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Executives

Feryal Akin - Director, IR

Jeff Olson - President and CEO

Greg Andrews - CFO

Tom McDonough - CIO

Arthur Gallagher - General Counsel

Bob Malagon - VP of Development.

Analysts

Paul Morgan - FBR

Michael Mueller - JPMorgan

Lou Taylor - Deutsche Bank

Paul Adornato - BMO Capital Markets

Susan Berliner - Bear Stearns

Rich Moore - RBC Capital Markets

Nathan Isbee - Stifel Nicolaus

Craig Schmidt - Merrill Lynch

Equity One Inc. (EQY) Q4 2007 Earnings Call February 20, 2008 10:00 AM ET

Operator

Good day ladies and gentlemen, and welcome to the fourth quarter 2007 Equity One Earnings Call. My name is Stacy and I will be your moderator for today. (Operator Instructions).

At this time, I will now turn the presentation over to your host for today Ms. Feryal Akin, Director of Investor Relations, please proceed.

Feryal Akin

Thank you Stacy, good morning ladies and gentlemen. Thank you all for joining the Equity One 2007 fourth quarter and 2007 year end earnings call. With me on the call this morning are Jeff Olson, President and CEO; Greg Andrews, Chief Financial Officer; Tom McDonough, Chief Investment Officer Arthur Gallagher, General Counsel and ; Bob Malagon, VP of Development.

Before we start I would like to address forward-looking statements that may be addressed on the call. Forward-looking statements involve risks and uncertainties. Actual future performance outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Equity One with the SEC. Specifically the most recent reports on Forms 10-K and 10-Q, which identifying important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

We will open the conference up for Q&A after the presentation. I will now turn the call over to Jeff Olson.

Jeff Olson

Thank you, Feryal and good morning. Thank you for joining us for our fourth quarter 2007 earnings call. Our principal theme for 2007 and as we enter 2008 is our continued interest in lowering the risk premium on our stock. During the past year we have made great strides towards making this happen. Through building a stronger balance sheet, disposing of many of our lower tier assets and using those proceeds to acquire top tier properties in supply constrained markets.

We have also improved our properties through redevelopment and most recently established an alternative source of equity capital with the largest pension fund in the country. We are very pleased with our 2007 results, and I'd like to share with you the same positives and negatives we shared with our audit committee earlier this week.

On the positive side, first, our year end FFO of $1.34 a share was towards the higher end of our latest guidance of $1.32 to $1.34 share. Also, our 2008 guidance is inline with expectations. Greg, will go through the numbers with you in detail.

Second, we have upgraded our portfolio through selective dispositions and acquisitions. During the year, we sold l4 lower tier properties for $73 million including four centers anchored by Winn-Dixie. All but two of these dispositions occurred in the fourth quarter. We were pleased with the pricing especially in light of the secondary markets in which these properties are located.

On the acquisition front we acquired four high-quality centers for $129 million, most notably Concord in Miami and Buckhead Station in Atlanta. These centers are situated in densely populated markets with severe supply constrains and contain leases with below market rents.

Third, same-store NOI for the year was a respectable 3.3%. This was driven by year-over-year cash leasing spreads of 27% on new leases and 15% on renewals.

Fourth, our redevelopment and development projects are progressing well. During the year we completed two ground-up developments, shops at Westridge and Winchester for $19 million. We also completed four re-development projects having a total cost of $21 million. We're currently underway with $23 million in new re-development project and $59 million in new developments.

Finally our balance sheet is in great shape. Our debt to total capitalization ratio was less than 40% at year end. We have limited maturities this year totaling $34 million out of $1.2 billion in total debt.

On the negative side, same store NOI for the quarter was lower than expected at 1.4%. This was primarily a result of certain year end adjustments on our expense recoveries and higher bad debt.

Same store growth would've been closer to 4.5% if these adjustments were excluded. Greg will comment on this in more detail. Second, occupancy ended at 93.2% down 30 bases points as compared to September 30th, '07. The drop was primarily due to the unexpected loss of a 91,000 square foot anchor tenant and Wesley Chapel paying a low rent of $5 a foot.

