Market Overview

Equity One Reports Fourth Quarter and Year End 2016 Operating Results

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Equity
One, Inc.
(NYSE:EQY), an owner, developer, and operator of shopping
centers, announced today its financial results for the three months and
year ended December 31, 2016. Net income attributable to Equity One,
Inc. was $17.6 million, or $0.12 per diluted share, for the quarter
ended December 31, 2016, as compared to $13.4 million, or $0.10 per
diluted share, for the fourth quarter of 2015. Net income attributable
to Equity One, Inc. was $72.8 million, or $0.51 per diluted share, for
the year ended December 31, 2016, as compared to $65.5 million, or $0.51
per diluted share, for the same period of 2015. Net income attributable
to Equity One, Inc. for the three months and year ended December 31,
2016 included $5.5 million of merger expenses associated with the
company's pending merger with Regency Centers Corporation ("Regency").
Net income attributable to Equity One, Inc. for the year ended December
31, 2016 also included $14.7 million of debt extinguishment losses and
$3.1 million of impairment losses. Net income attributable to Equity
One, Inc. for the year ended December 31, 2015 included $16.8 million of
impairment losses, $7.3 million of debt extinguishment losses and $8.8
million of income associated with the redemption of the company's
interest in a joint venture.

Highlights of the quarter and recent activity include:

  • Generated net income attributable to Equity One, Inc. for the quarter
    of $0.12 per diluted share, representing a 20% increase as compared to
    the fourth quarter of 2015, and generated net income attributable to
    Equity One, Inc. of $0.51 per diluted share for the year ended
    December 31, 2016, consistent with the same period in 2015
  • Generated Funds From Operations (FFO) for the quarter of $0.29 per
    diluted share, consistent with the fourth quarter of 2015, and Core
    FFO of $0.36 per diluted share for the quarter, representing a 6%
    increase as compared to the fourth quarter of 2015, and generated FFO
    and Core FFO for the year ended December 31, 2016 of $1.23 and $1.41
    per diluted share, respectively, representing growth of 1% and 7%,
    respectively, as compared to the same period in 2015
  • Same-property net operating income (NOI) increased by 4.8% (6.3%
    including redevelopments) for the quarter as compared to the fourth
    quarter of 2015, and increased 4.5% (5.6% including redevelopments)
    for the year ended December 31, 2016 as compared to the same period in
    2015
  • Retail occupancy (excluding developments and redevelopments) was 95.8%
    as of December 31, 2016, up 40 basis points as compared to September
    30, 2016, and down 20 basis points as compared to December 31, 2015
  • Executed 98 leases totaling 489,200 square feet during the quarter,
    including 94 same-space new leases, renewals, and options totaling
    481,101 square feet at an average rent spread of 14.3% on a cash
    basis. On a same-space basis, 29 new leases and 65 renewals and
    options were executed during the quarter at an average rent spread of
    19.8% and 12.0%, respectively
  • Retail portfolio average base rent (including developments and
    redevelopments) was $20.59 per square foot as of December 31, 2016 as
    compared to $20.13 as of September 30, 2016
  • Acquired San
    Carlos Marketplace
    , a 153,510 square foot shopping center located
    in San Carlos, California, for $97.0 million in October 2016
  • Closed on the sale of a non-core asset for a total gross sales price
    of $2.7 million in December 2016. Additionally, subsequent to year
    end, closed on the sale of three non-core assets for a total gross
    sales price of $34.1 million

The company's previously announced planned merger with Regency is
expected to close on or about March 1, 2017, subject to the satisfaction
of customary closing conditions. On February 24, 2017, the stockholders
of both Equity One and Regency approved the merger and other related
items at their respective stockholder meetings.

