UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2011

OR

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

For the transition period from              to             

Commission file number 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 North Miami Beach, FL	33179
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (305) 947-1664

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.01 Par Value	New York Stock Exchange
(Title of each class)	(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations 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  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
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  x

As of June 30, 2011, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the Common Stock held by non-affiliates of the Registrant was $1,006,351,085 based upon the last reported sale price of $18.64 per share on the New York Stock Exchange on such date.

As of February 22, 2012, the number of outstanding shares of Common Stock, par value $.01 per share, of the Registrant was 114,763,624.

DOCUMENTS INCORPORATED BY REFERENCE

Certain sections of the Registrant’s definitive Proxy Statement for the 2012 Annual Meeting of Stockholders to be filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K to the extent stated herein are incorporated by reference in Part III hereof.

EQUITY ONE, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		2
Item 1A.	Risk Factors		7
Item 1B.	Unresolved Staff Comments		17
Item 2.	Properties		18
Item 3.	Legal Proceedings		26
Item 4.	Mine Safety Disclosures		26
PART II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		27
Item 6.	Selected Financial Data		30
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 7A.	Quantitative and Qualitative Disclosures about Market Risks		56
Item 8.	Financial Statements and Supplementary Data		57
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		57
Item 9A.	Controls and Procedures		57
Item 9B.	Other Information		57
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		58
Item 11.	Executive Compensation		58
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		58
Item 13.	Certain Relationships and Related Transactions and Director Independence		58
Item 14.	Principal Accounting Fees and Services		58
PART IV
Item 15.	Exhibits and Financial Statement Schedules		59
	Signatures		64

PART I

ITEM 1. BUSINESS

The Company

We are a real estate investment trust, or REIT, that owns, manages, acquires, develops and redevelops shopping centers primarily located in supply constrained suburban and urban communities. We were organized as a Maryland corporation in 1992, completed our initial public offering in May 1998, and have elected to be taxed as a REIT since 1995.

As of December 31, 2011, our consolidated property portfolio comprised 165 properties totaling approximately 17.2 million square feet of gross leasable area, or GLA, and included 144 shopping centers, nine development or redevelopment properties, six non-retail properties and six land parcels. As of December 31, 2011, our core portfolio was 90.7% leased and included national, regional and local tenants. Additionally, we had joint venture interests in 17 shopping centers and two office buildings totaling approximately 2.8 million square feet. For a listing of the properties in our core portfolio, refer to Item 2 - Properties.

In this annual report, references to “we,” “us” or “our” or similar terms refer to Equity One, Inc. and our consolidated subsidiaries, including DIM Vastgoed, N.V., which we refer to as DIM, a Dutch company in which we acquired a controlling interest in the first quarter of 2009, and C&C (US) No. 1, Inc., which we refer to as CapCo, in which we acquired a controlling interest through a joint venture with Liberty International Holdings Limited, or LIH, in the first quarter of 2011.

Business Objectives and Strategies

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. Our strategies for reaching this objective include:

• Operating Strategy: Maximizing the internal growth of revenue from our shopping centers by leasing and re-leasing those properties to a diverse group of creditworthy tenants, maintaining our properties to standards that our existing and prospective tenants find attractive, as well as containing costs through effective property management;

• Investment Strategy: Using capital wisely to renovate or redevelop our properties and to acquire and develop additional shopping centers in supply constrained suburban and urban communities where expected, risk-adjusted returns meet or exceed our standards as well as by investing in strategic partnerships that minimize operational or other risks; and

• Capital Strategy: Financing our capital requirements with internally generated funds, borrowings under our existing credit facilities, proceeds from selling properties that do not meet our investment criteria and proceeds from institutional partners and the debt and equity capital markets.

Operating Strategy. Our core operating strategy is to maximize rents and maintain high occupancy levels by attracting and retaining a strong and diverse base of tenants, as well as containing costs through effective property management. Many of our properties are located in some of the most densely populated areas of the country, including the metropolitan areas around Miami, Ft. Lauderdale, West Palm Beach, Tampa, Jacksonville and Orlando, Florida, Atlanta, Georgia, Boston, Massachusetts, the greater New York City metropolitan area, and Los Angeles and San Francisco, California.

In order to effectively achieve our operating strategy, we seek to:

• actively manage and maintain the high standards and physical appearance of our assets while maintaining competitive tenant occupancy costs;

• maintain a diverse tenant base in order to limit exposure to any one tenant’s financial condition;

• develop strong, mutually beneficial relationships with creditworthy tenants, particularly our anchor tenants, by consistently meeting or exceeding their expectations;

• maximize rental rates upon the renewal of expiring leases or as we lease space to new tenants while limiting vacancy and down-time;

• evaluate renovation or redevelopment opportunities that will make our properties more attractive for leasing or re-leasing to tenants and that will increase the overall value of our centers;

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• take advantage of under-utilized land or existing square footage, or re-configure properties for better uses; and

• adopt consistent standards and vendor review procedures.

Investment Strategy. Our investment strategy is to deploy capital in high quality investments and projects that are expected to generate risk-adjusted returns that exceed our cost of capital. Our investments primarily fall into one of the following categories:

• re-developing, renovating, expanding, reconfiguring and/or re-tenanting our existing properties;

• selectively acquiring shopping centers that will benefit from our active management and leasing strategies with a focus on supply constrained markets;

• selectively acquiring vacant and occupied land for the purpose of developing new shopping centers to meet the needs of expanding retailers; and

• investing in strategic partnerships in real estate related ventures where we act as a manager and utilize our expertise or benefit from the local expertise of others.

In evaluating potential redevelopment, acquisition and development opportunities for properties, we also consider such factors as:

• the expected returns in relation to our cost of capital, as well as the anticipated risks we will face in achieving the expected returns;

• the current and projected cash flow of the property and the potential to increase that cash flow;

• the tenant mix at the property, tenant sales performance and the creditworthiness of those tenants;

• economic, demographic, regulatory and zoning conditions in the property’s local and regional market;

• competitive conditions in the vicinity of the property, including competition for tenants and the potential that others may create competing properties through redevelopment, new construction or renovation;

• the level and success of our existing investments in the relevant market;

• the current market value of the land, buildings and other improvements and the potential for increasing those market values;

• the physical configuration of the property, its visibility, ease of entry and exit, and availability of parking; and

• the physical condition of the land, buildings and other improvements, including the structural and environmental conditions.

Capital Strategy. We intend to grow and expand our business by using cash flow from operations, by borrowing under our existing credit facilities, reinvesting proceeds from selling properties that do not or no longer meet our investment criteria, accessing the capital markets to issue equity and debt or by using joint venture arrangements. Our strategy is designed to help us maintain a strong balance sheet and sufficient flexibility to fund our operating and investment activities in a cost-efficient way. Our strategy includes:

• maintaining a prudent level of overall leverage and an appropriate pool of unencumbered properties that is sufficient to support our unsecured borrowings;

• managing our exposure to variable-rate debt;

• taking advantage of market opportunities to refinance existing debt and manage our debt maturity schedule;

• selling properties that no longer fit our investment strategy, that have limited growth potential or that are not a strategic fit within our overall portfolio and redeploying the proceeds elsewhere in our business; and

• using joint venture arrangements to access less expensive capital, mitigate capital risk, or to benefit from the expertise of local real estate partners.

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Change in Policies

Our board of directors establishes the policies that govern our operating, investment and capital strategies, including, among others, the development and acquisition of shopping centers, tenant and market focus, debt and equity financing policies, and quarterly distributions to our stockholders. The board may amend these policies at any time without a vote of our stockholders.

Segment Information

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We have aggregated our operating segments in five reportable segments based primarily upon our method of internal reporting which classifies our operations by geographical area. Our reportable segments by geographical area are as follows: (1) South Florida – including Miami-Dade, Broward and Palm Beach Counties; (2) North Florida and the Southeast – including all of Florida north of Palm Beach County, Georgia, Louisiana, Alabama, Mississippi, North Carolina, South Carolina and Tennessee; (3) Northeast – including Connecticut, Maryland, Massachusetts, New York and Virginia; (4) West Coast – including California and Arizona; and (5) Other/Non-Retail – which is comprised of our non-retail assets. See Note 20 in the consolidated financial statements of this annual report for more information about our business segments and the geographic diversification of our portfolio of properties.

Tax Status

We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “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. 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. Also, at least 95% of our gross income in any year must be derived from qualifying sources. 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, provided that distributions to our stockholders equal at least the amount of our REIT taxable income as defined under the Code. 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 state income or franchise taxes in certain states in which our properties are located and excise taxes on our undistributed taxable income.

We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, each of which we refer to as a (“TRS”). In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Code. A TRS is subject to federal and state income taxes. Our investment in certain land parcels, our investment in DIM and certain other real estate and other activities are being conducted through our TRS entities. Our current TRS activities are limited and they have not incurred any significant income taxes to date.

We own a controlling interest in DIM, which is not a REIT. DIM is not consolidated with us for tax purposes and is subject to U.S. corporate income tax. However, it did not pay any U.S. federal income tax for the previous four years as a result of its taxable operating losses, but is subject to the alternative minimum tax for the 2011 fiscal year.