Excluding this loss occupancy would've increase to 93.7%. Also contributing to the occupancy loss were four Hollywood video stores we received back early as a result of their bankruptcy.

These stores accounted for 22,000 square feet paying an average rent of $19.50 a foot as compared to market of $25 a foot. Each of these four locations are in high profile areas where we expect re-lease the space with minimal down time.

Third we pushed our stabilization date on our Sunlight development to 4Q '09 from 4Q '08. The good news is that we are still expecting Publix will open in the fourth quarter of this year. However we anticipate it will take a bit longer to complete the rest of the development including selling off the excess land.

And fourth and finally as we previously announced Jeff Stauffer, our Chief Operating Officer resigned for personal reasons effective February 28th. While we are disappointed for the loss of such a great leader, we are all grateful for his contributions. And I am particularly grateful for his ability to organize a top quality leasing and property management firm.

Overall we are pleased with our 2007 results. We indicated on the last two conference calls that we are exploring the use of joint venture capital. We are pleased to announce that we have found two excellent partners First Washington Realty and CalPERS for our first joint venture fund.

As some of you may know First Washington and CalPERS built up a national portfolio of grocery-anchored neighborhood centers having a value of $2.8 billion when it was sold to a joint venture between Regency Centers and Macquarie in 2005. Tom McDonough our Chief Investment Officer played a critical role in helping us structure this joint venture's first acquisition the $37 million grocery-anchored center in Miami.

Equity One will own a 10% interest and earn market rate fees in a back ended promo. We are very pleased with the structure and economics of our joint venture; however we do not plan to disclose specific details in the interest of confidentiality.

We are excited about our joint venture on many levels. I've known the individuals at First Washington and CalPERS for nearly a decade. As an analyst, I used to follow First Washington's stock and came to appreciate their capital allocation decisions and intensive operating style. Two things we can continue to learn and improve upon.

They have an impressive track record as a public and private company with an eye towards being responsible fiduciaries, and earning high returns for their investors. We have always wanted to do business together. We also believe it is important to have an alternative capital source especially during these times. While there is plenty of capital to build this fund into a sizeable entity, we have not designated a targeted amount. It will be built on a property-by-property basis, with each asset standing on its own.

Our business plan for 2008 remains grounded by our strategy of owning and operating high quality grocery-anchored neighborhood centers in major markets throughout the country, having below market rents. Our supermarket anchors generate sales that are approaching $500 a foot with rents that are less than $9 a foot or 50% below market. We believe our average shop rents are 15% to 20% below market.

Given the built-in rent increases coupled with our normalized roll-over, we expect our portfolio will deliver 3% to 4% same-property NOI growth over an extended time period. However, given the current state of the economy our 2008 NOI guidance of 2% to 3% reflects some uncertainty in retailer demand. We remain excited about our business and are committed to providing our shareholders with a defensive strategy during these turbulent times.

Greg, will now review the numbers.

Greg Andrews

Thank you Jeff, good morning everyone. Before I go through the numbers, I'd like to address our accomplishments on the development and leasing fronts during the quarter. On the development front, we completed two projects during the quarter.

The first is Chapel Trail and Pembroke Pines, Florida where L.A. Fitness opened a brand new location in a vacant Winn Dixie box that we acquired in 2006. Chapel Trail is adjacent to our Publix anchored shops at Silver Lake. Upon opening L.A Fitness exceeded their initial membership expectations by 30%.

The second development opened in the fourth quarter was Stanley Marketplace, a 53,000 square foot redevelopment property in Stanley, North Carolina about 15 miles from Charlotte and anchored by a state of the art Food Lion. Upon stabilization, these projects are expected to yield over 10% on costs.

We currently have a number of developments and redevelopment underway. I'll highlight just a few of them. At our Mandarin Landing center in Jacksonville, Florida, we recently delivered the pad to Whole Foods, which has commenced construction with an anticipated opening date of January 2009.

At Sunlake in Tampa, Florida, we've broken ground on our Publix anchor development. Publix is expected to open for business near the end of this year. At Sheridan Plaza in Hollywood, Florida, we have demolished the old AMC theatre, relocated other tenants and are preparing a pad for delivery to Kohl’s in early March.