Financial and Operational Highlights

Net income attributable to Equity One, Inc. for the three months and
year ended December 31, 2016 of $17.6 million and $72.8 million,
respectively, included $5.5 million of merger expenses associated with
the company's pending merger with Regency. Also included in net income
attributable to Equity One, Inc. for the year ended December 31, 2016 is
$14.7 million of debt extinguishment losses primarily from the
redemption of the company's 6.00% and 6.25% senior notes and the
defeasance of a mortgage loan, and $3.1 million of impairment losses.
Net income attributable to Equity One, Inc. for the three months ended
December 31, 2015 of $13.4 million included $4.7 million of debt
extinguishment losses and $2.8 million of impairment losses. Net income
attributable to Equity One, Inc. for the year ended December 31, 2015 of
$65.5 million included $7.3 million of debt extinguishment losses, $16.8
million of impairment losses and $8.8 million of income associated with
the redemption of the company's interest in a joint venture.

In the fourth quarter of 2016, the company generated FFO of $42.7
million, or $0.29 per diluted share, as compared to $40.1 million, or
$0.29 per diluted share, for the fourth quarter of 2015. Core FFO was
$51.7 million, or $0.36 per diluted share, for the fourth quarter of
2016, as compared to $47.3 million, or $0.34 per diluted share, for the
fourth quarter of 2015, representing a 6% increase on a per share basis.
During the year ended December 31, 2016, the company generated FFO of
$176.3 million, or $1.23 per diluted share, as compared to $170.8
million, or $1.22 per diluted share for the same period of 2015,
representing an increase of 1% on a per share basis. Core FFO was $202.1
million, or $1.41 per diluted share, for the year ended December 31,
2016, as compared to $184.5 million, or $1.32 per diluted share, for the
same period of 2015, representing a 7% increase on a per share basis. A
reconciliation of net income attributable to Equity One, Inc. to FFO and
to Core FFO is provided in the tables accompanying this press release.

Same-property NOI excluding redevelopments increased by 4.8% for the
fourth quarter of 2016 as compared to the fourth quarter of 2015, which
was driven primarily by increased minimum rent throughout the portfolio
from new rent commencements, lease renewals and contractual rent
increases at properties including Westwood
Complex
, Buckhead
Station
and Willows
Shopping Center
. Same-property NOI for the broader same-property
pool including redevelopments increased by 6.3% for the fourth quarter
of 2016 as compared to the fourth quarter of 2015 largely due to 17.1%
NOI growth from redevelopment assets, especially at 101
7th Avenue
. A reconciliation of net income attributable to Equity
One, Inc. to same-property NOI is provided in the tables accompanying
this press release. On a same-property basis, occupancy for the
company's retail portfolio was 95.7%, up 40 basis points as compared to
September 30, 2016 and down 30 basis points as compared to December 31,
2015.

One of the company's anchor tenants, The Sports Authority, filed for
bankruptcy in March 2016, which ultimately led to the rejection of all
of the company's four leases. The four leases comprised a total of
108,000 square feet of GLA and aggregate annualized base rent of
approximately $3.8 million. The company executed leases totaling
approximately 93,000 square feet of GLA at three of these locations (Broadway
Plaza
, The
Gallery at Westbury Plaza
and Westbury
Plaza
) at an aggregate annualized base rent of approximately $3.4
million, which exceeds the rent previously paid by The Sports Authority
in those locations. Two of the new tenants commenced rent in October
2016 and the other new tenant is expected to commence paying rent in the
fourth quarter of 2017. The company is actively marketing the one
remaining location.

Development and Redevelopment Activities

As of December 31, 2016, the company had approximately $232.8 million of
active development and redevelopment projects underway of which $89.8
million remained to be incurred.

At Serramonte
Center
in Daly City, California, construction is underway on all
significant components of the $109.1 million, 247,000 square foot
multi-phased redevelopment. The entertainment portion of the project,
anchored by Dave & Buster's, opened and commenced paying rent during the
fourth quarter of 2016. Daiso also opened during the fourth quarter of
2016. The balance to complete this project is estimated at $53.8 million
as of December 31, 2016.

At Countryside
Shops
in Cooper City, Florida, the company continued site work
during the fourth quarter of 2016 to build a new 45,600 square foot
store for Publix that is expected to be delivered in the second quarter
of 2017, reconfigure existing space to accommodate Ross Dress for Less,
and make other enhancements to the center. The balance to complete this
project is estimated at $15.7 million as of December 31, 2016.

