695
Equity One JV Portfolio, LLC(4)(“NYCRF”)	3	FL, MA		30.0	%		17,041		11,393
Total							54,223		49,127
Advances to unconsolidated joint ventures							740		1,031
Investments in and advances to unconsolidated joint ventures						$	54,963	$	50,158

⁽¹⁾ With the exception of the Madison 2260 Realty LLC and Madison 1235 Realty LLC joint ventures which are accounted for under the cost method, all joint ventures are accounted for under the equity method.

⁽²⁾ The investment balance as of March 31, 2012 and December 31, 2011 is presented net of deferred gains of $3.3 million associated with the disposition of assets by us to the joint venture.

⁽³⁾ Our effective interest is 48% when considering the 5% noncontrolling interest held by Vestar Development Company.

⁽⁴⁾ The investment balance as of March 31, 2012 and December 31, 2011 is presented net of a deferred gain of approximately $404,000 associated with the disposition of assets by us to the joint venture in 2011.

We recorded $188,000 of equity in losses of unconsolidated joint ventures for the three months ended March 31, 2012. Equity in income of unconsolidated joint ventures totaled approximately $366,000 for the three months ended March 31, 2011. Management fees and leasing fees paid to us associated with these joint ventures, which are included in management and leasing services revenue in the accompanying condensed consolidated statements of income, totaled approximately $700,000 and $74,000 for the three months ended March 31, 2012 and $367,000 and $75,000 for the three months ended March 31, 2011, respectively.

New York Common Retirement Fund Joint Venture

In May 2011, we sold two operating properties, Country Walk Plaza in Miami, Florida and Veranda Shoppes in Plantation, Florida to a newly formed joint venture between us and the New York State Common Retirement Fund (“NYCRF”). In December 2011, the joint venture purchased an operating property located in Framingham, Massachusetts, for an aggregate purchase price of $23.2 million, which included the assumption of $10.4 million of mortgage debt.

On January 26, 2012, our NYCRF joint venture made an $18.5 million mortgage loan (the “JV Loan”) secured by a newly developed shopping center. The JV Loan bears interest at 6.25%, has a maturity of nine years and is pari passu with a $71.4 million mortgage loan (the “Third Party Loan”) provided by a third party lender. In addition to the JV Loan, we provided a mezzanine loan (the “Mezzanine Loan”) indirectly secured by the shopping center in the amount of $19.3 million. The Mezzanine Loan bears interest at 10.0% and has a maturity of nine years. During certain periods prior to January 26, 2014, the joint venture has an option to purchase the shopping center and during certain different periods the borrower has a put option to sell the shopping center to the joint venture, in each case for a formula based purchase price currently projected to be approximately $143.0 million, which is comprised of a predetermined fixed amount of $128.4 million and a variable amount to be derived from the minimum rent associated with a portion of the shopping center under development. In the event it acquires the shopping center, the joint venture is required to immediately repay the Mezzanine Loan. If certain events of default occur under the Third Party Loan, the JV Loan will become subordinate to such Third Party Loan. In that case, we will be obligated to purchase the JV Loan at par plus accrued interest. In addition, if the put and call options expire unexercised, the JV Loan will become subordinate to the Third Party Loan and we will be required to purchase the JV Loan at par plus accrued interest. We have determined that the entities holding direct and indirect interests in the shopping center are VIEs. However, in relation to the VIE in which we hold a variable interest, we are not the primary beneficiary as we do not have the power to direct the activities that most significantly impact the VIE’s economic performance.

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NYCRF holds a 70% interest in the joint venture and we own a 30% interest. We perform the day to day accounting and property management functions for the joint venture and, as such, earn a management fee for the services provided. Our ownership interest in this joint venture is accounted for under the equity method.

6. Variable Interest Entities

Included within our consolidated operating properties at March 31, 2012 are two consolidated joint venture properties, Danbury Green and Southbury Green, that are held through VIEs and for which we are the primary beneficiary. These entities have been established to own and operate real estate property. Our involvement with these entities is through our majority ownership of the properties. These entities were deemed VIEs primarily because they may not have sufficient equity at risk for them to finance their activities without additional subordinated financial support from other parties. Specifically, with respect to the VIEs holding the Danbury Green and Southbury Green properties, we determined that the interests held by the other equity investors were not equity investments at risk pursuant to the Consolidation Topic of the FASB ASC and also gave consideration to the maturity of certain debt obligations of the entities. We determined that we are the primary beneficiary of these VIEs as a result of our having the power to direct the activities that most significantly impact their economic performance and the obligation to absorb losses, as well as the right to receive benefits, that could be potentially significant to the VIEs.

At March 31, 2012 and December 31, 2011, the total assets of the VIE which owns Danbury Green and Southbury Green was approximately $109.0 million and $109.2 million, respectively. These assets can only be used to settle obligations of the VIE. At March 31, 2012 and December 31, 2011, the liabilities of the VIE which owns Danbury Green and Southbury Green of $61.5 million and $61.9 million, respectively, include third party liabilities for which the creditors or beneficial interest holders do not have recourse against us other than for customary environmental indemnifications and non-recourse carve-outs. The classification of these assets is primarily within real estate and the classification of liabilities is primarily within mortgages payable and redeemable and nonredeemable noncontrolling interests in the condensed consolidated balance sheets (as discussed further in Note 13).

Included within our consolidated operating properties at December 31, 2011, in addition to Danbury Green and Southbury Green, was one consolidated property, 90-30 Metropolitan Avenue, which was held at the time by a qualified intermediary. As of March 31, 2012, legal ownership had been transferred to us by the qualified intermediary, and as such it is no longer considered a VIE.

At March 31, 2012 and December 31, 2011, total assets of these VIEs were approximately $109.0 million and $138.2 million, respectively, and total liabilities were approximately $61.5 million and $62.4 million, respectively, including non-recourse mortgage debt of $45.7 million at both March 31, 2012 and December 31, 2011.

The majority of the operations of these VIEs are funded with cash flows generated from the properties. We have not provided financial support to any of these VIEs that we were not previously contractually required to provide; our contractual commitments consist primarily of funding any capital expenditures, including tenant improvements, which are deemed necessary to continue to operate the entity and any operating cash shortfalls that the entity may experience. Costs are funded with capital contributions from us and the outside partners in accordance with our respective ownership percentages.

7. Mezzanine Loans Receivable

On July 5, 2011, we invested in a $45.0 million junior mezzanine loan indirectly secured by a portfolio of seven California shopping centers which had an aggregate appraised value of approximately $272.0 million at the time we acquired the mezzanine loan. This mezzanine loan is subordinated in right of payment to a $120.0 million mortgage loan and a $60.0 million senior mezzanine loan, matures on July 9, 2013 subject to the borrower’s ability to extend the maturity date for three additional one-year periods, and bears interest at 8.46% per annum plus one month LIBOR (subject to a 0.75% per annum LIBOR floor). At March 31, 2012, the mezzanine loan bore interest of 9.21%. We capitalized $108,000 in net fees paid relating to the acquisition of this loan and are amortizing these amounts against interest income over the initial two-year term. As of March 31, 2012, the loan was performing, and the carrying amount of the loan was $45.3 million. This carrying amount also reflects our maximum exposure to loss related to this investment. At inception and as of March 31, 2012, we had and continue to have the ability and intention to hold this mezzanine loan to maturity.

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On January 26, 2012, we invested in a $19.3 million mezzanine loan indirectly secured by a newly developed shopping center. This mezzanine financing bears interest at 10.0% and has a maturity of nine years (see Note 5 for further details). As of March 31, 2012, the loan was performing, and the carrying amount of the loan was $19.4 million. As discussed in Note 5 above, if certain events of default occur under the Third Party Loan, the JV Loan of $18.5 million will become subordinate to it. In that case, we will be obligated to purchase the JV Loan at par plus accrued interest. In addition, if the put and call options expire unexercised, the JV Loan will become subordinate to the Third Party Loan and we will be required to purchase the JV Loan at par plus accrued interest. As a result of these conditions, in the event of default, our maximum exposure to loss related to this investment includes the carrying amount of the $19.3 million mezzanine loan, the $18.5 million JV Loan we would be obligated to purchase, as well as our 30% share of any potential losses or liability incurred by the joint venture as a result of any default. At inception and as of March 31, 2012, we had and continue to have the ability to hold this mezzanine loan to maturity. While we do not intend to sell the mezzanine loan, the joint venture may acquire the shopping center and repay our mezzanine loan prior to maturity; however, we believe that we will recover our cost basis and as such we continue to classify this investment as held to maturity.

8. Goodwill

The following table provides a summary of goodwill activity in the condensed consolidated balance sheets:

	March 31, 2012			December 31, 2011
	(In thousands)
Balance at beginning of period	$	8,406		$	9,561
Impairment		—			(1,155	)
Allocated to property sale		(5	)		—
Balance at end of period	$	8,401		$	8,406

The following table presents goodwill by segment:

	March 31,		December 31,
	2012		2011
	(In thousands)
South Florida	$	2,028	$	2,028
North Florida		1,546		1,546
Southeast		4,827		4,832
Total	$	8,401	$	8,406

9. Other Assets

The following is a summary of the composition of the other assets in the condensed consolidated balance sheets:

	March 31,		December 31,
	2012		2011
	(In thousands)
Lease intangible assets, net	$	95,978	$	92,559
Leasing commissions, net		30,396		28,755
Deposits and mortgage escrow		37,522		34,567
Straight-line rent receivable, net		18,290		17,270
Deferred financing costs, net		10,012		8,676
Prepaid and other expenses		10,093		2,178
Deferred tax asset		3,174		3,229
Fair value of interest rate swaps		975		—
Furniture and fixtures, net		2,342		2,234
Total other assets	$	208,782	$	189,468

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10. Borrowings

Mortgage Notes Payable

The following table is a summary of our mortgage notes payable balances in the condensed consolidated balance sheets:

	March 31,			December 31,
	2012			2011
	(In thousands)
Mortgage Notes Payable
Fixed rate mortgage loans	$	468,485		$	471,754
Unamortized premium, net		9,583			10,521
Total	$	478,068		$	482,275
Weighted-average interest rate of fixed rate mortgage notes		6.18	%		6.18	%

Included in liabilities associated with assets held for sale are mortgage notes payable of $27.3 million at December 31, 2011, with a weighted average interest rate of 5.39%. There were no mortgage notes payable associated with assets held for sale at March 31, 2012.

During the three months ended March 31, 2012, we prepaid $1.0 million in mortgage loans with a weighted-average interest rate of 6.75%. During the three months ended March 31, 2011, we prepaid $31.0 million in mortgage loans with a weighted-average interest rate of 7.18%.

Unsecured Senior Notes

Our outstanding unsecured senior notes payable in the condensed consolidated balance sheets consisted of the following:

	March 31,			December 31,
	2012			2011
	(In thousands)
Unsecured Senior Notes Payable
7.84% Senior Notes, due 1/23/12	$	—		$	10,000
6.25% Senior Notes, due 12/15/14		250,000			250,000
5.375% Senior Notes, due 10/15/15		107,505			107,505
6.0% Senior Notes, due 9/15/16		105,230			105,230
6.25% Senior Notes, due 1/15/17		101,403			101,403
6.0% Senior Notes, due 9/15/17		116,998			116,998
Total Unsecured Senior Notes		681,136			691,136
Unamortized discount, net		(2,199	)		(2,340	)
Total	$	678,937		$	688,796
Weighted-average interest rate, net of discount adjustment		6.03	%		6.06	%

On January 23, 2012, we repaid the $10.0 million principal amount of 7.84% unsecured senior notes.

The indentures under which our unsecured senior notes were issued have several covenants which limit our ability to incur debt, require us to maintain an unencumbered asset to unencumbered debt ratio above a specified level and limit our ability to consolidate, sell, lease, or convey substantially all of our assets to, or merge with, any other entity. These notes have also been guaranteed by many of our subsidiaries. At March 31, 2012, we were in compliance with each of these financial restrictions and requirements.

Unsecured Revolving Credit Facilities

Our primary credit facility is with a syndicate of banks and provides $575.0 million of unsecured revolving credit. The facility bears interest at applicable LIBOR plus a margin of 1.00% to 1.85%, depending on the credit ratings of our senior unsecured

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notes. The facility also includes a facility fee applicable to the aggregate lending commitments thereunder which varies from 0.175% to 0.450% per annum depending on the credit ratings of our senior unsecured notes. Based on our credit ratings at March 31, 2012, the interest rate margin applicable to amounts outstanding under the facility is 1.55% per annum and the facility fee is 0.30% per annum. The facility includes a competitive bid option which allows us to conduct auctions among the participating banks for borrowings at any one time outstanding up to 50% of the lender commitments, a $50.0 million swing line facility for short term borrowings, a $50.0 million letter of credit commitment and a $61.3 million multicurrency subfacility. The facility expires on September 30, 2015, with a one year extension at our option. The facility contains a number of customary restrictions on our business, including restrictions on our ability to make certain investments, and also includes various financial covenants, including a minimum tangible net worth requirement, maximum unencumbered and total leverage ratios, a maximum secured indebtedness ratio, a minimum fixed charge coverage ratio and a minimum unencumbered interest coverage ratio. The facility also contains customary affirmative covenants and events of default, including a cross default to our other material indebtedness and the occurrence of a change of control. If a material default under the facility were to arise, our ability to pay dividends is limited to the amount necessary to maintain our status as a REIT unless the default is a payment default or bankruptcy event in which case we are prohibited from paying any dividends. As of March 31, 2012, we had drawn approximately $42.0 million against the facility, which bore interest at 1.80%. As of December 31, 2011, we had drawn approximately $138.0 million against the facility, which bore interest at 1.85%.