We are very pleased with the attentiveness that our development construction and leasing teams have shown to these projects. They are building a track record of success on the development front that we expect will only get better in 2008 and beyond.

On the leasing front we had an active quarter, we executed new or renewal leases with many national or regional shop tenants or franchises such as Radio Shack, Subway GNC, H&R Block, Banc of America and UPS. Our focus is on merchandising our centers with productive and profitable merchants that serve the community.

The impact of this leasing strategy continues to be evident in our leasing spreads. During the quarter we executed new leases at an average rent spread on a cash basis of 28% over the prior rates. Rents on renewal leases were 14% higher than prior rents. All rents on leases that renewed subject to auctions increased 5%.

We are also pleased to report two important anchor conversions. At Treasure Coast in Vero Beach, Publix relocated from across the street in to a former Winn Dixie box in our center and opened for business in November. Publix is indicating strong sales out of the gate at this store.

At Boca Village in Boca Raton, Publix will be converting their conventional store to a new Green Life Store, which is a higher end organic concept. The Green Life Store will open this June and will immediately distinguish our center from the competition in this high income area.

Now for the numbers, we reported fourth quarter FFO of $0.29 per share in line with our internal forecast. For the full year we reported FFO of $1.34 per share, which was also within the range of guidance provided on our third quarter call. The quarter contained the following six notable items.

Item one our recovery ratio was lower than in prior quarters, which reduced FFO by approximately $0.02 per share. The lower recovery ratio reflects mostly a year end true-up for tenant recoveries of about $1.50 per share. Although we make estimates to match our recovery revenue to our recoverable expenses throughout the year, our periodic recovery true-ups prove to be too high once we calculated our actual expenses at year end. We are tightening up our true-up process for 2008 to minimize the quarterly fluctuations going forward.

Our recovery ratio in the fourth quarter was also reduced by about $1.50 per share due to higher than normal bad debt expense. The bad debt expense this quarter reflects both the more challenging environment for certain tenants and our conservative policy with respect to reserving for receivables at properties we have sold. Although, we believe it is appropriate to be conservative in setting bad debt reserves, we do pursue all legal means available to us in collecting amounts we are due.

While the quarter was affected by these two items, our full year recovery ratio of 83.1% exceeded last year's recovery ratio of 81.5% by a healthy 160 basis points. We attribute this increase to our efforts to build and collect in accordance with our leases and without land or contributions.

Recovery true-ups and bad debt expense had an affect on our same property NOI growth in the quarter, which was 1.4%. For the full year our same property NOI increased 3.3% reflecting internal growth from contractual rent increases, strong leasing spreads, and affective expense management.

Offsetting the growth in rents and expense control was a modest 40 basis points decrease in same property occupancy from 93.6% at year end 2006 to 93.2% at year end 2007. At this time last year we forecast same property NOI growth for the year of 3% to 4%. Our leasing agents and property managers really delivered the goods for us in 2007.

Item two, the contribution from straight line rent this quarter was negative $224,000 compared to our more typical quarter of positive $400,000 to $600,000. This reflects a write-off of certain straight line rent receivables that we deemed uncollectible, as well as a modest reserve for our straight line rent receivables were collection maybe doubtful.

The majority of our straight line rent receivable is attributable to tenants who are creditworthy and productive retailers. So, we expect positive straight line rent in future quarters. There is also worth noting that the straight line rent booked in the fourth quarter of last year included a one time catch-up adjustment of approximately $1 million to adjust for the company's could version to straight lining in 2004.

Item number three. We booked $382,000 or $0.015 per share of investment income this quarter, which primarily reflect interest earned on $55 million of cash proceeds from our fourth quarter dispositions that were held in 1031 exchange accounts at year end. In February, we used approximately $45 million of escrow cash to pay down our line of credit and provide working capital.

Item four, we recorded $544,000 or about $0.01 per share of gains on land sales in the quarter. The gains were generated by the sale of two land parcels for net proceeds of $1.6 million.

Item five, we booked an impairment loss of $430,000 or about $0.015 per share. This loss relates to a property, we've slated for sale.

Item six, we booked a loss on the early extinguishment of debt of $491,000 related to our fourth quarter dispositions. Although, the gain from these dispositions is not included in FFO, the loss on extinguishment of debt is required to be included in FFO under SEC rules.