At Pablo
Plaza
, in Jacksonville, Florida, an $18.0 million project is
underway which will add a Whole Foods specialty grocery anchor, add a
PetSmart junior anchor, reconfigure shop space to accommodate another
junior anchor, and add a Chipotle as an outparcel to the center. Both
PetSmart and the Chipotle opened for business and commenced paying rent
during the fourth quarter of 2016. The company closed on the purchase of
a 4,000 square foot outparcel, adjacent to the property and occupied by
Mattress Firm, for $2.6 million in November 2016. The balance to
complete this project is estimated at $10.6 million as of December 31,
2016.

At Point
Royale
in Miami, Florida, the approximately 50,500 square foot space
built for Burlington substantially replaces the space previously leased
to Best Buy. Burlington opened and commenced paying rent during the
fourth quarter of 2016. The company is in discussions with national
tenants to lease the center's remaining 30,000 square feet of junior
anchor space. The total budget for the redevelopment of Point Royale is
estimated at $9.8 million with a balance to complete of $5.7 million as
of December 31, 2016.

Acquisition and Disposition Activity

In October 2016, the company acquired San
Carlos Marketplace
, a 153,510 square foot shopping center located in
San Carlos, California, for $97.0 million and paid $3.4 million for the
prepayment penalty on the existing mortgage loan encumbering the
property that was not assumed in the acquisition. The property is 100%
leased and anchored by TJMaxx/HomeGoods, Best Buy, PetSmart and Bassett
Furniture. In connection with this transaction, the company drew the
remaining $75.0 million under its $300.0 million delayed draw term loan
facility.

In December 2016, the company closed on the sale of Thomasville Commons
located in Thomasville, North Carolina, for a gross sales price of $2.7
million. Additionally, subsequent to year end, the company closed on the
sale of Lantana Village located in Lantana, Florida, Riverview Shopping
Center located in Durham, North Carolina, and Centre Pointe Plaza
located in Smithfield, North Carolina for an aggregate gross sales price
of $34.1 million.

Balance Sheet Highlights

At December 31, 2016, the company's total market capitalization
(including debt and equity) was $5.9 billion, comprising 145.3 million
shares of common stock outstanding (on a fully diluted basis) valued at
approximately $4.5 billion and approximately $1.4 billion of debt
(excluding any debt premium/discount). The company's ratio of net debt
(net of cash) to total market capitalization was 23.9%. At December 31,
2016, the company had approximately $16.7 million of cash and cash
equivalents on hand and $118.0 million outstanding under its $850.0
million revolving credit facility. During the quarter, the company did
not sell any shares of its common stock under its "at-the-market" equity
offering program.

ACCOUNTING AND OTHER DISCLOSURES

The company believes FFO (combined with the primary presentations in
accordance with accounting principles generally accepted in the United
States of America ("GAAP")) is a useful, supplemental measure of its
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 diminishes 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 further states that "adjustments for
unconsolidated partnerships and joint ventures will be calculated to
reflect funds from operations on the same basis." The company makes
certain adjustments to FFO, which it refers to as Core FFO, to account
for items it does not believe are representative of ongoing operating
results, including transaction costs associated with acquisition and
disposition activity and other financing and investing activities,
merger expenses, impairment of goodwill, land and joint venture
investments, severance and reorganization costs, gains (or losses) on
the extinguishment of debt, and gains (or losses) on the disposal of
non-depreciable assets. The company also believes that Core FFO is a
useful, supplemental measure of its core operating performance that
facilitates comparability of historical financial periods. The company
believes that the presentation of comparable period operating results
generated from its FFO and Core FFO measures provides financial
analysts, investors and stockholders with more complete information
regarding the company's performance than they would have without the
presentation of this information.

