Exhibit 99.1
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INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF EQUITY ONE, INC.
North Miami Beach, Florida:
We have audited the accompanying statement of revenues and certain operating
expenses (the "Statement") of Sheridan Plaza (the "Property") for the year ended
December 31, 2002. This Statement is the responsibility of the management of
Equity One, Inc. (the "Company"). Our responsibility is to express an opinion on
the Statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the Statement is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the Statement.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission (for inclusion
in the filing of a Form 8-K of the Company) as described in Note 1 to the
Statement, and is not intended to be a complete presentation of the Property's
revenues and expenses.
In our opinion, such Statement presents fairly, in all material respects, the
revenues and certain operating expenses described in Note 1 to the Statement of
Sheridan Plaza for the year ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Certified Public Accountants
Miami, Florida
September 19, 2003
F-1
SHERIDAN PLAZA
STATEMENT OF REVENUES
AND CERTAIN OPERATING EXPENSES
(Amounts in thousands)
Six Months Ended
June 30, 2003 Year Ended
(unaudited) December 31, 2002
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REVENUES:
Minimum rental...................................... $ 2,779 $ 5,506
Percentage rent payments............................ 283 49
Expense recoveries.................................. 951 1,817
Other property revenues............................. 6 107
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Total revenues.................................. 4,019 7,479
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CERTAIN OPERATING EXPENSES:
Property Operating Expenses:
Real estate taxes................................. 631 1,220
Maintenance and repairs........................... 367 587
Utilities......................................... 94 187
Insurance......................................... 85 135
Other operating................................... 358 660
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Total certain operating expenses................ 1,535 2,789
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EXCESS OF REVENUES OVER CERTAIN OPERATING EXPENSES..... $ 2,484 $ 4,690
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See accompanying notes to the statement of revenues and certain operating
expenses.
F-2
SHERIDAN PLAZA
NOTES TO STATEMENT OF REVENUES
AND CERTAIN OPERATING EXPENSES
(Dollars in thousands)
1. ORGANIZATION AND BASIS FOR PRESENTATION
The accompanying statement of revenues and certain operating expenses (the
"Statement") relate to Sheridan Plaza (the "Property"), an approximately 452,000
square foot shopping center located in Hollywood, Florida. The Property was
acquired effective July 14, 2003 by Equity One, Inc. (the "Company"). The
Property was acquired for cash of approximately $75,300. The cash consideration
was funded from cash on hand and the Company's existing revolving credit
facility.
The Statement is prepared for the purpose of complying with Rule 3-14 of
Regulation S-X promulgated under the Securities Act of 1933, as amended.
Accordingly, the Statement is not representative of the actual operations of the
Property for the periods presented as revenues and certain operating expenses,
which may not be directly attributable to the revenues and operating expenses
expected to be incurred in future operations of the Property, have been
excluded. Revenues and expenses not directly attributable to the future
operations of the Property have been excluded. Such items include depreciation,
amortization, interest expense, and interest income.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rental income comprises minimum rents, expense reimbursements and
percentage rent payments. Rental income is recognized as earned. Expense
reimbursements are recognized in the period that the applicable costs are
incurred. The Property accounts for these leases as operating leases as the
Property has retained substantially all risks and benefits of property
ownership. Percentage rent is recognized when the tenant's reported sales have
reached certain levels specified in the respective lease. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
The results of operations for the six-month period ended June 30, 2003 are
not necessarily indicative of the results that may be expected for the full
year.
F-3
SHERIDAN PLAZA
NOTES TO STATEMENT OF REVENUES
AND CERTAIN OPERATING EXPENSES
(Dollars in thousands)
3. LEASING ACTIVITIES
The Property has noncancellable operating leases with tenants
requiring monthly payments of specified minimum rent. A majority of the
leases require reimbursement by the tenant of substantially all operating
expenses of the Property. Future minimum rental commitments under the
noncancellable operating leases at December 31, 2002 are as follows:
Year Ending December 31,
2003............................. $ 5,572
2004............................. 5,573
2005............................. 5,227
2006............................. 4,853
2007............................. 3,823
Thereafter....................... 12,770
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$ 37,818
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F-4