We had anticipated recording a larger charge for prepaying debt related to dispositions, but the composition of our dispositions pool changed and these pre-payments were not necessary.

Quarterly fluctuations aside, our business remains in good health as the full year results for same property NOI growth, NOI Margin and recovery ratio all exceeded the comparable results posted last year.

Turning to our balance sheet, we continue to maintain a conservative financial position that affords plenty of flexibility as a result of our dispositions of non-core properties concluded in the fourth quarter. We now have no debt drawn under our bank line today and in fact have cash on hand.

Our only significant debt material this year consists of $23 million mortgage due in the middle of the year. Our scheduled principal amortization amounts to roughly $11 million for the year. We anticipate funding our development using proceeds from dispositions and availability under our line of credit.

Turning to 2008 our guidance for FFO before any gains on land sales is $1.40 to $1.45 per share. This guidance assumes same property NOI growth of 2% to 3% during 2008. This is lower than the 3.3% same property NOI growth generated in 2007, but we believe it is prudent to assume that 2008 may be more challenging on the leasing front.

We do anticipate recognizing some gains on land sales during 2008 given a pipeline of outparcels at our developments and at some existing centers. However the timing and amounts are difficult to predict at this stage and for that our guidance exclusively excludes any gains on land sales.

Our FFO guidance also excludes charges for the early extinguishment of debt because we do not currently foresee incurring debt prepayment penalties. After a year of transition during which we have been building a more robust platform on all fronts we are excited about our prospects in 2008.

At this point I'd like to turn the call over to the operator so we can take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Paul Morgan with FBR. Please proceed.

Paul Morgan - FBR

Good morning. About the joint venture, could you just maybe give a little more detail about the focused asset is it? We see the Miami asset is it within your core geographic markets or is it national, and then if you also maybe compare us with whether it would be value-added properties or kind of core the type that you don't buy within your core portfolio?

Jeff Olson

Good morning, Paul. I mean, we certainly are focused on first on the markets in which we have critical mass and experience where we might be able to get off market deals. We're not limited by that, and we could potentially use it to expand into newer markets, and as you know, there are certain markets that we like primarily the costal ones.

But, everything really will be looked at on a case-by-case basis. And if the first acquisition out of the gate happens to be in an area that we have a lot expertise and we think that in this particular asset that there could be an anchor repositioning down the line during the whole period, and that's really going to be the (inaudible).

Paul Morgan - FBR

So, how would I distinguish what you might acquire within your core or should we expect pretty much all acquisitions activities to be in the JV?

Jeff Olson

I mean we are certainly going to be, I mean given our cost of capital, we're certainly going to be focused more on the JV and using other people's capital in buying assets for ourselves within the core, unless there is a 1031 need that we have to prevail.

Paul Morgan - FBR

Okay. And you still would have a 1031 need associated with the dispositions you did. Is that right?

Jeff Olson

Not on the 2007 dispositions.

Paul Morgan - FBR

No, okay. Okay, my second question on the same store kind of NOI trends. Your breakout revenue and expenses and revenue for '07 was up 1.7%, expenses were down 2%. Is there any reason that we should think that, that type of pattern where you can actually push the expenses down, would persist or change during 2008?

Greg Andrews

Well, first of all Paul, the revenues are up 1.7, but that increases of course pull down, because part of what's in revenue are the recoveries of the expenses. No, I don't think we're projecting that. I mean, we watch our expenses very closely, but I don't think we're projecting that we can keep pushing expenses down into the future. So, I think you'll probably see a more normal kind of relationship there where expenses grow a little bit and revenue grows a little bit and hopefully more than the expenses.

Paul Morgan - FBR

And that sort of incorporates occupancy trends along the lines of what you have seen recently or more stable?

Greg Andrews

For our 2008 same property guidance for NOI of 2% to 3%, we are currently assuming stable occupancy.

Paul Morgan - FBR

Okay. Thanks.

Operator

Your next question comes from the line of Michael Mueller with JPMorgan. Please proceed.

Michael Mueller - JPMorgan

Hi, first Greg. Can you tell us what you have baked into guidance for disposition acquisition activity for '08?