The company uses NOI and cash NOI, which are non-GAAP financial
measures, internally as performance measures and believes NOI and cash
NOI provide useful information to investors regarding the company's
financial condition and results of operations because they reflect only
those income and expense items that are incurred at the property level
and when compared across periods, reflect the impact on operations from
trends in occupancy rates, rental rates, operating costs and acquisition
and disposition activity on an unleveraged basis. In this release, the
company has provided NOI information on a same-property basis.
Information provided on a same-property basis, unless otherwise noted,
includes the results of properties that the company consolidated, owned
and operated for the entirety of both periods being compared and
excludes non-retail properties and properties for which significant
development or redevelopment occurred during either of the periods being
compared. The same-property pool including redevelopments includes those
properties that the company consolidated, owned and operated for the
entirety of both periods being compared, including properties for which
significant redevelopment occurred during either of the periods being
compared, but excluding non-retail properties and development
properties. For the three months ended December 31, 2016, the company
moved three properties that had been under redevelopment (Boynton Plaza,
Kirkman Shoppes and Willows Shopping Center) with 473,210 square feet
into the same-property pool. In addition, during the year ended December
31, 2016, the company moved one property that had been under
redevelopment (Alafaya Commons) with 130,811 square feet into the
same-property pool and moved one property (Point Royale), with 182,339
square feet out of the same-property pool as it is undergoing
redevelopment.

The company's method of calculating FFO, Core FFO, NOI, cash NOI and
same-property NOI may be different from methods used by other REITs and,
accordingly, may not be comparable to such other REITs. FFO, Core FFO,
NOI, cash NOI and same-property NOI are presented to assist investors in
analyzing the company's operating performance. Neither FFO, Core FFO,
NOI, cash NOI nor same-property NOI (i) represents cash flow from
operations as defined by GAAP, (ii) is indicative of cash available to
fund all cash flow needs, including the ability to make distributions,
(iii) is an alternative to cash flow as a measure of liquidity, or (iv)
should be considered as an alternative to net income (which is
determined in accordance with GAAP) for purposes of evaluating the
company's operating performance. The company believes net income
attributable to Equity One, Inc. is the most directly comparable GAAP
measure to FFO, Core FFO, NOI, cash NOI and same-property NOI.
Reconciliations of these measures to their respective comparable GAAP
measures have been provided in the tables accompanying this press
release.

Retail occupancy as used herein refers to the company's consolidated
portfolio and excludes developments and redevelopments and non-retail
and unconsolidated joint venture properties.

FOR ADDITIONAL INFORMATION

For a copy of the company's fourth quarter supplemental information
package, please access the "Investors" section of Equity One's web site
at www.equityone.com.
To be included in the company's e-mail distributions for press releases
and other company notices, please click here
or send contact details to Investor Relations at investorrelations@equityone.com.

ABOUT EQUITY ONE, INC.

As of December 31, 2016, the company's portfolio comprised 122
properties, including 101 retail properties and five non-retail
properties totaling approximately 12.8 million square feet of gross
leasable area, or GLA, 10 development or redevelopment properties with
approximately 2.3 million square feet of GLA, and six land parcels. As
of December 31, 2016, the company's retail occupancy excluding
developments and redevelopments was 95.8% and included national,
regional and local tenants. Additionally, the company had joint venture
interests in six retail properties and two office buildings totaling
approximately 1.4 million square feet of GLA.

FORWARD LOOKING STATEMENTS

Certain matters discussed by Equity One in this press release
constitute forward-looking statements within the meaning of the federal
securities laws. Forward-looking statements 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.
Although Equity One believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can
give no assurance that these expectations will be achieved. Factors that
could cause actual results to differ materially from current
expectations include the ability to consummate the previously announced
merger between Equity One and Regency; volatility in the capital markets
and changes in borrowing rates; changes in macro-economic conditions and
the demand for retail space in the markets in which Equity One owns
properties; the continuing financial success of Equity One's current and
prospective tenants; the risks that Equity One may not be able to
proceed with or obtain necessary approvals for development or
redevelopment projects or that it may take more time and cost to
complete such projects or incur costs greater than anticipated; the
availability of properties for acquisition; the timing, extent and
ultimate proceeds realized from asset dispositions; the extent to which
continuing supply constraints occur in geographic markets where Equity
One owns properties; the success of Equity One's efforts to lease up
vacant space; changes in key personnel; the effects of natural and other
disasters; the ability of Equity One to successfully integrate the
operations and systems of acquired companies and properties; changes in
Equity One's credit ratings; and other risks, which are described in
Equity One's filings with the Securities and Exchange Commission.