We also have a $15.0 million unsecured credit facility with City National Bank of Florida, for which there was no outstanding balance as of March 31, 2012 and December 31, 2011. This facility provides for the issuance of up to $15.0 million in outstanding letters of credit. The facility bears interest at the rate of LIBOR plus 1.40% and expires on August 8, 2012.

As of March 31, 2012, the maximum availability under these credit facilities was approximately $442.8 million, net of outstanding letters of credit and subject to the covenants in the loan agreements.

Term Loan and Interest Rate Swaps

On February 13, 2012, we entered into an unsecured term loan in the principal amount of $200.0 million with a maturity date of February 13, 2019. At our request and upon identification of interested lenders, the principal amount of the term loan may be increased up to an aggregate of $250.0 million. Borrowings under the term loan will bear interest, at our option, at the base rate or one month, two month, three month or six month LIBOR, in each case plus a margin of 1.500% to 2.350% depending on the credit ratings of our senior unsecured long term debt, which margin is currently 1.900%. The loan agreement also calls for other customary fees and charges. The loan agreement contains customary restrictions on our business, financial and affirmative covenants, events of default and remedies which are generally the same as those provided in our $575.0 million unsecured revolving credit facility. In connection with the closing, we entered into interest rate swaps to convert the LIBOR rate to a fixed interest rate, providing an effective fixed interest rate under the loan agreement of 3.46% per annum based on the current credit ratings of our senior unsecured notes. The swaps are designated and qualified as cash flow hedges and have been recorded at fair value. The swap agreements mature on February 13, 2019. At March 31, 2012, the interest rate swaps had a fair value of $975,000, which is included in other assets on our condensed consolidated balance sheet.

11. Other Liabilities

The following is a summary of the composition of other liabilities in the condensed consolidated balance sheets:

	March 31, 2012		December 31, 2011
	(in thousands)
Lease intangible liabilities, net	$	178,513	$	156,495
Prepaid rent		7,789		6,882
Other		542		811
Total other liabilities	$	186,844	$	164,188

12. Income Taxes

We elected to be taxed as a REIT under the Code, commencing with our taxable year ended December 31, 1995. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we currently distribute at least 90% of our REIT taxable income to our stockholders. The difference between net income available to common stockholders for financial reporting purposes and taxable income before dividend deductions relates primarily to temporary differences, such as real estate depreciation and amortization, deduction of deferred compensation and deferral of gains on sold properties utilizing like kind exchanges. Also, at least 95% of our gross income in any year must be derived from

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qualifying sources. It is our intention to adhere to these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income tax, provided that distributions to our stockholders equal at least the amount of our REIT taxable income as defined under the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to state income or franchise taxes in certain states in which some of our properties are located and excise taxes on our undistributed taxable income. We are required to pay U.S. federal and state income taxes on our net taxable income, if any, from the activities conducted by our taxable REIT subsidiaries (“TRSs”). Accordingly, the only provision for federal income taxes in our condensed consolidated financial statements relates to our consolidated TRSs.

We recorded an income tax benefit from continuing operations during the three months ended March 31, 2012 and 2011 of approximately $46,000 and $133,000, respectively. These benefits are primarily attributable to the net operating losses generated by DIM Vastgoed, N.V. (“DIM”), a Dutch company in which we acquired a controlling interest in the first quarter of 2009, offset by taxable income generated by IRT Capital Corporation II (“IRT”). We recorded an income tax benefit from discontinued operations of approximately $432,000 during the three months ended March 31, 2011. There was no income tax benefit from discontinued operations recorded during the three months ended March 31, 2012. The tax benefit recorded related to discontinued operations for the three months ended March 31, 2011 is primarily attributable to the reversal of a deferred tax liability associated with properties held for sale by DIM and IRT and, to a lesser extent, by net operating losses. Although DIM is organized under the laws of the Netherlands, it pays U.S. corporate income tax based on its operations in the United States. Pursuant to the tax treaty between the U.S. and the Netherlands, DIM is entitled to the avoidance of double taxation on its U.S. income. Thus, it pays virtually no taxes in the Netherlands. As of March 31, 2012, DIM had federal and state net operating loss carry forwards of approximately $6.2 million and $9.5 million, respectively. These carry forwards begin to expire in 2027.

Further, we believe that we have appropriate support for the tax positions taken on our tax returns and that our accruals for the tax liabilities are adequate for all years still subject to tax audit after 2007.

13. Noncontrolling Interests

Noncontrolling interest represents the portion of equity that we do not own in those entities that we consolidate. We account for and report our noncontrolling interest in accordance with the provisions under the Consolidation Topic of the FASB ASC.

The following is a summary of the noncontrolling interests of our consolidated entities in the condensed consolidated balance sheets:

	March 31,		December 31,
	2012		2011
	(in thousands)
Danbury 6 Associates LLC(1)	$	7,720	$	7,720
Southbury 84 Associates LLC (2)		11,242		11,242
Vestar/EQY Canyon Trails LLC(3)		2,775		2,853
Walden Woods Village, Ltd.		989		989
Total redeemable noncontrolling interests	$	22,726	$	22,804
CapCo	$	206,145	$	206,145
DIM		1,209		1,132
Vestar/EQY Talega LLC(4)		176		181
Vestar/EQY Vernola LLC(5)		426		428
Total noncontrolling interests included in stockholders’ equity	$	207,956	$	207,886

⁽¹⁾  This entity owns the Danbury Green Shopping Center.

⁽²⁾  This entity owns the Southbury Green Shopping Center.

⁽³⁾  This entity owns the Canyon Trails Shopping Center.

⁽⁴⁾  Holds our interest in Talega Village Center JV, LLC.

⁽⁵⁾  Holds our interest in Vernola Marketplace JV, LLC.

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We are involved in the following investment activities in which we have a controlling interest:

On January 1, 1999, Equity One (Walden Woods) Inc., a wholly-owned subsidiary of ours, formed a limited partnership as a general partner. Walden Woods Village, an income producing shopping center, was contributed by its owners (the “Noncontrolling Partners”), and we contributed 93,656 shares of our common stock to the limited partnership at an agreed-upon price of $10.30 per share. Under the terms of the agreement, the Noncontrolling Partners do not share in any earnings of the partnership, except to the extent of dividends received by the partnership for the shares originally contributed by us. Based on the per-share price and the net value of property contributed by the Noncontrolling Partners, the limited partners received 93,656 partnership units. We have entered into a redemption agreement with the Noncontrolling Partners whereby the Noncontrolling Partners can request that we purchase their partnership units at a price of $10.30 per unit at any time before January 1, 2014. In accordance with the Distinguishing Liabilities subtopic from the Equity Topic of the FASB ASC, the value of the redeemable noncontrolling interest of $989,000 is included in the mezzanine section of our condensed consolidated balance sheet, separate from permanent equity, until the earlier of January 1, 2014 or upon election by the Noncontrolling Partners to redeem their partnership units. We have also entered into a conversion agreement with the Noncontrolling Partners pursuant to which, following notice, the Noncontrolling Partners can convert their partnership units into our common stock. The Noncontrolling Partners have not exercised their redemption or conversion rights, and their noncontrolling interest remains valued at $989,000 at March 31, 2012.

Two of our joint ventures in which we have a controlling interest, together, own our Sunlake development project. We have funded all of the acquisition costs, are required to fund any necessary development and operating costs, receive an 8% preferred return on our advances, have reimbursement rights of all capital outlays upon disposition of the property, and are entitled to 60% of the profits thereafter. The minority partners are not required to make contributions and, to date, have not contributed any capital. Noncontrolling interest will not be recorded until the equity in the property surpasses our capital expenditures and cumulative preferred return.

On January 14, 2009, we acquired a controlling interest in DIM which required us to consolidate DIM’s results as of the acquisition date. Upon consolidation, we recorded $25.8 million of noncontrolling interest which represented the fair value of the portion of DIM’s equity that we did not own upon acquisition. Subsequent changes to the noncontrolling interest in equity result from the allocation of losses, and additional shares purchased from the noncontrolling interests. Our ownership in DIM as of March 31, 2012 was 97.8%.

In December 2010, we acquired controlling interests in three joint ventures with Vestar which required us to consolidate their results as of the acquisition date. With respect to two of these joint ventures, $602,000 and $609,000 of noncontrolling interest is recorded in permanent equity in our condensed consolidated balance sheets at March 31, 2012 and December 31, 2011, respectively. The third joint venture with Vestar, which owns a property in Arizona and in which we have a 90% interest, contains certain provisions which may require us to redeem the noncontrolling interest at fair market value at Vestar’s option, beginning on the fifth anniversary of the venture. Due to the redemption feature, we have recorded the $2.8 million of noncontrolling interest associated with this venture in the mezzanine section of our condensed consolidated balance sheets at March 31, 2012 and December 31, 2011, which approximates redemption value. The carrying amount of Vestar’s redeemable noncontrolling interest will be increased by periodic accretions, which shall be recognized against paid-in capital, such that the carrying amount of the noncontrolling interest will equal the mandatory redemption amount.

We acquired a controlling interest in CapCo on January 4, 2011 which required us to consolidate CapCo’s results as of the acquisition date. We recorded $206.1 million of noncontrolling interest upon consolidation, which represented the fair value of the portion of CapCo’s equity that we did not own upon acquisition. The $206.1 million of noncontrolling interest is reflected in the equity section of our condensed consolidated balance sheet as permanent equity at March 31, 2012. Since LIH, the noncontrolling party, only participates in the earnings of CapCo to the extent of dividends declared on our common stock and considering that dividends are generally declared and paid in the same quarter, subsequent changes to the noncontrolling interest will only occur if dividends are declared but not paid, or if we acquire all or a portion of LIH’s interest or if its LLC shares in CapCo are converted into our common stock.

In October 2011, we acquired a 60% controlling interest in two VIEs, Danbury 6 Associates LLC and Southbury 84 Associates LLC. We determined that we are the primary beneficiary of these entities and, accordingly, we consolidated their results as of the acquisition date. Upon consolidation, we recorded $19.0 million of noncontrolling interest which represented the estimated fair value of the preferred equity interests which are entitled to a cumulative 5% annual preferred return, held by the noncontrolling interest holders. The operating agreements contain certain provisions that may require us to redeem the noncontrolling interest at the balance of their contributed capital as adjusted for unpaid preferred returns due to them pursuant to the operating agreements. The provisions are exercisable at the earlier of the partner’s death or at any time after the fifth

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anniversary of the acquisition closing until the tenth anniversary of the acquisition closing. Due to the redemption feature, we have recorded the $19.0 million of noncontrolling interest associated with this venture in the mezzanine section of our condensed consolidated balance sheet at March 31, 2012, which approximates redemption value. Together with our valuation advisors, we are in the process of determining the fair market value of the redeemable noncontrolling interests as of the acquisition date, and thus, the accounting for these business combinations has not yet been finalized. The carrying amount of the redeemable noncontrolling interest is increased by periodic accretions of a preferred return of 5%, and will be decreased by payments made to the noncontrolling partner which shall be recognized as income attributable to the noncontrolling interest holders for the period, such that the carrying amount of the noncontrolling interest will equal the mandatory redemption amount. Income attributable to the noncontrolling interest holders and amounts paid to them during the three months ended March 31, 2012 were both $236,000.

14. Stockholders’ Equity and Earnings Per Share

At the closing of the CapCo acquisition on January 4, 2011, LIH contributed all of the outstanding shares of CapCo’s common stock to a joint venture between us and LIH in exchange for approximately 11.4 million Class A joint venture shares. The Class A joint venture shares are redeemable by the joint venture upon LIH’s option until the tenth anniversary of the closing of the CapCo transaction for cash or, solely at our option, shares of our common stock on a one-for-one basis, subject to certain adjustments. Also in connection with the CapCo acquisition on January 4, 2011, LIH transferred and assigned to us an outstanding promissory note of CapCo in the amount of $67.0 million in exchange for approximately 4.1 million shares of our common stock and one share of a newly-established class of our capital stock, Class A common stock, that (i) was convertible into 10,000 shares of our common stock in certain circumstances, and (ii) subject to certain limitations, entitled LIH to voting rights with respect to a number of shares of our common stock determined with reference to the number of joint venture shares held by LIH from time to time. Effective June 29, 2011, the one share of Class A common stock was converted in accordance with its terms into 10,000 shares of our common stock.

In connection with the closing of the CapCo transaction in 2011, we also executed a Registration and Liquidity Rights Agreement between us and LIH pursuant to which we agreed to register the approximately 4.1 million shares of our common stock received by LIH in the transaction and the approximately 11.4 million shares of our common stock issuable if we exercise our right to pay for the redemption of LIH’s joint venture units with shares of our common stock. On March 9, 2012, LIH sold the approximately 4.1 million shares of our common stock issued in exchange for the CapCo note and upon conversion of the Class A common stock pursuant to a registered public offering. Pursuant to the Registration and Liquidity Rights Agreement, we paid all of the expenses of the offering other than underwriting discounts and legal expenses of counsel to LIH, which amounted to $160,000 and are included in general and administrative expenses in the accompanying condensed consolidated statement of income for the three months ended March 31, 2012.

