EQUITY ONE, INC. - FORM 10-Q - November 8, 2010

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - EQUITY ONE, INC.	ex31_2.htm
EX-32.1 - EXHIBIT 32.1 - EQUITY ONE, INC.	ex32_1.htm
EX-10.1 - EXHIBIT 10.1 - EQUITY ONE, INC.	ex10_1.htm
EX-31.1 - EXHIBIT 31.1 - EQUITY ONE, INC.	ex31_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

S	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

Commission File No. 001-13499

EQUITY ONE, INC.

(Exact name of registrant as specified in its charter)

Maryland		52-1794271
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1600 N.E. Miami Gardens Drive N. Miami Beach, Florida		33179
(Address of principal executive offices)		(Zip Code)

(305) 947-1664

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes S No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a “smaller reporting company”. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer S Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No S

Applicable only to Corporate Issuers:

As of November 1, 2010, the number of outstanding shares of Common Stock, par value $0.01 per share, of the Registrant was 93,566,139.

EQUITY ONE, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2010

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	Page

	Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2010 and December 31, 2009	1

	Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2010 and 2009	2

	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2010 and 2009	3

	Condensed Consolidated Statement of Stockholders' Equity (unaudited) for the nine months ended September 30, 2010	4

	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2010 and 2009	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	44

Item 4.	Controls and Procedures	45


PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	45

Item 4.	(Removed and Reserved)	45

Item 5.	Other Information	45

Item 6.	Exhibits	46

	Signatures	47

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

September 30, 2010 (Unaudited) and December 31, 2009

(In thousands, except per share amounts)

	September 30,			December 31,
	2010			2009
ASSETS
Properties:
Income producing	$	2,615,171		$	2,433,431
Less: accumulated depreciation		(276,492	)		(240,172	)
Income producing properties, net		2,338,679			2,193,259

Construction in progress and land held for development		72,776			68,866
Properties, net		2,411,455			2,262,125

Cash and cash equivalents		747			47,970
Accounts and other receivables, net		11,505			9,806
Investment in and advances to unconsolidated joint ventures		12,136			11,524
Securities		-			820
Goodwill		11,442			11,477
Other assets		123,085			108,598
TOTAL ASSETS	$	2,570,370		$	2,452,320

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable:
Mortgage notes payable	$	537,060		$	551,647
Unsecured revolving credit facilities		32,000			-
Unsecured senior notes payable		691,136			691,136
		1,260,196			1,242,783
Unamortized discount on notes payable, net		(22,579	)		(25,892	)
Total notes payable		1,237,617			1,216,891

Other liabilities:
Accounts payable and accrued expenses		49,570			33,251
Tenant security deposits		8,926			9,180
Deferred tax liabilities, net		47,184			50,059
Other liabilities		94,949			54,237
Total liabilities		1,438,246			1,363,618
Redeemable noncontrolling interest		989			989

Commitments and contingencies		-			-

Stockholders' equity:
Preferred stock, $0.01 par value - 10,000 shares authorized but unissued		-			-
Common stock, $0.01 par value - 150,000 shares authorized, 92,207 and 86,131 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively		921			861
Additional paid-in capital		1,221,447			1,110,427
Distributions in excess of earnings		(91,047	)		(46,810	)
Contingent consideration		-			323
Accumulated other comprehensive loss		(1,804	)		(266	)
Total stockholders’ equity of Equity One, Inc.		1,129,517			1,064,535

Noncontrolling interest		1,618			23,178
Total stockholders' equity		1,131,135			1,087,713

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,570,370		$	2,452,320

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three and nine months ended September 30, 2010 and 2009

(In thousands, except per share amounts)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010			2009
REVENUE:
Minimum rent	$	55,261		$	51,772		$	163,909		$	156,834
Expense recoveries		15,690			14,510			46,313			43,346
Percentage rent		176			126			1,534			1,516
Management and leasing services		354			322			1,125			1,316
Total revenue		71,481			66,730			212,881			203,012
COSTS AND EXPENSES:
Property operating		20,601			19,500			60,647			58,103
Rental property depreciation and amortization		16,906			15,425			50,022			45,559
General and administrative		9,749			7,772			31,577			29,021
Total costs and expenses		47,256			42,697			142,246			132,683
INCOME BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		24,225			24,033			70,635			70,329
OTHER INCOME AND EXPENSE:
Investment income		39			6,772			687			10,035
Equity in loss in unconsolidated joint ventures		(64	)		(9	)		(147	)		(37	)
Other income		49			325			205			1,409
Interest expense		(19,117	)		(17,733	)		(58,360	)		(55,425	)
Amortization of deferred financing fees		(479	)		(369	)		(1,379	)		(1,135	)
Gain on acquisition of controlling interest in subsidiary		-			-			-			26,866
Loss on sale of real estate		(186	)		-			(186	)		-
Gain on extinguishment of debt		-			160			63			12,395
Other expense		(34	)		-			(34	)		-
INCOME FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		4,433			13,179			11,484			64,437
Income tax benefit of taxable REIT subsidiaries		690			774			2,684			2,263
INCOME FROM CONTINUING OPERATIONS		5,123			13,953			14,168			66,700
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		-			215			81			885
Gain on disposal of income producing properties		-			580			1,898			5,373
INCOME FROM DISCONTINUED OPERATIONS		-			795			1,979			6,258
NET INCOME		5,123			14,748			16,147			72,958
Net loss attributable to noncontrolling interest		10			570			657			1,553
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	5,133		$	15,318		$	16,804		$	74,511

EARNINGS PER COMMON SHARE - BASIC:
Continuing operations	$	0.05		$	0.17		$	0.16		$	0.82
Discontinued operations		-			0.01			0.02			0.08
	$	0.05		$	0.18		$	0.18		$	0.90
Number of Shares Used in Computing Basic Earnings per Share		92,180			85,960			90,695			82,375

EARNINGS PER COMMON SHARE – DILUTED:
Continuing operations	$	0.05		$	0.16		$	0.16		$	0.81
Discontinued operations		-			0.01			0.02			0.07
	$	0.05		$	0.17		$	0.18		$	0.89
Number of Shares Used in Computing Diluted Earning per Share		92,330			86,649			90,898			83,019

Note: Diluted EPS for the nine months ended September 30, 2009, does not foot due to the rounding of the individual calculations.

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three and nine months ended September 30, 2010 and 2009

(In thousands)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010			2009

NET INCOME	$	5,123		$	14,748		$	16,147		$	72,958

OTHER COMPREHENSIVE (LOSS) INCOME:
Net unrealized holding gain on securities available for sale		-			151			14			10,908
Reclassification adjustment for (gain) loss on sale of securities included in net income		-			(8,803	)		(359	)		10,598
Net realized (gain) loss on interest rate contracts included in net income		-			(7	)		-			184
Net amortization of interest rate contracts included in net income		16			16			47			66
Net unrealized loss on interest rate swap		(64	)		-			(1,240	)		-
Other comprehensive (loss) income adjustment		(48	)		(8,643	)		(1,538	)		21,756

COMPREHENSIVE INCOME		5,075			6,105			14,609			94,714

Comprehensive loss attributable to noncontrolling interest		10			570			657			1,553

COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	5,085		$	6,675		$	15,266		$	96,267

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders' Equity

For the nine months ended September 30, 2010

(In thousands)

(Unaudited)

	Common Stock		Additional Paid-In Capital			Distributions in Excess of Earnings			Contingent Consideration			Accumulated Other Comprehensive Loss			Total Stockholders' Equity of Equity One, Inc			Noncontrolling Interest			Total Stockholders' Equity


BALANCE, DECEMBER 31, 2009	$	861	$	1,110,427		$	(46,810	)	$	323		$	(266	)	$	1,064,535		$	23,178		$	1,087,713

Issuance of common stock		55		99,928			-			-			-			99,983			-			99,983

Stock issuance cost		-		(1,297	)		-			-			-			(1,297	)		-			(1,297	)

Share-based compensation expense		-		4,826			-			-			-			4,826			-			4,826

Dividends paid on common stock		-		-			(61,041	)		-			-			(61,041	)		-			(61,041	)

Purchase of subsidiary shares from noncontrolling interest		5		7,563			-			(323	)		-			7,245			(20,903	)		(13,658	)

Other comprehensive loss adjustment		-		-			-			-			(1,538	)		(1,538	)		-			(1,538	)

Net income		-		-			16,804			-			-			16,804			(657	)		16,147

BALANCE, SEPTEMBER 30, 2010	$	921	$	1,221,447		$	(91,047	)	$	-		$	(1,804	)	$	1,129,517		$	1,618		$	1,131,135

See accompanying notes to the condensed consolidated financial statements.

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EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2010 and 2009

(In thousands)

(Unaudited)

	Nine months ended September 30,
	2010			2009
OPERATING ACTIVITIES:
Net income	$	16,147		$	72,958
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions and disposals:
Straight line rent adjustment		(1,594	)		(1,552	)
Accretion of below market lease intangibles		(5,580	)		(4,632	)
Equity in loss in unconsolidated joint ventures		147			37
Amortization of premium on investments held for sale		-			(257	)
Gain on acquisition of DIM Vastgoed		-			(26,866	)
Income tax benefit of taxable REIT subsidiaries		(2,684	)		(2,263	)
Provision for losses on accounts receivable		1,857			3,567
Amortization of discount on notes payable, net		2,161			1,638
Amortization of deferred financing fees		1,379			1,135
Depreciation and amortization		51,306			46,858
Share-based compensation expense		4,826			6,212
Operating distributions from joint venture		-			265
Amortization of derivatives		47			119
Gain on disposal of income producing properties		(1,712	)		(5,373	)
Gain on extinguishment of debt		(63	)		(12,395	)
Gain on sale of securities		(366	)		(6,362	)
Other expense		34			-
Changes in assets and liabilities:
Accounts and other receivables		(3,645	)		(1,151	)
Other assets		(6,125	)		(13,646	)
Accounts payable and accrued expenses		13,491			11,405
Tenant security deposits		(254	)		(428	)
Other liabilities		(1,825	)		(3,109	)
Net cash provided by operating activities		67,547			66,160

INVESTING ACTIVITIES:
Acquisition of income producing properties		(81,971	)		-
Additions to income producing properties		(7,293	)		(5,901	)
Additions to and purchases of land held for development		(1,337	)		-
Additions to construction in progress		(6,957	)		(9,243	)
Proceeds from disposal of real estate and rental properties		3,442			12,190
Change in cash held in escrow		-			(7,211	)
Increase in deferred leasing costs and lease intangibles		(3,378	)		(4,378	)
Advances to joint ventures		(69	)		(21	)
Investment in consolidated subsidiary		(13,437	)		(956	)
Investment in joint ventures		(2,236	)		(200	)
Distributions of capital from joint ventures		304			-
Proceeds from sale of securities		841			152,008
Purchase of securities		-			(10,867	)
Net cash (used in) provided by investing activities		(112,091	)		125,421

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EQUITY ONE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2010 and 2009

(In thousands)

(Unaudited)

	Nine months ended September 30,
	2010			2009
FINANCING ACTIVITIES:
Repayments of mortgage notes payable	$	(71,357	)	$	(11,722	)
Net borrowings (repayments) under revolving credit facilities		32,000			(16,772	)
Repayment of senior debt borrowings		-			(203,482	)
Proceeds from issuance of common stock		99,983			132,488
Repurchase of common stock		-			(5,425	)
Payment of deferred financing costs		(967	)		-
Stock issuance cost		(1,297	)		(4,266	)
Dividends paid to stockholders		(61,041	)		(74,982	)
Net cash used in financing activities		(2,679	)		(184,161	)

Net (decrease) increase in cash and cash equivalents		(47,223	)		7,420
Cash and cash equivalents from acquisitions		-			1,857
Cash and cash equivalents at beginning of the period		47,970			5,355
Cash and cash equivalents at end of the period	$	747		$	14,632

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (net of capitalized interest of $1.7 million and $1.0 million in 2010 and 2009, respectively)	$	56,723		$	58,207
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in unrealized holding gain on securities	$	14		$	10,908


The Company acquired upon acquisition of certain rental properties:
Income producing properties	$	170,406
Intangible and other assets		18,713
Intangible and other liabilities		(50,406	)
Assumption of mortgage notes payable		(56,742	)
Cash paid for rental property	$	81,971

See accompanying notes to condensed consolidated financial statements.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

1.	Organization and Basis of Presentation

Organization

We are a real estate investment trust (“REIT”) that owns, manages, acquires, develops and redevelops neighborhood and community shopping centers. As of September 30, 2010, our consolidated property portfolio comprised 189 properties, including 174 shopping centers consisting of approximately 19.5 million square feet of gross leasable area (“GLA”), four development or redevelopment properties, six non-retail properties and five land parcels held for development. As of September 30, 2010, our core portfolio, consisting of our shopping centers, was 89.9% leased and included national, regional and local tenants.

In addition to our consolidated properties, we have an ownership interest in two joint ventures which collectively own twelve neighborhood shopping centers and one office building totaling 1.9 million square feet of GLA, which we actively manage and lease. We also have passive joint venture ownership interests in two retail properties totaling 20,000 square feet of GLA.

We have a controlling interest in DIM Vastgoed, N.V. (“DIM”), through which we own 21 of our shopping centers, which was acquired in the first quarter of 2009. Until August 1, 2010, the ordinary shares of DIM were listed on the NYSE Euronext Stock Exchange in Amsterdam. During 2010, we increased our ownership of DIM to approximately 97.4%. On July 26, 2010, we filed a writ of summons with the Dutch Enterprise Chamber in Amsterdam initiating statutory squeeze-out proceedings with respect to the minority shares not owned by us. The results of DIM’s operations have been consolidated in our financial statements since January 14, 2009, the acquisition date of our controlling interest. A complete description of our interest in DIM is contained in Note 7 below.