 
EQUITY ONE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, 2016 and 2015
(Unaudited)
(In thousands, except share par value amounts)
 
 

December 31,
2016

 

December 31,
2015

ASSETS
Properties:
Income producing $ 3,509,492 $ 3,337,531
Less: accumulated depreciation   (493,162 )   (438,992 )
Income producing properties, net 3,016,330 2,898,539
Construction in progress and land 141,829 167,478
Properties held for sale   32,630     2,419  
Properties, net 3,190,789 3,068,436
Cash and cash equivalents 16,650 21,353
Restricted cash 250 250
Accounts and other receivables, net 11,699 11,808
Investments in and advances to unconsolidated joint ventures 61,796 64,600
Goodwill 5,719 5,838
Other assets   207,701     203,618  
TOTAL ASSETS $ 3,494,604   $ 3,375,903  
 
LIABILITIES AND EQUITY
Liabilities:
Notes payable:
Mortgage loans $ 255,646 $ 282,029
Senior notes 500,000 518,401
Term loans 550,000 475,000
Revolving credit facility   118,000     96,000  
1,423,646 1,371,430
Unamortized deferred financing costs and premium/discount on notes
payable, net
  (8,008 )   (4,708 )
Total notes payable 1,415,638 1,366,722
Other liabilities:
Accounts payable and accrued expenses 51,547 46,602
Tenant security deposits 9,876 9,449
Deferred tax liability 14,041 13,276
Other liabilities   163,215     169,703  
Total liabilities   1,654,317     1,605,752  
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value – 10,000 shares authorized but
unissued
Common stock, $0.01 par value – 250,000 shares authorized and 144,861
and 129,106 shares issued and outstanding at December 31, 2016 and
2015, respectively 1,449 1,291
Additional paid-in capital 2,304,395 1,972,369
Distributions in excess of earnings (461,344 ) (407,676 )
Accumulated other comprehensive loss   (4,213 )   (1,978 )
Total stockholders' equity of Equity One, Inc.   1,840,287     1,564,006  
Noncontrolling interests       206,145  
Total equity   1,840,287     1,770,151  
TOTAL LIABILITIES AND EQUITY $ 3,494,604   $ 3,375,903  
 
 
EQUITY ONE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
For the three months and year ended December 31, 2016 and 2015
(Unaudited)
(In thousands, except per share data)
 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2016   2015 2016   2015
REVENUE:
Minimum rent $ 73,665 $ 68,983 $ 287,487 $ 272,204
Expense recoveries 19,769 20,217 81,585 80,737
Percentage rent 838 855 5,126 5,335
Management and leasing services   303     445     1,140     1,877  
Total revenue   94,575     90,500     375,338     360,153  
COSTS AND EXPENSES:
Property operating 12,692 12,606 51,705 51,373
Real estate taxes 9,844 9,960 43,041 42,167
Depreciation and amortization 24,389 24,024 102,252 92,997
General and administrative   12,995     9,913     39,426     36,277  
Total costs and expenses   59,920     56,503     236,424     222,814  
INCOME BEFORE OTHER INCOME AND EXPENSE AND INCOME TAXES 34,655 33,997 138,914 137,339
OTHER INCOME AND EXPENSE:
Equity in income of unconsolidated joint ventures 602 2,060 2,711 6,493
Other income 39 336 909 6,200
Interest expense (11,783 ) (13,279 ) (48,603 ) (55,322 )
(Loss) gain on sale of operating properties (23 ) 3,670 3,952
Loss on extinguishment of debt (4,735 ) (14,650 ) (7,298 )
Impairment losses (2,829 ) (3,121 ) (16,753 )
Merger expenses   (5,505 )       (5,505 )    
INCOME BEFORE INCOME TAXES 17,985 15,550 74,325 74,611
Income tax (provision) benefit of taxable REIT subsidiaries   (354 )   389     (1,485 )   856  
NET INCOME 17,631 15,939 72,840 75,467
Net income attributable to noncontrolling interests       (2,507 )       (10,014 )
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC. $ 17,631   $ 13,432   $ 72,840   $ 65,453  
 
EARNINGS PER COMMON SHARE
Basic $ 0.12   $ 0.10   $ 0.51   $ 0.51  
Diluted $ 0.12   $ 0.10   $ 0.51   $ 0.51  
 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic   144,775     129,048     142,492     127,957  
Diluted   145,015     129,301     143,167     128,160  
 
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.22   $ 0.22   $ 0.88   $ 0.88  
 

EQUITY ONE, INC. AND SUBSIDIARIES
Reconciliation of Net
Income Attributable to Equity One, Inc. to FFO and to Core FFO

The
following table reflects the reconciliation of net income attributable
to Equity One, Inc., the most directly comparable GAAP measure, to FFO
and to Core FFO for the periods presented.