Governmental Regulations Affecting Our Properties

We and our properties are subject to a variety of federal, state and local environmental, health, safety and similar laws.

Environmental Regulations. The application of these laws to a specific property depends on a variety of property-specific circumstances, including the current and former uses of the property, the building materials used at the property and the physical layout of the property. Under certain environmental laws, we, as the owner or operator of properties currently or previously owned, may be required to investigate and clean up certain hazardous or toxic substances, asbestos-containing materials, or petroleum product releases at the property. We may also be held liable to a federal, state or local governmental entity or third parties for property damage, injuries resulting from the contamination and for investigation and clean up costs incurred in connection with the contamination, whether or not we knew of, or were responsible for, the contamination. Such costs or liabilities could exceed the value of the affected real estate. The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate as collateral. We have several properties that will require or are currently undergoing varying levels of environmental remediation as a result of contamination from on-site uses by current or former owners or tenants, such as gas stations or dry cleaners.

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Americans with Disabilities Act. Our properties are subject to the Americans with Disabilities Act, or ADA. Under this act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services, including restaurants and retail stores, be made accessible and available to people with disabilities. The Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages.

Although we believe that we are in substantial compliance with existing regulations, including environmental and ADA regulations, we cannot predict the impact of new or changed laws or regulations on properties we currently own or may acquire in the future. Other than as part of our development or redevelopment projects, we have no current plans for substantial capital expenditures with respect to compliance with environmental, health, safety and similar laws, and we carry environmental insurance which covers a number of environmental risks for most of our properties.

Competition

There are numerous commercial developers, real estate companies, REITs and other owners of real estate in the areas in which our properties are located that compete with us with respect to the leasing of our properties and in seeking land for development or properties for acquisition. Some of these competitors have substantially greater resources than we have, although we do not believe that any single competitor or group of competitors in any of the primary markets where our properties are located is dominant in that market. This level of competition may reduce the number of properties available for development or acquisition, increase the cost of development or acquisition or interfere with our ability to attract and retain tenants.

All of our existing properties are located in developed areas that include other shopping centers and other retail properties. The number of retail properties in a particular area could materially adversely affect our ability to lease vacant space and maintain the rents charged at our existing properties. We believe that the principal competitive factors in attracting tenants in our market areas are location, price, anchor tenants and maintenance of properties. Our retail tenants also face competition from other retailers (including internet retailers), outlet stores, super centers and discount shopping clubs. This competition could contribute to lease defaults and insolvency of our tenants.

Tenants

Publix Super Markets is our largest tenant and accounted for approximately 1.8 million square feet, or approximately 10.6% of our gross leasable area, at December 31, 2011, and approximately $14.5 million, or 6.9%, of our annual minimum rent in 2011.

Employees

Our headquarters are located at 1600 N.E. Miami Gardens Drive, North Miami Beach, Florida 33179. At December 31, 2011, we had 185 full-time employees and we believe that our relationships with our employees are good.

Available Information

The internet address of our website is www.equityone.net. In the investors section of our website you can obtain, free of charge, a copy of our annual report on Form 10-K, our quarterly reports on Form 10-Q, our Supplemental Information Packages, our current reports on Form 8-K, and any amendments to those or other reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file or furnish such reports or amendments with the SEC. Also available in the corporate governance section of our website, free of charge, are copies of our Corporate Governance Guidelines, Code of Conduct and Ethics and the charters for our audit committee, compensation committee and nominating and corporate governance committee. We intend to provide any amendments or waivers to our Code of Conduct and Ethics that apply to any of our executive officers or our senior financial officers on our website within four business days following the date of the amendment or waiver. The reference to our website address does not constitute incorporation by reference of the information contained on our website and should not be considered a part of this report.

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You may also obtain printed copies of any of the foregoing materials from us, free of charge, by contacting our Investor Relations Department at:

Equity One, Inc.

1600 N.E. Miami Gardens Drive

North Miami Beach, Florida 33179

Attn: Investor Relations Department

(305) 947-1664

You may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, or you may obtain information by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet address at http://www.sec.gov that contains reports, proxy statements and information statements, and other information which you may obtain free of charge.

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ITEM 1A. RISK FACTORS

This annual report on Form 10-K and the information incorporated by reference herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. 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,” “would,” “could,” “should,” “believe,” “intend,” “project,” “forecast,” “target,” “plan,” or “continue” or the negative of these words or other variations or comparable terminology. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Some specific risk factors that could impair forward looking statements are set forth below.

These risks factors are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. Investors should also refer to our quarterly reports on Form 10-Q and current reports on Form 8-K for future periods for updates to these risk factors.

The current economic environment may make it difficult to lease vacant space or cause space to be vacated in the future.

Our goal is to improve the performance of our properties by re-leasing vacated space. While economic conditions in many of our markets have improved, macro-economic challenges, such as volatile consumer confidence, high unemployment and reduced consumer spending, have adversely affected many retailers and continue to adversely affect the retail sales of many regional and local tenants in some of our markets. While most of our centers are anchored by supermarkets, drug stores or other necessity-oriented retailers, which are less susceptible to economic cycles, other tenants in our centers, particularly smaller 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. As a result, some tenants have requested rent adjustments and abatements, while other tenants have not been able to continue in business at all.

Our ability to continue to lease or re-lease vacant space in our properties will be affected by these and other factors, including our properties’ locations, current market conditions and covenants and restrictions found in certain leases at our properties that may limit our ability to lease to certain types of tenants. If these economic conditions persist or worsen in 2012, our properties and results of operations could be adversely affected with lower occupancy and higher bad debt expense as tenants fail to pay rent, close their stores or file bankruptcy. Moreover, because many retailers have slowed their growth plans as a result of the prevailing economic climate or their lack of access to capital, demand for retail space has declined, generally, reducing the market rental rates for our properties. Several national retailers have indicated that they will require reduced store sizes in the future as they adjust their square footage needs based on sales volumes and alternative sales channels including internet sales.

Shorter term expirations of our shop tenants may lead to increased vacancies and reduced rental income which would have an adverse effect on our future results of operations.

From 2012 through 2014, approximately 50.3% of our leases, based on annualized minimum rents, with small shop tenants are due to expire. The annualized minimum rents at expiration for these leases are $19.1 million, $17.0 million, and $16.8 million for 2012-2014, respectively. Additionally, approximately 5.1% of our leases with small shop tenants are month-to-month, representing $5.3 million of annualized rents. Our ability to renew or replace these tenants at comparable rents could have a significant impact on our future results of operations.

We may not be able to re-lease vacated space and, if we are able to re-lease vacated space, there is no assurance that rental rates will be equal to or in excess of current rental rates. In addition, we may incur substantial costs in obtaining new tenants, including brokerage commissions paid by us in connection with new leases or lease renewals, and the cost of making leasehold improvements. All of these events and factors could adversely affect our results of operations.

We are dependent upon certain key tenants, and decisions made by these tenants or adverse developments in the business of these tenants could have a negative impact on our financial condition.

We own shopping centers which are supported by “anchor” tenants which, due to size, reputation or other factors, are particularly responsible for drawing other tenants and shoppers to our centers. For instance, Publix Super Markets is our largest tenant and accounted for approximately 1.8 million square feet, or approximately 10.6% of our gross leasable area, at December 31, 2011, and approximately $14.5 million, or 6.9%, of our annual minimum rent in 2011. No other tenant accounted for over 5% of our annual minimum rent.

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In addition, an anchor tenant may decide that a particular store is unprofitable and close its operations in our center, and, while the tenant may continue to make rental payments, such a failure to occupy its premises could have an adverse effect on the property. A lease termination by an anchor tenant or a failure by that anchor tenant to occupy the premises could result in lease terminations or reductions in rent by other tenants in the same shopping center if their leases have “co-tenancy” clauses which permit cancellation or rent reduction if an anchor tenant’s lease is terminated or the anchor “goes dark.” Vacated anchor tenant space also tends to adversely affect the entire shopping center because of the loss of the departed anchor tenant’s power to draw customers to the center. We cannot provide any assurance that we would be able to quickly re-lease vacant space on favorable terms, if at all. Any of these developments could adversely affect our financial condition or results of operations.

Declarations of bankruptcy by national or regional tenants may have an adverse effect on our operations as those tenants may close multiple locations within our portfolio.

Certain segments of the retail environment remain weak, particularly those relating to home sales, discretionary spending, books, music and video stores. Some of our anchor or other small shop tenants may continue to experience a downturn in their businesses that may weaken their financial condition. As a result, tenants may delay lease commencement, fail to make rental payments when due or declare bankruptcy. In 2010 and 2011, several of our national tenants filed for bankruptcy protection. We are subject to the risk that these tenants may be unable to make their lease payments, may refuse to extend leases upon expiration or may reject leases in bankruptcy. Tenant bankruptcies, leasing delays or failures to make rental payments when due could result in the termination of the tenant’s lease and material losses to our business and harm to our operating results.

Volatility in the credit markets may affect our ability to obtain or re-finance our indebtedness at a reasonable cost.