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Earnings per Share

The following summarizes the calculation of basic EPS and provides a reconciliation of the amounts of net income available to common stockholders and shares of common stock used in calculating basic EPS:

	Three Months Ended March 31,
	2012			2011
	(Dollars in thousands, except per share amounts)
Income from continuing operations	$	9,499		$	33,356
Net income attributable to noncontrolling interests		(2,713	)		(2,400	)
Income from continuing operations attributable to Equity One, Inc.		6,786			30,956
Allocation of continuing income to restricted share awards and to Class A common stockholder		(280	)		(394	)
Income from continuing operations attributable to common stockholders		6,506			30,562
Income from discontinued operations		12,196			4,021
Net loss attributable to noncontrolling interests		—			17
Income from discontinued operations attributable to Equity One, Inc.		12,196			4,038
Allocation of discontinued loss to restricted share awards and to Class A common stockholder		(138	)		(51	)
Income from discontinued operations attributable to common stockholders		12,058			3,987
Net income available to common stockholders	$	18,564		$	34,549
Weighted average shares outstanding — Basic		112,649			106,254
Basic earnings per share attributable to the common stockholders:
Basic earnings per share from continuing operations	$	0.06		$	0.29
Basic earnings per share from discontinued operations		0.11			0.04
Earnings per common share — Basic	$	0.16	*	$	0.33

* Note: Basic EPS for the three months ended March 31, 2012 does not foot due to the rounding of the individual calculations.

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The following summarizes the calculation of diluted EPS and provides a reconciliation of the amounts of net income available to common stockholders and shares of common stock used in calculating diluted EPS:

	Three Months Ended March 31,
	2012			2011
	(Dollars in thousands, except per share amounts)
Income from continuing operations	$	9,499		$	33,356
Net income attributable to noncontrolling interests		(2,713	)		(2,400	)
Income from continuing operations attributable to Equity One, Inc.		6,786			30,956
Allocation of continuing income to restricted share awards and to Class A common stockholder		(280	)		(385	)
Allocation of earnings associated with DIM contingent shares		—			—
Income attributable to convertible EQY-CSC partnership units		—			2,415
Income from continuing operations attributable to common stockholders		6,506			32,986
Income from discontinued operations		12,196			4,021
Net loss attributable to noncontrolling interests		—			17
Income from discontinued operations attributable to Equity One, Inc.		12,196			4,038
Allocation of discontinued income to restricted share awards and to Class A common stockholder		(125	)		(47	)
Income from discontinued operations attributable to common stockholders		12,071			3,991
Net income available to common stockholders	$	18,577		$	36,977
Weighted average shares outstanding — Basic:		112,649			106,254
Convertible EQY-CSC partnership units		—			10,853
Stock options using the treasury method		171			151
Weighted average shares outstanding — Diluted		112,820			117,258
Diluted earnings per share attributable to common stockholders:
Diluted earnings per share from continuing operations	$	0.06		$	0.28
Diluted earnings per share from discontinued operations		0.11			0.03
Earnings per common share — Diluted	$	0.16	*	$	0.32	*

* Note: Diluted EPS for the three months ended March 31, 2012 and 2011 do not foot due to the rounding of the individual calculations.

The computation of diluted EPS for both the three months ended March 31, 2012 and 2011 did not include 2.0 million and 1.9 million shares of common stock, respectively, issuable upon the exercises of outstanding options, at prices ranging from $19.07 to $26.66 and $18.88 to $26.66, respectively, because the option prices were greater than the average market prices of our common shares during these respective periods. The computation of diluted EPS for the three months ended March 31, 2012 did not include the 11.4 million units held by LIH which are convertible into our common stock. The LIH shares are redeemable for cash or, solely at our option, our common stock on a one-for-one basis, subject to certain adjustments. These convertible units are not included in the diluted weighted average share count because their inclusion is anti-dilutive.

15. Share-Based Payment Plans

The Amended and Restated Equity One 2000 Executive Incentive Compensation Plan (the “2000 Plan”) provides for grants of stock options, stock appreciation rights, restricted stock, and deferred stock, other stock-related awards and performance or annual incentive awards that may be settled in cash, stock or other property. The persons eligible to receive an award under the 2000 Plan are our officers, directors, employees and independent contractors. Following an amendment to the 2000 Plan, approved by our stockholders on May 2, 2011, the total number of shares of common stock that may be issued under the 2000 Plan is 13.5 million shares, plus (i) the number of shares with respect to which options previously granted under the 2000 Plan terminate without being exercised, and (ii) the number of shares that are surrendered in payment of the exercise price for any awards or any tax withholding requirements. The 2000 Plan will terminate on the earlier of July 28, 2021 or the date on which all shares reserved for issuance under the 2000 Plan have been issued. As of March 31, 2012, 5.0 million shares were available for issuance under the 2000 Plan.

Options and Restricted Stock

As of March 31, 2012, we have stock options and restricted stock outstanding under the 2000 Plan. In addition, in connection with the initial employment in 2006 of Jeffrey S. Olson, our Chief Executive Officer, we issued Mr. Olson options to purchase 364,660 shares of common stock.

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The term of each award is determined by our compensation committee, but in no event can be longer than ten years from the date of grant. The vesting of the awards is determined by the committee, in its sole and absolute discretion, at the date of grant of the award. Dividends are paid on certain shares of non-vested restricted stock, which makes the restricted stock a participating security under the Earnings Per Share Topic of the FASB ASC. Certain options, restricted stock and other share awards provide for accelerated vesting if there is a change in control, as defined in the 2000 Plan.

The fair value of each option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatilities, dividend yields, employee exercises and employee forfeitures are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. We measure compensation expense for restricted stock awards based on the fair value of our common stock at the date of the grant and charge to expense such amounts ratably over the vesting period. For grants with a graded vesting schedule, we have elected to recognize compensation expense on a straight-line basis. We use the shortcut method described in the Share Compensation Topic of the FASB ASC for determining the expected life used in the valuation method.

The following table presents stock option activity during the three months ended March 31, 2012:

	Shares Under Option			Weighted- Average Exercise Price
	(In thousands)
Outstanding at January 1, 2012		3,565		$	20.62
Granted		—			—
Exercised		(30	)		11.59
Forfeited or expired		(2	)		18.88
Outstanding at March 31, 2012		3,533		$	20.70
Exercisable at March 31, 2012		2,933		$	21.22

Restricted Stock Grants

The following table presents information regarding restricted stock activity during the three months ended March 31, 2012:

	Unvested Shares			Weighted- Average Price
	(In thousands)
Unvested at January 1, 2012		1,178		$	17.23
Granted		64			18.62
Vested		(67	)		18.41
Forfeited		—			—
Unvested at March 31, 2012		1,175	*	$	17.24

* Does not include 800,000 shares of restricted stock awarded to Messrs. Caputo, Langer and Gallagher which are subject to performance vesting conditions and are not entitled to vote or receive dividends during the performance period.

Our compensation committee grants restricted stock to our officers, directors, and other employees. Vesting periods for the restricted stock are determined by our compensation committee. We measure compensation costs for restricted stock awards based on the fair value of our common stock at the date of the grant and expense such amounts ratably over the vesting period.

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During the three months ended March 31, 2012, we granted 64,742 shares of restricted stock that are subject to forfeiture and vest over periods from 0 to 3 years. The total vesting-date value of the 67,126 shares of restricted stock that vested during the three months ended March 31, 2012 was $1.2 million.

As of March 31, 2012, we had $15.9 million of total unrecognized compensation expense related to unvested and restricted share-based payment arrangements (unvested options and restricted shares) granted under the 2000 Plan. This expense is expected to be recognized over a weighted-average period of 2.6 years.

16. Segment Reporting

We invest in retail shopping centers through direct ownership or through joint ventures. It is our intent that all retail shopping centers will be owned or developed for investment purposes; however, we may decide to sell all or a portion of a development upon completion. Our revenue and net income are generated from the operation of our investment portfolio. We also earn fees from third parties for services provided to manage and lease retail shopping centers owned through joint ventures or by third parties.

We review operating and financial data for each property on an individual basis; therefore each of our individual properties is a separate operating segment. We have aggregated our operating segments in six reportable segments based primarily upon our method of internal reporting which classifies our operations by geographical area. Our reportable segments by geographical area are as follows: (1) South Florida – including Miami-Dade, Broward and Palm Beach Counties; (2) North Florida – including all of Florida north of Palm Beach County; (3) Southeast – including Georgia, Louisiana, Alabama, Mississippi, North Carolina, South Carolina and Tennessee; (4) Northeast – including Connecticut, Maryland, Massachusetts, New York and Virginia; (5) West Coast – including California and Arizona; and (6) Other/Non-retail – which is comprised of our non-retail assets. Our segments as reported in this Quarterly Report on Form 10-Q for the period ended March 31, 2012 are not consistent with our segments as reported in our Annual Report on Form 10-K for the year ended December 31, 2011. We have divided our previously combined North Florida and Southeast region into two separate regions in this Quarterly Report on Form 10-Q for the period ended March 31, 2012, as a result of a change in management responsibilities for the North Florida region during the period and corresponding changes in our internal reporting. These changes have been reflected in our segment disclosures for all periods presented herein.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 above.

We assess a segment’s performance based on net operating income (“NOI”). NOI excludes interest and other income, acquisition costs, general and administrative expenses, interest expense, depreciation and amortization expense, gains (losses) from extinguishments of debt, income (loss) of unconsolidated joint ventures, gains on sales of real estate, impairments, and noncontrolling interests. NOI is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income from continuing operations before tax and discontinued operations, which, to calculate NOI, is adjusted to add back amortization of deferred financing fees, rental property depreciation and amortization, interest expense, impairment losses, general and administrative expense, and to exclude revenues earned from management and leasing services, straight line rent adjustments, accretion of below market lease intangibles (net), gain on sale of real estate, equity in income (loss) of unconsolidated joint ventures, gain on bargain purchase and acquisition of controlling interest in subsidiary, gain (loss) on extinguishment of debt and investment income, and other income. NOI includes management fee expense recorded at each operating segment based on a percentage of revenue which is eliminated in consolidation. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations before tax and discontinued operations as presented in our condensed consolidated financial statements. NOI should not be considered as an alternative to net income attributable to Equity One, Inc. as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. We consider NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core operations of our properties.

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The following table sets forth the financial information relating to our continuing operations presented by segments and includes a reconciliation of NOI to income from continuing operations before tax and discontinued operations, the most directly comparable GAAP financial measure:

	Three Months Ended March 31,
	2012			2011
	(In thousands)
Revenues:
South Florida	$	23,387		$	22,551
North Florida		11,534			11,783
Southeast		14,018			14,047
Northeast		11,427			8,558
West Coast		15,718			10,585
Non-retail		655			762
Total segment revenues	$	76,739		$	68,286
Add:
Straight line rent adjustment		1,024			628
Accretion of below market lease intangibles, net		2,948			1,459
Management and leasing services		804			466
Total revenues	$	81,515		$	70,839
Net operating income (NOI):
South Florida	$	15,929		$	14,659
North Florida		8,198			7,931
Southeast		9,950			9,921
Northeast		7,399			5,763
West Coast		10,441			7,037
Non-retail		344			393
Total	$	52,261		$	45,704
Add:
Straight line rent adjustment		1,024			628
Accretion of below market lease intangibles, net		2,948			1,459
Management and leasing services		804			466
Elimination of intersegment expenses		2,348			2,008
Equity in (loss) income of unconsolidated joint ventures		(188	)		366
Investment income		1,445			693
Other income		141			129
Gain on bargain purchase		—			30,561
(Loss) gain on extinguishment of debt		(93	)		42
Less:
General and administrative		11,560			11,977
Rental property depreciation and amortization		21,715			18,766
Interest expense		17,369			17,551
Amortization of deferred financing fees		593			539
Income from continuing operations before tax and discontinued operations	$	9,453		$	33,223

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	March 31,		December 31,
	2012		2011
	(In thousands)
Assets:
South Florida	$	720,425	$	724,276
North Florida		369,179		369,540
Southeast		489,604		504,585
Northeast		706,465		645,439
West Coast		844,717		690,379
Non-retail		27,893		52,681
Corporate assets		127,329		189,016
Assets held for sale or sold in a disposal group		11,901		46,655
Total assets	$	3,297,513	$	3,222,571

Prior year assets by segment have been reclassified to conform to current year segment presentation.

17. Commitments and Contingencies

As of March 31, 2012, we had pledged letters of credit having an aggregate face amount of $3.7 million as additional security for financial and other obligations.

As of March 31, 2012, we have invested an aggregate of approximately $105.0 million in development or redevelopment projects at various stages of completion and anticipate that these projects will require an additional $77.7 million to complete, based on our current plans and estimates, which we anticipate will be expended over the next two years. These obligations, comprising principally construction contracts, are generally due as the work is performed and are expected to be financed by the funds available under our credit facilities, proceeds from the issuance of additional debt or equity securities, capital from institutional partners that desire to form joint venture relationships with us and proceeds from property dispositions.