Basis of Presentation

The condensed consolidated financial statements include the accounts of Equity One, Inc. and our wholly-owned subsidiaries, DIM, and those other entities where we have a controlling financial interest. Equity One, Inc. and our subsidiaries are hereinafter referred to as “the consolidated companies”, the “Company”, “we”, “our”, “us” or similar terms. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior-period data have been reclassified to conform to the current period presentation.

The provisions of the Consolidations Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “FASB ASC”) are being applied prospectively, except for the provisions related to the presentation and disclosure of noncontrolling interests, which have been applied retrospectively. Redeemable noncontrolling interests are classified in the mezzanine section of the condensed consolidated balance sheets as a result of their redemption features.

The condensed consolidated financial statements included in this report are unaudited. In our opinion, all adjustments considered necessary for a fair presentation have been included. The results of operations for the three and nine month periods ended September 30, 2010 and 2009 are not necessarily indicative of the results that may be expected for a full year.

Our unaudited condensed consolidated financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions of Form 10-Q. Accordingly, these unaudited condensed consolidated financial statements do not contain certain information included in our annual financial statements and notes. The unaudited condensed consolidated balance sheet as of December 31, 2009 was derived from audited financial statements included in our 2009 Annual Report on Form 10-K, but does not include all disclosures required under GAAP. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2010.

2.	Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Construction in Progress and Land Held for Development

Our method of calculating capitalized interest is based upon applying our weighted-average borrowing rate to that portion of actual costs incurred. Total interest expense capitalized to construction in progress and land held for development was approximately $607,000 and $318,000 for the three months ended September 30, 2010 and 2009, respectively, and $1.7 million and $1.0 million for the nine months ended September 30, 2010 and 2009, respectively.

Business Combinations

We allocate the purchase price of acquired properties to land, building, improvements and intangible assets in accordance with the Business Combinations Topic of the FASB ASC. We allocate the initial purchase price of assets acquired (net tangible and identifiable intangible assets) and liabilities assumed based on their relative fair values at the date of acquisition. There are four categories of intangible assets to be considered: (1) in-place leases; (2) above and below-market value of in-place leases; (3) lease origination costs and (4) customer relationships. The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to depreciation expense over the remaining non-cancelable periods of the respective leases. The value of above-market and below-market in-place leases is amortized to rental revenue over the remaining non-cancelable periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.

The results of operations of acquired properties are included in our financial statements as of the dates they are acquired. The intangible assets and liabilities associated with property acquisitions are included in other assets and other liabilities in our condensed consolidated balance sheets.

Investments in Unconsolidated Joint Ventures

We analyze our joint ventures under the FASB ASC Topics of Consolidation and Real Estate-General in order to determine whether the entity should be consolidated. If it is determined that these investments do not require consolidation because the entities are not variable interest entities (“VIEs”) in accordance with the Consolidation Topic of the FASB ASC, we do not have voting control, and/or the limited partners (or non-managing members) have substantive participatory rights, then the selection of the accounting method used to account for our investments in unconsolidated joint ventures is generally determined by our voting interests and the degree of influence we have over the entity.

We use the equity method of accounting for investments in unconsolidated joint ventures when we own more than 20% but less than 50% of the voting interests and have significant influence but do not have a controlling financial interest, or if we own less than 20% of the voting interests but have determined that we have significant influence. Under the equity method, our proportionate share of earnings or losses earned by the joint venture is recognized in equity in income (loss) of unconsolidated joint ventures in the accompanying consolidated statements of income.

On a periodic basis, we assess whether there are any indicators, including underlying property operating performance and general market conditions, that the value of our investments in unconsolidated joint ventures may be impaired. An investment in a joint venture is considered impaired only if we determine that its fair value is less than the net carrying value of the investment in that joint venture on an other-than-temporary basis. Cash flow projections for the investments consider property level factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. If our analysis indicates that there is an other-than-temporary impairment related to the investment in a particular joint venture, the carrying value of the venture will be adjusted to an amount to reflect the estimated fair value of the investment.

Long-lived Assets

We evaluate the carrying value of long-lived assets, including definite-lived intangible assets, when events or changes in circumstances indicate that the carrying value may not be recoverable in accordance with the Property, Plant and Equipment Topic of the FASB ASC. There was no impairment loss for the three and nine months ended September 30, 2010 and 2009.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Accounts Receivable

Accounts receivable includes amounts billed to tenants and accrued expense recoveries due from tenants. We evaluate the probability of collection for these receivables and adjust the allowance for doubtful accounts to reflect amounts estimated to be uncollectible. The allowance for doubtful accounts was approximately $4.9 million and $4.5 million at September 30, 2010 and December 31, 2009, respectively.

Securities

Our investments in securities are classified as available-for-sale and recorded at fair value based on current market prices. Changes in the fair value of the securities investments are included in accumulated other comprehensive income, except other-than-temporary decreases in fair value, which are recognized immediately as a charge to earnings. We evaluate our investments in available-for-sale securities for other-than-temporary declines each reporting period in accordance with the Investments-Debt and Equity Securities Topic of the FASB ASC.

During the nine months ended September 30, 2010, we sold 34,200 shares of another publicly traded REIT, which we held as an investment. We recognized a gain, net of transaction costs, of approximately $367,000, which is included in investment income in the accompanying statement of income for the nine months ended September 30, 2010.

During the three months ended September 30, 2009, we sold approximately 1.8 million shares of another publicly traded REIT, which we held as an investment. We recognized a gain, net of transaction costs, of approximately $6.3 million, which is included in investment income in the accompanying statements of income for the three and nine months ended September 30, 2009.

Goodwill

We are required to perform annual, or more frequently in certain circumstances, impairment tests of our goodwill. We did not recognize any material goodwill impairments during the three and nine months ended September 30, 2010 and 2009. We cannot predict the occurrence of future events that might adversely affect the reported value of goodwill that totaled approximately $11.4 million at September 30, 2010. Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on our tenant base, or a materially negative change in our relationships with significant tenants.

Revenue Recognition

Revenue includes minimum rents, expense recoveries, percentage rental payments and management and leasing services. Minimum rents are recognized on an accrual basis over the terms of the related leases on a straight-line basis. As part of the leasing process, we may provide the lessee with an allowance for the construction of leasehold improvements. Leasehold improvements are capitalized and recorded as tenant improvements and depreciated over the shorter of the useful life of the improvements or the lease term. If the allowance represents a payment for a purpose other than funding leasehold improvements, or in the event we are not considered the owner of the improvements, the allowance is considered a lease incentive and is recognized over the lease term as a reduction to revenue. Factors considered during this evaluation include, among others, the type of improvements made, who holds legal title to the improvements, and other controlling rights provided by the lease agreement. Lease revenue recognition commences when the lessee is given possession of the leased space and there are no contingencies offsetting the lessee’s obligation to pay rent.

Many of the lease agreements contain provisions that require the payment of additional rents based on the respective tenants’ sales volumes (contingent or percentage rent) and substantially all contain provisions that require reimbursement of the tenants’ allocable real estate taxes, insurance and common area maintenance costs, or CAM. Revenue based on a percentage of a tenant’s sales is recognized only after the tenant exceeds its sales breakpoint. Revenue from tenant reimbursements of taxes, CAM and insurance is recognized in the period that the applicable costs are incurred in accordance with the lease agreements.

Earnings Per Share

Under the Earnings Per Share Topic of the FASB ASC, unvested share-based payment awards that entitle their holders to receive non-forfeitable dividends, such as our restricted stock awards, are classified as “participating securities.” As participating securities, our shares of restricted stock will be included in the calculation of basic and diluted earnings per share. Because the awards are considered participating securities under provisions of the Earnings Per Share Topic of the FASB ASC, we are required to apply the two-class method of computing basic and diluted earnings per share. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that would otherwise have been available to common shareholders. Under the two-class method, earnings for the period are allocated between common shareholders and other security holders, based on their respective rights to receive dividends.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Income Taxes

We elected to be taxed as a REIT under the Internal Revenue Code (“Code”) commencing with our taxable year ended December 31, 1995. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we currently distribute at least 90% of our REIT taxable income to our stockholders. Also, at least 95% of our gross income in any year must be derived from qualifying sources. The difference between net income available to common stockholders for financial reporting purposes and taxable income before dividend deductions relates primarily to temporary differences, such as real estate depreciation and amortization, deduction of deferred compensation, and deferral of gains on sold properties utilizing like kind exchanges. It is our intention to adhere to these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income tax on taxable income that we distribute currently to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and to federal income and excise taxes on our undistributed taxable income.

We are subject to federal, state and local income tax laws to the extent of the activities conducted by our taxable REIT subsidiaries. We recorded an income tax benefit during the three months ended September 30, 2010 and 2009 of approximately $690,000 and $774,000, respectively, and for the nine months ended September 30, 2010 and 2009 of approximately $2.7 million and $2.3 million, respectively. These benefits are primarily attributable to the net operating losses generated by DIM. Although DIM is organized under the laws of the Netherlands, it pays U.S. corporate tax based on its operations in the United States. In 2009, DIM did not pay any U.S. income tax, which reflected the benefit of net operating loss carry forwards (“NOLs”) in previous years. As of September 30, 2010, DIM had NOLs of approximately $18.4 million remaining.

We believe that we have appropriate support for the tax positions taken on our tax returns and that our accruals for income tax liabilities are adequate for all years still subject to tax audits after 2006.

Share-Based Compensation

Share-based compensation cost charged against earnings is summarized as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In thousands)						(In thousands)

Restricted stock	$	998		$	1,022		$	3,107		$	4,092
Stock options		648			486			1,712			2,110
Employee stock purchase plan discount		3			3			7			10
Total cost		1,649			1,511			4,826			6,212
Less amount capitalized		(9	)		(31	)		(48	)		(124	)
Net share-based compensation expense	$	1,640		$	1,480		$	4,778		$	6,088

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Restricted stock and option expense includes amounts for which vesting was accelerated under separation agreements. Discounts offered to participants under our 2004 Employee Stock Purchase Plan represent the difference between market value of our stock on the purchase date and purchase price of shares as provided under the plan. A portion of share-based compensation cost is capitalized as part of property-related assets.

Segment Information

We invest in retail shopping centers through direct ownership or through joint ventures. It is our intent that all retail shopping centers will be owned or developed for investment purposes; however, we may decide to sell all or a portion of a development upon completion. Our revenue and net income are generated from the operation of our investment portfolio. We also earn fees from third parties for services provided to manage and lease retail shopping centers owned through joint ventures or by third parties.

Our portfolio is primarily located throughout the eastern United States; however, we do not distinguish or group our operations on a geographical basis for purposes of allocating resources or measuring performance. We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. No individual property constitutes more than 10% of our revenue, net income or assets, and thus the individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the centers, tenants and operational processes, as well as long-term average financial performance. In addition, none of the shopping centers is located outside the United States.

Concentration of Credit Risk

A concentration of credit risk arises in our business when a national or regionally-based tenant occupies a substantial amount of space in multiple properties owned by us. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rental payments to us, exposing us to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, we do not obtain security from our national or regionally-based tenants in support of their lease obligations to us. We regularly monitor our tenant base to assess potential concentrations of credit risk. As of September 30, 2010, Publix Super Markets accounted for approximately 11.4%, or approximately $24.3 million, of our aggregate annualized minimum rent. No other tenant accounted for more than 4% of our annualized minimum rent.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update No. 2010-06, “Improving Disclosures About Fair Value Measurements” (“ASU 2010-06”), which provides amendments to Accounting Standards Codification Subtopic No. 820-10, “Fair Value Measurements and Disclosures — Overall.” ASU 2010-06 requires additional disclosures and clarifications of existing disclosures for recurring and nonrecurring fair value measurements. The revised guidance is effective for interim and annual reporting periods beginning after December 15, 2009. ASU 2010-06 concerns disclosure only and did not have an impact on the Company’s financial position or results of operations.

3.	Acquisitions and Dispositions

The following table provides a summary of income producing property acquisition activity during the nine months ended September 30, 2010:

Date Purchased	Property Name	City	State	Square Feet		Purchase Price		Mortgage Assumed
September 22, 2010	1175 Third Avenue	New York	NY		25,350	$	21,000	$	7,475
September 2, 2010	Country Walk Plaza	Miami	FL		100,686		27,750		13,500
August 31, 2010	Pablo Plaza	Jacksonville	FL		151,238		19,338		7,515
August 31, 2010	West Bird Plaza	Miami	FL		99,864		17,550		8,455
April 15, 2010	Veranda Shoppes	Plantation	FL		44,888		11,675		-
March 31, 2010	Copps Hill Plaza	Ridgefield	CT		184,528		33,400		19,797
March 19, 2010	Gateway Plaza at Aventura	Aventura	FL		29,800		8,000		-
Total						$	138,713	$	56,742

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

During the three and nine months ended September 30, 2010, we recognized approximately $557,000 and $1.2 million, respectively, of acquisition-related costs in connection with these property acquisitions.

Other Acquisitions

During the nine months ended September 30, 2010, we acquired two outparcels for an aggregate cash purchase price of approximately $1.3 million.

Property Dispositions

During the nine months ended September 30, 2010, we sold three outparcels for net proceeds of approximately $2.4 million and recognized a net gain of $1.9 million which is included in gain on disposal of income producing properties in the accompanying statement of income. In July 2010, we sold an undeveloped land parcel for net proceeds of $1.0 million which is included in loss on sale of real estate in the accompanying statements of income for the three and nine months ended September 30, 2010.