As of December 31, 2011, we had approximately $352.3 million of senior notes and mortgage debt scheduled to mature in the next three years. Additionally, our $575.0 million unsecured revolving credit facility matures on September 30, 2015 with a one year extension at our option. If credit conditions worsen or if interest rates increase from their current historically low levels, we may experience difficulty refinancing these upcoming loan maturities at a reasonable cost or with desired financing alternatives. For example, it may be hard to raise new unsecured financing in the form of additional bank debt or corporate bonds at interest rates that are appropriate for our long term objectives. If we draw under our existing unsecured revolving line of credit to repay maturing debt, our ability to use the line for other uses such as investments will be reduced. If we increase our reliance on mortgage debt, the credit rating agencies that rate our unsecured corporate debt may reduce our investment-grade credit ratings. Alternatively, we may need to repay maturing debt with proceeds from the issuance of equity or the sale of assets. In addition, lenders may impose more restrictive covenants, events of default and other conditions.

We have substantial debt obligations which may reduce our operating performance and put us at a competitive disadvantage.

As of December 31, 2011, we had debt and other liabilities outstanding in the aggregate amount of approximately $1.6 billion. Many of our loans require scheduled principal amortization. In addition, our organizational documents do not limit the level or amount of debt that we may incur, nor do we have a policy limiting our debt to any particular level. The amount of our debt outstanding from time to time could have important consequences to our stockholders. For example, it could:

• require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, property acquisitions, developments and redevelopments and other appropriate business opportunities that may arise in the future;

• limit our ability to make distributions on our outstanding shares of our common stock, including the payment of dividends required to maintain our status as a REIT;

• make it difficult to satisfy our debt service requirements;

• limit our flexibility in planning for, or reacting to, changes in our business and the factors that affect the profitability of our business, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms;

• adversely affect financial ratios and debt and operational coverage levels monitored by rating agencies and adversely affect the ratings assigned to our unsecured debt;

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• limit our ability to obtain any additional debt or equity financing we may need in the future for working capital, debt refinancing, capital expenditures, acquisitions, redevelopment or other general corporate purposes or to obtain such financing on favorable terms; and

• require us to dedicate increased amounts of our cash flow from operations to payments on our variable rate, unhedged debt if interest rates rise.

If our internally generated cash is inadequate to repay our indebtedness upon maturity, then we will be required to repay debt through refinancing or equity offerings. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of our properties, potentially upon disadvantageous terms, which might result in losses and might adversely affect our cash available for distribution. If prevailing interest rates or other factors at the time of refinancing result in higher interest rates on refinancing, our interest expense would increase which may not be offset by a corresponding increase in our rental rates, which would adversely affect our results of operations. Further, if one of our properties is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, or if we are in default under the related mortgage or deed of trust, such property could be transferred to the mortgagee, or the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of income and asset value. Foreclosure could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements under the Code.

Our financial covenants may restrict our operating or acquisition activities, which may harm our financial condition and operating results.

Our unsecured revolving credit facility, our unsecured term loan facility, our outstanding senior unsecured notes and much of our existing mortgage indebtedness contain customary covenants and conditions, including, among others, compliance with various financial ratios and restrictions upon the incurrence of additional indebtedness and liens on our properties. Furthermore, the terms of some of this indebtedness will restrict our ability to consummate transactions that result in a change of control or to otherwise issue equity or debt securities. The existing mortgages also contain customary negative covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. If we were to breach covenants in these debt agreements, the lender could declare a default and require us to repay the debt immediately. If we fail to make such repayment in a timely manner, the lender may be entitled to take possession of any property securing the loan. If the lenders declared a default under our unsecured revolving credit facility, all amounts outstanding would become due and payable and our ability to borrow in future periods could be restricted. In addition, any such default would constitute a cross default under our senior note indebtedness and unsecured term loan giving rise to the acceleration of such indebtedness.

Increases in interest rates would cause our borrowing costs to rise and generally adversely affect the market price of our securities.

While we had approximately $1.2 billion of fixed interest rate debt outstanding as of December 31, 2011, we do borrow funds at variable interest rates under our lines of credit and could borrow under other variable facilities in the future. Increases in interest rates would increase our interest expense on any variable rate debt, as well as maturing fixed rate debt that must be refinanced at higher interest rates. This would reduce our future earnings and cash flows, which could adversely affect our ability to service our debt and meet our other obligations and also could reduce the amount we are able to distribute to our stockholders. In addition, long-term increases in interest rates will affect the terms under which we refinance our existing debt as it matures, thereby adversely affecting results of operations.

In addition, the market price of our common stock is affected by the annual distribution rate on the shares of our common stock. An increase in market interest rates relative to our annual dividend rate may lead prospective purchasers of our common stock and other securities to seek alternative investments that offer a higher annual yield which would likely adversely affect the market price of our common stock and other securities. Finally, increases in interest rates may have the effect of depressing the market value of retail properties such as ours, including the value of those properties securing our indebtedness. Such declines in the market value of our properties would likely adversely affect the market price of our common stock and other securities.

Geographic concentration of our properties makes our business vulnerable to economic downturns in certain regions or to other events, like hurricanes and earthquakes, that disproportionately affect those areas.

As of December 31, 2011, approximately 47.6% and 11.7% of our retail property gross leasable area was located in Florida and California, respectively. As a result, economic, real estate and other general conditions in these states will significantly affect our revenues and the value of our properties. Business layoffs or downsizing, industry slowdowns, declines in real estate values, reduced migration to Florida, changing demographics, increases in insurance costs and real estate taxes and other factors may adversely affect the economic climate in Florida and California. Any resulting reduction in demand for retail properties in Florida or California would adversely affect our operating performance and limit our ability to make distributions to stockholders.

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In addition, a significant portion of our retail property gross leasable area is located in coastal or other areas that are susceptible to the harmful effects of tropical storms, hurricanes, earthquakes and other similar natural disasters. As of December 31, 2011, over 45% of the total insured value of our portfolio is located in the State of Florida. Intense hurricanes and tropical storm activity during the last decade has caused our cost of property insurance to increase significantly. While much of the cost of this insurance is passed on to our tenants as reimbursable property costs, some tenants, particularly national tenants, do not pay a pro rata share of these costs under their leases. Hurricanes and similar storms also disrupt our business and the business of our tenants, which could affect the ability of some tenants to pay rent and may reduce the willingness of residents to remain in or move to the affected area.

In addition, as of December 31, 2011, over 25% of the total insured value of our portfolio is located in the State of California, including a number of assets in the San Francisco Bay and Los Angeles areas. These properties may be subject to the risk that an earthquake or other, similar peril would affect the operations of these properties. We currently do not have comprehensive insurance covering losses from these perils. Therefore, if an earthquake did occur and our properties were affected, we would bear the losses resulting therefrom.

Therefore, as a result of the geographic concentration of our properties, we face demonstrable risks, including higher costs, such as uninsured property losses and higher insurance premiums, and disruptions to our business and the businesses of our tenants.

Our insurance coverage on our properties may be inadequate therefore increasing the risks to our business.

We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire, flood, rental loss and acts of terrorism; however, we currently do not carry coverage for losses from earthquakes or other, similar perils. We also currently carry environmental insurance on all of our properties. All of these policies contain coverage limitations. We believe these coverages are of the types and amounts customarily obtained for or by an owner of similar types of real property assets located in the areas where our properties are located. We intend to obtain similar insurance coverage on subsequently acquired properties.

The availability of insurance coverage may decrease and the prices for insurance may increase as a consequence of significant losses incurred by the insurance industry. For instance, given the issues facing financial firms in general, including insurance companies, and following the hurricane, earthquake and other property loss activity in recent years, property insurance costs across our portfolio have increased. In the event of future industry losses, we may be unable to renew or duplicate our current insurance coverage in amounts we deem adequate or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses from named wind storms, earthquakes or due to terrorist acts and toxic mold, or, if offered, the cost of obtaining these types of insurance may not be commercially justified. We, therefore, may cease to have insurance coverage against certain types of losses and/or there may be decreases in the covered loss limits of insurance available.

If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but still remain obligated for any mortgage debt or other financial obligations related to the property. We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Also, due to inflation, changes in codes and ordinances, environmental considerations and other factors, it may not be feasible to use insurance proceeds to replace a building after it has been damaged or destroyed or the proceeds could be insufficient. Events such as these could adversely affect our results of operations and our ability to meet our obligations, including distributions to our stockholders.

We may be unable to sell properties in accordance with our business plan which could reduce our available capital or require us to hold non-core assets longer than we deem desirable.

In general, we intend to sell certain assets over time as part of our capital recycling efforts and as assets no longer meet our investment criteria. However, real estate investments generally cannot be sold quickly. Also, there are limitations under federal income tax laws applicable to real estate and to REITs in particular that may limit our ability to sell our assets. We may not be able to alter our portfolio promptly in response to changes in economic or other conditions. Our inability to respond quickly to changes in the performance of our investments could adversely affect our ability to meet our obligations and make distributions to our stockholders.

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Our assets may be subject to impairment charges.