         
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2016   2015 2016   2015
 
(In thousands, except per share data)
 
Net income attributable to Equity One, Inc. $ 17,631 $ 13,432 $ 72,840 $ 65,453
Real estate depreciation and amortization, net of
noncontrolling interest 24,096 23,685 101,059 91,705
Pro-rata share of real estate depreciation and
amortization from unconsolidated joint ventures 957 943 3,577 3,947
Loss (gain) on disposal of depreciable real estate (1) 23 (3,670 ) (3,952 )
Pro rata share of gains on disposal of depreciable
assets from unconsolidated joint ventures, net of

noncontrolling interest (2)

(1,403 ) (8,428 )
Impairments of depreciable real estate 1,579 2,454 12,886
Tax effect of adjustments     (599 )       (768 )
FFO 42,707 37,637 176,260 160,843
Earnings attributed to noncontrolling interest (3)     2,499         9,995  
FFO Available to Diluted Common Stockholders 42,707 40,136 176,260 170,838
Transaction costs (4) 3,496 1,073 4,919 2,733
Merger expenses (5) 5,505 5,505
Impairment of goodwill, land and joint venture investments 1,250 667 3,867
Reorganization and severance adjustments (6) 57 196 637
Loss on extinguishment of debt 4,735 14,650 7,298
Tax effect of adjustments         (70 )   (918 )
Core FFO Available to Diluted Common Stockholders $ 51,708 $ 47,251   $ 202,127   $ 184,455  
FFO per Diluted Common Share $ 0.29 $ 0.29 $ 1.23 $ 1.22
Core FFO per Diluted Common Share $ 0.36 $ 0.34 $ 1.41 $ 1.32
Weighted average diluted shares (7) 145,015 140,659 143,167 139,518
                 

(1)

  Includes the recognition of deferred gains of $3.3 million
associated with the past disposition of assets by the company to
GRI-EQY I, LLC (the "GRI JV") for the year ended December 31, 2015.

(2)

Includes the remeasurement of the fair value of the company's equity
interest in the GRI JV of $5.5 million for the year ended December
31, 2015.

(3)

Represents earnings attributed to convertible units held by Liberty
International Holdings Limited ("LIH") for the three months and year
ended December 31, 2015. Although these convertible units are
excluded from the calculation of earnings per diluted share for the
three months and year ended December 31, 2015, FFO available to
diluted common stockholders includes earnings allocated to LIH, as
the inclusion of these units is dilutive to FFO per diluted share.
In January 2016, LIH exercised its redemption right with respect to
all of its outstanding convertible units in the CapCo joint venture,
and the company elected to satisfy the redemption through the
issuance of approximately 11.4 million shares of its common stock to
LIH. LIH subsequently sold the shares of common stock in a public
offering that closed on January 19, 2016.

(4)

Represents costs primarily associated with acquisition and
disposition activity of $3.5 million and $4.4 million, for the three
months and year ended December 31, 2016, respectively, as well as
costs of $348,000 incurred during the year ended December 31, 2016
in connection with the company's issuance of shares of common stock
to satisfy the exercise of LIH's redemption right and the subsequent
sale of these shares by LIH in a public offering. For the three
months and year ended December 31, 2015, includes $300,000 and $1.8
million, respectively, of acquisition and disposition costs, and
$773,000 and $908,000, respectively, of costs associated with a
financing transaction that was not consummated, the initiation of
the company's "at-the-market" equity offering program, and affiliate
public offerings.

(5)

Represents expenses associated with the company's pending merger
with Regency.

