Most shareholder letters this year will no doubt focus on the traumas caused by the financial crisis - from liquidity crunches to evaporating demand for space. 2009 surely was a difficult year, but for Equity One it was also a year of validation, transformation, and an opportunity to again prudently take the road less traveled. In 2006, we announced a long term strategic plan to reduce risk through strengthening our balance sheet, disposing of our lower quality assets, upgrading the quality and geographic diversification of our portfolio and reducing our development exposure. What you saw from Equity One in 2009 - reaping the benefits of conservative financial management and making investments while others couldn’t or wouldn’t - is a template for what to expect from us in the future.
2009 finally proved to any in doubt that there are real benefits to low leverage and access to capital. While so many companies this year were consumed with survival and managing daunting short-term maturities, we were instead able to assume an offensive posture. As a result of having a strong balance sheet and stable portfolio, we had the time to intensively evaluate dozens of investment opportunities. During 2009, we invested over $150 million in opportunistic acquisitions, most of it while our peers were frozen, either frantically trying to sell equity or dispose of assets to raise necessary capital. You only heard about those transactions that closed - our acquisition of Westbury Plaza and adjacent land on Long Island, NY, our additional investment in DIM Vastgoed (DIM), our investment in Ramco-Gershenson (RPT) and the repurchases of our publicly traded debt. But you shouldn’t underestimate the value of a management team thinking about the future and prudently investing capital at a time when there were very few other bidders.
We are very excited about our investment in Westbury - a 400,000 square foot shopping center anchored by Wal-Mart and Costco and an adjacent 22 acre development site. The 100% occupied power center generates sales in excess of $500 million per year, or $1,250 per square foot. The property is located in one of the strongest retail corridors in the country, less than a mile from Roosevelt Field Mall, one of the premier shopping malls in the United States. The surrounding area is densely populated, well-educated and affluent, with nearly 850,000 residents living within a 7-mile radius of the property. The adjacent development site will benefit from these positive demographic characteristics as evidenced by the strong tenant demand we have witnessed to date.
While the Westbury transaction provides good reasons to think of Equity One as an opportunistic risk taker - our 2009 activity also exemplifies the prudence that will characterize our future investment activity. We didn’t just buy, we bought fortress quality. The tenants in our new properties represent extraordinarily high quality credits, they are located amid hundreds of thousands of shoppers with very limited local competition, and we bought efficient and enduring design.
During 2009, we placed an emphasis on operational excellence. The results were noteworthy. We signed over 450 new leases and renewals totaling 1.6 million square feet. Our property management team rolled up their sleeves and kept tenant relations on solid ground during one of the most difficult retail climates we have seen. Our accounting, finance and legal teams completed a $126 million equity offering and a $250 million bond offering, consolidated and integrated DIM, and enhanced our quarterly closing process.
I believe our continued commitment to operational excellence is a real and sustainable competitive advantage for Equity One. We are maximizing the value of our existing centers through aggressive leasing efforts, attentive property management and property enhancements. Our leasing professionals stay very close to the markets, are in regular contact with our tenants and are incentivized to drive results. The tenant relations team carefully monitors credit risk and regularly performs portfolio reviews with all major retailers to assess opportunities and strengthen relationships. We have allocated increased internal resources toward collection efforts and have rebid our largest third party vendor contracts in an effort to reduce costs. While many landlords are not in a position to invest in their properties and infrastructure, we remain committed to doing so.
2009 was, in a nutshell, a glimpse into Equity One’s future. We will continue to use a prudent and opportunistic investing style to expand our portfolio into the nation’s most desirable infill markets. Our intensive focus on operational excellence will further solidify our position as a premier operator and allow us to execute on value creation opportunities at new and existing assets. And we’ll accomplish these objectives in a way that protects our balance sheet and allows us to grow per share FFO and NAV.
Sincerely,
Jeffrey S. Olson
April 2010