Our long-lived assets, including real estate held for investment, are carried at net book value unless circumstances indicate that the carrying value of the assets may not be recoverable. Our properties are reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. When assets are identified as held for sale, we estimate the sales prices, net of selling costs, of such assets. Assets that will be sold together in a single transaction are aggregated in determining if the net sales proceeds of the group are expected to be less than the net book value of the assets. If, in our opinion, the net sales prices of the assets which have been identified for sale are expected to be less than the net book value of the assets, an impairment charge is recorded and we write down the asset to fair value. An impairment charge may also be recorded for any asset if it is probable, in our estimation, that the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. In addition, we may be required to test for impairment when we perform periodic valuations of our properties in accordance with International Financial Reporting Standards under our agreement with our largest stockholder, Gazit-Globe, Ltd. We also perform an annual test of our goodwill for impairment and perform periodic evaluations for impairment of our investments in unconsolidated entities such as joint ventures. Recording an impairment charge results in an immediate reduction in our income and therefore could have a material adverse effect on our results of operations and financial condition in the period in which the charge is taken.

Our development and redevelopment activities are inherently risky and may not yield anticipated returns, which would harm our operating results and reduce funds available for distributions to stockholders.

An important component of our growth strategy is the redevelopment of properties within our portfolio and the development of new shopping centers, including The Gallery at Westbury Plaza in Nassau County, New York. At December 31, 2011, we had invested an aggregate of approximately $82.2 million in these development or redevelopment projects at various stages of completion and based on our current plans and estimates we anticipate that these projects will require an additional $100.7 million to complete, including $71.8 million to complete The Gallery at Westbury Plaza. In addition to these costs, we may in the future expend substantial amounts in connection with a redevelopment of Serramonte Shopping Center located in Daly City, California, and other development and redevelopment opportunities we identify. These developments and redevelopments may not be as successful as currently expected. Expansion, renovation and development projects entail the following considerable risks:

• significant time lag between commencement and completion subjects us to greater risks due to fluctuations in the general economy;

• failure or inability to obtain construction or permanent financing on favorable terms;

• expenditure of money and time on projects that may never be completed;

• inability to achieve projected rental rates or anticipated pace of lease-up;

• higher-than-estimated construction costs, including labor and material costs; and

• possible delay in completion of the project because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, or man-made or natural disasters (such as fires, hurricanes, earthquakes or floods).

While our policies with respect to expansion, renovation and development activities are intended to limit some of the risks otherwise associated with such activities, such as initiating construction only after securing commitments from anchor tenants, we will nevertheless be subject to risks that the construction costs of a property, due to factors such as cost overruns, design changes and timing delays arising from a lack of availability of materials and labor, weather conditions and other factors outside of our control, as well as financing costs, may exceed original estimates, possibly making the associated investment unprofitable. Significant changes in economic conditions could adversely affect prospective tenants and our ability to lease newly developed and redeveloped properties. Any substantial unanticipated delays or expenses could adversely affect the investment returns from these redevelopment projects and harm our operating results.

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Future acquisitions may not yield the returns expected, may result in disruptions to our business, may strain management resources and may result in stockholder dilution.

Our investing strategy and our market selection process may not ultimately be successful and may not provide positive returns on our investment. The acquisition of properties or portfolios of properties entails risks that include the following, any of which could adversely affect our results of operations and our ability to meet our obligations:

• we may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify, even after making a non refundable deposit or incurring significant acquisition related costs;

• we may not be able to integrate any acquisitions into our existing operations successfully;

• properties we acquire may fail to achieve the occupancy or rental rates we project at the time we make the decision to acquire, which may result in the properties’ failure to achieve the returns we projected;

• our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs, which could significantly increase our total acquisition costs; and

• our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller of such building or property, may fail to reveal various liabilities (such as to tenants or vendors or with respect to environmental contamination), which could reduce the cash flow from the property or increase our acquisition cost.

If we acquire a business, we will be required to integrate the operations, personnel and accounting and information systems of the acquired business and train, retain and motivate any key personnel from the acquired business. In addition, acquisitions of or investments in companies may cause disruptions in our operations and divert management’s attention away from day-to-day operations, which could impair our relationships with our current tenants and employees. The issuance of equity or debt securities in connection with any acquisition or investment could be substantially dilutive to our stockholders.

Our ability to grow will be limited if we cannot obtain additional capital.

Our growth strategy is focused on the redevelopment of properties we already own and the acquisition and development of additional properties. We believe that it will be difficult to fund our expected growth with cash from operating activities because, in addition to other requirements, we are required to distribute to our stockholders at least 90% of our REIT taxable income (excluding net capital gains) each year to continue to qualify as a REIT for federal income tax purposes. As a result, we must rely primarily upon the availability of debt or equity capital, which may or may not be available on favorable terms or at all. The debt could include mortgage loans from third parties or the sale of debt securities. Equity capital could include shares of our common stock or preferred stock. We cannot guarantee that additional financing, refinancing or other capital will be available in the amounts we desire or on favorable terms. Our access to debt or equity capital depends on a number of factors, including the general availability of credit in the capital markets, the market’s perception of our growth potential, our ability to pay dividends, our financial condition, our credit rating and our current and potential future earnings. Depending on the outcome of these factors, we could experience delay or difficulty in implementing our growth strategy on satisfactory terms, or we may be unable to implement this strategy at all. See the Risk Factor entitled “Volatility in the credit markets may affect our ability to obtain or re-finance our indebtedness at a reasonable cost.”

Property ownership through joint ventures could limit our control of those investments and reduce our expected returns.

We have invested in some cases as a partner or co-venturer in properties. Real estate partnership or joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partners or co-venturers might become bankrupt, that our partners or co-venturers might at any time have different interests or goals than we do, that our partners or co-venturers might fail to provide capital and fulfill their obligations, which may result in certain liabilities to us for guarantees and other commitments, and that our partners or co-venturers may take actions or fail to take actions contrary to our instructions, requests, policies or objectives. Other risks of joint venture investments could include an impasse on decisions, such as sales of the ventures or their properties, because neither our partners or co-venturers nor we would have full control over the involved partnerships or joint ventures. In other cases, our partners or co-venturers may have the power to cause the involved partnership or joint venture to take or refrain from taking actions contrary to our desires. In addition, our lenders may not be easily able to sell our joint venture assets and investments or view them less favorably as collateral, which could negatively affect our liquidity and capital resources. These factors could limit the return that we receive from those investments or cause our cash flows to be lower than our estimates.

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Our activity level places significant demands on our operational, administrative and financial resources.

We continue to pursue extensive capital recycling and growth opportunities through a combination of acquisitions, dispositions and joint venture opportunities, some of which have complicated structures. This activity level and complexity places significant demands on our operational, administrative and financial resources. Our future performance will depend in part on our ability to successfully identify, attract and retain qualified personnel to support and manage the transformation, growth and complexity of our business, including successfully integrating new acquisitions into our operating platform. Obtaining sufficient personnel and other resources may increase our expenses, including general and administrative expense. In the event we have insufficient resources to support the growth and complexity in our business, we may fail to properly structure or account for the financial or tax aspects of our transactions or satisfy obligations owed to transaction counterparties, thereby impacting our qualification as a REIT or our financial results.

Competition for the acquisition of assets and the leasing of properties may adversely impact our future operating performance, our growth plans, and stockholder returns.

Numerous commercial developers and real estate companies compete with us in seeking tenants for our existing properties and properties for acquisition, particularly in our target markets. This competition may affect us in various ways, including:

• reducing properties available for acquisition;

• increasing the cost of properties we acquire;

• reducing the rate of return on these properties;

• reducing rents payable to us;

• interfering with our ability to attract and retain tenants;

• increasing vacancy rates at our properties; and

• adversely affecting our ability to minimize expenses of operation.

In addition, tenants and potential acquisition targets may find competitors to be more attractive because they may have greater resources, broader geographic diversity, may be willing to pay more or offer greater lease incentives or may have a more compatible operating philosophy. In particular, larger REITs may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. These competitive factors may adversely affect our profitability, and our stockholders may experience a lower return on their investment.

We may be subjected to liability for environmental contamination which might have a material adverse impact on our financial condition and results of operations.

As an owner and operator of real estate and real estate-related facilities, we may be liable for the costs of removal or remediation of hazardous or toxic substances present at, on, under, in or released from our properties, as well as for governmental fines and damages for injuries to persons and property. We may be liable without regard to whether we knew of, or were responsible for, the environmental contamination and with respect to properties we have acquired, whether the contamination occurred before or after the acquisition. We have several properties in our portfolio that will require or are currently undergoing varying levels of environmental remediation. The presence of contamination or the failure to properly remediate contamination at any of our properties may adversely affect our ability to sell or lease those properties or to borrow funds by using those properties as collateral. The costs or liabilities could exceed the value of the affected real estate. Although we have environmental insurance policies covering most of our properties, there is no assurance that these policies will cover any or all of the potential losses or damages from environmental contamination; therefore, any liability, fine or damage could directly impact our financial results.

We may experience adverse consequences in the event we fail to qualify as a REIT.

Although we believe that we are organized and have operated so as to qualify as a REIT under the Code since our REIT election in 1995, no assurance can be given that we have qualified or will remain so qualified. In addition, no assurance can be given that new legislation, regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification.

Qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are often only limited judicial and administrative interpretations. These provisions include requirements concerning, among other things, the ownership of our outstanding common stock, the nature of our assets, the nature and sources of our income, and the

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amount of our distributions to our stockholders. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying sources. Satisfying this requirement could be difficult, for example, if defaults by tenants were to reduce the amount of income from qualifying rents or if the structure of one of our joint ventures or other investments fails to yield qualifying income. In addition, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, excluding net capital gains. Under a revenue procedure issued by the Internal Revenue Service, REITs, subject to certain limitations, are permitted to pay the distributions required to qualify as a REIT under the Code in predominantly their own stock, rather than all cash, provided the distributions are declared on or after January 1, 2008 and on or before December 31, 2012, with respect to a taxable year ending on or before December 31, 2011. To the extent we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions (or deemed distributions) in any year are less than the sum of 85% of our ordinary income for that year, 95% of our capital gain net earnings for that year and 100% of our undistributed taxable income from prior years. We intend to make distributions to our stockholders to comply with the distribution provisions of the Code. Although we anticipate that our cash flows from operating activities and our ability to borrow under our existing credit facilities will enable us to pay our operating expenses and meet distribution requirements, no assurance can be given in this regard. We may be required to sell assets to distribute enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax.

In addition, the federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of a property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. We intend to hold our properties for investment with a view to long-term appreciation, to engage in the business of acquiring and owning properties and to make occasional sales as are consistent with our investment objectives. Although we do not intend to engage in prohibited transactions, it is possible that our dispositions may not qualify for safe harbor treatment. Accordingly, we cannot assure you that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of our sales are prohibited transactions. In addition, the sale of our properties may generate gains for tax purposes which, if not adequately sheltered through “like kind exchanges” under Section 1031 of the Code, could require us to make additional distributions to our stockholders, thus reducing our capital available for investment in other properties, or if the proceeds of such sales are already invested in other properties, require us to obtain additional funds to make such distributions, in either such case to permit us to maintain our status as a REIT.

If we fail to qualify as a REIT:

• we would not be allowed a deduction for distributions to stockholders in computing taxable income, and therefore our taxable income or alternative minimum taxable income so computed would be fully subject to the regular federal income tax or the federal alternative minimum tax;

• unless we are entitled to relief under specific statutory provisions, we could not elect to be taxed as a REIT again for the four taxable years following the year during which we were disqualified;

• we could be required to pay significant income taxes, which would substantially reduce the funds available for investment or for distribution to our stockholders for each year in which we failed or were not permitted to qualify; and

• the tax laws would no longer require us to pay any distributions to our stockholders.

We are subject to other tax liabilities.

Even if we qualify as a REIT, we are subject to some federal, state and local taxes on our income and property that could reduce operating cash flow. For example, we will pay tax on certain types of income that are not distributed, and will be subject to a 100% excise tax on transactions with a TRS that are not conducted on an arms-length basis. In addition, our TRSs are subject to foreign, federal, state and local taxes.

Our mezzanine debt investments involve a greater risk of loss than investments in conventional mortgage debt.

We hold a small number of investments in mezzanine indebtedness issued by owners of real estate and their affiliates. Mezzanine debt investments involve a higher degree of risk than investments in conventional mortgage debt due to a variety of factors, including that such investments are subordinate to mortgage financing and are not directly secured by the property

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underlying the investment. Should the borrower default on our mezzanine loan, we would only be able to proceed against the entity which issued the mezzanine loan, and not the property underlying our investment or the owner thereof. Such collection efforts may entail costly negotiations or litigation with the borrower, the senior mortgage lender or both. Furthermore, in the event of default by the borrower under the mortgage loan, we may need to make cure payments to the mortgage lender in order to protect our rights and investment. In these cases, the total amount we recover may be less than our total investment, resulting in a loss.

Our Chairman of the Board and his affiliates are beneficial owners of approximately 47.2% of our common stock and exercise significant control over our company and may delay, defer or prevent us from taking actions that would be beneficial to our other stockholders.

As of December 31, 2011, Chaim Katzman, the chairman of our board of directors and our largest stockholder, and his affiliates beneficially owned approximately 47.2% of the outstanding shares of our common stock and, as a result of a stockholders’ agreement with other of our stockholders, have voting power over approximately 50.8% of our outstanding shares with respect to the election of directors. Accordingly, Mr. Katzman is able to exercise significant influence over the outcome of substantially all matters required to be submitted to our stockholders for approval, including decisions relating to the election of our board of directors and the determination of our day-to-day corporate and management policies. In addition, Mr. Katzman is able to exercise significant influence over the outcome of any proposed merger or consolidation of our company which, under our charter, requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Mr. Katzman’s ownership interest in our company may discourage third parties from seeking to acquire control of our company which may adversely affect the market price of our common stock.

To maintain our status as a REIT, we limit the amount of shares any one stockholder can own.

The Code imposes certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our outstanding shares of capital stock may be owned, actually or constructively, by five or fewer individuals (as defined in the Code). To protect our REIT status, our charter provides that, subject to certain exceptions, no person may own, or be deemed to own, directly and by virtue of the constructive ownership provisions of the Code, more than 9.9% (or 5.0% in the case of an “individual”) in value of the aggregate outstanding shares of our capital stock or more than 9.9% (or 5.0% in the case of an “individual”), in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock. The constructive ownership rules are complex. Shares of our capital stock owned, actually or constructively, by a group of related individuals and/or entities may be treated as constructively owned by one of those individuals or entities. As a result, the acquisition of less than 5.0% or 9.9%, as applicable, in value of the outstanding common stock and/or a class or series of preferred stock (or the acquisition of an interest in an entity that owns common stock or preferred stock) by an individual or entity could cause that individual or entity (or another) to own constructively more than 5.0% or 9.9%, as applicable, in value of the outstanding stock. If that happened, either the transfer or ownership would be void or the shares would be transferred to a charitable trust and then sold to someone who can own those shares without violating the 5.0% or 9.9% ownership limit, as applicable. Our board of directors may waive the REIT ownership restrictions on a case-by-case basis, and it has in the past done so, including for Chaim Katzman, our chairman of the board, and his affiliates, and for Liberty International Holdings Limited (“LIH”) and its affiliates. Our charter also provides that, subject to certain exceptions, a foreign person may not acquire, beneficially or constructively, any shares of our capital stock, if immediately following the acquisition of such shares, the fair market value of the shares of our capital stock owned, directly and indirectly, by all foreign persons (other than LIH and its affiliates) would comprise 29% or more of the fair market value of the issued and outstanding shares of our capital stock. This 29% limit is intended to ensure that CapCo, one of our subsidiaries, will qualify as a “domestically controlled” REIT. The foregoing ownership restrictions may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the stockholders’ best interest.

We cannot assure you we will continue to pay dividends at current rates.

Our ability to continue to pay dividends on our common stock at current rates or to increase our common stock dividend rate will depend on a number of factors, including, among others, the following:

• our financial condition and results of future operations;

• the ability of our tenants to perform in accordance with the lease terms;

• the terms of our loan covenants; and

• our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.

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If we do not maintain or increase the dividend rate on our common stock, there could be an adverse effect on the market price of our common stock. Conversely, the payment of dividends on our common stock may be subject to payment in full of the interest on debt we may owe.

Under a revenue procedure issued by the Internal Revenue Service, REITs, subject to certain limitations, are permitted to pay the distributions required to qualify as a REIT under the Code in predominantly their own stock, rather than all cash, provided the distributions are declared on or after January 1, 2008 and on or before December 31, 2012, with respect to a taxable year ending on or before December 31, 2011. To date, we have paid all of our dividends solely in cash. If we were to pay a portion of our dividends in stock, there could be an adverse effect on the market price of our stock.

Our organizational documents contain provisions which may discourage the takeover of our company, may make removal of our management more difficult and may depress our stock price.

Our organizational documents contain provisions that may have an anti-takeover effect and inhibit a change in our management. As a result, these provisions could prevent our stockholders from receiving a premium for their shares of common stock above the prevailing market prices. These provisions include:

• the REIT and foreign ownership limits described above;

• the ability to issue preferred stock with the powers, preferences or rights determined by our board of directors;

• special meetings of our stockholders may be called only by the chairman of the board, the chief executive officer, the president or by the board of directors;

• advance notice requirements for stockholder proposals;

• the absence of cumulative voting rights; and

• provisions relating to the removal of incumbent directors.

Finally, Maryland law also contains several statutes that restrict mergers and other business combinations with an interested stockholder or that may otherwise have the effect of preventing or delaying a change of control.

Changes in taxation of corporate dividends may adversely affect the value of our common stock.

The maximum marginal rate of tax payable by a domestic non-corporate taxpayer on a dividend received from a regular “C” corporation in a taxable year beginning before January 1, 2013 is 15%, as opposed to the marginal tax rates of up to 35% that apply to ordinary income. The reduced tax rate, however, does not apply to dividends paid to domestic non-corporate taxpayers by a REIT, except for certain limited amounts. Although the distributed earnings of a REIT are generally subject to less total federal income tax than are the distributed earnings of a non-REIT “C” corporation which are distributed to stockholders net of corporate-level income tax, domestic non-corporate investors could view the stock of regular “C” corporations as more attractive relative to the stock of a REIT because the dividends from regular “C” corporations are taxed at a lower stated tax rate while distributions from REITs (other than distributions designated as capital gain dividends or returns of capital or the limited amounts of dividends that qualify for the 15% rate) are generally taxed at the same rate as the individual’s other ordinary income.