As of September 30, 2010, there were no properties held for sale. The following table provides a summary of selected operating results for those properties sold during the three and nine months ended September 30, 2010 and 2009:


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010			2009
	(In thousands)					(In thousands)
Rental Revenue	$	-	$	174		$	73		$	1,001
Expenses:
Property operating expenses		-		(57	)		(23	)		41
Rental property depreciation and amortization		-		16			15			75
Operations of income producing properties sold		-		215			81			885
Gain on disposal of income producing property		-		580			1,898			5,373
Income from discontinued operations	$	-	$	795		$	1,979		$	6,258

As part of our strategy to upgrade and diversify our portfolio and recycle our capital, we evaluate opportunities to sell assets or otherwise contribute assets to existing or new joint ventures with third parties. If the market values of these assets are below their carrying values, it is possible that the disposition or contribution of these assets could result in impairments or other losses. Depending on the prevailing market conditions and historical carrying values, these losses could be material.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

4.	Investments in and Advances to Unconsolidated Joint Ventures

As of September 30, 2010, our investment in unconsolidated joint ventures, which is presented net of a deferred gain of approximately $2.9 million associated with the disposition of assets to our GRI-EQY I, LLC venture, was composed of the following:

			Investment Balance
Joint Venture	Ownership Interest as of September 30, 2010		September 30, 2010		December 31, 2009
			(In thousands)
GRI-EQY I, LLC		10%	$	6,830	$	8,271
G&I Investment South Florida Portfolio, LLC		20%		2,866		2,947
Madison 2260, Realty, LLC (1)		8%		1,066		-
Madison 1235 Holding, LLC (1)		20%		1,000		-
Total				11,762		11,218

Advances to joint ventures				374		306
Investments in and advances to joint ventures			$	12,136	$	11,524

(1) Ownership interest was acquired during 2010.

Equity in losses from joint ventures totaled approximately $64,000 and $147,000 for the three and nine months ended September 30, 2010, respectively, and totaled $9,000 and $37,000, respectively, for the same periods in 2009. Fees paid to us associated with these joint ventures totaled approximately $300,000 and $1.0 million for the three and nine months ended September 30, 2010, respectively, and $322,000 and $1.1 million, respectively, for the same periods in 2009.

5.	Borrowings

During the nine months ended September 30, 2010, we repaid mortgages totaling approximately $61.2 million with a weighted- average interest rate of 8.34%.

We assumed mortgages with an aggregate principal balance of approximately $56.7 million in connection with our acquisition activity during the nine months ended September 30, 2010. These mortgages mature on various dates through January 1, 2029 with payments based on a weighted-average interest rate of 5.91%.

The following table is a summary of our mortgage notes payable balances at September 30, 2010 and December 31, 2009:


Mortgage Notes Payable	September 30,			December 31,
	2010			2009
	(In thousands)
Fixed rate mortgage notes	$	537,060		$	551,647
Unamortized discount, net		(19,726	)		(22,754	)
Total	$	517,334		$	528,893

Weighted-average interest rate of fixed rate mortgage notes		6.41	%		6.58	%

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Our outstanding unsecured senior notes payable at September 30, 2010 and December 31, 2009 consisted of the following:


Unsecured Senior Notes Payable	September 30,			December 31,
	2010			2009
	(In thousands)
7.84% Senior Notes, due 1/23/12	$	10,000		$	10,000
6.25% Senior Notes, due 12/15/14		250,000			250,000
5.375% Senior Notes, due 10/15/15		107,505			107,505
6.0% Senior Notes, due 9/15/16		105,230			105,230
6.25% Senior Notes, due 1/15/17		101,403			101,403
6.0% Senior Notes, due 9/15/17		116,998			116,998
Total Unsecured Senior Notes		691,136			691,136
Unamortized discount, net		(2,853	)		(3,138	)
Total	$	688,283		$	687,998

Weighted-average interest rate, net of discount adjustment		6.06	%		6.10	%

The indentures under which our unsecured senior notes were issued have several covenants which limit our ability to incur debt, require us to maintain an unencumbered asset ratio above a specified level and limit our ability to consolidate, sell, lease, or convey substantially all of our assets to, or merge with, any other entity. These notes have also been guaranteed by many of our subsidiaries.

In September 2010, we exercised an accordion feature under our revolving credit facility to increase the total unsecured commitment from $272.0 million to $400.0 million with a syndicate of banks. Four new financial institutions provided commitments under the expanded facility with no modification to the terms and covenants, and several of the incumbent banks added to their previous commitments. The facility contains customary covenants, including financial covenants regarding debt limits, total liabilities, interest coverage ratio, fixed charge coverage ratios, unencumbered properties and permitted investments which may limit the amount available under the facility. If a default under the facility exists, our ability to pay dividends would be limited to the amount necessary to maintain our status as a REIT unless the default is a payment default or bankruptcy event in which case we would be prohibited from paying any dividends. Additionally, we have a $15.0 million unsecured revolving credit facility with City National Bank of Florida. As of September 30, 2010 and December 31, 2009, we had $32.0 million and $0, respectively, drawn against the credit facilities. The maximum availability under these credit facilities was approximately $203.5 million as of September 30, 2010, which is net of outstanding letters of credit of $3.5 million.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

6.	Earnings Per Share

The following table sets forth the computation of our basic earnings per share:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(Dollars in thousands, except per share amounts)

Income from continuing operations	$	5,123		$	13,953		$	14,168		$	66,700
Net loss attributable to noncontrolling interest		10			570			657			1,553
Income from continuing operations attributable to Equity One, Inc.		5,133			14,523			14,825			68,253
Allocation of continuing income to restricted share awards		(66	)		(144	)		(218	)		(435	)
Income from continuing operations attributable to common stockholders		5,067			14,379			14,607			67,818
Income from discontinued operations attributable to common stockholders		-			795			1,979			6,258
Allocation of discontinued income to restricted share awards		-			(4	)		(7	)		(37	)
Income from discontinued operations attributable to common shareholders		-			791			1,972			6,221
Net income available to common stockholders	$	5,067		$	15,170		$	16,579		$	74,039


Weighted Average Shares Outstanding — Basic		92,180			85,960			90,695			82,375
Basic earnings per share attributable to the common stockholders:
Basic earnings per share from continuing operations	$	0.05		$	0.17		$	0.16		$	0.82
Basic earnings per share from discontinued operations		-			0.01			0.02			0.08
Earnings per common share — Basic	$	0.05		$	0.18		$	0.18		$	0.90

The following table sets forth the computation of our diluted earnings per share:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(Dollars in thousands, except per share amounts)

Income from continuing operations	$	5,123		$	13,953		$	14,168		$	66,700
Net loss attributable to noncontrolling interest		10			570			657			1,553
Income from continuing operations attributable to Equity One, Inc.		5,133			14,523			14,825			68,253
Allocation of continuing income to restricted share awards		(66	)		(144	)		(218	)		(435	)
Allocation of earnings associated with DIM contingent shares		-			(153	)		(79	)		(397	)
Income from continuing operations attributable to common stockholders		5,067			14,226			14,528			67,421
Income from discontinued operations attributable to common stockholders		-			795			1,979			6,258
Allocation of discontinued income to restricted share awards		-			(4	)		(7	)		(37	)
Net income available to common stockholders	$	5,067		$	15,017		$	16,500		$	73,642


Weighted Average Shares Outstanding — Basic:		92,180			85,960			90,695			82,375
Walden Woods Village, Ltd.		-			94			-			94
Stock options using the treasury method		88			58			107			41
Long term incentive plan shares using the treasury method		62			-			-			-
Contingent shares to be issued for DIM stock		-			537			96			509
Weighted Average Shares Outstanding — Diluted		92,330			86,649			90,898			83,019

Diluted earnings per share attributable to common stockholders:
Diluted earnings per share from continuing operations	$	0.05		$	0.16		$	0.16		$	0.81
Diluted earnings per share from discontinued operations		-			0.01			0.02			0.07
Earnings per common share — Diluted	$	0.05		$	0.17		$	0.18		$	0.89	(1)

(1) Note: Diluted EPS for the nine months ended September 30, 2009, does not foot due to the rounding of the individual calculations.

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

7.	Noncontrolling Interest

Noncontrolling interest represents the portion of equity that we do not own in those entities that we consolidate. We account for and report our noncontrolling interest in accordance with the provisions under the Consolidation Topic of the FASB ASC.

We are involved in the following investment activities in which we have a controlling interest:

On January 1, 1999, Equity One (Walden Woods) Inc., a wholly-owned subsidiary of ours, formed a limited partnership as a general partner. Walden Woods Village, an income producing shopping center, was contributed by its owners (the “Minority Partners”), and we contributed 93,656 shares of our common stock to the limited partnership at an agreed-upon price of $10.30 per share. Under the terms of the agreement, the Minority Partners do not share in any earnings of the partnership, except to the extent of dividends received by the partnership for the shares originally contributed by us. Based on the per-share price and the net value of property contributed by the Minority Partners, the limited partners received 93,656 partnership units. We have entered into a redemption agreement with the Minority Partners whereby the Minority Partners can request that we purchase their partnership units at a price of $10.30 per unit at any time before January 1, 2014. In accordance with the Distinguishing Liabilities from the Equity Topic of the FASB ASC, the value of the redeemable noncontrolling interest of $989,000 is presented in the mezzanine section of our balance sheet, separate from permanent equity, until the earlier of January 1, 2014 or upon election by the Minority Partners to redeem their partnership units. We have also entered into a conversion agreement with the Minority Partners pursuant to which, following notice, the Minority Partners can convert their partnership units into our common stock. The Minority Partners have not exercised their redemption or conversion rights, and their minority interest remains valued at $989,000.

We have controlling interests in two joint ventures that, together, own our Sunlake development project. We have funded all of the acquisition costs, are required to fund any necessary development and operating costs, receive an 8% preferred return on our advances,

have reimbursement rights of all capital outlays upon disposition of the property, and are entitled to 60% of the profits thereafter. The minority partners are not required to make contributions and, to date, have not contributed any capital. Noncontrolling interest will not be recorded until the equity in the property surpasses our capital expenditures and cumulative preferred return.

On January 14, 2009, we acquired a controlling interest in DIM which required us to consolidate DIM’s results as of the acquisition date. Upon consolidation, we recorded $25.8 million of noncontrolling interest which represented the fair value of the portion of DIM’s equity that we did not own upon acquisition. Subsequent changes to the noncontrolling interest in stockholders’ equity result from the allocation of losses, and additional shares purchased subsequent to January 14, 2009.

During 2010, we reduced the amount of noncontrolling interest in DIM through the acquisition of 1,870,915 DIM ordinary shares through the combination of a cash tender offer and other open market and private purchases, increasing our ownership percentage to approximately 97.4% at September 30, 2010.

The following table shows the effects on our equity resulting from the changes in our ownership interest in DIM for the three and nine months ended September 30, 2010 and 2009:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In thousands)				(In thousands)

Net income attributable to Equity One, Inc.	$	5,133	$	15,318	$	16,804	$	74,511
Increase in our paid-in-capital for purchase of DIM ordinary shares totaling,
110,475 and 0 shares for the three months ended September 30, 2010 and 2009 and 2,637,488 and 19,780 shares for the nine months ended September 30, 2010 and 2009, respectively		63		-		7,563		16
Net transfers from noncontrolling interest		63		-		7,563		16
Change from net income attributable to Equity One, Inc. and transfers from noncontrolling interest	$	5,196	$	15,318	$	24,367	$	74,527

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

8.	Share-Based Payment Plans

As of September 30, 2010, we have options outstanding under our 2000 Executive Incentive Compensation Plan (“2000 Plan”). The 2000 Plan provides for the grant of options, restricted stock and other share-based awards for up to 8.5 million shares of common stock, of which 1.4 million shares are available for issuance. In addition, in connection with the initial employment of Jeffrey S. Olson, our chief executive officer, we issued Mr. Olson options to purchase 364,660 shares of common stock, which were not issued under the 2000 Plan.

The term of each award, including vesting, is determined by our compensation committee, in its sole discretion, on the date of grant, subject to limitations contained in the 2000 Plan. Generally, dividends are paid on shares of non-vested restricted stock, which makes the restricted stock a participating security under the Earnings Per Share Topic of the FASB ASC. Certain options, restricted stock and other share awards provide for accelerated vesting if there is a change in control, as defined in the 2000 Plan.

The fair value of each option awarded during 2010 and 2009 was estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatilities, dividend yields, employee exercises and employee forfeitures are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. We measure compensation expense for restricted stock awards based on the fair value of our common stock at the date of the grant and expense such amounts ratably over the vesting period. For grants with a graded vesting schedule, we have elected to recognize compensation expense on a straight-line basis. The Company used the shortcut method described in the Share Compensation Topic of the FASB ASC for determining the expected life used in the valuation method.

The following table presents stock option activity during the nine months ended September 30, 2010:


	Shares Under Option			Weighted-Average Exercise Price
	(In thousands)

Outstanding at January 1, 2010		2,762		$	21.28
Granted		409		$	18.97
Forfeited		(25	)	$	28.05
Outstanding at September 30, 2010		3,146		$	20.92

Exercisable at September 30, 2010		1,622		$	22.95

The following table presents information regarding restricted stock activity during the nine months ended September 30, 2010:


	Unvested Shares			Weighted-Average Price
	(In thousands)

Unvested at January 1, 2010		263		$	21.51
Granted		1,117		$	16.76
Vested		(105	)	$	24.60
Forfeited		(5	)	$	15.49
Unvested at September 30, 2010		1,270		$	17.10

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

During the nine months ended September 30, 2010, we granted 1.1 million shares of restricted stock that are subject to forfeiture and vest over periods from two to four years. The total vesting-date value of the 104,740 shares that vested during the nine months ended September 30, 2010 was $1.8 million.