We are subject to litigation in the normal course of business. However, we do not believe that any of the litigation outstanding as of March 31, 2012 will have a material adverse effect on our financial condition, results of operations or cash flows. During the quarter ended March 31, 2012, we recorded $525,000, which is included in property operating expenses in the accompanying condensed consolidated statement of income, related to litigation that was settled as of March 31, 2012.

At March 31, 2012, we are obligated under non-cancellable operating leases for office space, equipment rentals and ground leases on certain of our properties. At March 31, 2012, minimum annual payments under non-cancellable operating leases are as follows:

Year Ending	Amount
	(In thousands)
2012	$	683
2013		845
2014		819
2015		794
2016		826
Thereafter		7,223
Total	$	11,190

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18. Environmental Matters

We are subject to numerous environmental laws and regulations. The operation of dry cleaning and gas station facilities at our shopping centers are the principal environmental concerns. We require that the tenants who operate these facilities do so in material compliance with current laws and regulations and we have established procedures to monitor their operations. Where available, we have applied and been accepted into state sponsored environmental programs. Several properties in the portfolio will require or are currently undergoing varying levels of environmental remediation; however, we have environmental insurance policies covering most of our properties which limits our exposure to some of these conditions. Management believes that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity or operations.

19. Fair Value Measurements

Fair Value Hierarchy

The Fair Value Measurements and Disclosures Topic of FASB ASC requires the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The various levels of the fair value hierarchy are described as follows:

• Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.

• Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

• Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The Fair Value Measurements and Disclosures Topic of FASB ASC requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

As of March 31, 2012, we have interest rate swap agreements with a notional amount of $200.0 million that are measured at fair value on a recurring basis. The fair value of our swaps at March 31, 2012 was an asset of $975,000 and is included in other assets on our condensed consolidated balance sheets. The change in valuation on our interest rate swaps was $975,000 for the quarter ended March 31, 2012 and is included in accumulated other comprehensive income. The fair value of the interest rate swaps is based on the estimated amount we would receive or pay to terminate the contract at the reporting date and is determined using interest rate pricing models and observable inputs. The interest rate swap is classified within Level 2 of the valuation hierarchy.

The following table presents our hierarchy for those assets measured and recorded at fair value on a recurring basis as of March 31, 2012:

	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Interest rate swaps	$	975,000	$	—	$	975,000	$	—

We held no assets or liabilities that were required to be measured on a recurring basis at fair value as of December 31, 2011.

Valuation Methods

Interest rate swap - The valuation of interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest

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rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy under authoritative accounting guidance, the credit valuation adjustments associated with the derivatives also utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of March 31, 2012, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed and it was determined that these adjustments are not significant to the overall valuation of the derivative financial instruments. As a result, it was determined that the derivative financial instruments in their entirety are classified in Level 2 of the fair value hierarchy. The unrealized gain of $975,000 included in other comprehensive income (“OCI”) is attributable to the net change in unrealized gains or losses related to the interest rate swaps that remain outstanding at March 31, 2012, none of which were reported in the condensed consolidated statements of income because they are documented and qualify as hedging instruments.

Long term incentive plan -We have a long-term incentive plan for four of our executives based on our total shareholder return versus returns for five of our peer companies. The fair value of this plan is determined using the average trial-specific value of the awards eligible for grant under the plan based upon a Monte Carlo simulation model. This model considers various assumptions, including time value, volatility factors, current market and contractual prices as well as projected future market prices for our common stock as well as common stock of our peer companies over the performance period. Substantially all of these assumptions are observable in the marketplace throughout the full term of the plan, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Non-Recurring Fair Value Measurements

We perform annual, or more frequent in certain circumstances, impairment tests of our goodwill. Impairments, if any, result from values established by Level 3 valuations. We estimate the fair value of the reporting unit using discounted projected future cash flows, which approximate a current sales price. If the results of this analysis indicate that the carrying value of the reporting unit exceeds its fair value, impairment is recorded to reduce the carrying value to fair value. We did not recognize any goodwill impairment losses during the three months ended March 31, 2012 and March 31, 2011.

On a non-recurring basis, we evaluate the carrying value of investment property and investments in and advances to joint ventures, when events or changes in circumstances indicate that the carrying value may not be recoverable. Impairments, if any, result from values established by Level 3 valuations. The carrying value is considered impaired when the total projected undiscounted cash flows from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset as determined by purchase price offers or by discounted cash flows using the income or market approach. These cash flows were comprised of unobservable inputs which included contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models were based upon observable rates that we believed to be within a reasonable range of current market rates for the respective properties. Based on these inputs, we determined that the valuation of these investments was classified within Level 3 of the fair value hierarchy. During the three months ended March 31, 2012, we did not record any impairments related to operating properties, land parcels held for development, and investments in and advances to unconsolidated joint ventures.

Additionally, during the three months ended March 31, 2012, we recognized a $1.9 million impairment loss on a property held for sale based on the expected sales price as determined by an executed letter of intent. We determined that the valuation of this property was classified within Level 2 of the fair value hierarchy.

20. Fair Value of Financial Instruments

The estimated fair values of financial instruments have been determined by us using available market information and appropriate valuation methods. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions and/or estimation methods may have a material effect on the estimated fair value amounts. We have used the following market assumptions and/or estimation methods:

Cash and Cash Equivalents and Accounts and Other Receivables (classified within levels 1, 2 and 3 of the valuation hierarchy) – The carrying amounts reported in the balance sheets for these financial instruments approximate fair value because of their short maturities.

Mezzanine Loans Receivable(classified within Level 2 of the valuation hierarchy) – The fair value estimated at March 31, 2012 and December 31, 2011 was $63.0 million and $45.0 million, respectively. The fair value is estimated by using a discounted

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cash flow analysis based on the current interest rates at which similar loans would be made. The carrying amount of these mezzanine loans receivable, including accrued interest, was approximately $64.7 million and $45.3 million at March 31, 2012 and December 31, 2011, respectively.

Mortgage Notes Payable(classified within Level 2 of the valuation hierarchy) – The fair value estimated at March 31, 2012 and December 31, 2011 was $516.5 million and $545.6 million, respectively, calculated based on the net present value of payments over the term of the loans using estimated market rates for similar mortgage loans and remaining terms. The carrying amount of these notes, including notes associated with properties held for sale, was approximately $478.1 million and $509.6 million at March 31, 2012 and December 31, 2011, respectively.

Unsecured Senior Notes Payable(classified within Level 2 of the valuation hierarchy) – The fair value estimated at March 31, 2012 and December 31, 2011 was $739.0 million and $725.9 million, respectively, calculated based on the net present value of payments over the terms of the notes using estimated market rates for similar notes and remaining terms. The carrying amount of these notes was approximately $678.9 million and $688.8 million at March 31, 2012 and December 31, 2011, respectively.

Term Loan(classified within Level 2 of the valuation hierarchy) – The fair value estimated at March 31, 2012 was $187.6 million, calculated based on the net present value of payments over the term of the loan using estimated market rates for similar notes and remaining terms. The carrying amount of this loan was approximately $200.0 million at March 31, 2012. The loan was entered into in the first quarter of 2012.

The fair market value calculation of our debt as of March 31, 2012 includes assumptions as to the effects that prevailing market conditions would have on existing secured or unsecured debt. The calculation uses a market rate spread over the risk free interest rate. This spread is determined by using the weighted average life to maturity coupled with loan-to-value considerations of the respective debt. Once determined, this market rate is used to discount the remaining debt service payments in an attempt to reflect the present value of this stream of cash flows. While the determination of the appropriate market rate is subjective in nature, recent market data gathered suggest that the composite rates used for mortgages and senior notes are consistent with current market trends.

Interest Rate Swap Agreements(classified within Level 2 of the valuation hierarchy) – The fair value of our interest rate swaps at March 31, 2012 was an asset of $975,000. See Note 19 above for a discussion of the method used to value the interest rate swaps.

Mandatorily Redeemable Noncontrolling Interests(classified within Level 3 of the valuation hierarchy) – The carrying amount of the mandatorily redeemable noncontrolling interests of $22.7 million and $22.8 million at March 31, 2012 and December 31, 2011, respectively, approximates their fair value. The valuation method used to estimate fair value of mandatorily redeemable noncontrolling interests is based on discounted cash flow analyses.

Investments In and Advances to Joint Ventures(classified within Level 3 of the valuation hierarchy) – The carrying amount of the investments in and advances to joint ventures of $55.0 million and $50.2 million at March 31, 2012 and December 31, 2011, respectively, approximates its fair value as determined by discounted cash flow analyses.

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21. Condensed Consolidating Financial Information

Many of our subsidiaries have guaranteed our indebtedness under the unsecured senior notes and the revolving credit facilities. The guarantees are joint and several and full and unconditional. The following statements set forth consolidating financial information with respect to the guarantors of our unsecured senior notes:

Condensed Consolidating Balance Sheet As of March 31, 2012	Equity One, Inc.			Combined Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminating Entries			Consolidated
	(In thousands)
ASSETS
Properties, net	$	266,508		$	1,302,701	$	1,365,391	$	(46	)	$	2,934,554
Investment in affiliates		1,228,310			—		—		(1,228,310	)		—
Other assets		280,055			57,380		856,999		(831,475	)		362,959
Total Assets	$	1,774,873		$	1,360,081	$	2,222,390	$	(2,059,831	)	$	3,297,513
LIABILITIES
Mortgage notes payable	$	28,038		$	132,572	$	401,475	$	(93,600	)	$	468,485
Unsecured senior notes payable		1,281,136			—		67,000		(667,000	)		681,136
Term loan		200,000			—		—		—			200,000
Unsecured revolving credit facilities		42,000			—		—		—			42,000
Unamortized/unaccreted (discount) premium on notes payable		(2,297	)		285		9,396		—			7,384
Other liabilities		13,044			103,507		168,054		(31,475	)		253,130
Liabilities associated with assets held for sale		—			—		—		—			—
Total Liabilities		1,561,921			236,364		645,925		(792,075	)		1,652,135
Redeemable noncontrolling interests		—			—		—		22,726			22,726
EQUITY		212,952			1,123,717		1,576,465		(1,290,482	)		1,622,652
TOTAL LIABILITIES AND EQUITY	$	1,774,873		$	1,360,081	$	2,222,390	$	(2,059,831	)	$	3,297,513

Condensed Consolidating Balance Sheet As of December 31, 2011	Equity One, Inc.			Combined Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminating Entries			Consolidated
	(In thousands)
ASSETS
Properties, net	$	269,233		$	1,296,620	$	1,242,139	$	(46	)	$	2,807,946
Investment in affiliates		1,228,310			—		—		(1,228,310	)		—
Other assets		345,082			52,882		855,502		(838,841	)		414,625
Total Assets	$	1,842,625		$	1,349,502	$	2,097,641	$	(2,067,197	)	$	3,222,571
LIABILITIES
Mortgage notes payable	$	28,535		$	133,994	$	402,825	$	(93,600	)	$	471,754
Unsecured senior notes payable		1,291,136			—		67,000		(667,000	)		691,136
Unsecured revolving credit facilities		138,000			—		—		—			138,000
Unamortized/unaccreted (discount) premium on notes payable		(2,433	)		296		10,318		—			8,181
Other liabilities		20,467			102,377		145,883		(30,820	)		237,907
Liabilities associated with assets held for sale		—			—		27,587		—			27,587
Total Liabilities		1,475,705			236,667		653,613		(791,420	)		1,574,565
Redeemable noncontrolling interests		—			—		—		22,804			22,804
EQUITY		366,920			1,112,835		1,444,028		(1,298,581	)		1,625,202
TOTAL LIABILITIES AND EQUITY	$	1,842,625		$	1,349,502	$	2,097,641	$	(2,067,197	)	$	3,222,571

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Condensed Consolidating Statement of Comprehensive Income for the three months ended March 31, 2012	Equity One Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
REVENUE:
Minimum rent	$	6,992		$	30,629		$	23,197		$	—		$	60,818
Expense recoveries		1,916			8,545			7,478			—			17,939
Percentage rent		94			809			1,051			—			1,954
Management and leasing services		—			30			774			—			804
Total revenue		9,002			40,013			32,500			—			81,515
EQUITY IN SUBSIDIARIES’ EARNINGS:		41,769			—			—			(41,769	)		—
COSTS AND EXPENSES:
Property operating		2,678			10,456			8,946			50			22,130
Rental property depreciation and amortization		1,717			8,640			11,338			20			21,715
General and administrative		8,140			2,148			1,312			(40	)		11,560
Total costs and expenses		12,535			21,244			21,596			30			55,405
INCOME BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		38,236			18,769			10,904			(41,799	)		26,110
OTHER INCOME AND EXPENSE:
Investment income		4,081			5			10,979			(13,620	)		1,445
Equity in loss of unconsolidated joint ventures		—			—			(188	)		—			(188	)
Other income		127			—			14			—			141
Interest expense		(23,097	)		(1,118	)		(6,774	)		13,620			(17,369	)
Amortization of deferred financing fees		(555	)		(12	)		(26	)		—			(593	)
Loss on extinguishment of debt		—			—			(93	)		—			(93	)
INCOME FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		18,792			17,644			14,816			(41,799	)		9,453
Income tax (expense) benefit of taxable REIT subsidiaries		—			(55	)		101			—			46
INCOME FROM CONTINUING OPERATIONS		18,792			17,589			14,917			(41,799	)		9,499
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		2			(88	)		(105	)		50			(141	)
Gain on disposal of income producing property		282			424			13,563			—			14,269
Impairment loss on income producing properties held for sale		—			(1,932	)		—			—			(1,932	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		284			(1,596	)		13,458			50			12,196
NET INCOME		19,076			15,993			28,375			(41,749	)		21,695
Other comprehensive income		991			—			94			—			1,085
COMPREHENSIVE INCOME		20,067			15,993			28,469			(41,749	)		22,780
Comprehensive income attributable to noncontrolling interests		—			—			(2,713	)		—			(2,713	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	20,067		$	15,993		$	25,756		$	(41,749	)	$	20,067