Foreign stockholders may be subject to U.S. federal income tax on gain recognized on a disposition of our common stock if we do not qualify as a “domestically controlled” REIT.

A foreign person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests is generally subject to U.S. federal income tax on any gain recognized on the disposition. This tax does not apply, however, to the disposition of stock in a REIT if the REIT is “domestically controlled.” In general, we will be a domestically controlled REIT if at all times during the five-year period ending on the applicable stockholder’s disposition of our stock, less than 50% in value of our stock was held directly or indirectly by non-U.S. persons. If we were to fail to qualify as a domestically controlled REIT, gain recognized by a foreign stockholder on a disposition of our common stock would be subject to U.S. federal income tax unless our common stock was traded on an established securities market and the foreign stockholder did not at any time during a specified testing period directly or indirectly own more than 5% of our outstanding common stock.

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Several of our controlling stockholders have pledged their shares of our stock as collateral under bank loans, which could result in foreclosure and disposition and could have a negative impact on our stock price.

As of December 31, 2011, Chaim Katzman, the chairman of our board of directors and his affiliates beneficially owned approximately 47.2% of the outstanding shares of our common stock. Several of our stockholders affiliated with Mr. Katzman, including Gazit-Globe, Ltd. and related entities, have pledged a substantial portion of our stock that they own to secure loans made to them by commercial banks. Based on information from these stockholders, we believe that 80.4% of the shares reported as beneficially owned by Mr. Katzman and his affiliates are pledged to secure loans made to these stockholders.

If one of these stockholders defaults on any of its obligations under these pledge agreements or the related loan documents, these banks may have the right to sell the pledged shares in one or more public or private sales that could cause our stock price to decline. Many of the occurrences that could result in a foreclosure of the pledged shares are out of our control and are unrelated to our operations. Some of the occurrences that may constitute such an event of default include:

• the stockholder’s failure to make a payment of principal or interest when due;

• a reduction in the dividend we pay on our common stock;

• the occurrence of another default that would entitle any of the stockholder’s other creditors to accelerate payment of any debts and obligations owed to them by the stockholder;

• if the bank, in its absolute discretion, deems that a change has occurred in the condition of the stockholder to which the bank has not given its prior written consent; and

• if, in the opinion of the bank, the value of the pledged shares has been reduced or is likely to be reduced (for example, the price of our common stock declines).

In addition, because so many shares are pledged to secure these loans, the occurrence of an event of default could result in a sale of pledged shares that would trigger a change of control of our company, even when such a change may not be in the best interests of our stockholders or may violate covenants of certain loan agreements.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

Our consolidated portfolio consists primarily of grocery-anchored shopping centers and, at December 31, 2011, contained an aggregate of approximately 17.2 million square feet of gross leasable area, or GLA. All of our properties are owned in fee simple other than McAlpin Square shopping center located in Savannah, Georgia, Plaza Acadienne shopping center located in Eunice, Louisiana, and El Novillo shopping center located in Miami, Florida, each of which is subject to a ground lease in favor of a third party lessor. Additionally, a small number of our shopping centers include outparcels or minor portions of the center that are subject to ground leases. In addition, some of our properties are subject to mortgages as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness.”

The following table provides a brief description of our properties as of December 31, 2011:

Property	State	Year Built / Renovated	Total Sq. Ft. Owned		Percent Leased			Average base rent per leased SF		Grocer Anchor	Other anchor tenants
SOUTH FLORIDA (38)
Aventura Square	FL	1991		143,250		100.0	%	$	23.45		Babies R Us / Jewelry Exchange / Old Navy / Bed, Bath & Beyond / DSW
Bird Ludlum	FL	1988 / 1998		192,274		94.3	%	$	18.49	Winn-Dixie	CVS Pharmacy / Goodwill
Bluffs Square	FL	1986		123,917		78.9	%	$	13.76	Publix	Walgreens
Cashmere Corners	FL	2001		89,234		94.7	%	$	9.08	Albertsons
Chapel Trail	FL	2007		56,378		100.0	%	$	21.58		LA Fitness
Coral Reef Shopping Center	FL	1968 / 1990		76,632		91.0	%	$	25.75		Office Depot / Walgreens
Countryside Shops	FL	1986 / 1988 / 1991		179,561		86.9	%	$	13.73	Publix	Stein Mart
Crossroads Square	FL	1973		81,587		79.9	%	$	16.74		CVS Pharmacy / Goodwill
CVS Plaza	FL	2004		18,214		100.0	%	$	22.67
El Novillo	FL	1970 / 2000		10,000		100.0	%	$	17.00		Sakura Japanese Buffet
Greenwood	FL	1982 / 1994		133,339		91.0	%	$	13.01	Publix	Bealls Outlet
Hammocks Town Center	FL	1987 / 1993		172,806		92.4	%	$	13.74	Publix	Metro Dade Library / CVS Pharmacy / Porky’s Gym
Jonathan’s Landing	FL	1997		26,820		49.4	%	$	20.05
Lago Mar	FL	1995		82,613		82.7	%	$	13.46	Publix
Lantana Village	FL	1976 / 1999		181,780		97.5	%	$	7.39	Winn-Dixie	Kmart / Rite Aid* (Family Dollar)
Magnolia Shoppes	FL	1998		114,118		85.2	%	$	11.40		Regal Cinemas / Deal$
Meadows	FL	1997		75,524		94.2	%	$	13.99	Publix
Oakbrook Square	FL	1974 / 2000 / 2003		199,633		96.6	%	$	14.03	Publix	Stein Mart / Homegoods / CVS / Basset Furniture / Duffy’s
Oaktree Plaza	FL	1985		23,745		63.6	%	$	16.83
Plaza Alegre	FL	2003		88,411		93.7	%	$	15.78	Publix	Goodwill
Point Royale	FL	1970 / 2000		174,875		97.0	%	$	10.76	Winn-Dixie	Best Buy / Pasteur Medical
Prosperity Centre	FL	1993		122,014		96.7	%	$	15.54		Office Depot / CVS / Bed Bath & Beyond / TJ Maxx
Ridge Plaza	FL	1984 / 1999		155,204		93.6	%	$	11.36		Ridge Cinema / Kabooms / United Collection / Round Up / Goodwill
Riverside Square	FL	1987		103,241		81.8	%	$	11.63	Publix
Salerno Village	FL	1987		82,477		90.8	%	$	10.58	Winn-Dixie	CVS Pharmacy

18

Property	State	Year Built / Renovated	Total Sq. Ft. Owned		Percent Leased			Average base rent per leased SF		Grocer Anchor	Other anchor tenants
Sawgrass Promenade	FL	1982 / 1998		107,092		84.8	%	$	10.73	Publix	Walgreens / Dollar Tree
Sheridan Plaza	FL	1973 / 1991		508,455		99.4	%	$	15.43	Publix	Kohl’s / Ross / Bed Bath & Beyond / Pet Supplies Plus / LA Fitness / USA Baby & Child Space / Assoc. in Neurology
Shoppes of Andros Isles	FL	2000		79,420		82.4	%	$	12.17	Publix
Shoppes of Silverlakes	FL	1995 / 1997		126,789		88.2	%	$	15.74	Publix	Goodwill
Shops at Skylake	FL	1999 / 2005 / 2006		285,816		96.0	%	$	18.57	Publix	TJ Maxx / LA Fitness / Goodwill
Shops at St. Lucie	FL	2006		19,361		74.2	%	$	22.94
Summerlin Square	FL	1986 / 1998		109,156		46.9	%	$	7.53	Winn-Dixie
Tamarac Town Square	FL	1987		124,585		77.9	%	$	11.17	Publix	Dollar Tree
Waterstone	FL	2005		61,000		97.1	%	$	14.67	Publix
West Bird	FL	1977 / 2000		99,864		87.7	%	$	13.24	Publix	CVS Pharmacy
West Lakes Plaza	FL	1984 / 2000		100,747		100.0	%	$	13.90	Winn-Dixie	Navarro Pharmacy
Westport Plaza	FL	2002		49,533		100.0	%	$	17.62	Publix
Young Circle	FL	1962 / 1997		65,834		93.6	%	$	15.28	Publix	Walgreens
TOTAL SHOPPING CENTERS SOUTH FLORIDA (38)				4,445,299		90.9	%	$	14.51
NORTH FLORIDA AND SOUTHEAST (82)
Madison Centre	AL	1997		64,837		100.0	%	$	9.86	Publix	Rite Aid
Alafaya Commons	FL	1987		126,333		81.2	%	$	13.83	Publix
Alafaya Village	FL	1986		38,118		94.8	%	$	15.81
Beauclerc Village	FL	1962 / 1988		68,846		89.6	%	$	8.49		Big Lots / Goodwill / Bealls Outlet
Charlotte Square	FL	1980		96,626		69.9	%	$	5.47		Seafood Buffet / American Signature Furniture
Eastwood, Shoppes of	FL	1997		69,037		100.0	%	$	12.64	Publix
Forest Village	FL	2000		71,526		80.7	%	$	10.49	Publix
Ft. Caroline	FL	1985 / 1995		71,816		86.8	%	$	6.86	Winn-Dixie	Citi Trends
Glengary Shoppes	FL	1995		99,182		100.0	%	$	17.70		Best Buy / Barnes & Noble
Kirkman Shoppes	FL	1973		88,820		62.4	%	$	21.52
Lake Mary Centre	FL	1988 / 2001		340,434		96.9	%	$	12.81	Albertsons	Kmart / Lifestyle Fitness Center / Office Depot
Lutz Lake	FL	2002		64,985		90.2	%	$	12.03	Publix
Mandarin Landing	FL	1976		139,580		78.6	%	$	16.53	Whole Foods	Office Depot / Aveda Institute
Mariners Crossing	FL	1989 / 1999		97,812		100.0	%	$	10.62	Sweet Bay
Medical & Merchants	FL	1993		156,153		97.0	%	$	12.13	Publix	Memorial Hospital / Planet Fitness
Middle Beach	FL	1994		69,277		82.2	%	$	8.53	Publix*
New Smyrna Beach	FL	1987		118,451		94.4	%	$	12.06	Publix	Bealls Outlet
Oak Hill	FL	1985 / 1997		78,492		100.0	%	$	6.07	Publix	Planet Fitness
Old King Commons	FL	1988		84,759		89.6	%	$	7.86		Wal-Mart