Included in the above restricted stock grants are 698,894 restricted shares awarded to Jeffrey S. Olson, our chief executive officer, on August 9, 2010 as part of his new employment agreement. Of this amount, 582,412 restricted shares (“Contingent Shares”) were issued under the 2000 Plan and are designed to vest if the total shareholder return of the Company over a four-year measurement period commencing on January 1, 2011 exceeds the average total shareholder return of a peer group of publicly traded retail property REITs, as well as an absolute return threshold. All of the Contingent Shares will vest on December 31, 2014 (or such shorter time as provided in the employment agreement) if the total shareholder return of the Company for the measurement period both (1) exceeds the average total shareholder return of the peer group of companies by at least 300 basis points and (2) equals or exceeds 9%. One-half of the Contingent Shares will vest on December 31, 2014 if the total shareholder return of the Company for the measurement period both (1) exceeds the average total shareholder return of the peer group of companies by at least 150 basis points and (2) equals or exceeds 6%. Mr. Olson must be employed by the Company on the vesting date. Mr. Olson will receive any dividends declared on the Contingent Shares over the measurement period and those dividends will not be forfeited by Mr. Olson if the Contingent Shares fail to vest.

The Contingent Shares were valued at approximately $4.5 million utilizing a Monte Carlo simulation to estimate the probability of the performance vesting conditions being satisfied. The Monte Carlo simulation used the statistical formula underlying the Black-Scholes-Merton binomial formula. We recognize compensation expense for these awards over the requisite service period from August 9, 2010 through December 31, 2014.

Also included in the restricted stock grants are 380,000 shares awarded to our chairman as part of his chairman compensation agreement with us which was executed on August 9, 2010.

As of September 30, 2010, we had $17.1 million of total unrecognized compensation expense related to unvested options and restricted shares granted under our plans. This expense is expected to be recognized over a weighted-average period of 3.73 years.

Equity

During each of the first three quarters of 2010, our Board of Directors declared cash dividends of $0.22 per share on our common stock. These dividends were paid in March, June, and September 2010. The $0.22 per share dividend represents an annualized rate of $0.88 per share.

In March of 2010, we completed an underwritten public offering and concurrent private placement of approximately 5.4 million shares of our common stock at a price of $18.40 per share. In the concurrent private placement, an aggregate of 600,000 shares were purchased for $11.0 million by MGN America, LLC and Silver Maple (2001), Inc., affiliates of our largest stockholder, Gazit-Globe, Ltd., which may be deemed to be controlled by Chaim Katzman, the chairman of our board of directors. The offerings generated net proceeds to us of approximately $98.9 million.

On May 5, 2010, we filed an amendment to our charter to increase our authorized common stock from 100,000,000 to 150,000,000 shares. No change was made to our authorized preferred stock of 10,000,000 shares.

10.	Fair Value Measurements

In September 2006, the FASB issued provisions under the Fair Value Measurements and Disclosures Topic of FASB ASC. The provisions established a framework for measuring fair value, which included a hierarchy based on the quality of inputs used to measure fair value and provided specific disclosure requirements based on the hierarchy.

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Fair Value Hierarchy

The Fair Value Measurements and Disclosures Topic of FASB ASC requires the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest

priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The various levels of the fair value hierarchy are described as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and

liabilities in an active market that we have the ability to access.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The Fair Value Measurements and Disclosures Topic of FASB ASC requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following table presents our fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2010:


	Fair Value Measurements
	(In thousands)
Description	Level 2

Long term incentive plan	$	170

During the three months ended September 30, 2010, we recorded a decline in the fair value of the long term incentive plan established in 2006 for our CEO of $725,000 based on an independent third-party valuation which is included in general and administrative expenses in the accompanying statements of income for the three and nine months ended September 30, 2010.

The following table presents our fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2009:


	Fair Value Measurements
	(In thousands)
Description	Level 1		Level 2

Available for sale securities	$	820	$	-
Long term incentive plan	$	-	$	743

During the nine months ended September 30, 2010, we sold an equity investment which was previously recorded as a Level 1 available for sale security. Our 34,200 share investment was acquired at a price of $13.88 per share and sold at an average price of $24.60 per share, generating a gain of approximately $367,000, net of transaction costs, during the second quarter of 2010 which is included in investment income in the accompanying statement of income for the nine months ended September 30, 2010.

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Valuation Methods

Long term incentive plans. We have two long-term incentive plans, one for four of our executives, and one for Jeffrey S. Olson, our chief executive officer. These long term incentive plans are based on our total stockholder return versus returns for six of our peer companies. The fair values of these plans are determined using the average trial-specific value of the awards eligible for grant under the plans based upon a Monte Carlo simulation model. This model considers various assumptions, including time value, volatility factors, current market and contractual prices as well as projected future market prices for our common stock as well as common stock of our peer companies over the performance period. Substantially all of these assumptions are observable in the marketplace throughout the full term of the plans, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Debt securities. These securities are valued using industry-standard models that consider various assumptions, including time to maturity, applicable market volatility factors, and current market and selling prices for the underlying debt instruments which are traded on the open market, even if not highly liquid. Substantially all of these assumptions are observable in the marketplace, or can be derived from observable data.

11.	Fair Value of Financial Instruments

The estimated fair values of financial instruments have been determined by us using available market information and appropriate valuation methods. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions and/or estimation methods may have a material effect on the estimated fair value amounts. We have used the following market assumptions and/or estimation methods:

Cash and Cash Equivalents and Accounts and Other Receivables. The carrying amounts reported in the balance sheets for these financial instruments approximate fair value because of their short maturities.

Notes Receivable. The fair value is estimated by using the current interest rates at which similar loans would be made. The carrying amounts reported in the balance sheets approximate fair value.

Mortgage Notes Payable. The fair value estimated at September 30, 2010 and December 31, 2009 was $580.0 million and $561.6 million, respectively, calculated based on the net present value of payments over the term of the loans using estimated market rates for similar mortgage loans and remaining terms. The carrying amount of these notes was approximately $517.3 million and $528.9 million at September 30, 2010 and December 31, 2009, respectively.

Unsecured Senior Notes Payable. The fair value estimated at September 30, 2010 and December 31, 2009 was $740.1 million and $642.0 million, respectively, calculated based on the net present value of payments over the terms of the notes using estimated market rates for similar notes and remaining terms. The carrying amount of these notes was approximately $688.3 million and $688.0 million at September 30, 2010 and December 31, 2009, respectively.

The fair market value calculation of our debt, as of September 30, 2010 includes assumptions as to the effects that prevailing market conditions would have on existing secured or unsecured debt. The calculation uses a market rate spread over the risk free interest rate. This spread is determined by using the weighted average life to maturity coupled with loan-to-value considerations of the respective debt. Once determined, this market rate is used to discount the remaining debt service payments in an attempt to reflect the present value of this stream of cash flows. While the determination of the appropriate market rate is subjective in nature, recent market data gathered suggest that the composite rates used for mortgages and senior notes are consistent with current market trends.

12.	Environmental Matters

We are subject to numerous environmental laws and regulations. The operation of dry cleaning and gas station facilities at our shopping centers are the principal environmental concerns. We require that the tenants who operate these facilities do so in material compliance with current laws and regulations and we have established procedures to monitor their operations. Where available, we have applied and been accepted into state sponsored environmental programs. Several properties in the portfolio will require or are currently undergoing varying levels of environmental remediation; however, we have environmental insurance policies covering most of our properties which limits our exposure to some of these conditions. We currently have one significant environmental remediation liability on our balance sheet related to our Westbury land acquisition. The capitalized cost associated with this acquisition comprised

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the purchase price and a preliminary estimate of the cost of environmental remediation for the site of $5.9 million, which was based on a range provided by third party environmental consultants. This range varied from $5.9 million to $8.4 million on an undiscounted basis, with no amount being more likely than any other at the time the study was performed. Management believes that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity or operations.

13.	Commitments and Contingencies

As of September 30, 2010, we had pledged letters of credit totaling $3.5 million as additional security for financial and other obligations.

We have committed to fund approximately $806,000, based on current plans and estimates, to complete pending development and redevelopment projects. These obligations, composed principally of construction contracts, are generally due as the work is performed and are expected to be financed by the funds available under our credit facilities and available cash.

Certain of our properties are subject to ground leases, which are accounted for as operating leases and have annual obligations of approximately $71,000. We have operating lease agreements for office space in which we have an annual obligation of approximately $360,000. Additionally, we have lease agreements for equipment rentals which have annual obligations of $97,000.

We are subject to litigation in the normal course of business. However, we do not believe that any of the litigation outstanding as of September 30, 2010 will have a material adverse effect on our financial condition, results of operations or cash flows.

Probable Business Combination

Contribution Agreement

On May 23, 2010, we entered into a Contribution Agreement with Liberty International Holdings Limited, a private company limited by shares organized under the laws of England and Wales (“LIH”), and Capital Shopping Centres PLC, a public limited company organized under the laws of England and Wales (“CSC”), pursuant to which we will acquire a majority ownership interest in C&C (US) No. 1, Inc., a Delaware corporation (“CapCo”), through a joint venture with LIH. CapCo, which is currently wholly-owned by LIH, owns a portfolio of 15 properties in California totaling 2.6 million square feet, including Serramonte Shopping Center in Daly City, Plaza Escuela in Walnut Creek, The Willows Shopping Center in Concord, 222 Sutter Street in San Francisco, and The Marketplace Shopping Center in Davis. LIH and CSC are subsidiaries of Capital Shopping Centres Group PLC, a United Kingdom real estate investment trust.

Pursuant to the Contribution Agreement and related transaction documents, at the closing LIH will contribute all of the outstanding shares of CapCo’s common stock to the joint venture in exchange for 10.9 million joint venture units, representing an approximate 23% interest in the joint venture, and we will contribute a shared appreciation promissory note to the joint venture in the amount of $600 million in exchange for an approximate 77% interest in the joint venture. In addition, at the closing, LIH will transfer and assign to us an outstanding promissory note of CapCo in the amount of $67 million in exchange for 4.1 million shares of our common stock and one share of a newly-established class of our capital stock, Class A Common Stock, that (i) is convertible into 10,000 shares of our common stock in certain circumstances, and (ii) subject to certain limitations, will entitle LIH to voting rights with respect to a number of shares of our common stock determined with reference to the number of joint venture units held by LIH from time to time.

The joint venture units to be received by LIH will be redeemable for cash or, at our option, our common stock on a one-for-one basis. The joint venture will assume approximately $330 million of mortgage debt, including its proportionate share of debt held by CapCo’s joint ventures, with a weighted average interest rate of 5.7%.

The transaction is expected to close in the first quarter of 2011 and is subject to customary and other closing conditions.

Equityholders Agreement

In connection with the transactions contemplated by the Contribution Agreement, we entered into an Equityholders Agreement, dated May 23, 2010, among us, CSC, LIH, Gazit-Globe Ltd. (“Gazit”), MGN (USA) Inc., Gazit (1995), Inc., MGN America, LLC, Silver Maple (2001), Inc. and Ficus, Inc. Pursuant to the Equityholders Agreement, we will increase the size of our board of directors by one seat, effective at the time of closing of the transactions contemplated by the Contribution Agreement, and appoint a designee of CSC to the board. Subject to its continuing to hold a minimum number of shares of our common stock (on a fully diluted basis), CSC will

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subsequently have the right to nominate one candidate for election to our board of directors at each annual meeting of our stockholders at which directors are elected.

In addition, the Equityholders Agreement provides that we, and then Gazit and its affiliates, will have a right of first offer with respect to proposed sales by LIH of any of its joint venture units and that Gazit and its affiliates will have a right of first offer with respect to proposed sales by LIH of any shares of our capital stock. We will also have a right of first refusal with respect to any joint venture units proposed to be sold by LIH to one of our competitors.

14.	Condensed Consolidating Financial Information

Many of our subsidiaries have guaranteed our indebtedness under the unsecured senior notes and the revolving credit facilities. The guarantees are joint and several and full and unconditional.