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Condensed Consolidating Statement of Comprehensive Income for the three months ended March 31, 2011	Equity One Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
REVENUE:
Minimum rent	$	7,220		$	29,393		$	16,558		$	—		$	53,171
Expense recoveries		1,864			8,479			5,405			—			15,748
Percentage rent		86			575			793			—			1,454
Management and leasing services		—			24			442			—			466
Total revenue		9,170			38,471			23,198			—			70,839
EQUITY IN SUBSIDIARIES’ EARNINGS:		25,666			—			—			(25,666	)		—
COSTS AND EXPENSES:
Property operating		2,749			10,638			6,704			483			20,574
Rental property depreciation and amortization		1,648			8,231			8,869			18			18,766
General and administrative		7,023			2,274			2,815			(135	)		11,977
Total costs and expenses		11,420			21,143			18,388			366			51,317
INCOME BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		23,416			17,328			4,810			(26,032	)		19,522
OTHER INCOME AND EXPENSE:
Investment income		2,777			1			10,822			(12,907	)		693
Equity in income of unconsolidated joint ventures		—			—			366			—			366
Other income		118			—			11			—			129
Interest expense		(21,708	)		(2,965	)		(4,673	)		11,795			(17,551	)
Amortization of deferred financing fees		(480	)		(28	)		(31	)		—			(539	)
Gain on bargain purchase		30,561			—			—			—			30,561
Gain on extinguishment of debt		—			42			—			—			42
INCOME FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		34,684			14,378			11,305			(27,144	)		33,223
Income tax (expense) benefit of taxable REIT subsidiaries		—			(8	)		141			—			133
INCOME FROM CONTINUING OPERATIONS		34,684			14,370			11,446			(27,144	)		33,356
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		391			1,796			(193	)		1,595			3,589
Income tax benefit of taxable REIT subsidiaries		—			—			432			—			432
INCOME FROM DISCONTINUED OPERATIONS		391			1,796			239			1,595			4,021
NET INCOME		35,075			16,166			11,685			(25,549	)		37,377
Other comprehensive income		16			—			81			—			97
COMPREHENSIVE INCOME		35,091			16,166			11,766			(25,549	)		37,474
Comprehensive income attributable to noncontrolling interests		—			—			32			(2,415	)		(2,383	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	35,091		$	16,166		$	11,798		$	(27,964	)	$	35,091

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Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2012	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidated
	(In thousands)
Net cash (used in) provided by operating activities	$	(29,573	)	$	31,541		$	21,838		$	23,806
INVESTING ACTIVITIES:
Acquisition of income producing properties		—			—			(153,750	)		(153,750	)
Additions to income producing properties		(1,058	)		(2,850	)		(1,000	)		(4,908	)
Additions to construction in progress		(479	)		(18,899	)		(205	)		(19,583	)
Proceeds from sale of real estate and rental properties		1,417			6,514			25,235			33,166
Decrease in cash held in escrow		90,845			—			—			90,845
Investment in mezzanine loan		(19,258	)		—			—			(19,258	)
Increase in deferred leasing costs and lease intangibles		(395	)		(551	)		(394	)		(1,340	)
Investment in joint ventures		—			—			(6,572	)		(6,572	)
Repayments from joint ventures		—			—			381			381
Distributions from joint ventures		—			—			567			567
Advances to subsidiaries, net		(100,917	)		(14,333	)		115,250			—
Net cash used in investing activities		(29,845	)		(30,119	)		(20,488	)		(80,452	)
FINANCING ACTIVITIES:
Repayment of mortgage notes payable		(497	)		(1,422	)		(1,350	)		(3,269	)
Net repayments under revolving credit facilities		(96,000	)		—			—			(96,000	)
Repayment of senior debt		(10,000	)		—			—			(10,000	)
Proceeds from issuance of common stock		258			—			—			258
Borrowings under term loan		200,000			—			—			200,000
Payment of deferred financing costs		(1,943	)		—			—			(1,943	)
Stock issuance costs		(39	)		—			—			(39	)
Dividends paid to stockholders		(25,071	)		—			—			(25,071	)
Distributions to noncontrolling interests		(2,643	)		—			—			(2,643	)
Net cash provided by (used in) financing activities		64,065			(1,422	)		(1,350	)		61,293
Net increase in cash and cash equivalents		4,647			—			—			4,647
Cash and cash equivalents obtained through acquisition		—			—			—			—
Cash and cash equivalents at beginning of the period		10,963			—			—			10,963
Cash and cash equivalents at end of the period	$	15,610		$	—		$	—		$	15,610

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Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2011	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidated
Net cash provided by (used in) operating activities	$	57,824		$	37,476		$	(60,121	)	$	35,179
INVESTING ACTIVITIES:
Acquisition of income producing properties		—			—			(45,472	)		(45,472	)
Additions to income producing properties		(665	)		(2,035	)		(196	)		(2,896	)
Additions to construction in progress		(610	)		(2,516	)		(9	)		(3,135	)
Increase in deferred leasing costs and lease intangibles		(258	)		(879	)		(183	)		(1,320	)
Investment in joint ventures		—			—			(500	)		(500	)
Advances to subsidiaries, net		(170,178	)		9			170,169			—
Net cash (used in) provided by investing activities		(171,711	)		(5,421	)		123,809			(53,323	)
FINANCING ACTIVITIES:
Repayment of mortgage notes payable		(435	)		(32,055	)		(86,949	)		(119,439	)
Net borrowings under revolving credit facilities		113,500			—			—			113,500
Proceeds from issuance of common stock		37			—			—			37
Payment of deferred financing costs		(101	)		—			(151	)		(252	)
Stock issuance costs		(124	)		—			—			(124	)
Dividends paid to stockholders		(23,694	)		—			—			(23,694	)
Distributions to noncontrolling interests		(2,415	)		—			—			(2,415	)
Net cash provided by (used in) financing activities		86,768			(32,055	)		(87,100	)		(32,387	)
Net decrease in cash and cash equivalents		(27,119	)		—			(23,412	)		(50,531	)
Cash and cash equivalents obtained through acquisition		—			—			23,412			23,412
Cash and cash equivalents at beginning of the period		38,333			—			—			38,333
Cash and cash equivalents at end of the period	$	11,214		$	—		$	—		$	11,214

22. Related Parties

We received rental income from affiliates of Gazit, our largest shareholder, of approximately $87,000 and $74,000 for the three months ended March 31, 2012 and 2011, respectively.

Reimbursements from Gazit of general and administrative expenses incurred by us totaled approximately $124,000 and $332,000 for the three months ended March 31, 2012 and 2011, respectively. The balance due from Gazit, which is included in accounts and other receivables, was approximately $140,000 and $126,000 at March 31, 2012 and December 31, 2011, respectively.

For the three months ended March 31, 2012, we expensed and paid $150,000 and $68,000, respectively, to MGN Icarus, Inc., an affiliate of Gazit, for certain travel expenses incurred by the Chairman of our Board of Directors. There were no reimbursements paid for the three months ended March 31, 2011.

23. Subsequent Events

Pursuant to the Subsequent Events Topic of the FASB ASC, we have evaluated subsequent events and transactions that occurred after our March 31, 2012 unaudited condensed consolidated balance sheet date for potential recognition or disclosure in our condensed consolidated financial statements.

We have approximately $43.5 million in proposed acquisitions that we expect to close in the second quarter of 2012. These proposed transactions consist of the acquisition of a shopping center in Connecticut for $36.0 million, which includes the assumption of $19.0 million of indebtedness, and a parcel of land in New York for $7.5 million. These acquisitions are past the due diligence periods under the applicable purchase and sale agreements and, as such, aggregate deposits of $1.7 million are non-refundable except as otherwise provided in the contracts.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated interim financial statements and notes thereto appearing in “Item 1. Financial Statements” of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 29, 2012.

Overview

We are a real estate investment trust, or REIT, that owns, manages, acquires, develops and redevelops shopping centers primarily located in supply constrained suburban and urban communities. Our principal business objective is to maximize long-term stockholder value by generating sustainable cash flow growth and increasing the long-term value of our real estate assets. To achieve our objective, we lease and manage our shopping centers primarily with experienced, in-house personnel. We acquire shopping centers that either have leading anchor tenants or contain a mix of tenants that reflect the shopping needs of the communities they serve. We also develop and redevelop shopping centers on a tenant-driven basis, leveraging either existing tenant relationships or geographic and demographic knowledge while seeking to minimize risks associated with land development.

As of March 31, 2012, our consolidated property portfolio comprised 164 properties totaling approximately 16.9 million square feet of gross leasable area, or GLA, and included 143 shopping centers, ten development or redevelopment properties, five non-retail properties and six land parcels. As of March 31, 2012, our core portfolio was 91.2% leased and included national, regional and local tenants. Additionally, we had joint venture interests in 17 shopping centers and two office buildings totaling approximately 2.8 million square feet.

In January 2011, we closed on the acquisition of C&C (US) No. 1, Inc., which we refer to as CapCo, through a joint venture with Liberty International Holdings Limited, or LIH. At the time of acquisition, CapCo owned a portfolio of 13 properties in California totaling approximately 2.6 million square feet of GLA. In December 2011, we sold 36 shopping centers, comprising 3.9 million square feet of GLA, predominantly located in the Atlanta, Tampa and Orlando markets, with additional properties located in the states of North Carolina, South Carolina, Alabama, Tennessee and Maryland.

The economic downturn continues to affect our business, especially as it relates to leasing space to smaller shop tenants. While most of our shopping centers are anchored by supermarkets, drug stores or other necessity-oriented retailers, which are less susceptible to economic cycles, other tenants in our shopping centers, particularly smaller shop tenants, have been especially vulnerable as they have faced both declining sales and reduced access to capital. As of March 31, 2012, 60.8% of our shopping centers were supermarket-anchored, which we believe is a competitive advantage because supermarket sales have not been as affected as the sales of many other classes of retailers, and our supermarkets continue to draw traffic to these centers.

We continue to seek opportunities to invest in our primary target markets of South Florida, the northeast U.S. and California. We also look for opportunities to develop or redevelop centers in urban markets with strong demographic characteristics and high barriers to entry. We expect to acquire additional assets in our target markets through the use of both joint venture arrangements and our own capital resources.

While we expect to see continued gradual improvement in economic conditions in 2012, we expect continuing challenges in leasing space to small shop tenants. We believe the continued diversification of our portfolio during 2011, including the reinvestment of proceeds from dispositions into higher quality assets, has made us less susceptible to economic downturns. In that light, we anticipate that our core portfolio (which excludes non-retail properties, unconsolidated properties and properties held for sale) occupancy and same-property net operating income (as defined below) for 2012 will experience a modest increase as compared to 2011.

The execution of our business strategy during the first quarter of 2012 resulted in:

• the sale of five non-core assets for aggregate gross proceeds of approximately $62.1 million resulting in a net gain of $14.3 million;

• the acquisition of one shopping center located in California and two shopping centers located in Connecticut representing an aggregate of approximately 290,000 square feet of GLA for an aggregate purchase price of $153.8 million;

• a $19.3 million mezzanine loan investment indirectly secured by a newly developed shopping center;

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• the signing of 48 new leases totaling 141,840 square feet at an average rental rate of $16.54 per square foot in 2012 as compared to the prior in-place average rent of $16.96 per square foot, on a same space basis;

• the renewal and extension of 74 leases totaling 303,194 square feet at an average rental rate of $15.10 per square foot in 2012 as compared to the prior in-place average rent of $14.14 per square foot in 2011, on a same space basis;

• an increase in core occupancy to 91.2% from 90.7% at December 31, 2011, and on a same property basis, a decrease in occupancy of 10 basis points to 90.8% as compared to March 31, 2011;

• the closing of an unsecured term loan in the principal amount of $200.0 million, with a maturity date of February 13, 2019, which bears interest at an effective fixed rate of 3.46% per annum based on our current credit ratings through the utilization of interest rate swaps; and

• the prepayment of approximately $1.0 million principal amount in mortgage debt.

Results of Operations

We derive substantially all of our revenues from rents received from tenants under existing leases on each of our properties. These revenues include fixed base rents, recoveries of expenses that we have incurred and that we pass through to the individual tenants and percentage rents that are based on specified percentages of tenants’ revenues, in each case as provided in the particular leases.

Our primary cash expenses consist of our property operating expenses, which include: real estate taxes; repairs and maintenance; management expenses; insurance; utilities; general and administrative expenses, which include payroll, office expenses, professional fees, acquisition costs and other administrative expenses; and interest expense, primarily on mortgage debt, unsecured senior debt and revolving credit facilities. In addition, we incur substantial non-cash charges for depreciation and amortization on our properties. We also capitalize certain expenses, such as taxes, interest and salaries related to properties under development or redevelopment until the property is ready for its intended use.

