Exhibit 99.3
------------
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Dollars in thousands)
Management has prepared the following unaudited consolidated pro forma
financial statements which are based on the historical consolidated financial
statements of Equity One, Inc. and subsidiaries (the "Company") and adjusted to
give effect to the acquisitions of Sheridan Plaza, Butler Creek, Presidential
Markets, Bandera Outparcel, and HEB-Spring Shadows (the "Acquired Properties")
and IRT Property Company ("IRT").
The unaudited consolidated pro forma balance sheet at June 30, 2003 has
been prepared to reflect the subsequent acquisition of the Acquired Properties
as if the acquisitions had occurred on June 30, 2003. The unaudited consolidated
pro forma statements of operations for the year ended December 31, 2002 and the
six months ended June 30, 2003 have been prepared to present the results of
operations of the Company as if the subsequent acquisition of the Acquired
Properties had occurred at the beginning of the periods presented.
On February 12, 2003, the Company completed a statutory merger with IRT. As
a result of the merger, the Company acquired 93 properties that comprise an
aggregate of approximately 10 million square feet of gross leasable area. The
IRT pro forma adjustment is presented to reflect the effects of the IRT
acquisitions and related transactions, and the impact on the Company's results,
as if the transactions had occurred at the beginning of the periods presented.
The pro forma information includes the acquisition of IRT, the issuance of
common stock related to the IRT transaction, the private placement of common
stock and the borrowing under the revolving credit facility.
The unaudited consolidated pro forma financial statements neither purport
to represent what the consolidated results of operations actually would have
been had the Acquired Properties, IRT and related transactions occurred at the
beginning of the periods presented, nor does it purport to project the
consolidated operations for any future period.
The following unaudited consolidated pro forma financial statements should
be read in conjunction with the 2002 Consolidated Financial Statements and the
Notes thereto that are included in the Company's Current Report on Form 8-K
dated September 19, 2003, the Company's Quarterly Report on Form 10-Q for the
six months ended June 30, 2003, the 2002 Consolidated Financial Statements and
the Notes thereto of IRT that are included in the Company's Current Report on
Form 8-K dated May 13, 2003, and the Statement of Revenues and Certain Operating
Expenses and related Notes thereto included elsewhere in this Form 8-K. In the
Company's opinion, all significant adjustments necessary to reflect the effects
of the Acquired Properties and IRT have been made.
1
Exhibit 99.3
------------
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2003
(In thousands)
Pro Forma
Historical Adjustments Pro Forma
(A) (B) Consolidated
--------------- ------------- ---------------
ASSETS
PROPERTIES:
Income producing....................................................$ 1,414,908 $ 138,542 $ 1,553,450
Less: accumulated depreciation...................................... (52,059) - (52,059)
--------------- -------------- --------------
1,362,849 138,542 1,501,391
Construction in progress and land held for development.............. 42,104 - 42,104
Properties held for sale............................................ 1,210 - 1,210
--------------- ------------- --------------
Properties, net.................................................. 1,406,163 138,542 1,544,705
CASH AND CASH EQUIVALENTS.............................................. 2,119 - 2,119
CASH HELD IN ESCROW.................................................... 3,381 - 3,381
ACCOUNTS AND OTHER RECEIVABLES, NET.................................... 11,964 - 11,964
INVESTMENTS IN AND ADVANCES TO JOINT VENTURES.......................... 8,503 - 8,503
GOODWILL .............................................................. 22,535 - 22,535
OTHER ASSETS........................................................... 27,841 - 27,841
--------------- ------------- --------------
TOTAL..................................................................$ 1,482,506 $ 138,542 $ 1,621,048
=============== ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
NOTES PAYABLE
Mortgage notes payable..............................................$ 420,265 $ 27,502 $ 447,767
Revolving credit facilities......................................... 98,931 106,724 205,655
Unsecured senior notes payable...................................... 150,000 - 150,000
--------------- ------------- --------------
669,196 134,226 803,422
Unamortized premium on notes payable................................... 20,945 3,181 24,126
--------------- ------------- --------------
Total notes payable............................................. 690,141 137,407 827,548
--------------- ------------- --------------
OTHER LIABILITIES
Accounts payable and accrued expenses............................... 25,416 864 26,280
Tenant security deposits............................................ 6,678 271 6,949
Other liabilities................................................... 2,895 - 2,895
--------------- ------------- --------------
Total liabilities................................................ 725,130 138,542 863,672
--------------- ------------- --------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES......................... 15,763 - 15,763
--------------- ------------- --------------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value - 10,000 shares authorized but
unissued............................................................