Condensed Balance Sheet As of September 30, 2010	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
ASSETS	(In thousands)
Properties, net	$	1,104,617		$	495,058		$	811,780		$	-		$	2,411,455
Investment in affiliates		628,310			-			-			(628,310	)		-
Other assets		156,873			42,933			110,818			(151,709	)		158,915
Total Assets	$	1,889,800		$	537,991		$	922,598		$	(780,019	)	$	2,570,370
LIABILITIES
Mortgage notes payable	$	79,106		$	121,154		$	481,453		$	(144,653	)	$	537,060
Unsecured revolving credit facilities		32,000			-			-			-			32,000
Unsecured senior notes payable		691,136			-			-			-			691,136
Unamortized discount on notes payable, net		(1,368	)		(3	)		(21,208	)		-			(22,579	)
Other liabilities		70,128			22,987			114,570			(7,056	)		200,629
Total Liabilities		871,002			144,138			574,815			(151,709	)		1,438,246
Redeemable noncontrolling interest		-			-			-			989			989
STOCKHOLDERS' EQUITY		1,018,798			393,853			347,783			(629,299	)		1,131,135
Total Liabilities and Stockholders' Equity	$	1,889,800		$	537,991		$	922,598		$	(780,019	)	$	2,570,370

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Condensed Balance Sheet As of December 31, 2009	Equity One, Inc.			Combined Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
ASSETS	(In thousands)
Properties, net	$	1,007,214		$	272,205	$	982,706		$	-		$	2,262,125
Investment in affiliates		628,310			-		-			(628,310	)		-
Other assets		185,166			18,903		133,343			(147,217	)		190,195
Total Assets	$	1,820,690		$	291,108	$	1,116,049		$	(775,527	)	$	2,452,320
LIABILITIES
Mortgage notes payable	$	55,060		$	44,054	$	597,461		$	(144,928	)	$	551,647
Unsecured revolving credit facilities		-			-		820			(820	)		-
Unsecured senior notes payable		691,136			-		-			-			691,136
Unamortized/unaccreted (discount)/premium on notes payable, net		(2,638	)		13		(23,267	)		-			(25,892	)
Other liabilities		27,983			6,488		113,725			(1,469	)		146,727
Total Liabilities		771,541			50,555		688,739			(147,217	)		1,363,618
Redeemable noncontrolling interest		-			-		-			989			989
STOCKHOLDERS' EQUITY
Total Liabilities and Stockholders' Equity		1,049,149			240,553		427,310			(629,299	)		1,087,713
	$	1,820,690		$	291,108	$	1,116,049		$	(775,527	)	$	2,452,320

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Condensed Statement of Income for the three months ended September 30, 2010	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
REVENUE:
Minimum rent	$	24,896		$	12,771		$	17,594		$	-		$	55,261
Expense recoveries		6,884			4,427			4,379			-			15,690
Percentage rent		38			30			108			-			176
Management and leasing services		27			327			-			-			354
Total revenue		31,845			17,555			22,081			-			71,481
EQUITY IN SUBSIDIARIES' EARNINGS		7,021			-			-			(7,021	)		-
COSTS AND EXPENSES:
Property operating		9,344			5,229			6,028			-			20,601
Rental property depreciation and amortization		6,607			3,764			6,522			13			16,906
General and administrative		8,418			873			476			(18	)		9,749
Total costs and expenses		24,369			9,866			13,026			(5	)		47,256
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSE AND TAX		14,497			7,689			9,055			(7,016	)		24,225
OTHER INCOME AND EXPENSE:
Investment income		2,799			1			5			(2,766	)		39
Equity in loss in unconsolidated joint ventures		-			(64	)		-			-			(64	)
Other income		49			-			-			-			49
Interest expense		(11,574	)		(62	)		(10,247	)		2,766			(19,117	)
Amortization of deferred financing fees		(426	)		(11	)		(42	)		-			(479	)
Loss on sale of real estate		(24	)		-			(162	)		-			(186	)
Other expense		-			(34	)		-			-			(34	)
INCOME (LOSS) BEFORE TAX		5,321			7,519			(1,391	)		(7,016	)		4,433
Income tax (provision) benefit of taxable REIT subsidiaries		(198	)		185			703			-			690
NET INCOME (LOSS)		5,123			7,704			(688	)		(7,016	)		5,123
Net loss attributable to noncontrolling interest		10			-			-			-			10
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	5,133											$	5,133

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Condensed Statement of Income for the three months ended September 30, 2009	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
REVENUE:
Minimum rent	$	25,245		$	9,957		$	16,570		$	-		$	51,772
Expense recoveries		6,841			3,224			4,445			-			14,510
Percentage rent		49			74			3			-			126
Management and leasing services		-			322			-			-			322
Total revenue		32,135			13,577			21,018			-			66,730
EQUITY IN SUBSIDIARIES' EARNINGS		8,773			-			-			(8,773	)		-
COSTS AND EXPENSES:
Property operating		10,441			2,698			6,361			-			19,500
Rental property depreciation and amortization		6,344			2,507			6,574			-			15,425
General and administrative		6,139			890			743			-			7,772
Total costs and expenses		22,924			6,095			13,678			-			42,697
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		17,984			7,482			7,340			(8,773	)		24,033
OTHER INCOME AND EXPENSE:
Investment income		6,768			2			2			-			6,772
Equity in loss in unconsolidated joint ventures		-			(9	)		-			-			(9	)
Other income		325			-			-			-			325
Interest expense		(7,742	)		(1,705	)		(8,286	)		-			(17,733	)
Amortization of deferred financing fees		(269	)		(26	)		(74	)		-			(369	)
Gain on extinguishment of debt		160			-			-			-			160
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		17,226			5,744			(1,018	)		(8,773	)		13,179
Income tax (provision) benefit of taxable REIT subsidiaries		-			(115	)		889			-			774
INCOME (LOSS) FROM CONTINUING OPERATIONS		17,226			5,629			(129	)		(8,773	)		13,953
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		(1,188	)		1,977			(574	)		-			215
Gain (loss) on disposal of income producing properties		(1,290	)		1,870			-			-			580
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		(2,478	)		3,847			(574	)		-			795
NET INCOME (LOSS)		14,748			9,476			(703	)		(8,773	)		14,748
Net loss attributable to noncontrolling interest		570			-			-			-			570
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	15,318											$	15,318

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Condensed Statement of Income for the nine months ended September 30, 2010	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
REVENUE:
Minimum rent	$	74,439		$	38,071		$	51,399		$	-		$	163,909
Expense recoveries		19,752			13,007			13,554			-			46,313
Percentage rent		475			368			691			-			1,534
Management and leasing services		24			1,101			-			-			1,125
Total revenue		94,690			52,547			65,644			-			212,881
EQUITY IN SUBSIDIARIES' EARNINGS		16,192			-			-			(16,192	)		-
COSTS AND EXPENSES:
Property operating		27,052			14,882			18,713			-			60,647
Rental property depreciation and amortization		19,120			11,411			19,468			23			50,022
General and administrative		26,504			2,745			2,452			(124	)		31,577
Total costs and expenses		72,676			29,038			40,633			(101	)		142,246
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		38,206			23,509			25,011			(16,091	)		70,635
OTHER INCOME AND EXPENSE:
Investment income		10,082			19			20			(9,434	)		687
Equity in loss in unconsolidated joint ventures		-			(147	)		-			-			(147	)
Other income		180			-			25			-			205
Interest expense		(34,821	)		(1,537	)		(31,436	)		9,434			(58,360	)
Amortization of deferred financing fees		(1,199	)		(58	)		(122	)		-			(1,379	)
Loss on sale of real estate		-			-			(186	)		-			(186	)
Gain on extinguishment of debt		58			5			-			-			63
Other expense		-			(34	)		-			-			(34	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		12,506			21,757			(6,688	)		(16,091	)		11,484
Income tax (provision) benefit of taxable REIT subsidiaries		(198	)		552			2,330			-			2,684
INCOME (LOSS) FROM CONTINUING OPERATIONS		12,308			22,309			(4,358	)		(16,091	)		14,168
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		1,941			11			(1,871	)		-			81
Gain on disposal of income producing properties		1,898			-			-			-			1,898
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		3,839			11			(1,871	)		-			1,979
NET INCOME (LOSS)		16,147			22,320			(6,229	)		(16,091	)		16,147
Net loss attributable to noncontrolling interest		657			-			-			-			657
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	16,804											$	16,804

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Condensed Statement of Income for the nine months ended September 30, 2009	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
REVENUE:
Minimum rent	$	76,350		$	30,366		$	50,118		$	-		$	156,834
Expense recoveries		20,369			9,892			13,085			-			43,346
Percentage rent		566			389			561			-			1,516
Management and leasing services		194			1,122			-			-			1,316
Total revenue		97,479			41,769			63,764			-			203,012
EQUITY IN SUBSIDIARIES' EARNINGS		42,083			-			-			(42,083	)		-
COSTS AND EXPENSES:
Property operating		28,062			11,144			18,897			-			58,103
Rental property depreciation and amortization		18,733			7,295			19,531			-			45,559
General and administrative		23,711			2,528			2,782			-			29,021
Total costs and expenses		70,506			20,967			41,210			-			132,683
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS		69,056			20,802			22,554			(42,083	)		70,329
OTHER INCOME AND EXPENSE:
Investment income		10,014			12			9			-			10,035
Equity in loss in unconsolidated joint ventures		-			(37	)		-			-			(37	)
Other income		1,409			-			-			-			1,409
Interest expense		(25,296	)		(5,158	)		(24,971	)		-			(55,425	)
Amortization of deferred financing fees		(931	)		(77	)		(127	)		-			(1,135	)
Gain on acquisition of controlling interest in subsidiary		-			-			26,866			-			26,866
Gain on extinguishment of debt		12,395			-			-			-			12,395
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX AND DISCONTINUED OPERATIONS		66,647			15,542			24,331			(42,083	)		64,437
Income tax (provision) benefit of taxable REIT subsidiaries		-			(273	)		2,536			-			2,263
INCOME (LOSS) FROM CONTINUING OPERATIONS		66,647			15,269			26,867			(42,083	)		66,700
DISCONTINUED OPERATIONS:
Operations of income producing properties sold or held for sale		3,432			2,821			(5,368	)		-			885
Gain on disposal of income producing properties		2,879			2,494			-			-			5,373
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		6,311			5,315			(5,368	)		-			6,258
NET INCOME (LOSS)		72,958			20,584			21,499			(42,083	)		72,958
Net loss attributable to noncontrolling interest		1,553			-			-			-			1,553
NET INCOME ATTRIBUTABLE TO EQUITY ONE, INC.	$	74,511											$	74,511

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Condensed Statement of Cash Flows for the nine months ended September 30, 2010	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidated
	(In thousands)

Net cash provided by operating activities	$	15,245		$	29,370		$	22,932		$	67,547
INVESTING ACTIVITIES:
Acquisition of income producing properties		(48,691	)		(11,675	)		(21,605	)		(81,971	)
Additions to income producing properties		(2,189	)		(1,141	)		(3,963	)		(7,293	)
Additions to and purchases of land held for development		(1,337	)		-			-			(1,337	)
Additions to construction in progress		(4,438	)		(984	)		(1,535	)		(6,957	)
Proceeds from disposal of real estate and rental properties		2,433			-			1,009			3,442
Increase in deferred leasing costs and lease intangibles		(1,879	)		(593	)		(906	)		(3,378	)
Advances to joint ventures		(69	)		-			-			(69	)
Investment in consolidated subsidiary		(13,437	)		-			-			(13,437	)
Investment in joint ventures		(2,236	)		-			-			(2,236	)
Distributions of capital from joint ventures		304			-			-			304
Proceeds from sale of securities		841			-			-			841
Advances to subsidiares, net		(64,185	)		47,440			16,745			-

Net cash (used in) provided by investing activities		(134,883	)		33,047			(10,255	)		(112,091	)
FINANCING ACTIVITIES:
Repayments of mortgage notes payable		(12,938	)		(49,191	)		(9,228	)		(71,357	)
Net borrowings under revolving credit facilities		32,000			-			-			32,000
Proceeds from issuance of common stock		99,983			-			-			99,983
Payment of deferred financing costs		(768	)		-			(199	)		(967	)
Stock issuance cost		(1,297	)		-			-			(1,297	)
Dividends paid to stockholders		(61,041	)		-			-			(61,041	)
Net cash provided by (used in) financing activities		55,939			(49,191	)		(9,427	)		(2,679	)
NET DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS		(63,699	)		13,226			3,250			(47,223	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		47,970			-			-			47,970
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	(15,729	)	$	13,226		$	3,250		$	747

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

Condensed Statement of Cash Flows for the nine months ended September 30, 2009	Equity One, Inc.			Combined Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidated
	(In thousands)

Net cash provided by operating activities	$	10,503		$	537		$	55,120		$	66,160
INVESTING ACTIVITIES:
Additions to income producing properties		(2,019	)		(1,647	)		(2,235	)		(5,901	)
Additions to construction in progress		(3,361	)		147			(6,029	)		(9,243	)
Proceeds from disposal of real estate and rental properties		8,157			3,144			889			12,190
Decrease in cash held in escrow		(7,211	)		-			-			(7,211	)
Increase in deferred leasing costs and lease intangibles		(2,816	)		(258	)		(1,304	)		(4,378	)
Advances to joint ventures		(21	)		-			-			(21	)
Investment in consolidated subsidiary		(956	)		-			-			(956	)
Investment in joint ventures		(200	)		-			-			(200	)
Proceeds from sale of securities		152,008			-			-			152,008
Purchase of securities		(10,867	)		-			-			(10,867	)
Advances to subsidiaries, net		(160,389	)		198,086			(37,697	)		-
Net cash provided by (used in) investing activities		(27,675	)		199,472			(46,376	)		125,421
FINANCING ACTIVITIES:
Repayments of mortgage notes payable		(1,840	)		(2,408	)		(7,474	)		(11,722	)
Net borrowings under revolving credit facilities		(20,696	)		5,194			(1,270	)		(16,772	)
Repayment of senior debt borrowings		(687	)		(202,795	)		-			(203,482	)
Proceeds from issuance of common stock		132,488			-			-			132,488
Repurchase of common stock		(5,425	)		-			-			(5,425	)
Stock issuance cost		(4,266	)		-			-			(4,266	)
Dividends paid to stockholders		(74,982	)		-			-			(74,982	)
Net cash provided by (used in) financing activities		24,592			(200,009	)		(8,744	)		(184,161	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		7,420			-			-			7,420
CASH AND CASH EQUIVALENTS FROM ACQUISITIONS		1,857			-			-			1,857
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		5,355			-			-			5,355
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	14,632		$	-		$	-		$	14,632

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EQUITY ONE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2010

(Unaudited)

15.	Subsequent Events

Pursuant to the Subsequent Events Topic of the FASB ASC, we have reviewed all subsequent events and transactions that occurred after our September 30, 2010 unaudited condensed consolidated balance sheet date through the time of filing this quarterly report on Form 10-Q.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated interim financial statements and notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 9, 2010.

Unless the context otherwise requires, all references to “we”, “our”, “us”, and “Equity One” in this report refer collectively to Equity One, Inc. and its consolidated subsidiaries.