Greg Andrews

Sure Mike. On the disposition front we anticipate $50 million to $100 million of additional dispositions taking place some time in 2008. And then on the acquisition front we don't have as Jeff said sort of a specific target in mind, because the opportunistic nature of that. So to the extent that we redeploy the proceeds from dispositions that would in our effect sort of net no acquisitions that would be an appropriate way to model it.

Michael Mueller - JPMorgan

Okay, so basically taking the $50 million to $100 million in dispositions on balance sheet and assuming that gets redeployed into acquisition so you are net neutral?

Greg Andrews

Correct.

Michael Mueller - JPMorgan

Okay. and the second question pertaining to the 2% to 3% same store, little bit lower obviously probably fairly prudent thing to do, but is it something you're seeing today or is it more along the lines we should be thinking of this as an expectation that things will be tougher down the road. So is it something you are seeing today or just you're taking more of a cautious stance?

Greg Andrews

I would say we're taking it cautious, but probably realistic stance too.

Michael Mueller - JPMorgan

Okay. Okay thanks.

Operator

Your next question comes from the line of Lou Taylor with Deutsche Bank. Please proceed.

Lou Taylor - Deutsche Bank

Thanks good morning guys. Jeff you had mentioned that the 91,000 square feet tenant that you had lost unexpectedly. Could you provide a little color in terms of who that was and I guess what was that expected about it, where you expecting them to leave in '08 and just may be you could give a little bit more color on that?

Jeff Olson

I think it was the local tenant specializing in an entertainment concept. They actually never opened up for business and we lost them. We’re pursuing them hard as we are entitled to under the lease, but nonetheless we've recaptured the space back. And we are currently negotiating with someone to take about half of this space, but there is no guarantee that'll happen either.

Lou Taylor - Deutsche Bank

Okay. And then second question Greg, in terms of you're kind of alluding a little bit to bad debt type of cost. Can you give us a flavor in terms of where are you seeing the bad debt expense coming from and kind of the straight line rent write-off? Is there a theme here in terms of format, type of tenant or any regional influences or themes there?

Greg Andrews

I looked at that Lou, and there really isn't. I mean, we approach reserving for bad debt on a tenant-by-tenant basis. So it really all comes down to the individual cases. And there really wasn't any particular theme, I guess, regionally the only thing I might say is that on the southwest coast of Florida maybe we saw a little bit more there. And that's an area which I think has been hit a little bit harder by the downturn in home prices, and so maybe that's had some carryover. But that's about the only theme I could see in the data.

Lou Taylor - Deutsche Bank

Okay. Was it mostly local or did you have some regional or national credits in there?

Greg Andrews

No, it was mostly local tenants.

Lou Taylor - Deutsche Bank

Great, thank you.

Operator

Your next question comes from the line of Paul Adornato with BMO Capital Markets. Please proceed.

Paul Adornato - BMO Capital Markets

Yes, good morning. Could you talk about the delay in property stabilization from 4Q '08 to 4Q '09, seems like a long time, so what were the circumstances there?

Greg Andrews

As we had mentioned in our prepared remarks on Sunlake specifically, which we took from 4Q '08 to 4Q '09. We think it may take a little bit longer in particular to sell the excess land that's there Paul. But we're still expecting our anchor tenant and there is only one anchor tenant which is Publix, will still open on time in the fourth quarter of this year.

Paul Adornato - BMO Capital Markets

Okay, so the sale of excess land is part of the stabilization of the property?

Greg Andrews

Yes. It is.

Paul Adornato - BMO Capital Markets

Okay. That’s all I've. Thanks.

Greg Andrews

Thank you.

Operator

Your next question comes from the line of Susan Berliner with Bear Stearns. Please proceed.

Susan Berliner - Bear Stearns

Hi, good morning. I guess just in terms of the markets difficulty in financing, looking into 2009. Can you just give us an update of your thoughts on, I guess extending out your bank line. I don't know if there is an automatic extension at your option and then also addressing your bond maturity in April?