Throughout this section, we have provided certain information on a “same-property” basis. Information provided on a same-property basis includes the results of properties that we consolidated, owned and operated for the entirety of both periods being compared except for properties for which significant redevelopment or expansion occurred during either of the periods being compared and properties classified as held for sale or discontinued operations.

Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments and redevelopments. The results of operations of any acquired property are included in our financial statements as of the date of its acquisition. A large portion of the changes in our statement of income line items is related to these changes in our property portfolio. In addition, non-cash impairment charges may also affect comparability.

Net operating income (“NOI”) is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income from continuing operations before tax and discontinued operations, which, to calculate NOI, is adjusted to add back amortization of deferred financing fees, rental property depreciation and amortization, interest expense, impairment losses, general and administrative expense, and to exclude revenues earned from management and leasing services, straight line rent adjustments, accretion of below market lease intangibles (net), gain on sale of real estate, equity in income (loss) of unconsolidated joint ventures, gain on bargain purchase and acquisition of controlling interest in subsidiary, gain (loss) on extinguishment of debt and investment income, and other income. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Our management also uses NOI to evaluate regional property level performance and to make decisions about resource allocations. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from continuing operations before tax and before discontinued operations. NOI excludes certain components from net income attributable to Equity One, Inc. in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations before tax and before discontinued operations as presented in our condensed consolidated financial statements. NOI should not be considered as an alternative to income from continuing operations before tax and before discontinued operations as an indication of our performance or to cash flows as a measure of liquidity or ability to make distributions.

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We review operating and financial data, primarily NOI, for each property on an individual basis; therefore each of our individual properties is a separate operating segment. We have aggregated our operating segments into six reportable segments based primarily upon our method of internal reporting which classifies our operations by geographical area. Our reportable segments by geographical area are as follows: South Florida, North Florida, Southeast, Northeast, West Coast and Other/Non-retail. See Note 16 in the condensed consolidated financial statements of this report, which is incorporated in this Item 2 by reference, for more information about our business segments, recent changes in segment structure, and the geographic diversification of our portfolio of properties, and for a reconciliation of NOI to income from continuing operations before tax and before discontinued operations for the three months ended March 31, 2012 and 2011.

Comparison of the three months ended March 31, 2012 to 2011

The following summarizes certain line items from our unaudited condensed consolidated statements of income which we believe are important in understanding our operations and/or those items which significantly changed in the three months ended March 31, 2012 as compared to the same period in 2011:

	Three Months Ended March, 31
	2012			2011		% Change
	(In thousands)
Total revenue	$	81,515		$	70,839		15.1	%
Property operating expenses		22,130			20,574		7.6	%
Rental property depreciation and amortization		21,715			18,766		15.7	%
General and administrative expenses		11,560			11,977		(3.5	)%
Investment income		1,445			693		108.5	%
Equity in (loss) income of unconsolidated joint ventures		(188	)		366		(151.4	)%
Interest expense		17,369			17,551		(1.0	)%
Gain on bargain purchase		—			30,561		(100.0	)%
(Loss) gain on extinguishment of debt		(93	)		42		(321.4	)%
Income tax benefit of taxable REIT subsidiaries		46			133		(65.4	)%
Income from discontinued operations		12,196			4,021		203.3	%
Net income		21,695			37,377		(42.0	)%
Net income attributable to Equity One, Inc.		18,982			34,994		(45.8	)%

Total revenue increased by $10.7 million, or 15.1%, to $81.5 million in 2012 from $70.8 million in 2011. The increase is primarily attributable to the following:

• an increase of approximately $10.7 million associated with properties acquired in 2012 and 2011;

• an increase of $430,000 in same-property revenue due to increased occupancy, increased expense recoveries and higher percentage rent from anchor tenants in the 2012 period;

• a net increase of $100,000 related to redevelopment projects which were under construction in the 2011 period but are income producing in the 2012 period, partially offset by a decrease in revenues related to various development and redevelopment projects which were under construction in the 2012 period; and

• an increase of $370,000 related to management and leasing fees charged to our NYCRF joint venture relating to its recent acquisition and financing activities; offset by

• a decrease of $950,000 related to assets sold to our NYCRF joint venture in 2011.

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Property operating expenses increased by $1.6 million, or 7.6%, to $22.1 million in 2012 from $20.6 million in 2011. The increase primarily consists of the following:

• an increase of approximately $2.5 million associated with properties acquired in 2012 and 2011; and

• an increase of approximately $525,000 related to a legal settlement in the first quarter of 2012; offset by

• a decrease of $440,000 in operating expenses at various development and redevelopment project sites which were under construction in 2012;

• a net decrease of approximately $800,000 in same-property and land expenses, primarily attributable to lower bad debt expense, real estate taxes and external management fees, offset by increased insurance expense; and

• a decrease of $240,000 in expenses related to assets sold to our NYCRF joint venture in 2011.

Rental property depreciation and amortization increased by $2.9 million, or 15.7%, to $21.7 million for 2012 from $18.8 million in 2011. The increase was primarily related to the following:

• an increase of approximately $3.9 million related to depreciation on properties acquired in 2012 and 2011; offset by

• a decrease of approximately $570,000 primarily related to assets fully depreciated in 2011 as a result of tenant vacancies; and

• a decrease of $390,000 due to the disposition of assets sold to our NYCRF joint venture in 2011.

General and administrative expenses decreased by $417,000, or 3.5%, to $11.6 million for 2012 from $12.0 million in 2011. The decrease in 2012 was primarily related to the following:

• a decrease of approximately $1.2 million related to legal, consulting, and other costs associated with acquisitions, dispositions, and the exploration of other potential transactions, primarily related to the CapCo transaction completed in 2011; and

• a decrease of approximately $500,000 in severance costs paid to former CapCo employees in 2011; offset by

• an increase in professional services fees of approximately $620,000 primarily due to information technology consulting services;

• an increase of approximately $315,000 due to increased personnel related costs; and

• an increase of $300,000 in fees paid to directors as a result of the grant and acceleration of restricted stock awards to a retiring director and higher stock compensation expense for 2012 grants to directors.

We recorded investment income of $1.4 million in 2012 compared to $693,000 in 2011. The increase is due to interest income from the mezzanine loan investments made in 2011 and early 2012; offset by a decrease in interest earned on bridge loans made to unconsolidated joint ventures which were repaid in 2011.

We recorded $188,000 of equity in losses of unconsolidated joint ventures in 2012 compared to equity in income of unconsolidated joint ventures of $366,000 in 2011. The decrease is primarily a result of lower income recognized in the joint ventures due to tenants vacating and associated accelerated depreciation of tenant specific assets, acquisition costs related to a recently acquired property by an unconsolidated joint venture, and the sale of Pacific Financial Center by an unconsolidated joint venture in the third quarter of 2011.

Interest expense decreased by $182,000, or 1.0%, to $17.4 million for 2012 from $17.6 million in 2011. The decrease is primarily attributable to the following:

• a decrease of approximately $1.9 million associated with lower mortgage interest due to mortgages paid off during 2012 and 2011;

• a decrease of $650,000 due to higher capitalized interest as a result of a major development project; and

• a decrease of $60,000 due to the maturity of $10 million of senior notes in the first quarter of 2012; offset by

43

• an increase of approximately $1.3 million primarily associated with mortgage assumptions in 2012 and 2011 related to acquisitions;

• an increase of approximately $780,000 associated with our new $200.0 million term loan; and

• an increase of $320,000 associated with higher average balances outstanding under our line of credit.

The gain on bargain purchase of approximately $30.6 million recognized in 2011 was generated from our acquisition of a controlling interest in CapCo. No comparable amounts are included in 2012. The gain represents the difference between the fair value of the net assets acquired of $310.4 million and the fair value of the consideration paid and noncontrolling interest of $279.8 million.

During 2012, we prepaid approximately $1.0 million principal amount of our mortgages and recognized a net loss from early extinguishment of debt related to continuing operations of approximately $93,000. During 2011, we prepaid approximately $31.0 million principal amount of our mortgages and recognized a net gain from early extinguishment of debt of approximately $42,000.

We recorded income tax benefits from continuing operations for 2012 and 2011 of approximately $46,000 and $133,000, respectively. The decrease in tax benefit was primarily due to a decrease in the net operating losses of our taxable REIT subsidiaries.

For 2012, we recorded income from discontinued operations of $12.2 million compared to income of $4.0 million for 2011. The increase is primarily attributable to the following:

• an increase of $14.3 million related to net gains from sales of four operating properties and one operating outparcel; offset by

• an increase of $1.9 million in impairment losses on assets held for sale;

• a decrease of $3.7 million in operating income from sold or held-for-sale properties; and

• a decrease in income tax benefit of $430,000 relating to properties that were sold in 2011.

As a result of the foregoing, net income decreased by $15.7 million, to $21.7 million for 2012 from $37.4 million in 2011. Net income attributable to Equity One, Inc. decreased by $16.0 million to $19.0 million for 2012 compared to $35.0 million in 2011.

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Reportable Segments

The following table sets forth the financial information relating to our operations presented by segments:

	Three Months Ended March 31,
	2012		2011
	(In thousands)
Revenues:
South Florida	$	23,387	$	22,551
North Florida		11,534		11,783
Southeast		14,018		14,047
Northeast		11,427		8,558
West Coast		15,718		10,585
Non-retail		655		762
Total segment revenues	$	76,739	$	68,286
Add:
Straight line rent adjustment		1,024		628
Accretion of below market lease intangibles, net		2,948		1,459
Management and leasing services		804		466
Total revenues	$	81,515	$	70,839
Net operating income (NOI):
South Florida	$	15,929	$	14,659
North Florida		8,198		7,931
Southeast		9,950		9,921
Northeast		7,399		5,763
West Coast		10,441		7,037
Non-retail		344		393
Total	$	52,261	$	45,704

For a reconciliation of NOI to income from continuing operations before tax and discontinued operations see Note 16 to the condensed consolidated financial statements included in this report, which are incorporated herein by reference.

The following table reflects our same-property occupancy information at the end of the March 31 period:

	2012			2011			% Change
South Florida		92.2	%		91.9	%		0.3	%
North Florida		87.6	%		88.1	%		(0.5	)%
Southeast		90.0	%		90.6	%		(0.6	)%
Northeast		98.1	%		96.9	%		1.2	%
West Coast		91.7	%		91.5	%		0.2	%
Same-property shopping center portfolio occupancy		90.8	%		90.9	%		(0.1	)%
Non-retail		74.5	%		47.5	%		27.0	%
Same-property occupancy including Non-retail occupancy		90.4	%		89.9	%		0.5	%

Comparison of the three months ended March 31, 2012 to 2011 - Segments

South Florida:Revenues increased by 3.7% or $836,000 to $23.4 million for 2012 from $22.6 million for 2011. NOI for South Florida increased by 8.7% or $1.3 million to $15.9 million for 2012 from $14.7 million for 2011. Revenues increased due to higher minimum rent and expense recovery income as a result of 2011 acquisitions, an increase in percentage rent primarily from anchor tenants, increased occupancy and higher rent from contractual rent increase and new rent commencements. These increases in revenue were partially offset by decreases in revenue due to the sale of two properties to our NYCRF joint venture during 2011, lower lease termination fees received in 2012, and a decrease in expense recovery income resulting from a decrease in recoverable expenses from our same site properties. The increase in NOI was a result of the increase in revenues as well as a decrease in property operating expenses. The decrease in property operating expenses was driven by the sale of two properties to our NYCRF joint venture during 2011, decreases in bad debt expense, real estate taxes and real estate tax consulting fees; partially offset by higher property operating expenses as a result of 2011 acquisitions.

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North Florida:Revenues decreased by 2.1% or $249,000 to $11.5 million for 2012 from $11.8 million for 2011. NOI increased by 3.4% or $267,000 to $8.2 million for 2012 from $7.9 million for 2011. Revenues decreased due to a decrease in occupancy and an increase in rent concessions and abatements. The increase in NOI was a result of decreases in bad debt expense and real estate taxes; partially offset by the decrease in revenues.

Southeast:Revenues decreased by 0.2% or $29,000 to $14.0 million for 2012 from $14.0 million for 2011. NOI increased by 0.3% or $29,000 to $10.0 million for 2012 from $9.9 million for 2011. The slight decrease in revenues was due to increased rent concessions and abatements in 2012 and a decrease in occupancy; partially offset by rent commencements. The slight increase in NOI was a result of decreases in bad debt expense and real estate taxes; partially offset by the decrease in revenues.

Northeast:Revenues increased by 33.5% or $2.9 million to $11.4 million for 2012 from $8.6 million for 2011. NOI increased by 28.4% or $1.6 million to $7.4 million for 2012 from $5.8 million for 2011. The increase in both revenues and NOI is primarily a result of higher minimum rent and expense recovery income, net of related property operating expenses, as a result of 2011 acquisitions and an increase in same property occupancy. This increase was partially offset by an increase in non-recoverable property operating expenses due primarily to the settlement of a tenant dispute during 2012 which resulted in a $525,000 expense. In addition, there was a decrease in occupancy at one of our redevelopment sites.