Executive Overview

We are a real estate investment trust (“REIT”) that owns, manages, acquires, develops and redevelops neighborhood and community shopping centers. Our principal business objective is to maximize long-term stockholder value by generating sustainable cash flow growth and increasing the long-term value of our real estate assets. To achieve our objective, we lease and manage our shopping centers primarily with experienced, in-house personnel. We acquire neighborhood or community shopping centers that either have leading anchor tenants or contain a mix of tenants that reflect the shopping needs of the communities they serve. We also develop and redevelop shopping centers on a tenant-driven basis, leveraging either existing tenant relationships or geographic and demographic knowledge while seeking to minimize risks associated with land development.

Our Portfolio. As of September 30, 2010, our consolidated property portfolio comprised 189 properties, including 174 shopping centers consisting of approximately 19.5 million square feet of gross leasable area, or GLA, four development or redevelopment properties, six non-retail properties, and five land parcels held for development. As of September 30, 2010, our core portfolio, consisting of our shopping centers, was 89.9% leased and included national, regional, and local tenants.

Outlook and Business Strategy. The economic downturn in 2009 and 2010 has affected and continues to affect our business. While the economy in many of our markets has made some modest improvements, macro-economic challenges have impacted many retailers and continue to impact the retail sales of many regional and local tenants in some of our markets. These challenges have continued to adversely affect many of our tenants, particularly those tenants that sell goods or provide services that tend to be more discretionary in nature. As a result, tenants have requested rent adjustments and abatements, while other tenants have not been able to continue in business at all. We have observed that small shop tenants (those occupying less than 10,000 square feet) have been particularly vulnerable as they have faced both declining sales and reduced access to capital. We have responded to these challenges by undertaking intensive leasing efforts, negotiating reductions in certain recoverable expenses from our vendors, and making case-by-case assessments of rent relief based on the financial and operating strength of our tenants. These macro-economic trends have made it more difficult for us to achieve our objectives of growing our business through internal rent increases, re-cycling capital from lower-tiered assets into higher quality properties, and growing our asset management business.

Notwithstanding the struggling economy, we are actively seeking to expand our portfolio, specifically seeking to expand our asset base to coastal constrained markets in California, Boston, Connecticut, and New York as well as our existing markets in Florida. We seek markets with very strong demographic characteristics with barriers to entry.

While we continue to see improvements in the capital and credit markets, the persistence of a consumer-led economic slowdown has negatively affected net operating income. As a result, for the three months ended September 30, 2010, our same property net operating income declined 0.6% to $35.8 million as compared to $36.0 million for the same period in 2009 and rent spreads on a same-space cash basis for new leases declined 1.2% and renewals declined 3.3%. For the nine months ended September 30, 2010, our same property net operating income declined 1.6% to $108.8 million as compared to $110.6 million for the same period in 2009. Additionally, economic occupancy for our core shopping center portfolio decreased to 89.9% as of September 30, 2010 as compared to 90.3% at December 31, 2009.

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Notwithstanding the difficult operating environment, the execution of our business strategy during the third quarter of 2010 resulted in:

the acquisition of three shopping centers located in Florida representing an aggregate of approximately 351,788 square feet of GLA for an aggregate purchase price of $64.6 million;

the acquisition of a fee interest in a retail condominium in New York with 25,350 square feet of GLA for a purchase price of $21.0 million;

the increase of commitments under our unsecured revolving credit facility from $272.0 million to $400.0 million by exercising the facility’s accordion feature and adding four new banks to the facility;

55 new leases totaling 116,007 square feet at an average rental rate of $14.28 per square foot as compared to the prior in-place average rent of $14.45 per square foot, on a same space basis; and

the renewal and extension of 90 leases totaling 244,046 square feet with an average rental rate of $15.26 per square foot as compared to the prior in–place average rent of $15.78, on a same space basis.

In addition to the above, for the nine months ended September 30, 2010, the execution of our business strategy resulted in:

the sale of approximately 5.4 million shares of our common stock in an underwritten public offering and concurrent private placement which raised net proceeds of approximately $98.9 million;

the acquisition of approximately 2.6 million ordinary shares of DIM through a tender offer and other purchases bringing our ownership to 97.4% as of September 30, 2010;

the acquisition of three shopping centers located in Florida and Connecticut representing an aggregate of approximately 259,216 square feet of GLA for an aggregate purchase price of $53.1 million;

the sale of four outparcels in Florida for aggregate net proceeds of approximately $3.4 million resulting in a net gain of $1.7 million;

the repayment of approximately $61.2 million in mortgages;

the acquisition of two undeveloped land parcels at an aggregate cash purchase price of $1.3 million; and

the execution of a contract to acquire C&C (US) No.1, Inc. (“CapCo”), through a joint venture with its parent company.

Results of Operations

We derive substantially all of our revenues from rents received from tenants under existing leases on each of our properties. These revenues include fixed base rents, recoveries of expenses that we have incurred and that we pass through to the individual tenants and percentage rents that are based on specified percentages of tenants’ revenues, in each case as provided in the particular leases.

Our primary cash expenses consist of our property operating expenses, which include: real estate taxes; repairs and maintenance; management expenses; insurance; utilities; general and administrative expenses, which include payroll, office expenses, professional fees, acquisition costs and other administrative expenses; and interest expense, primarily on mortgage debt, unsecured senior debt and revolving credit facilities. In addition, we incur substantial non-cash charges for depreciation and amortization on our properties. We also capitalize certain expenses, such as taxes, interest and salaries related to properties under development or redevelopment until the property is ready for its intended use.

Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments and redevelopments. The results of operations of any acquired property are included in our financial statements as of the date of its acquisition. A large portion of the changes in our statement of income line items is related to these changes in our property portfolio.

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Comparison of the three months ended September 30, 2010 to 2009

The following summarizes certain line items from our unaudited condensed consolidated statements of income which we believe are important in understanding our operations and/or those items which have significantly changed in the three months ended September 30, 2010 as compared to the same period in 2009:


	Three Months Ended
	September 30,
	2010		2009		% Change
	(In thousands)

Total revenue	$	71,481	$	66,730		7.1	%
Property operating expenses		20,601		19,500		5.6	%
Rental property depreciation and amortization		16,906		15,425		9.6	%
General and administrative expenses		9,749		7,772		25.4	%
Investment income		39		6,772		-99.4	%
Equity in loss in unconsolidated joint ventures		64		9		611.1	%
Other income		49		325		-84.9	%
Interest expense		19,117		17,733		7.8	%
Amortization of deferred financing fees		479		369		29.8	%
Loss on sale of real estate		186		-		-
Gain on extinguishment of debt		-		160		-100.0	%
Other expense		34		-		-
Income tax benefit of taxable REIT subsidiaries		690		774		-10.9	%
Income from discontinued operations		-		795		-100.0	%
Net income		5,123		14,748		-65.3	%

Total revenue increased by $4.8 million, or 7.1%, to $71.5 million in 2010 from $66.7 million in 2009. The increase is primarily attributable to the following:

an increase of approximately $5.8 million associated with properties acquired in 2009 and 2010; and

an increase of approximately $165,000 related to the completion of various development and redevelopment projects; offset by

a decrease of approximately $1.0 million in same-property revenue due primarily to lower minimum rent income and decreased small shop occupancy which also has the effect of lowering rental expense recoveries.

Property operating expenses increased by $1.1 million, or 5.6%, to $20.6 million in 2010 from $19.5 million in 2009. The increase primarily consists of the following:

an increase of approximately $1.7 million associated primarily with properties acquired in 2009 and in 2010; offset by

a decrease of approximately $700,000 in property operating costs primarily due to a decrease in bad debt expense and lower real estate tax expense due to tax refunds received in 2010.

Rental property depreciation and amortization increased by $1.5 million, or 9.6%, to $16.9 million in 2010 from $15.4 million in 2009. The increase was primarily related to depreciation on properties acquired in 2009 and in 2010.

General and administrative expenses increased by $2.0 million, or 25.4%, to $9.7 million in 2010 from $7.8 million in 2009. The increase in 2010 was primarily related to the following:

an increase of approximately $2.3 million in acquisition costs related to properties acquired during 2010 as well as higher professional fees related to the proposed CapCo transaction and the exploration of other potential acquisitions;

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an increase of approximately $624,000 due to: (1) additional headcount, in part, to manage the DIM properties for which we assumed management responsibilities effective January 1, 2010; (2) executive compensation returning to 2008 levels following the voluntary 10% salary reductions taken during 2009; and (3) an increase in non-cash share-based compensation expense due to the restricted stock grants issued to our CEO in connection with his new employment agreement; and

an increase of approximately $145,000 associated with severance and severance related costs; offset by

a decrease of approximately $725,000 due to the decline in the fair value of a liability related to a long term cash incentive plan; and

a decrease of approximately $340,000 related to legal, consulting and other costs associated with our acquisition of DIM in 2009.

Investment income decreased by $6.7 million, or 99.4%, to $39,000 for 2010 from $6.8 million in 2009. The decrease was primarily related to a $6.3 million gain associated with the sale of equity securities in 2009 and dividend and interest income related to other equity investments and debt securities that we owned in 2009. No comparable amounts are included in the 2010 period.

Equity in loss in unconsolidated joint ventures was a net loss of approximately $64,000 in 2010 compared to a net loss of $9,000 in 2009. The net loss represents our pro rata share of our joint ventures’ operating results, which declined as a result of generally lower leasing activity.

Other income decreased by approximately $276,000 to $49,000 in 2010 compared to $325,000 in 2009. The decrease is primarily due to approximately $290,000 in income related to insurance proceeds in 2009 for tornado damage to a property in South Carolina.

Interest expense increased by $1.4 million, or 7.8%, to $19.1 million for 2010 from $17.7 million in 2009. The increase is primarily attributable to the following:

an increase of approximately $4.0 million primarily associated with our of 6.25% unsecured senior notes issued in the fourth quarter of 2009; offset by

a decrease of approximately $2.2 million of interest expense related to the repayment of certain mortgages in 2009 and 2010;

a decrease of approximately $290,000 associated with higher capitalized interest in 2010 related to our development projects; and

a decrease of approximately $100,000 related to lower average balances on our lines of credit.

Amortization of deferred financing fees increased by approximately $110,000 to approximately $479,000 in 2010 compared to $369,000 in 2009. The increase is mainly due to fees associated with the 6.25% senior notes issued in the fourth quarter of 2009.

The $186,000 loss on sale of real estate was primarily related to the disposition of an undeveloped land parcel which generated cash proceeds of approximately $1.0 million.

We recorded net income tax benefits during the three months ended September 30, 2010 and 2009 of approximately $690,000 and $774,000, respectively. At September 30, 2010, DIM accounts for approximately $700,000 in tax benefits and $200,000 in tax benefits were recognized by our Taxable REIT Subsidiaries (“TRSs”) in respect of their losses. These benefits were offset by a provision of approximately $200,000 related to an accrual for a state income tax liability.

For the three months ended September 30, 2010, there was no income derived from our discontinued operations compared to approximately $795,000 in 2009. During 2009, we sold two ground lease outparcels and one operating property generating a net gain of $580,000 and recorded $215,000 in net operating income related to discontinued operations.

As a result of the foregoing, net income decreased by $9.6 million, or 65.3%, to $5.1 million for the third quarter ended 2010, compared to net income of $14.7 million in the third quarter of 2009.

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Comparison of the nine months ended September 30, 2010 to 2009

The following summarizes certain line items from our unaudited condensed consolidated statements of income which we believe are important in understanding our operations and/or those items which have significantly changed in the nine months ended September 30, 2010 as compared to the same period in 2009:


	Nine Months Ended
	September 30,
	2010		2009		% Change
	(In thousands)

Total revenue	$	212,881	$	203,012		4.9	%
Property operating expenses		60,647		58,103		4.4	%
Rental property depreciation and amortization		50,022		45,559		9.8	%
General and administrative expenses		31,577		29,021		8.8	%
Investment income		687		10,035		-93.2	%
Equity in loss in unconsolidated joint ventures		147		37		297.3	%
Other income		205		1,409		-85.5	%
Interest expense		58,360		55,425		5.3	%
Amortization of deferred financing fees		1,379		1,135		21.5	%
Gain on acquisition of controlling interest in subsidiary		-		26,866		-100.0	%
Loss on sale of real estate		186		-		-
Gain on extinguishment of debt		63		12,395		-99.5	%
Other expense		34		-		-
Income tax benefit of taxable REIT subsidiaries		2,684		2,263		18.6	%
Income from discontinued operations		1,979		6,258		-68.4	%
Net income		16,147		72,958		-77.9	%

Total revenue increased by $9.9 million, or 4.9%, to $212.9 million in 2010 from $203.0 million in 2009. The increase is primarily attributable to the following:

an increase of approximately $14.9 million associated with properties acquired in 2009 and 2010; and

an increase of approximately $470,000 related to the completion of various development and redevelopment projects; offset by

a decrease of approximately $5.0 million in same-property revenue due primarily to lower minimum rent income and decreased small shop occupancy which also has the effect of lowering rental expense recoveries; and

a decrease of approximately $200,000 in leasing and management fee income due to lower leasing activity at our joint ventures.

Property operating expenses increased by $2.5 million, or 4.4%, to $60.6 million in 2010 from $58.1 million in 2009. The increase primarily consists of the following:

an increase of approximately $4.7 million associated with properties acquired in 2009 and 2010; and

an increase of approximately $600,000 related to the completion of various development and redevelopment projects; offset by

a decrease of approximately $2.6 million in property operating costs primarily due to a decrease in bad debt expense, lower common area maintenance costs, and lower real estate tax expense mainly due to tax refunds received in 2010.