Jeff Olson

Hi, Su. In terms of the bank line there is, I think an option for a one year extension, so that’s available to us. One of the, one of I guess the bright spots in all of the credit markets does happen to be the anchor market at least for now and we've already been in discussions with the leader ranger of that facility about renewing that facility come January of '09. So we're starting down that path.

Then with respect to the $200 million of bonds that come due in April of 2009. It's a little bit early to identify specific strategy, but we do feel that we've a lot of different alternatives and hopefully, of course the bond market improves by that time, but if does not again, the bank market has been pretty receptive to in term loan facilities and we also believe that in the worst case if we wanted to just put a mortgage or several mortgages on some properties in order to re-pay that, that’s an option that’s available as well.

Susan Berliner - Bear Stearns

Great and my second question was I was wondering if you can give us any update on your larger tenants; the Winn Dixie's and the Blockbusters. Has there been any change any more concerns less concern or any other tenants on your watch list?

Jeff Olson

No real concern about our remaining Winn Dixie's. They happen to actually be doing quite well, because they have been investing some dollars back in to their stores and the ones that are remaining in general have rents that are far below market and we feel very good about that. I think what causes us the most grief again we've come back to the furniture stores, almost any type of local retail tenant that serves the homebuilding industry.

We did have some fallout during '07 and those are the ones that we would highlight, not overly concerned about Blockbuster, I mean, much like Hollywood video where we got back four of them. We're so happy to get those four back, because it gives us an opportunity to mark these rents to market sooner and Blockbuster happens to have some terrific real estate in our portfolio. We have not been informed that we're getting any of that back but would be happy to get most of that back. And then as far as the grocers are concerned, Publix in particular they are doing very well in this market and overall we feel very good about the tenant there.

Susan Berliner - Bear Stearns

Great thank you.

Operator

Your next question comes from the line of Rich Moore with RBC Capital Markets. Please proceed.

Rich Moore - RBC Capital Markets

Hi good morning guys. You have a lot of leases expiring in 2008, pretty good percentage. How are you coming on the 2008 lease expirations?

Jeff Olson

So far we're coming along well. We have 13 anchor leases and we feel very good about the prospects for those 13, Rich which are the bigger ones and the small stores we are diligently working through it. I think the average rent is somewhere around $16.60 a foot and our leasing team is doing a very good job in renewing leases for '08, and we feel good about it.

Rich Moore - RBC Capital Markets

Okay. And as part of that Jeff, does the loss of Jeff you think have any impact on your leasing for this year, or how do you view that I guess?

Jeff Olson

I really don't think so. I'm spending more of my on time on it and we happen to have three great leaders, Bob Mitzel in Atlanta, Kevin Buth in Orlando and [Laura Lynch] in Miami. They are doing a great job on their own and I feel very good about the team that's in place.

Rich Moore - RBC Capital Markets

Okay, okay. Good, thank you. And then, the second thing I had was on dispositions. I think you guys had said in the last quarter that you had $80 million under contract, and you sold about $64. So I'm curious, what happened with that other $16 million was that a result of what's going in the disposition acquisition markets, is it a cap rate thing, I mean maybe you could comment as well on cap rates what you're seeing there?

Jeff Olson

I mean in same sentence, when we talked about our dispositions and described how we weren't under any pressure to sell anything, but if were able to achieve our price we would. There was one property in particular where we did not receive the price and we were very hard on that price and we decided to walk from it, because we felt comfortable owning it at that price. And at this point it is not on the disposition…

Rich Moore - RBC Capital Markets

Well, if you characterize, Jeff the cap rate situation, how would you characterize cap rates in your various markets? I mean, up down what are you seeing?

Jeff Olson

There are a few things, I mean obviously, the volume of transaction is down considerably Rich. There is going to be an a lot more volatility, just because you have less transactions, but in terms of pricing, we are still seeing 'A' quality assets priced in the 6% and in some cases even the sub 6% range, which would imply unleveraged IRR's of somewhere between 7.5 and 8.

Clearly, the 'C' quality assets and those that -- and this would be consistent with those that we sold in the fourth quarter, have probably experienced the most in terms of cap rate expansion and I think we would conclude that. They maybe up by as much a 100 basis points, we were able to sell that portfolio for somewhere less than 'A' cap and it maybe more difficult to replicate that over.