19

Property	State	Year Built / Renovated	Total Sq. Ft. Owned		Percent Leased			Average base rent per leased SF		Grocer Anchor	Other anchor tenants
Pablo Plaza	FL	1974 / 1998 / 2001 / 2008		151,238		88.5	%	$	11.85	Publix* (Office Depot)	Marshalls / HomeGoods
Park Promenade	FL	1987 / 2000		128,848		71.3	%	$	6.76		Beauty Depot / Dollar General
Regency Crossing	FL	1986 / 2001		85,864		80.5	%	$	10.35	Publix
Ryanwood	FL	1987		114,925		89.1	%	$	11.33	Publix	Bealls Outlet / Books-A-Million
Seven Hills	FL	1991		72,590		88.8	%	$	10.50	Publix
Shoppes of North Port	FL	1991		84,705		90.8	%	$	9.50		Bealls Outlet / Goodwill
South Beach	FL	1990 / 1991		303,856		87.3	%	$	12.49		Ross / Bed Bath & Beyond / Home Depot / Stein Mart / Staples
South Point Center	FL	2003		64,790		95.7	%	$	14.97	Publix
Sunlake	FL	2008		89,516		88.7	%	$	17.21	Publix	SunTrust
Sunpoint Shopping Center	FL	1984		132,374		68.2	%	$	8.00		Goodwill / Ozzie’s Buffet / Big Lots / Chapter 13 Trustee
Town & Country	FL	1993		72,043		93.3	%	$	8.44	Albertsons*(Ross Dress For Less)
Treasure Coast	FL	1983		133,781		95.8	%	$	12.55	Publix	TJ Maxx
Unigold Shopping Center	FL	1987		117,527		79.2	%	$	11.45	Winn- Dixie
Walden Woods	FL	1985 / 1998 / 2003		72,950		88.7	%	$	7.51		Dollar Tree / Aaron Rents / Dollar General
BridgeMill	GA	2000		89,102		91.9	%	$	15.44	Publix
Buckhead Station	GA	1996		233,739		100.0	%	$	21.04		Bed Bath & Beyond / TJ Maxx / Old Navy / Toys R Us / DSW / Ulta 3 / Nordstrom Rack
Butler Creek	GA	1990		95,597		88.3	%	$	9.96	Kroger
Chastain Square	GA	1981 / 2001		91,637		98.0	%	$	17.94	Publix
Commerce Crossing	GA	1988		100,668		25.5	%	$	5.26		Fred’s Store
Daniel Village	GA	1956 / 1997		171,932		85.5	%	$	8.95	Bi-Lo	St. Joseph Home Health Care
Douglas Commons	GA	1988		97,027		96.5	%	$	10.91	Kroger
Fairview Oaks	GA	1997		77,052		95.7	%	$	9.66	Kroger
Grassland Crossing	GA	1996		90,906		94.6	%	$	8.90	Kroger
Hairston Center	GA	2000		13,000		84.6	%	$	5.94
Hamilton Ridge	GA	2002		90,996		83.8	%	$	11.62	Kroger
Hampton Oaks	GA	2009		20,842		17.3	%	$	5.83
Mableton Crossing	GA	1997		86,819		98.1	%	$	10.35	Kroger
Macland Pointe	GA	1992-93		79,699		94.0	%	$	10.27	Publix
Market Place	GA	1976		77,706		95.7	%	$	11.28		Galaxy Cinema
McAlpin Square	GA	1979		173,952		97.7	%	$	7.58	Kroger	Big Lots / Post Office / Habitat for Humanity
Piedmont Peachtree Crossing	GA	1978 / 1998		152,239		97.7	%	$	18.02	Kroger	Cost Plus Store / Binders Art Supplies
Powers Ferry Plaza	GA	1979 / 1987 / 1998		86,401		84.7	%	$	9.72		Micro Center
Shops of Westridge	GA	2006		66,297		71.0	%	$	12.39	Publix

20

Property	State	Year Built / Renovated	Total Sq. Ft. Owned		Percent Leased			Average base rent per leased SF		Grocer Anchor	Other anchor tenants
Spalding Village	GA	1989		235,318		64.2	%	$	7.72	Kroger	Fred’s Store / Goodwill
Walton Plaza	GA	1990		43,460		91.7	%	$	7.10		Gold’s Gym
Wesley Chapel	GA	1989		164,153		83.5	%	$	6.82		Everest Institute / Little Giant/ Deal$ / Planet Fitness
Williamsburg @ Dunwoody	GA	1983		44,928		60.4	%	$	21.86
Ambassador Row	LA	1980 / 1991		187,678		98.3	%	$	9.87		Conn’s Appliances / Big Lots / Chuck E Cheese / Planet Fitness / JoAnn Fabrics
Ambassador Row Courtyard	LA	1986 / 1991 / 2005		146,697		98.4	%	$	10.30		Bed Bath & Beyond / Marshall’s / Hancock Fabrics / Unitech Training Academy / Tuesday Morning
Bluebonnet Village	LA	1983		101,623		98.7	%	$	11.27	Matherne’s	Office Depot
Boulevard	LA	1976 / 1994		68,012		93.2	%	$	9.00		Piccadilly / Harbor Freight Tools / Golfballs.com
Country Club Plaza	LA	1982 / 1994		64,686		94.6	%	$	6.36	Winn-Dixie
Crossing	LA	1988 / 1993		114,806		97.4	%	$	5.82	Save A Center	A-1 Home Appliance / Piccadilly
Elmwood Oaks	LA	1989		120,515		91.2	%	$	9.83		Academy Sports / Dollar Tree / Home Décor
Grand Marche (ground lease)	LA	1969		200,585		100.0	%		NA
Plaza Acadienne	LA	1980		59,419		97.5	%	$	4.35	Super 1 Store	Fred’s Store
Sherwood South	LA	1972 / 1988 / 1992		77,107		81.3	%	$	6.09		Burke’s Outlet / Harbor Freight Tools / Fred’s Store
Siegen Village	LA	1988		170,416		98.9	%	$	9.27		Office Depot / Big Lots / Dollar Tree / Stage / Party City
Tarpon Heights	LA	1982		56,605		100.0	%	$	5.84		Stage / Dollar General
Village at Northshore	LA	1988		144,638		97.6	%	$	7.38		Marshalls / Dollar Tree / Kirschman’s* / Bed Bath & Beyond / Office Depot
Shipyard Plaza	MS	1987		66,857		100.0	%	$	7.29		Big Lots / Buffalo Wild Wings
Brawley Commons	NC	1997 / 1998		119,189		74.6	%	$	11.97	Lowe’s Foods	Rite Aid
Centre Pointe Plaza	NC	1989		163,642		94.7	%	$	6.05		Belk’s / Dollar Tree / Aaron Rents / Burkes Outlet Stores
Chestnut Square	NC	1985 / 2008		34,260		82.9	%	$	15.69		Walgreens
Galleria	NC	1986 / 1990		92,114		37.7	%	$	9.65
Riverview Shopping Center	NC	1973 / 1995		128,498		92.4	%	$	7.76	Kroger	Upchurch Drugs / Riverview Galleries
Stanley Market Place	NC	2007		53,228		94.1	%	$	9.74	Food Lion	Family Dollar
Thomasville Commons	NC	1991		148,754		94.0	%	$	5.57	Ingles	Kmart
Willowdaile Shopping Center	NC	1986		95,601		91.3	%	$	8.37		Hall of Fitness / Ollie’s Bargain Outlet
North Village Center	SC	1984		60,356		70.3	%	$	8.05		Dollar General / Goodwill
Windy Hill	SC	1968 / 1988 / 2006		68,465		100.0	%	$	6.32		Rose’s Store / Citi Trends
Woodruff	SC	1995		68,055		98.7	%	$	10.66	Publix
Smyth Valley Crossing	VA	1989		126,841		98.0	%	$	6.06	Ingles	Wal-Mart
TOTAL SHOPPING CENTERS NORTH FLORIDA AND SOUTHEAST (82)				8,692,208		88.7	%	$	10.37
NORTHEAST (14)
Brookside Plaza	CT	1985 / 2006		213,274		95.6	%	$	12.06	Wakefern Food	Bed Bath & Beyond / Walgreens / Staples / Petsmart / Hibachi Grill
Copps Hill	CT	1979 / 2002		184,528		97.5	%	$	12.99	Stop & Shop	Kohl’s / Rite Aid