West Coast:Revenues increased by 48.5% or $5.1 million to $15.7 million for 2012 from $10.6 million for 2011. NOI increased by 48.4% or $3.4 million to $10.4 million for 2012 from $7.0 million for 2011. The increase in both revenues and NOI is primarily a result of higher minimum rent and expense recovery income, net of related property operating expenses, as a result of 2011 acquisitions, rent commencements and higher percentage rent due to higher reported tenant sales; partially offset by higher common area maintenance, insurance and real estate taxes.

Non-retail:Revenues decreased by 14.0% or $107,000 to $655,000 for the three months ended 2012 from $762,000 for the three months ended 2011. NOI decreased by 12.5% or $49,000 to $344,000 for 2012 from $393,000 for 2011. The decrease in both revenues and NOI is primarily due to lower minimum rent and expense recovery income as a result of a decrease in occupancy in one of our non-retail sites in the West Coast.

Funds From Operations

We believe Funds from Operations (“FFO”) (when combined with the primary GAAP presentations) is a useful supplemental measure of our operating performance that is a recognized metric used extensively by the real estate industry and, in particular, REITs. The National Association of Real Estate Investment Trusts (“NAREIT”) stated in its April 2002 White Paper on Funds from Operations, “Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminish predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves”.

FFO, as defined by NAREIT, is “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of, or impairment charges related to, depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.” NAREIT states further that “adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.” We believe that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from our FFO measure. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. In October 2011, NAREIT clarified that FFO should exclude the impact of impairment losses on depreciable operating properties, either wholly-owned or in joint ventures. We calculated FFO for all periods presented in accordance with this clarification.

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FFO is presented to assist investors in analyzing our operating performance. FFO (i) does not represent cash flow from operations as defined by GAAP, (ii) is not indicative of cash available to fund all cash flow needs, including the ability to make distributions, (iii) is not an alternative to cash flow as a measure of liquidity, and (iv) should not be considered as an alternative to net income (which is determined in accordance with GAAP) for purposes of evaluating our operating performance.

The following table illustrates the calculation of FFO for the three months ended March 31, 2012 and 2011:

	Three Months Ended March 31,
	2012			2011
	(In thousands)
Net income attributable to Equity One, Inc.	$	18,982		$	34,994
Adjustments:
Rental property depreciation and amortization, including discontinued operations, net of noncontrolling interest		21,758			23,020
Net adjustment for unvested shares and noncontrolling interest(1)		2,499			2,415
Pro rata share of real estate depreciation from unconsolidated joint ventures		1,157			611
Impairments of depreciable real estate, net of tax		1,932			—
Gain on disposal of depreciable assets, net of tax		(13,086	)		—
Funds from operations	$	33,242		$	61,040

⁽¹⁾ Includes net effect of: (a) distributions paid with respect to unissued shares held by a noncontrolling interest which have already been included for purposes of calculating earnings per diluted share for the three months ended March 31, 2012 and 2011; and (b) an adjustment to compensate for the rounding of the individual calculations.

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The following table reflects the reconciliation of FFO per diluted share to earnings per diluted share, the most directly comparable GAAP measure, for the three months ended March 31, 2012 and 2011:

	Three Months Ended March 31,
	2012			2011
	(In thousands)
Earnings per diluted share attributable to Equity One, Inc.	$	0.16		$	0.32
Adjustments:
Rental property depreciation and amortization, including discontinued operations, net of noncontrolling interest		0.18			0.20
Net adjustment for unvested shares and noncontrolling interest(1)		0.01			(0.01	)
Pro rata share of real estate depreciation from unconsolidated joint ventures		0.01			0.01
Impairments of depreciable real estate, net of tax		0.02			—
Gain on disposal of depreciable assets, net of tax		(0.11	)		—
Funds from operations per diluted share	$	0.27		$	0.52
Weighted average diluted shares(2)		124,178			117,258

⁽¹⁾ Includes net effect of: (a) distributions paid with respect to unissued shares held by a noncontrolling interest which already been included for purposes of calculating earnings per diluted share for the three months ended March 31, 2012 and 2011; and (b) an adjustment to compensate for the rounding of the individual calculations.

⁽²⁾ Weighted average diluted shares for the three months ended March 31, 2012 are higher than the GAAP diluted weighted average shares as a result of the 11.4 million units held by LIH which are convertible into our common stock. These convertible units are not included in the diluted weighted average share count for GAAP purposes because their inclusion is anti-dilutive.

Critical Accounting Policies

Our 2011 Annual Report on Form 10-K contains a description of our critical accounting policies, including initial adoption of accounting policies, revenue recognition and accounts receivable, recognition of gains from the sales of real estate, real estate acquisitions, real estate properties and development assets, long lived assets, investments in unconsolidated joint ventures, goodwill, share based compensation and incentive awards, income tax, and discontinued operations. For the three months ended March 31, 2012, there were no material changes to these policies. See Note 2 to the financial statements included as part of this Quarterly Report on Form 10-Q for a description of our significant accounting policies and the potential impact of the adoption of any new accounting pronouncements.

Liquidity and Capital Resources

Due to the nature of our business, we typically generate significant amounts of cash from operations; however, the cash generated from operations is primarily paid to our stockholders in the form of dividends. Our status as a REIT requires that we distribute 90% of our REIT taxable income (excluding net capital gains) each year, as defined in the Internal Revenue Code (the “Code”).

Short-term liquidity requirements

Our short-term liquidity requirements consist primarily of normal recurring operating expenses, regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities), recurring company expenditures, such as general and administrative expenses, non-recurring company expenditures (such as tenant improvements and redevelopments and acquisition expenses) and dividends to common stockholders. We have satisfied these requirements through cash generated from operations and from financing and investing activities.

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As of March 31, 2012, we had approximately $15.6 million of cash and cash equivalents available. In addition, we had two revolving credit facilities providing for borrowings of up to $590.0 million of which $442.8 million was available to be drawn, subject to covenants contained in those facilities which may otherwise limit borrowings. As of March 31, 2012, we had drawn $42.0 million under our $575.0 million credit facility, which bore interest at 1.80% at such date, and had no borrowings outstanding under our $15.0 million credit facility.

For the remainder of 2012, we have approximately $36.9 million in debt maturities in addition to normal recurring principal amortization payments. Additionally, we are actively searching for acquisition and joint venture opportunities that may require additional capital and/or liquidity. We currently have approximately $43.5 million in proposed acquisitions that we expect to close in the second quarter of 2012. These proposed transactions consist of the acquisition of a shopping center in Connecticut for $36.0 million, which includes the assumption of $19.0 million of indebtedness, and a parcel of land in New York City for $7.5 million. These acquisitions are past the due diligence periods under the applicable purchase and sale agreements and, as such, aggregate deposits of $1.7 million are non-refundable except as otherwise provided in the contracts. Our available cash, revolving credit facilities, and cash from property dispositions will be used to fund these and other prospective acquisitions as well as our debt maturities and normal operating expenses.

Long-term liquidity requirements

Our long-term capital requirements consist primarily of maturities of various long-term debts, development and redevelopment costs and the costs related to growing our business, including acquisitions.

An important component of our growth strategy is the redevelopment of properties within our portfolio and the development of new shopping centers. At March 31, 2012, we had invested approximately $105.0 million in development or redevelopment projects at various stages of completion and anticipate these projects will require an additional $77.7 million to complete, based on our current plans and estimates, which will be expended over the next two years.

Historically, we have funded these requirements through a combination of sources that were available to us, including additional and replacement secured and unsecured borrowings, proceeds from the issuance of additional debt or equity securities, capital from institutional partners that desire to form joint venture relationships with us and proceeds from property dispositions.

2012 liquidity events

While our availability under our lines of credit is sufficient to operate our business for the remainder of 2012, if we identify acquisition or redevelopment opportunities that meet our investment objectives, we may need to raise additional capital.

While there is no assurance that we will be able to raise additional capital in the amounts or at the prices we desire, we believe we have positioned our balance sheet in a manner that facilitates our capital raising plans. The following is a summary of our financing and investing activities completed during the three months ended March 31, 2012:

• We closed on a $200.0 million unsecured term loan which matures in February 2019 and bears interest at an effective fixed rate of 3.46% per annum based on our current credit ratings and through the utilization of interest rate swaps;

• We made a $19.3 million mezzanine loan investment indirectly secured by a shopping center which bears interest at 10.0% and has a maturity of nine years;

• We acquired three operating properties for an aggregate purchase price of approximately $153.8 million;

• We prepaid approximately $1.0 million in mortgage debt; and

• We reduced the borrowings outstanding under our $575.0 million line of credit from approximately $138.0 million as of December 31, 2011 to $42.0 million as of March 31, 2012.

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Summary of Cash Flows.The following summary discussion of our cash flows is based on the condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

	Three Months Ended March 31,
	2012			2011			(Decrease) Increase
	(In thousands)
Net cash provided by operating activities	$	23,806		$	35,179		$	(11,373	)
Net cash used in investing activities	$	(80,452	)	$	(53,323	)	$	(27,129	)
Net cash provided by (used in) financing activities	$	61,293		$	(32,387	)	$	93,680

Our principal source of operating cash flow is cash generated from our rental properties. Our properties provide a relatively consistent stream of rental income that provides us with resources to fund operating expenses, general and administrative expenses, debt service, and quarterly dividends. Net cash provided by operating activities totaled approximately $23.8 million for the three months ended March 31, 2012 compared to approximately $35.2 million in the 2011 period. The decrease of $11.4 million is attributable to cash used in operations of properties and the prepayment of real estate taxes and insurance; partially offset by an increase in investment income.

Net cash used in investing activities was approximately $80.5 million for the three months ended March 31, 2012 compared with approximately $53.3 million for the same period in 2011. Investing activities during 2012 consisted primarily of: acquisitions of income producing properties for $153.8 million; additions to income producing properties of $4.9 million; additions to construction in progress of $19.6 million, $19.3 million related to an investment made in a mezzanine loan indirectly secured by a newly developed shopping center, and the net cash investment outflow from joint ventures of $6.6 million; offset by $33.2 million of proceeds related to the sale of real estate and rental properties and a decrease in cash held in escrow of $90.9 million. Cash used by investing activities for 2011 consisted of: acquisitions of income producing properties for $45.5 million, net of debt assumed; and additions to income producing properties, land held for development, and construction in progress of $6.0 million.

Net cash provided by financing activities totaled approximately $61.3 million for the three months ended March 31, 2012 compared with approximately $32.4 million of net cash used in financing activities for the same period in 2011. The largest cash outflows for 2012 related to repayments of revolving credit facilities of $96.0 million, repayment of senior debt of $10.0 million, prepayments and repayments of $3.3 million in principal amount of mortgage debt, the payment of $25.1 million in dividends and $2.6 million of distributions to noncontrolling interests. This use of cash was offset by borrowings under the new term loan of $200.0 million. In the prior year, cash used by financing activities was mainly attributable to repayments of $119.4 million in principal amount of mortgage debt and the payment of $23.7 million in dividends. This increase was offset by net borrowings under our revolving credit facilities of $113.5 million.

Future Contractual Obligations. The following table sets forth certain information regarding future contractual obligations, excluding interest, as of March 31, 2012:

	Payments due by period
Contractual Obligations	Total		2012		2013		2014		2015		2016		Thereafter
	(In thousands)
Mortgage notes payable:
Scheduled amortization	$	90,304	$	6,317	$	7,844	$	7,446	$	7,554	$	7,489	$	53,654
Balloon payments		378,181		36,438		45,127		6,509		36,650		107,574		145,883
Total mortgage obligations		468,485		42,755		52,971		13,955		44,204		115,063		199,537
Unsecured revolving credit facilities		42,000		—		—		—		42,000		—		—
Unsecured senior notes		681,136		—		—		250,000		107,505		105,230		218,401
Term loan		200,000		—		—		—		—		—		200,000
Total unsecured obligations		923,136		—		—		250,000		149,505		105,230		418,401
Construction commitments		77,700		77,700		—		—		—		—		—
Operating leases		11,190		683		845		819		794		826		7,223
Purchase contracts		43,500		43,500		—		—		—		—		—
Total contractual obligations	$	1,524,011	$	164,638	$	53,816	$	264,774	$	194,503	$	221,119	$	625,161

Our debt level could subject us to various risks, including the risk that our cash flow will be insufficient to meet required payments of principal and interest, and the risk that the resulting reduction in financial flexibility could inhibit our ability to develop or improve our rental properties, withstand downturns in our rental income, or take advantage of business

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opportunities. In addition, because we currently anticipate that only a portion of the principal of our indebtedness will be repaid prior to maturity, it is expected that it will be necessary to refinance the majority of our debt. Accordingly, there is a risk that such indebtedness will not be able to be refinanced or that the terms of any refinancing will not be as favorable as the terms of our current indebtedness.

Off-Balance Sheet Arrangements

Joint Ventures:We consolidate entities in which we own less than a 100% equity interest if we have a controlling interest or are the primary beneficiary in a variable-interest entity, as defined in the Consolidation Topic of the FASB ASC. From time to time, we may have off-balance-sheet joint ventures and other unconsolidated arrangements with varying structures.