(6)

For the year ended December 31, 2016, represents severance expenses.
For the three months and year ended December 31, 2015, primarily
includes costs associated with the company's executive transition
and severance expenses.

(7)

Weighted average diluted shares used to calculate FFO per share and
Core FFO per share for the three months and year ended December 31,
2015 is higher than the GAAP diluted weighted average shares as a
result of the dilutive impact of the 11.4 million joint venture
units that were held by LIH which were convertible into the
company's common stock. These convertible units were not included in
the diluted weighted average share count for the three months and
year ended December 31, 2015 for GAAP purposes because their
inclusion was anti-dilutive.
 

EQUITY ONE, INC. AND SUBSIDIARIES
Reconciliation of Net
Income Attributable to Equity One, Inc. to Same-Property NOI

The
following table reflects the reconciliation of net income attributable
to Equity One, Inc., the most directly comparable GAAP measure, to
same-property NOI for the periods presented.

         
   
Three Months Ended

December 31,

Year Ended

December 31,

2016   2015 2016   2015
(dollars in thousands)
Net income attributable to Equity One, Inc. $ 17,631 $ 13,432 $ 72,840 $ 65,453
Net income attributable to noncontrolling interests 2,507 10,014
Income tax provision (benefit) of taxable REIT subsidiaries   354     (389 )   1,485     (856 )
Income before income taxes 17,985 15,550 74,325 74,611
Less:
Management and leasing services income 303 445 1,140 1,877
Equity in income of unconsolidated joint ventures 602 2,060 2,711 6,493
(Loss) gain on sale of operating properties (23 ) 3,670 3,952
Other income 39 336 909 6,200
Add:
Depreciation and amortization expense 24,389 24,024 102,252 92,997
General and administrative expense 12,995 9,913 39,426 36,277
Interest expense 11,783 13,279 48,603 55,322
Loss on extinguishment of debt 4,735 14,650 7,298
Impairment losses 2,829 3,121 16,753
Merger expenses (1)   5,505         5,505      
Total NOI 71,736 67,489 279,452 264,736
Straight-line rent (1,067 ) (1,101 ) (4,840 ) (4,612 )
Accretion of below-market lease intangibles, net (3,642 ) (3,505 ) (13,439 ) (13,793 )
Intercompany management fees (3,035 ) (2,784 ) (11,953 ) (11,212 )
Amortization of lease incentives 337 262 1,264 1,034
Amortization of below-market ground lease intangibles   193     152     733     601  
Total Cash NOI 64,522 60,513 251,217 236,754
Other non same-property NOI (2,678 ) (2,148 ) (13,124 ) (10,664 )
Adjustments (2)   (44 )   (238 )   (30 )   (745 )
Same-property NOI including redevelopments (3) 61,800 58,127 238,063 225,345
Redevelopment property NOI   (8,313 )   (7,100 )   (42,714 )   (38,432 )
Same-property NOI (3) $ 53,487   $ 51,027   $ 195,349   $ 186,913  
 
Growth in same-property NOI 4.8 % 4.5 %
Number of properties (4) 97 88
 
Growth in same-property NOI including redevelopments 6.3 % 5.6 %
Number of properties (5) 106 97
                 

(1)

  Represents expenses associated with the company's pending merger
with Regency.

(2)

Includes adjustments for items that affect the comparability of, and
were excluded from, the same-property results. Such adjustments
include: common area maintenance costs and real estate taxes related
to a prior period, revenue and expenses associated with outparcels
sold, settlement of tenant disputes, lease termination revenue and
expense, or other similar matters that affect comparability.

(3)

Included in same-property NOI for the year ended December 31, 2016
is $366,500 in rents related to prior periods that were recognized
in connection with the execution of a retroactive anchor lease
renewal at Westwood Complex.

(4)

The same-property pool includes only those properties that the
company consolidated, owned and operated for the entirety of both
periods being compared and excludes non-retail properties and
properties for which significant development or redevelopment
occurred during either of the periods being compared.

(5)

The same-property pool including redevelopments includes those
properties that the company consolidated, owned and operated for the
entirety of both periods being compared, including properties for
which significant redevelopment occurred during either of the
periods being compared, but excluding non-retail properties and
development properties.

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