Rental property depreciation and amortization increased by $4.5 million, or 9.8%, to $50.0 million for 2010 from $45.6 million in 2009. The increase was primarily related to depreciation on properties acquired in 2009 and 2010.

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General and administrative expenses increased by $2.6 million, or 8.8%, to $31.6 million for 2010 from $29.0 million in 2009. The increase in 2010 was primarily related to the following:

an increase of approximately $6.6 million in acquisition costs related to properties acquired during 2010, as well as higher professional fees related to the proposed CapCo transaction and the exploration of other potential acquisitions;

an increase of approximately $1.0 million due to: (1) additional headcount, in part, to manage the DIM properties for which we assumed management responsibilities effective January 1, 2010; (2) higher leasing costs due to lower capitalizable leasing efforts; and (3) executive compensation returning to 2008 levels following the voluntary 10% salary reduction taken during 2009; offset by

a decrease of approximately $3.0 million related to lower severance costs in 2010;

a decrease of approximately $1.1 million related to legal, consulting, and other costs associated with our acquisition of DIM in 2009;

a decrease of approximately $725,000 due to the decline in the fair value of a liability related to a long term cash incentive plan; and

a decrease of approximately $155,000 due to lower office and rent expenses related to cost reduction efforts and the closing of our California offices in 2009.

Investment income decreased by $9.3 million, or 93.2%, to $687,000 for 2010 from $10.0 million in 2009. The decrease was primarily related to the following:

a decrease of approximately $5.9 million primarily associated with gains realized from the disposition of equity securities in 2009;

a decrease of approximately $2.7 million related to interest earned on debt securities held in 2009 and disposed of prior to 2010; and

a decrease of approximately $953,000 related to dividends from several equity investments held during 2009 and disposed of prior to 2010; offset by

an increase of $200,000 in interest related to higher cash balances.

Equity in loss in unconsolidated joint ventures was a net loss of approximately $147,000 in 2010 compared to a net loss of $37,000 in 2009. The net loss represents our pro rata share of our joint ventures’ operating results, which declined as a result of generally lower leasing activity.

Other income decreased approximately $1.2 million, or 85.5%, in the 2010 period compared to 2009. The decrease is primarily due to approximately $1.1 million in income related to insurance proceeds received in 2009 for tornado damage to a property in South Carolina.

Interest expense increased by $2.9 million, or 5.3%, to $58.4 million for 2010 from $55.4 million in 2009. The increase is primarily attributable to the following:

an increase of approximately $10.0 million primarily associated with our 6.25% unsecured senior notes issued in the fourth quarter of 2009; offset by

a decrease of approximately $5.9 million of interest expense related to the repayment of certain mortgages in 2009 and 2010;

a decrease of approximately $663,000 associated with higher capitalized interest in 2010 related to our development projects; and

a decrease of approximately $425,000 related to lower average balances on our lines of credit.

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Amortization of deferred financing fees increased by approximately $244,000 to approximately $1.4 million in 2010 compared to $1.1 million in 2009. The increase is mainly due to fees associated with the 6.25% senior notes issued in the fourth quarter of 2009.

The gain on acquisition of controlling interest of approximately $26.9 million recognized in 2009 was generated from our acquisition of a controlling interest in DIM. No comparable amounts are included in the 2010 period.

The $186,000 loss on sale of real estate was related to the disposition of an undeveloped land parcel which generated cash proceeds of approximately $1.0 million.

During the nine months ended September 30, 2010, we repaid approximately $61.2 million principal amount of our mortgages and recognized a net gain from early extinguishment of debt of approximately $63,000. During the same period in 2009, we repurchased and canceled approximately $44.2 million principal amount of our senior notes and recognized a net gain from early extinguishment of debt of approximately $12.4 million.

We recorded net income tax benefits during the nine months ended September 30, 2010 and 2009 of approximately $2.7 million and $2.3 million, respectively. At September 30, 2010, DIM accounted for approximately $2.3 million of these tax benefits and approximately $400,000 in tax benefits were from our TRSs. The increase in tax benefit was primarily attributable to outparcel sales generating a tax provision in the first quarter of 2009.

For the nine months ended September 30, 2010, our discontinued operations resulted in net income of approximately $2.0 million compared to approximately $6.3 million in 2009. In the current period, we sold two ground lease outparcels at two of our income producing properties and two land outparcels generating a net gain of $1.9 million and recorded $81,000 in net operating income related to discontinued operations. During the same period in 2009, we sold seven ground lease outparcels and one income producing property generating a net gain of $5.4 million and recorded $885,000 in net operating income related to discontinued operations.

As a result of the foregoing, net income decreased by $56.8 million, or 77.9%, from $73.0 million in 2009 to $16.1 million in 2010.

Funds From Operations

We believe Funds from Operations (“FFO”) (when combined with the primary GAAP presentations) is a useful supplemental measure of our 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 diminish 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 depreciable real property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures”. It states further that “adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis”. We believe that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from our FFO measure. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

FFO is presented to assist investors in analyzing our operating performance. FFO (i) does not represent cash flow from operations as defined by GAAP, (ii) is not indicative of cash available to fund all cash flow needs, including the ability to make distributions, (iii) is not an alternative to cash flow as a measure of liquidity, and (iv) should not be considered as an alternative to net income (which is determined in accordance with GAAP) for purposes of evaluating our operating performance.

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The following table illustrates the calculation of FFO for the three and nine months ended September 30, 2010 and 2009:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In thousands)				(In thousands)

Net income attributable to Equity One, Inc.	$	5,133	$	15,318	$	16,804	$	74,511
Adjustments:
Rental property depreciation and amortization, including discontinued operations, net of noncontrolling interest		16,811		13,903		48,482		41,078
Loss on disposal of income producing properties		-		1,758		-		1,758
Pro rata share of real estate depreciation from unconsolidated joint ventures		292		359		899		1,059
Funds from operations	$	22,236	$	31,338	$	66,185	$	118,406

The following table reflects the reconciliation of FFO per diluted share to earnings per diluted share, the most directly comparable GAAP measure, for the three and nine months ended September 30, 2010 and 2009:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009


Earnings per diluted share attributable to Equity One, Inc.	$	0.05	$	0.17	$	0.18	$	0.89
Adjustments:
Rental property depreciation and amortization, including discontinued operations, net of noncontrolling interest		0.18		0.16		0.53		0.49
Loss on disposal of income producing properties		-		0.02		-		0.02
Pro rata share of real estate depreciation from unconsolidated joint ventures		-		-		0.01		0.01
Net adjustment for unvested shares and noncontrolling interest*		0.01		0.01		0.01		0.02
Funds from operations per diluted share	$	0.24	$	0.36	$	0.73	$	1.43

* Includes net effect of: (a) an adjustment for unvested awards of share-based payments with rights to receive dividends or dividend equivalents; (b) an adjustment related to the share issuance in the first quarter of 2010 pursuant to the DIM exchange agreement; and (c) an adjustment to compensate for rounding of the individual calculations.

Critical Accounting Policies

Our 2009 Annual Report on Form 10-K contains a description of our critical accounting policies, including initial adoption of accounting policies, revenue recognition and accounts receivable, recognition of gains from the sale of real estate, business acquisitions, real estate acquisitions, real estate properties and development assets, long lived assets, investments in unconsolidated joint ventures, securities, goodwill, share based compensation and incentive awards, income tax, and discontinued operations. For the three month period ended September 30, 2010, there were no material changes to these policies.

Liquidity and Capital Resources

Due to the nature of our business, we typically generate significant amounts of cash from operations; however, the cash generated from operations is primarily paid to our stockholders in the form of dividends. Our status as a REIT requires that we distribute 90% of our REIT taxable income (including net capital gain) each year, as defined in the Code.

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Short-term liquidity requirements

Our short-term liquidity requirements consist primarily of normal recurring operating expenses, regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities), recurring company expenditures, such as general and administrative expenses, non-recurring company expenditures (such as tenant improvements and redevelopments) and dividends to common stockholders. We have satisfied these requirements principally through cash generated from operations or from financing and investing activities.

As of September 30, 2010, we had approximately $747,000 of cash and cash equivalents available. At that date, we had two revolving credit facilities providing for borrowings of up to $415.0 million of which $203.5 million was available to be drawn. In September 2010, we exercised the accordion feature under our line to increase the total unsecured commitment from $272.0 million to $400.0 million with a syndicate of banks. Four new financial institutions provided commitments under the expanded facility with no modification to the terms and covenants, and several of the incumbent banks added to their previous commitment.

For the remainder of 2010, we have no debt maturities other than normal recurring principal payment installments. Our available cash and credit facilities will be used to fund prospective acquisitions and our normal operating and capital expenses. Additionally, we are actively searching for acquisition and joint venture opportunities that may require or provide additional capital and/or liquidity.

We have also recently announced our intention to acquire CapCo. A complete description of this proposed transaction is contained in Probable Business Combinations below.

Long-term liquidity requirements

Our long-term capital requirements consist primarily of maturities of various long-term debts, development and redevelopment costs and the costs related to growing our business, including acquisitions.

Historically, we have funded these requirements through a combination of sources which were available to us, including additional and replacement secured and unsecured borrowings, proceeds from the issuance of additional debt or equity securities, capital from institutional partners that desire to form joint venture relationships with us and proceeds from property dispositions.

2010 liquidity events

During the first nine months of 2010, we raised new capital from the issuance of equity securities. While the proceeds of this offering together with our availability under our lines of credit are sufficient to operate our business for the remainder of 2010, we may need to raise additional capital if we identify acquisition opportunities that meet our investment objectives.

While there is no assurance that we will be able to raise additional capital in the amounts or at the prices we desire, we believe we have positioned our balance sheet in a manner that facilitates our capital raising plans. The following is a summary of our financing and investing activities completed during the year:

We increased the commitments under our unsecured revolving credit facility from $227.0 million to $400.0 million by exercising the facility’s accordion feature in January and September and collectively added six new banks to the facility;

We sold four outparcels generating net proceeds of approximately $3.4 million and resulting in a net gain on sale of approximately $1.7 million;

We acquired $138.7 million in operating properties, which included approximately $56.7 million in secured debt (40.9% leveraged in total);

We repaid approximately $61.2 million in secured mortgage debt prior to maturity; and

In March 2010, we issued and sold approximately 4.8 million shares of our common stock in an underwritten public offering and approximately 600,000 shares of our common stock, in a concurrent private placement to affiliates of our largest stockholder, Gazit-Globe, Ltd., raising aggregate net proceeds of approximately $98.9 million.

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Summary Cash Flows. The following summary discussion of our cash flows is based on the condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below:


	Nine Months Ended
	September 30,
	2010			2009			Increase (Decrease)
	(In thousands)

Net cash provided by operating activities	$	67,547		$	66,160		$	1,387
Net cash (used in) provided by investing activities	$	(112,091	)	$	125,421		$	(237,512	)
Net cash used in financing activities	$	(2,679	)	$	(184,161	)	$	181,482

Our principal source of operating cash flow is cash generated from our rental properties. Our properties provide a relatively consistent stream of rental income that provides us with resources to fund operating expenses, general and administrative expenses, debt service, and quarterly dividends. Net cash provided by operating activities totaled approximately $67.5 million for the nine months ended September 30, 2010 compared to approximately $66.2 million in the 2009 period. The increase is attributable to an increase in cash provided by our operating properties and an increase in accounts payable and accrued expenses, offset by cash decreases related to lower investment income due to interest earned on debt securities held in 2009 and increased interest expense related to higher debt balances in 2010.

Net cash used in investing activities was approximately $112.1 million for the nine months ended September 30, 2010 compared with approximately $125.4 million provided by investing activities during the nine months ended September 30, 2009. Investing activities during the current period consisted of acquisitions of seven properties for $82.0 million, net of debt assumed, additions to income producing properties, land held for development, and construction in progress of $15.6 million, as well as investments in our consolidated subsidiary, DIM of $13.4 million. Cash provided by investing activities for 2009 comprised $152.0 million of cash inflows primarily associated with the sale of investment securities offset by cash used for additions to income producing properties and construction in progress of $15.1 million and to purchase additional investment securities for $10.9 million.

Net cash used in financing activities totaled approximately $2.7 million for the nine months ended September 30, 2010 compared with approximately $184.2 million net cash used in financing activities for the same period in 2009. Financing activities during the current period consisted of the proceeds from issuance of common stock of $100.0 million, offset by cash used to pay dividends in the amount of $61.0 million and cash used to pay mortgages in the amount of $71.4 million. Cash used in financing activities for 2009 consisted of the proceeds from issuance of common stock of $132.5 million, offset by cash used to pay dividends in the amount of $75.0 million and cash used to repay mortgages, our senior debt and our revolving credit facilities in the amount of $232.0 million.

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Future Contractual Obligations. The following table sets forth certain information regarding future contractual obligations, excluding interest, as of September 30, 2010:

	Payments due by period
Contractual Obligations	Total		Less than 1 year (1)		1-2 years(2)		3-5 years		More than 5 years
	(In thousands)

Mortgage notes payable:
Scheduled amortization	$	112,530	$	3,396	$	26,710	$	31,514	$	50,910
Balloon payments		424,530		-		110,058		175,655		138,817
Total mortgage obligations		537,060		3,396		136,768		207,169		189,727

Unsecured revolving credit facilities		32,000		-		32,000		-		-
Unsecured senior notes		691,136		-		10,000		357,505		323,631
Operating leases		1,002		79		314		149		460
Construction commitments		806		806		-		-		-
Total contractual obligations	$	1,262,004	$	4,281	$	179,082	$	564,823	$	513,818


(1) Amounts represent balance of obligation for the remainder of 2010.
(2) Amounts represent obligations for 2011 and 2012.