As of March 31, 2012, we have investments in eight unconsolidated joint ventures in which our effective ownership interests range from 8.6% to 50.5%. All eight of these joint ventures have mortgage indebtedness. We exercise significant influence over, but do not control, these entities and therefore they are presently accounted for using the equity method of accounting. For a more complete description of our joint ventures see Note 5 to the condensed consolidated financial statements included in this report. At March 31, 2012, the aggregate carrying amount of debt, including our partners’ shares, incurred by these ventures was approximately $248.2 million (of which our aggregate proportionate share is approximately $54.1 million). We have agreed to purchase the $18.5 million JV Loan at par (plus accrued interest) under certain circumstances (for a more complete description of this transaction please refer to Note 5 to the condensed consolidated financial statements included in this quarterly report), and we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) on certain mortgage loans incurred by the joint ventures.

Reconsideration events could cause us to consolidate these joint ventures and partnerships in the future. We evaluate reconsideration events as we become aware of them. Some triggers to be considered are additional contributions required by each partner and each partners’ ability to make those contributions. Under certain of these circumstances, we may purchase our partner’s interest. Our unconsolidated real estate joint ventures are with entities which appear sufficiently stable to meet their capital requirements; however, if market conditions worsen and our partners are unable to meet their commitments, there is a possibility we may have to consolidate these entities.

Contingencies

Letters of Credit: As of March 31, 2012, we have pledged letters of credit having an aggregate face amount of $3.7 million as additional security for financial and other obligations. Substantially all of our letters of credit are issued under our revolving credit facilities.

Construction Commitments:As of March 31, 2012, we have entered into construction commitments and have outstanding obligations to fund approximately $77.7 million, based on current plans and estimates, in order to complete current development and redevelopment projects. These obligations, comprising principally construction contracts, are generally due as the work is performed and are expected to be financed by funds available under our credit facilities and available cash.

Operating Lease Obligations: We are obligated under non-cancellable operating leases for office space, equipment rentals and ground leases on certain of our properties totaling $11.2 million.

Non-Recourse Debt Guarantees: Under the terms of certain non-recourse mortgage loans, we could, under specific circumstances, be responsible for portions of the mortgage indebtedness in connection with certain customary non-recourse carve-out provisions, such as environmental conditions, misuse of funds, and material misrepresentations. In management’s judgment, it would be unlikely for us to incur any material liability under these guarantees that would have a material adverse effect on our financial condition, results of operations, or cash flows.

Capital Recycling Initiatives

As part of our strategy to upgrade and diversify our portfolio and recycle our existing capital, we evaluate opportunities to sell assets or otherwise contribute assets to existing or new joint ventures with third parties. If the market values of these assets are below their carrying values, it is possible that the disposition or contribution of these assets could result in impairments or other losses. Depending on the prevailing market conditions and historical carrying values, these impairments and losses could be

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material. During the three months ended March 31, 2012, we recorded an impairment loss of $1.9 million related to properties held for sale. See Note 4 to the condensed consolidated financial statements included in this report for additional information regarding impairment losses.

Environmental Matters

We are subject to numerous environmental laws and regulations. The operation of dry cleaning or gas station facilities at our shopping centers are the principal environmental concerns. We require that the tenants who operate these facilities do so in material compliance with current laws and regulations and we have established procedures to monitor their operations. Where available, we have applied and been accepted into state sponsored environmental programs. Several properties in the portfolio will require or are currently undergoing varying levels of environmental remediation; however, we have environmental insurance policies covering most of our properties which limits our exposure to some of these conditions. Management believes that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity or operations.

Future Capital Requirements

We believe, based on currently proposed plans and assumptions relating to our operations, that our existing financial arrangements, together with cash generated from our operations, cash on hand and our short-term investments will be sufficient to satisfy our cash requirements for a period of at least twelve months. In the event that our plans change, our assumptions change or prove to be inaccurate or cash flows from operations or amounts available under existing financing arrangements prove to be insufficient to fund our debt maturities, pay our dividends, fund expansion and development efforts or to the extent we discover suitable acquisition targets the purchase price of which exceeds our existing liquidity, we would be required to seek additional sources of financing. Additional financing may not be available on acceptable terms or at all, and any future equity financing could be dilutive to existing stockholders. If adequate funds are not available, our business operations could be materially adversely affected. See Part I – Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011.

Distributions

We believe that we currently qualify and intend to continue to qualify as a REIT under the Code. As a REIT, we are allowed to reduce taxable income by all or a portion of our distributions to stockholders. As distributions have exceeded taxable income, no provision for federal income taxes has been made. While we intend to continue to pay dividends to our stockholders, we also will reserve such amounts of cash flow as we consider necessary for the proper maintenance and improvement of our real estate and other corporate purposes, while still maintaining our qualification as a REIT.

Inflation and Economic Condition Considerations

Most of our leases contain provisions designed to partially mitigate any adverse impact of inflation. Although inflation has been low in recent periods and has had a minimal impact on the performance of our shopping centers, there is more recent data suggesting that inflation may be a greater concern in the future given economic conditions and governmental fiscal policy. Most of our leases require the tenant to pay its share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. A small number of our leases also include clauses enabling us to receive percentage rents based on a tenant’s gross sales above predetermined levels, which sales generally increase as prices rise, or escalation clauses which are typically related to increases in the Consumer Price Index or similar inflation indices.

Cautionary Statement Relating to Forward Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q contain “forward-looking statements” for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations and are not guarantees of future performance.

All statements other than statements of historical facts are forward-looking statements and can be identified by the use of forward-looking terminology such as “may,” “will,” “might,” “would,” “expect,” “anticipate,” “estimate,” “could,” “should,” “believe,” “intend,” “project,” “forecast,” “target,” “plan,” or “continue” or the negative of these words or other variations or comparable terminology. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Because these statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on those statements, which speak only as of the date of this report.

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Among the factors that could cause actual results to differ materially are:

• general economic conditions, including current macro-economic challenges, competition and the supply of and demand for shopping center properties in our markets;

• risks that tenants will not remain in occupancy or pay rent, or pay reduced rent due to declines in their businesses;

• interest rate levels and the availability of financing;

• potential environmental liability and other risks associated with the ownership, development and acquisition of shopping center properties;

• greater than anticipated construction or operating costs or delays in completing development or redevelopment projects or obtaining necessary approvals therefor;

• inflationary, deflationary and other general economic trends;

• the effects of hurricanes, earthquakes and other natural disasters;

• management’s ability to successfully combine and integrate the properties and operations of separate companies that we have acquired in the past or may acquire in the future;

• the impact of acquisitions and dispositions of properties and joint venture interests and expenses incurred by us in connection with our acquisition and disposition activity;

• impairment charges related to changes in market values of our properties as well as those related to our disposition activity;

• our ability to maintain our status as a real estate investment trust, or REIT, for U.S. federal income tax purposes and the effect of future changes in REIT requirements as a result of new legislation; and

• other risks detailed from time to time in the reports filed by us with the Securities and Exchange Commission.

Except for ongoing obligations to disclose material information as required by the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The primary market risk to which we have exposure is interest rate risk. Changes in interest rates can affect our net income and cash flows. As changes in market conditions occur and interest rates increase or decrease, interest expense on the variable component of our debt will move in the same direction. We intend to utilize variable-rate indebtedness available under our unsecured revolving credit facilities in order to initially fund future acquisitions, development costs and other operating needs. With respect to our fixed rate mortgage notes and senior unsecured notes, changes in interest rates generally do not affect our interest expense as these notes are at fixed rates for extended terms. Because we have the intent to hold our existing fixed-rate debt either to maturity or until the sale of the associated property, these fixed-rate notes pose an interest rate risk to our results of operations and our working capital position only upon the refinancing of that indebtedness. Our possible risk is from increases in long-term interest rates that may occur as this may increase our cost of refinancing maturing fixed-rate debt. In addition, we may incur prepayment penalties or defeasance costs when prepaying or defeasing secured debt.

As of March 31, 2012, we had $42.0 million of floating rate debt outstanding under our unsecured revolving line of credit. Our unsecured revolving line of credit bears interest at applicable LIBOR plus 1.00% to 1.85%, depending on the credit ratings of our senior unsecured notes. Considering the total outstanding balance of $42.0 million, a 1% change in interest rates would result in an impact to income before taxes of approximately $426,000 per year.

The fair value of our fixed-rate debt is $1.3 billion as of March 31, 2012, which includes the mortgage notes and the fixed-rate portion of the senior unsecured notes payable. If interest rates increase by 1%, the fair value of our total fixed-rate debt would decrease by approximately $46.1 million. If interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately $48.5 million. This assumes that our total outstanding fixed-rate debt remains at approximately $1.1 billion, the balance as of March 31, 2012.

As of March 31, 2012, we had $200.0 million of floating rate debt outstanding under our term loan, which we have effectively converted to a fixed rate of interest through the use of interest rate swaps – see “Hedging Activities” below. The fair value of our term loan is $187.6 million as of March 31, 2012. If interest rates increase by 1%, the fair value of our total term loan would decrease by approximately $11.1 million. If interest rates decrease by 1%, the fair value of our total term loan would increase by approximately $11.8 million.

Hedging Activities

To manage, or hedge, our exposure to interest rate risk, we follow established risk management policies and procedures, including the use of a variety of derivative financial instruments. We do not enter into derivative instruments for speculative purposes. We require that the hedges or derivative financial instruments be effective in managing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential to qualify for hedge accounting. Hedges that meet these hedging criteria are formally designated as such at the inception of the contract. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, resulting in some ineffectiveness, the change in the fair value of the derivative instrument will be included in earnings. Additionally, any derivative instrument used for risk management that becomes ineffective is marked-to-market each period and would be charged to operations.

In connection with the $200.0 million unsecured seven-year term loan that we closed on February 13, 2012, we entered into interest rate swaps in order to convert the variable LIBOR rate under the term loan to a fixed interest rate, providing us an effective fixed interest rate on the term loan of 3.46% per annum based on the current credit ratings of our senior unsecured notes.

Other Market Risks

As of March 31, 2012 we had no material exposure to any other market risks (including foreign currency exchange risk, commodity price risk or equity price risk).

In making this determination and for purposes of the SEC’s market risk disclosure requirements, we have estimated the fair value of our financial instruments at March 31, 2012 based on pertinent information available to management as of that date. Although management is not aware of any factors that would significantly affect the estimated amounts as of March 31, 2012, future estimates of fair value and the amounts which may be paid or realized in the future may differ significantly from amounts presented.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2012, our disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Neither we nor our properties are subject to any material litigation. We and our properties may be subject to routine litigation and administrative proceedings arising in the ordinary course of business which, collectively, are not expected to have a material adverse effect on our business, financial condition, results of operations, or our cash flows.

ITEM 1A. RISK FACTORS

Our Annual Report on Form 10-K for the year ended December 31, 2011, Part I – Item 1A, Risk Factors, describes important risk factors that could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-Q or presented elsewhere by management from time to time. There have been no material changes in such risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

(c) Issuer Purchases of Equity Securities.

Period	(a) Total Number of Shares of Common Stock Purchased			(b) Average Price Paid per Common Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2012 - January 31, 2012		—		$	—	N/A	N/A
February 1, 2012 - February 29, 2012		3,286	(1)		19.69	N/A	N/A
March 1, 2012 - March 31, 2012		2,578	(1)		19.37	N/A	N/A
		5,864		$	19.55	N/A	N/A

⁽¹⁾  Represents shares of common stock surrendered by employees to us to satisfy such employees’ tax withholding obligations in connection with the vesting of restricted common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a) Exhibits:

10.1	Loan Agreement, dated as of February 13, 2012, by and among Equity One, Inc., each of the financial institutions party thereto as lenders, PNC Bank, National Association, as administrative agent, SunTrust Bank, as syndication agent, and PNC Capital Markets LLC and SunTrust Robinson Humphrey, Inc., as joint lead arrangers and joint book runners (filed as Exhibit 10.1 to Equity One’s Current Report on Form 8-K filed with the SEC on February 15, 2012 and incorporated by reference herein).
12.1	Ratio of Earnings to Fixed Charges
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS++	XBRL Instance Document
101.SCH++	XBRL Taxonomy Extension Schema
101.CAL++	XBRL Taxonomy Extension Calculation Linkbase
101.LAB++	XBRL Extension Labels Linkbase
101.PRE++	XBRL Taxonomy Extension Presentation Linkbase
101.DEF++	XBRL Taxonomy Extension Definition Linkbase

++ Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

57

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 10, 2012	EQUITY ONE, INC.
	/s/ Mark Langer
	Mark Langer Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
Date: May 10, 2012
	/s/ Angela F. Valdes
	Angela F. Valdes
	Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibits	Description
10.1	Loan Agreement, dated as of February 13, 2012, by and among Equity One, Inc., each of the financial institutions party thereto as lenders, PNC Bank, National Association, as administrative agent, SunTrust Bank, as syndication agent, and PNC Capital Markets LLC and SunTrust Robinson Humphrey, Inc., as joint lead arrangers and joint book runners (filed as Exhibit 10.1 to Equity One’s Current Report on Form 8-K filed with the SEC on February 15, 2012 and incorporated by reference herein).
12.1	Ratio of Earnings to Fixed Charges
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS++	XBRL Instance Document
101.SCH++	XBRL Taxonomy Extension Schema
101.CAL++	XBRL Taxonomy Extension Calculation Linkbase
101.LAB++	XBRL Extension Labels Linkbase
101.PRE++	XBRL Taxonomy Extension Presentation Linkbase
101.DEF++	XBRL Taxonomy Extension Definition Linkbase

++ Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

59