Common stock, $0.01 par value - 100,000 shares authorized, 63,517
shares issued and outstanding.................................... 635 - 635
Additional paid-in capital.......................................... 749,327 - 749,327
Retained earnings................................................... 1,451 - 1,451
Accumulated other comprehensive gain................................ 1 - 1
Unamortized restricted stock compensation........................... (6,194) - (6,194)
Notes receivable from issuance of common stock...................... (3,607) - (3,607)
--------------- ------------- --------------
Total stockholders' equity....................................... 741,613 - 741,613
--------------- ------------- --------------
TOTAL..................................................................$ 1,482,506 $ 138,542 $ 1,621,048
=============== ============= ==============
2
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2003
(In thousands)
A) Reflects the Company's unaudited historical consolidated balance sheet as
of June 30, 2003. The historical balance sheet for the Company includes IRT
and HEB - Spring Shadows.
B) Represents management's estimate of the allocation of the Company's
aggregate purchase price and closing costs for the acquisitions of the
Acquired Properties, excluding HEB - Spring Shadows, totaling $138,542.
Based on management's preliminary analysis, no significant assets or
liabilities related to above or below market leases were acquired in
connection with the Acquired Properties.
Represents assumption of a mortgage note of $27,502 related to Presidential
Markets, bearing a fixed interest rate of 7.65%, maturing in 2011. There is
a premium on the note of $3,181, to be amortized over the remaining life of
the loan. Also, represents other liabilities assumed on the acquisition of
the properties and additional borrowings on the Company's revolving credit
facility of $106,724.
3
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(In thousands except per share amounts)
IRT Pro Forma Acquired Pro Forma
Historical Adjustments Properties Consolidated
(A) (B) (C) (D)
-------------- --------------- --------------- ---------------
RENTAL INCOME:
Minimum rental.............................. $ 66,602 $ 8,371 $ 5,431 $ 80,404
Expense recoveries.......................... 18,599 2,037 1,458 22,094
Termination fees............................ 497 - - 497
Percentage rent payments.................... 1,476 77 283 1,836
-------------- --------------- --------------- ---------------
Total rental revenue..................... 87,174 10,485 7,172 104,831
INVESTMENT INCOME............................... 874 - - 874
OTHER INCOME.................................... 90 - 9 99
-------------- --------------- --------------- ---------------
Total revenues............................ 88,138 10,485 7,181 105,804
-------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Property operating expenses.................. 24,360 2,945 2,209 29,514
Interest expense............................. 18,307 3,158 2,326 23,791
Amortization of deferred financing fees...... 595 - - 595
Rental property depreciation and
amortization................................. 12,099 1,741 940 14,780
General and administrative expenses.......... 5,520 189 - 5,709
-------------- --------------- --------------- ---------------
Total costs and expenses.................. 60,881 8,033 5,475 74,389
-------------- --------------- --------------- ---------------
INCOME BEFORE EQUITY IN INCOME OF JOINT
VENTURES, LOSS ON EXTINGUISHMENT OF DEBT,
AND MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES.................................. 27,257 2,452 1,706 31,415
EQUITY IN INCOME OF JOINT VENTURES............... 260 - - 260
LOSS ON EXTINGUISHMENT OF DEBT................... (623) - - (623)
-------------- --------------- --------------- ---------------
INCOME BEFORE MINORITY INTEREST IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES..................... 26,894 2,452 1,706 31,052
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.. (379) (92) - (471)
-------------- --------------- --------------- ---------------
INCOME FROM CONTINUING OPERATIONS............... $ 26,515 $ 2,360 $ 1,706 $ 30,581
============== =============== =============== ===============
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE
Income from continuing operations............ $ 0.49 $ 0.51
============== ===============
NUMBER OF SHARES USED IN COMPUTING BASIC
EARNINGS PER SHARE............................ 54,080 5,796 59,876
============== =============== ===============
DILUTED EARNINGS PER SHARE
Income from continuing operations............ $ 0.48 $ 0.50
============== ===============
NUMBER OF SHARES USED IN COMPUTING DILUTED
EARNINGS PER SHARE........................... 55,671 5,971 61,642
============== =============== ===============
4
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(In thousands except per share amounts)
A) Represents the Company's unaudited historical consolidated statement of
operations for the six months ended June 30, 2003, including the results of
operations for IRT for the period February 12, 2003 to June 30, 2003 and
HEB - Spring Shadows from April 3, 2003 to June 30, 2003.
B) On February 12, 2003, the Company completed a statutory merger with IRT
Property Company ("IRT"). As a result of the merger, the Company acquired
93 properties that comprise an aggregate of approximately 10,041 square
feet of gross leasable area. The IRT pro forma adjustment is presented to
reflect the effects of the IRT acquisitions and related transactions, and
the impact on the Company's results, as if the transactions had occurred at
the beginning of the period. The pro forma information includes the
acquisition of IRT, the issuance of common stock related to the IRT
transaction, the private placement of common stock and the borrowing under
the revolving credit facility.
C) Represents the unaudited statement of revenues and certain operating
expenses for the Acquired Properties for the six months ended June 30, 2003
(excluding the operations included in the historical results of the
Company), including the following pro forma adjustments detailed below:
(1) Depreciation and amortization expenses totaling $940 based on the
allocation of the purchase price and closing costs to building and
improvements based on estimated useful lives of 40 years.