Rich Moore - RBC Capital Markets

Very good, thank you guys.

Jeff Olson

Thank you Rich.

Operator

Your next question comes from the line of Lou Taylor with Deutsche Bank

Lou Taylor - Deutsche Bank

Thanks. Are you guys seeing any kind of developers who are in a need a financing right now when the capital markets are being very tight, having difficulty and then approaching you to be that capital to fund their developments and become their development partner?

Jeff Olson

I would like Tom McDonough to answer that.

Tom McDonough

Sure. Yes, we are absolutely. One of the teams within our group has been at one of the best opportunities for us to find new development and new acquisitions is targeting the entrepreneurial developer who was expecting to be able to find take out loans on his development that he doesn't see down the future. So, we have much increased activity, we are looking at three different joint adventures in California as we speak in just those circumstances.

Lou Taylor - Deutsche Bank

Great thank you.

Operator

Your next question comes from the line of Nathan Isbee with Stifel Nicolaus. Please proceed.

Nathan Isbee - Stifel Nicolaus

Hi good morning.

Jeff Olson

Hi Nathan.

Nathan Isbee - Stifel Nicolaus

Many of your peers are telling us that the incremental JV capital sitting on the side right now especially for stabilized property. I know you had mentioned potential anchor replacements to the Miami property. Is it safe to say that's what that GRI interested in this specific property and can we expect most JV acquisitions will have some value add flavor?

Jeff Olson

I think there are preferences everyone's preference is to find value add opportunities and there may be a blend there, but I'd certainly think that would be their preference, Nathan.

Nathan Isbee - Stifel Nicolaus

Okay so we shouldn't expect 100% leased properties going in to this JV?

Jeff Olson

(inaudible)

Nathan Isbee - Stifel Nicolaus

I am sorry.

Jeff Olson

I would not rule that out necessarily. It again will be really driven off of the – an asset-by-asset basis and at certain pricing levels. I think that your interest could be high.

Nathan Isbee - Stifel Nicolaus

And how long is the anchor lease that you are thinking about?

Jeff Olson

It's within the 10 year hold period.

Nathan Isbee - Stifel Nicolaus

Okay thank you.

Jeff Olson

Okay thanks Nathan.

Operator

Your next question comes from the line of Craig Schmidt with Merrill Lynch. Please proceed.

Craig Schmidt - Merrill Lynch

Good morning on the slower same property NOI. Is there any different expectation relative to Southern Florida versus the rest of the portfolio?

Jeff Olson

I don't think so Craig. No.

Craig Schmidt - Merrill Lynch

So the housing trouble of Southern Florida at this point is not manifesting itself in any particular challenge?

Jeff Olson

No, there are more isolated circumstances that are property related Craig than they are market related. But by and large South Florida is on many measures is still under retail, and this maybe an opportunity for some other larger retailers to take advantage of more vacancy in the marketplace. But I can't say that it's isolated to one particular market, although as Greg had mentioned if there is one market to point to, I mean, that the southwest portion of the state is probably the weakest in terms of tenant demand and we have seen a little bit of fall out in our portfolio there.

Craig Schmidt - Merrill Lynch

Okay, great. And the [$2,000,001] that you earned on property management and leasing services. Roughly where do you think that's going to be for '08?

Greg Andrews

The majority of what we earned in '07 was still related to the management agreement that we had for our Texas properties that we sold at the end of '06. We had sort of the continuing management involvement during the first part of 2007. So that obviously wouldn't be recurring.

And then, the rest of the piece that we would earn Craig would be dependent on what we do in terms of joint venture activity, which is hard to predict at this stage.

Craig Schmidt - Merrill Lynch

But net, net you might think it to be lower?

Greg Andrews

Yeah, I think that's fair to say.

Craig Schmidt - Merrill Lynch

Okay, thanks a lot.

Operator

With no more further questions in the queue, I would like to turn the call back over to Mr. Jeff Olson for closing remarks.

Jeff Olson

We thank you everyone for attendance on this call and we look forward to talking to everyone next quarter.

Operator

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect and have a great day.

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Source: Equity One Inc. Q4 2007 Earnings Call Transcript
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