EQY Teams Up to Add to Its Kitty - Analyst Blog

Equity One Inc. (EQY), a real estate investment trust (REIT) that owns, manages and develops neighborhood and community shopping centers in the U.S., has recently formed two joint ventures with privately-held companies to acquire three shopping centers in the U.S.

The company's equity investment in both the joint ventures is worth approximately $37.3 million. The acquisition is part of the long-term strategy of  Equity One to own high-quality malls in major metropolitan markets with high population density, supply constraints and strong tenant sales.

In one of the transactions, Equity One formed a joint venture with Vestar Development Company, a premier privately-held real estate company in the western U.S. The company also formed a joint venture with Rockwood Capital, a privately-held real estate investment firm with a portfolio of over $4.2 billion of equity commitments.

The joint ventures acquired Talega Village Shopping Center, a 102,282 square foot mall (93% occupied) in California; and Vernola Marketplace, a 210,963 square foot shopping center (82% occupied) also in California. The properties are currently owned in a 50/50 partnership between Equity One/Vestar and Rockwood Capital.

In a separate transaction occurring simultaneously, the joint ventures acquired Canyon Trails Towne Center, a 211,581 square foot shopping mall (56% occupied) in Arizona. With 900,000 square feet of retail space, the property is one of the premier lifestyle destination in the region. Equity One has a 90% ownership stake in this Vestar venture.

As of September 30, 2010, Equity One owned 189 properties spanning 19.5 million square feet of space. The majority of the shopping centers owned by Equity One are anchored by pharmacies and large retail stores. The company has a diverse tenant mix – a hedge against tenant concentration risk, thereby ensuring a steady source of income.

In addition, bulk of the company's portfolio is located in some of the most densely populated and high growth areas of the country with high barriers to entry. These include the metropolitan areas around Miami, Fort Lauderdale, West Palm Beach, Jacksonville, Orlando, Atlanta, Georgia, Boston and New York. Consequently, the shopping centers generate relatively strong sales backed by solid trade area demographics.

We have a Neutral rating on Equity One, which presently has a Zacks #3 Rank translating into a short-term Hold rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral' recommendation and a Zacks #3 Rank for Regency Centers Corporation (REG), a competitor of Equity One.

 
EQUITY ONE INC (EQY): Free Stock Analysis Report
 
REGENCY CTRS CP (REG): Free Stock Analysis Report
 
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