(2) Additional interest expense totaling $1,265, assumes the borrowing of
$106,724 on the revolving credit facility at a rate of 2.71% (the
Company's effective borrowing rate for the period) and amortization of
interest premium relating to the assumption of a mortgage note on
purchase of Presidential Markets.
D) Represents the Company's consolidated pro forma statement of operations
including pro forma basic and diluted earnings per share as well as the pro
forma weighted average shares outstanding for the six months ended June 30,
2003.
5
IRT Pro Forma Acquired Pro Forma
Historical Adjustments Properties Consolidated
(A) (B) (C) (D)
-------------- -------------- ------------- -------------
RENTAL INCOME:
Minimum rental.............................. $ 72,536 $ 71,044 $ 10,761 $ 154,341
Expense recoveries.......................... 22,983 17,126 2,791 42,900
Termination fees............................ 2,235 1,172 - 3,407
Percentage rent payments.................... 1,507 783 49 2,339
-------------- -------------- ------------- -------------
Total rental revenue...................... 99,261 90,125 13,601 202,987
INVESTMENT INCOME............................... 1,632 413 - 2,045
OTHER INCOME.................................... 1,085 - 88 1,173
-------------- -------------- ------------- -------------
Total revenues............................ 101,978 90,538 13,689 206,205
-------------- -------------- ------------- -------------
COSTS AND EXPENSES:
Property operating expenses.................. 30,023 23,486 4,115 57,624
Interest expense............................. 22,368 21,890 5,546 49,804
Amortization of deferred financing fees...... 884 1,130 - 2,014
Rental property depreciation and
amortization................................. 13,533 11,551 1,907 26,991
Litigation settlement........................ 2,067 - - 2,067
General and administrative expenses.......... 6,649 4,199 - 10,848
-------------- -------------- ------------- -------------
Total costs and expenses................ 75,524 62,256 11,568 149,348
-------------- -------------- ------------- -------------
INCOME BEFORE EQUITY IN INCOME OF JOINT
VENTURES, LOSS ON EXTINGUISHMENT OF DEBT,
GAIN ON SALE OF PROPERTIES AND OUTPARCEL,
AND MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES................................. 26,454 28,282 2,121 56,857
EQUITY IN INCOME OF JOINT VENTURES.............. 549 - - 549
GAIN (LOSS) ON EXTINGUISHMENT OF DEBT........... 1,520 (156) - 1,364
GAIN ON SALE OF PROPERTIES AND OUTPARCEL........ - 1,101 - 1,101
-------------- -------------- ------------- -------------
INCOME BEFORE MINORITY INTEREST IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES.................... 28,523 29,227 2,121 59,871
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES. (101) (559) - (660)
-------------- -------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS............... $ 28,422 $ 28,668 $ 2,121 $ 59,211
============== ============== ============= =============
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE
Income from continuing operations............ $ 0.87 $ 1.04
============== =============
NUMBER OF SHARES USED IN COMPUTING BASIC
EARNINGS PER SHARE............................ 32,662 24,401 57,063
============== ============== =============
DILUTED EARNINGS PER SHARE
Income from continuing operations............ $ 0.86 $ 1.02
============== =============
NUMBER OF SHARES USED IN COMPUTING DILUTED
EARNINGS PER SHARE 33,443 25,426 58,869
============== ============== =============
6
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(In thousands except per share amounts)
A) Represents the Company's unaudited historical consolidated statement of
operations for the year ended December 31, 2002.
B) On February 12, 2003, the Company completed a statutory merger with IRT
Property Company ("IRT"). As a result of the merger, the Company acquired
93 properties that comprise an aggregate of approximately 10,041 square
feet of gross leasable area. The IRT pro forma adjustment is presented to
reflect the effects of the IRT acquisitions and related transactions, and
the impact on the Company's results, as if the transactions had occurred at
the beginning of the period. The pro forma information includes the
acquisition of IRT, the issuance of common stock related to the IRT
transaction, the private placement of common stock and the borrowing under
the revolving credit facility.
C) Represents the unaudited statement of revenues and certain operating
expenses for the Acquired Properties for the year ended December 31, 2002,
including the following pro forma adjustments detailed below:
(1) Depreciation and amortization expenses totaling $1,907 based on the
allocation of the purchase price and closing costs to building and
improvements based on estimated useful lives of 40 years.
(2) Additional interest expense totaling $3,392, assumes the borrowing of
$106,724 on the revolving credit facility at a rate of 3.51% (the
Company's effective borrowing rate for the period) and amortization of
interest premium relating to the assumption of a mortgage note on the
purchase of Presidential Markets.
D) Represents the Company's consolidated pro forma statement of operations
including pro forma basic and diluted earnings per share as well as the pro
forma weighted average shares outstanding for the year ended December 31,
2002.
7