Our debt level could subject us to various risks, including the risk that our cash flow will be insufficient to meet required payments of principal and interest, and the risk that the resulting reduction in financial flexibility could inhibit our ability to develop or improve our rental properties, withstand downturns in our rental income, or take advantage of business opportunities. In addition, because we currently anticipate that only a portion of the principal of our indebtedness will be repaid prior to maturity, it is expected that it will be necessary to refinance the majority of our debt. Accordingly, there is a risk that such indebtedness will not be able to be refinanced or that the terms of any refinancing will not be as favorable as the terms of our current indebtedness. If the credit rating agencies that rate our unsecured corporate debt reduce our credit rating, the future costs of unsecured borrowings could increase significantly, including the interest rates that would be applicable under our unsecured credit facilities.

Off-Balance Sheet Arrangements

Letters of Credit: As of September 30, 2010, we have pledged letters of credit for $3.5 million as additional security for financial and other obligations. Substantially all of our letters of credit are issued under our revolving credit facilities.

Construction Commitments: As of September 30, 2010, we have entered into construction commitments and have outstanding obligations to fund $806,000, based on current plans and estimates, in order to complete pending development and redevelopment projects. These obligations, comprising principally construction contracts, are generally due as the work is performed and are expected to be financed by funds available under our credit facilities and available cash.

Operating Lease Obligations: Certain of our properties are subject to ground leases, which are accounted for as operating leases and have annual obligations of approximately $71,000. We have operating lease agreements for office space in which we have an annual obligation of approximately $360,000. Additionally, we have lease agreements for equipment rentals which have annual obligations of $97,000.

Non-Recourse Debt Guarantees: Under the terms of certain non-recourse mortgage loans, we could, under specific circumstances, be responsible for portions of the mortgage indebtedness in connection with certain customary non-recourse carve-out provisions, such as environmental conditions, misuse of funds, and material misrepresentations. In management’s judgment, it would be unlikely for us to incur any material liability under these guarantees that will have a material adverse effect on our financial condition, results of operations, or cash flows.

Other than the obligations described above and items disclosed in the Contractual Obligations Table, we have no off-balance sheet arrangements as of September 30, 2010 that are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, capital expenditures or capital resources.

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Probable Business Combination

Contribution Agreement

On May 23, 2010, we entered into a Contribution Agreement (the "Contribution Agreement") with Liberty International Holdings Limited, a private company limited by shares organized under the laws of England and Wales (“LIH”), and Capital Shopping Centres PLC, a public limited company organized under the laws of England and Wales (“CSC”), pursuant to which we will acquire a majority ownership interest in C&C (US) No. 1, Inc., a Delaware corporation (“CapCo”), through a joint venture with LIH. CapCo, which is currently wholly-owned by LIH, owns a portfolio of 15 properties in California totaling 2.6 million square feet, including Serramonte Shopping Center in Daly City, Plaza Escuela in Walnut Creek, The Willows Shopping Center in Concord, 222 Sutter Street in San Francisco, and The Marketplace Shopping Center in Davis. LIH and CSC are subsidiaries of Capital Shopping Centres Group PLC, a United Kingdom real estate investment trust.

The transaction is expected to close in the first quarter of 2011 and is subject to customary and other closing conditions.

Equityholders Agreement

Equity

In March 2010, we completed an underwritten public offering and concurrent private placement of approximately 5.4 million shares of our common stock at a price to the public and in the private placement of $18.40 per share, which raised approximately $98.9 million in net proceeds. In the concurrent private placement, an aggregate of 600,000 shares were purchased for $11.0 million by MGN America, LLC and Silver Maple (2001), Inc., affiliates of our largest stockholder, Gazit-Globe, Ltd., which may be deemed to be controlled by Chaim Katzman, the Chairman of our Board of Directors.

During 2010, we reduced the amount of noncontrolling interest in DIM through the acquisition of 1,870,915 DIM ordinary shares through the combination of a cash tender offer and other open market and private purchases. We also issued 536,601 shares of our common stock in exchange for 766,573 DIM ordinary shares, increasing our ownership percentage to approximately 97.4% at September 30, 2010.

Environmental Matters

We are subject to numerous environmental laws and regulations. The operation of dry cleaning facilities or gas stations at our shopping centers is the principal environmental concern. We require that the tenants who operate these facilities do so in material compliance with current laws and regulations and we have established procedures to monitor their operations. Where available, we have applied and been accepted into state sponsored environmental programs. Several properties in our portfolio will require or are currently undergoing varying levels of environmental remediation. We have environmental insurance policies covering most of our properties. We currently have one significant environmental remediation liability on our balance sheet related to our Westbury land acquisition. The capitalized cost associated with this acquisition comprised of the purchase price and a preliminary estimate of the cost of environmental remediation for the site of $5.9 million, which was based on a range provided by third party environmental consultants. This range varied from $5.9 million to $8.4 million on an undiscounted basis, with no amount being more likely than any other at the time the study was performed. Management believes that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity or operations.

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Capital Recycling Initiatives

As part of our strategy to upgrade and diversify our portfolio and recycle our existing capital, we evaluate opportunities to sell assets or otherwise contribute assets to existing or new joint ventures with third parties. If the market values of these assets are below their carrying values, it is possible that the disposition or contribution of these assets could result in impairments or other losses. Depending on the prevailing market conditions and historical carrying values, these losses could be material.

Future Capital Requirements

We believe, based on currently proposed plans and assumptions relating to our operations, that our existing financial arrangements, together with cash generated from our operations, cash on hand and our short-term investments will be sufficient to satisfy our cash requirements for a period of at least twelve months. In the event that our plans change, our assumptions change or prove to be inaccurate, or cash flows from operations or amounts available under existing financing arrangements prove to be insufficient to fund our debt maturities, pay our dividends, fund expansion and development efforts or to the extent we discover suitable acquisition targets the purchase price of which exceeds our existing liquidity, we would be required to seek additional sources of financing. Additional financing may not be available on acceptable terms, or at all, and any future equity financing could be dilutive to existing stockholders. If adequate funds are not available, our business operations could be materially adversely affected. See Part I –Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2009.

Distributions

We believe that we currently qualify and intend to continue to qualify as a REIT under the Internal Revenue Code. As a REIT, we are allowed to reduce taxable income by all or a portion of our distributions to stockholders. As distributions have exceeded taxable income, no provision for federal income taxes has been made. While we intend to continue to pay dividends to our stockholders, we also will reserve such amounts of cash flow as we consider necessary for the proper maintenance and improvement of our real estate and other corporate purposes, while still maintaining our qualification as a REIT.

Inflation and Economic Condition Considerations

Most of our leases contain provisions designed to partially mitigate any adverse impact of inflation. Although inflation has been low in recent periods and has had a minimal impact on the performance of our shopping centers, there is more recent data suggesting that inflation maybe a greater concern in the future given economic conditions and governmental fiscal policy. Most of our leases require the tenant to pay its share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. A small number of our leases also include clauses enabling us to receive percentage rents based on a tenant’s gross sales above predetermined levels, which sales generally increase as prices rise, or escalation clauses which are typically related to increases in the Consumer Price Index or similar inflation indices.

Cautionary Statement Relating to Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q contain “forward-looking statements” for purposes of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations and are not guarantees of future performance.

All statements other than statements of historical facts are forward-looking statements, and 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, are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Because these statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on those statements, which speak only as of the date of this report.

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Among the factors that could cause actual results to differ materially are:

general economic conditions, including the current recession, competition and the supply of and demand for shopping center properties in our markets;

risks that tenants will not remain in occupancy or pay rent, or pay reduced rent due to declines in their businesses;

interest rate levels and the availability of financing;

potential environmental liability and other risks associated with the ownership, development and acquisition of shopping center properties;

greater than anticipated construction or operating costs;

inflationary, deflationary and other general economic trends;

the effects of hurricanes and other natural and man-made disasters;

management’s ability to successfully combine and integrate the properties and operations of separate companies that we have acquired in the past or may acquire in the future;

impairment charges; and

other risks detailed from time to time in the reports filed by us with the Securities and Exchange Commission.

Except for ongoing obligations to disclose material information as required by the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Interest Rate Risk

The primary market risk to which we have exposure is interest rate risk. Changes in interest rates can affect our net income and cash flows. As changes in market conditions occur and interest rates increase or decrease, interest expense on the variable component of our debt will move in the same direction. We intend to utilize variable-rate indebtedness available under our unsecured revolving credit facilities in order to initially fund future acquisitions, development costs and other operating needs. With respect to our fixed rate mortgage notes and senior unsecured notes, changes in interest rates generally do not affect our interest expense as these notes are at fixed rates for extended terms. Because we have the intent to hold our existing fixed-rate debt either to maturity or until the sale of the associated property, these fixed-rate notes pose an interest rate risk to our results of operations and our working capital position only upon the refinancing of that indebtedness. Our possible risk is from increases in long-term interest rates that may occur as this may increase our cost of refinancing maturing fixed-rate debt. In addition, we may incur prepayment penalties or defeasance costs when prepaying or defeasing secured debt.

As of September 30, 2010, we had $32.0 million of floating rate debt under our unsecured revolving line of credit.

The fair value of our fixed-rate debt is $1.3 billion as of September 30, 2010, which includes the mortgage notes and fixed-rate portion of the senior unsecured notes payable. If interest rates increase by 1%, the fair value of our total fixed-rate debt would decrease by approximately $55.4 million. If interest rates decrease by 1%, the fair value of our total outstanding debt would increase by approximately $59.0 million. This assumes that our total outstanding fixed-rate debt remains at approximately $1.2 billion, the balance as of September 30, 2010.

Hedging Activities

As of September 30, 2010, we had not entered into any hedging activity.

Other Market Risks

As of September 30, 2010, we had no material exposure to any other market risks (including foreign currency exchange risk, commodity price risk or equity price risk).

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Securities and Exchange Act of 1934, as amended, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended September 30, 2010 that have

materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Neither we nor our properties are subject to any material litigation. We and our properties may be subject to routine litigation and administrative proceedings arising in the ordinary course of business which, collectively, are not expected to have a material adverse affect on our business, financial condition, results of operations, or our cash flows.

ITEM 1A. RISK FACTORS

Our Annual Report on Form 10-K for the year ended December 31, 2009, Part I –Item 1A, Risk Factors, describes important risk factors that could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-Q or presented elsewhere by management from time to time. There have been no material changes in such risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

On November 8, 2010, Equity One, Inc., a Maryland corporation (the “Company”), entered into an Amendment to Contribution Agreement (the “Amendment”) with Liberty International Holdings Limited, a private company limited by shares organized under the laws of England and Wales (“LIH”), and Capital Shopping Centres plc, a public limited company organized under the laws of England and Wales (“CSC”), amending the Contribution Agreement, dated May 23, 2010, by and among such parties (as amended, the “Contribution Agreement”). As previously announced, pursuant to the Contribution Agreement and related transaction documents, the Company will acquire a majority ownership interest in C&C (US) No. 1, Inc. (“CapCo”) through a joint venture with LIH. The material revisions reflected in the Amendment are as follows:

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•

unless the Contribution Agreement is sooner terminated or extended pursuant to its terms, the closing shall take place on January 4, 2011, subject to the satisfaction, or to the extent permitted the wavier, of the closing conditions; and

•

the parties agreed that the mortgage loan on the Serramonte Shopping Center will be re-paid by the Company simultaneously with the closing of the transaction in exchange for additional units in the joint venture.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of such Amendment, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference thereto.

In connection with the transactions contemplated by the Contribution Agreement, the Company entered into an Equityholders Agreement, dated May 23, 2010, among the Company, CSC and certain other parties signatory thereto. Pursuant to the Equityholders Agreement, the Company agreed to increase the size of the Board by one seat, effective at the Commencement Date, and appoint a designee of CSC to the Board. Subject to continuing to hold a minimum number of shares of the Company’s common stock, CSC will subsequently have the right to nominate one candidate for election to the Board at each annual meeting of the Company’s stockholders at which directors are elected.

On November 2, 2010, the Board of Directors (the “Board”) of the Company appointed David Fischel, the designee of CSC, effective as of closing of the transactions contemplated by the Contribution Agreement (the “Commencement Date”), as a Director of the Company to serve until the Company’s 2011 annual meeting of stockholders. Mr. Fischel is not currently expected to serve on any committees of the Board.

Mr. Fischel has served as Chief Executive of Capital Shopping Centres Group PLC (“CSC Group”), the parent company of CSC, since March 2001. He was appointed Non-executive Director of Capital & Counties Properties PLC on its demerger from CSC Group in May 2010.

Upon joining the Board, Mr. Fischel will receive the same compensation as is paid to other directors of the Company. Additionally, in connection with Mr. Fischel’s appointment to the Board, the Company and Mr. Fischel will enter into an indemnification agreement in substantially the same form as the Company has entered into with each of the Company’s existing directors.

In connection with the appointment, the Board also changed the size of the Board to 10 directors, effective as of the Commencement Date.

ITEM 6. EXHIBITS

(a)

Exhibits:

10.1

Amendment to Contribution Agreement, dated November 8, 2010, by and among Equity One, Inc., Liberty International Holdings Limited and Capital Shopping Centres plc.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 8, 2010	EQUITY ONE, INC.

	/s/ Mark Langer

	Mark Langer
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: November 8, 2010

	/s/ Angela F. Valdes

	Angela F. Valdes
	Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibits

Description

10.1

Amendment to Contribution Agreement, dated November 8, 2010, by and among Equity One, Inc., Liberty International Holdings Limited and Capital Shopping Centres plc.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

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