21

Property	State	Year Built / Renovated	Total Sq. Ft. Owned		Percent Leased			Average base rent per leased SF		Grocer Anchor	Other anchor tenants
Danbury Green	CT	1985 / 2006		98,095		100.0	%	$	21.81		Trader Joe’s / Rite Aid / Annie Sez / Staples / DSW
Southbury Green	CT	1979 / 2002		156,215		99.1	%	$	21.14	ShopRite	Staples
Cambridge Star Market	MA	1953 / 1997		66,108		100.0	%	$	30.25	Star Market
Medford Shaw’s Supermarket	MA	1995		62,656		100.0	%	$	26.84	Shaw’s
Plymouth Shaw’s Supermarket	MA	1993		59,726		100.0	%	$	19.99	Shaw’s
Quincy Star Market	MA	1965 / 1995		100,741		100.0	%	$	19.53	Star Market
Swampscott Whole Foods	MA	1967 / 2005		35,907		100.0	%	$	22.89	Whole Foods
Webster Plaza	MA	1963 / 1998		199,425		100.0	%	$	8.24	Shaw’s	K Mart
West Roxbury Shaw’s Plaza	MA	1973 / 1995 / 2006		76,316		97.7	%	$	24.20	Shaw’s
1175 Third Avenue	NY	1995		25,350		100.0	%	$	41.66	Food Emporium
90-30 Metropolitan	NY	2007		59,815		93.9	%	$	28.99		Trader Joe’s / Staples / Michael’s
161 W. 16th Street	NY	1930		56,870		100.0	%	$	24.62		Loehmann’s
TOTAL SHOPPING CENTERS NORTHEAST (14)				1,395,026		98.5	%	$	18.49
WEST COAST (10)
Canyon Trails	AZ	2008		198,701		56.8	%	$	17.84		Office Max / Petsmart / Ross / Cost Plus
222 Sutter	CA	1908 / 1984		128,595		100.0	%		40.25		Loehmann’s / Global Fund for Women / Mother Jones Magazine / Fluid / Craigslist
Circle Center West	CA	1989		64,403		93.5	%		20.21		Marshalls
Culver Center	CA	1950 / 2000		216,646		99.0	%		25.01	Ralph’s	Bally Total Fitness / Sit N Sleep / Tuesday Morning / Best Buy
Marketplace Shopping Center	CA	1990		111,156		95.4	%		22.12	Safeway	Petco / CVS
Plaza Escuela	CA	2002		152,452		99.3	%		39.93		AAA / Yoga Works / The Container Store / Cheesecake Factory / Forever 21 / Sports Authority
Ralph’s Circle Center	CA	1983		59,837		95.5	%		15.99	Ralph’s
Serramonte	CA	1968		818,177		96.4	%		17.89		Macy’s / JC Penney / Target / Daiso / H&M / Forever 21 / A’Gaci / New York & Company / Crunch Gym
Von’s Circle Center	CA	1972		148,353		94.2	%		15.61	Von’s	Rite Aid / Ross
Willows	CA	1977		256,086		95.7	%		21.59		El Torito / Claim Jumper / U Gym / REI / The Jungle / Old Navy / Pier 1 / Cost Plus
TOTAL SHOPPING CENTERS WEST COAST (10)				2,154,406		93.0	%	$	22.28
TOTAL CORE SHOPPING CENTER PORTFOLIO (144)				16,686,939		90.7	%	$	13.97
NON-RETAIL PROPERTIES (6)
4101 South I-85 Industrial		1956 / 1963		188,513		100.0	%				Bromley Pallet / Park ‘N Go
Banco Popular Office Building		1971		32,737		81.7	%
Laurel Walk Apartments		1985		106,480		97.5	%
Prosperity Office Building		1972		3,200		0.0	%
Providence Square		1973		85,930		16.6	%

22

Property	State	Year Built / Renovated	Total Sq. Ft. Owned		Percent Leased			Average base rent per leased SF	Grocer Anchor	Other anchor tenants
Danville - San Ramon Medical		1982-1986		74,599		78.4	%
TOTAL NON-RETAIL PROPERTIES (6)				491,459		79.7	%
TOTAL EXCLUDING DEVELOPMENTS, REDEVELOPMENTS & LAND (150)				17,178,398		90.3	%
DEVELOPMENTS, REDEVELOPMENTS & LAND (15)
Developments (1)
Redevelopments (8)
Land Held for Development (6)
TOTAL CONSOLIDATED -165 Properties

Note: Total square footage does not include shadow anchor square footage that is not owned by Equity One.

* Indicates a tenant which continues to pay rent, but has closed its store and ceased operations. The subtenant, if any, is shown in ( ).

Most of our leases provide for the monthly payment in advance of fixed minimum rent, the tenants’ pro rata share of property taxes, insurance (including fire and extended coverage, rent insurance and liability insurance) and common area maintenance for the property. Our leases may also provide for the payment of additional rent based on a percentage of the tenants’ sales. Utilities are generally paid directly by tenants except where common metering exists with respect to a property. In those cases, we make the payments for the utilities and are reimbursed by the tenants on a monthly basis. Generally, our leases prohibit our tenants from assigning or subletting their spaces. The leases also require our tenants to use their spaces for the purposes designated in their lease agreements and to operate their businesses on a continuous basis. Some of the lease agreements with major or national or regional tenants contain modifications of these basic provisions in view of the financial condition, stability or desirability of those tenants. Where a tenant is granted the right to assign its space, the lease agreement generally provides that the original tenant will remain liable for the payment of the lease obligations under that lease agreement.

Major Tenants

The following table sets forth as of December 31, 2011 the gross leasable area, or GLA, of our existing properties leased to tenants in our core shopping center portfolio. Our core shopping center portfolio is defined as all of our shopping centers accounted for on a consolidated basis, excluding shopping centers owned through unconsolidated joint ventures. We define anchor tenants as tenants occupying a space consisting of 10,000 square feet or more of GLA.

	Supermarket Anchor Tenants			Other Anchor Tenants			Non-anchor Tenants			Total
Leased GLA (sq. ft.)		4,111,443			6,395,693			4,620,375			15,127,511
Percentage of Total Leased GLA		27.2	%		42.3	%		30.5	%		100.0	%

The following table sets forth as of December 31, 2011 the annual minimum rent at expiration attributable to tenants in our core shopping center portfolio:

	Supermarket Anchor Tenants			Other Anchor Tenants			Non-anchor Tenants			Total
Annual Minimum Rent (“AMR”)	$	41,782,751		$	73,917,587		$	105,012,141		$	220,712,479
Percentage of Total AMR		18.9	%		33.5	%		47.6	%		100.0	%

23

The following table sets forth as of December 31, 2011 information regarding leases with the ten largest tenants in our core shopping center portfolio:

Tenant	Number of Leases		GLA (square feet)		Percent of Total GLA			Annualized Minimum Rent at 12/31/11		Percent of Aggregate Annualized Minimum Rent			Average Annual Minimum Rent per Square Foot
Publix		40		1,768,363		10.6	%	$	14,463,983		6.9	%	$	8.18
Supervalu		6		398,625		2.4	%		8,995,251		4.3	%	$	22.57
Kroger		10		573,686		3.4	%		4,233,263		2.0	%	$	7.38
Bed, Bath & Beyond		8		275,761		1.6	%		3,536,398		1.7	%	$	12.82
TJ Maxx Companies		10		277,053		1.7	%		2,989,103		1.4	%	$	10.79
Winn Dixie		9		398,128		2.4	%		2,937,815		1.4	%	$	7.38
Loehmann’s		2		97,267		0.6	%		2,904,098		1.4	%	$	29.86
LA Fitness		3		144,307		0.9	%		2,592,222		1.3	%	$	17.96
Goodwill		16		220,573		1.3	%		2,349,400		1.1	%	$	10.65
Office Depot		8		195,777		1.2	%		2,270,402		1.1	%	$	11.60
Total top ten tenants		112		4,349,540		26	%	$	47,271,935		22.6	%	$	10.87

Lease Expirations

The following tables sets forth as of December 31, 2011 the anticipated expirations of tenant leases in our core shopping center portfolio for each year from 2012 through 2020 and thereafter:

ALL TENANTS

Year	Number of Leases		GLA (square feet)		Percent of Total GLA			Annualized Minimum Rent at Expiration		Percent of Aggregate Annualized Minimum Rent at Expiration			Average Annual Minimum Rent per Square Foot at Expiration (1)
M-T-M		144		368,743		2.2	%	$	6,559,768		3.0	%	$	17.79
2012		473		2,212,640		13.3	%		28,741,849		13.0	%	$	14.27
2013		392		1,685,407		10.1	%		24,946,290		11.3	%	$	14.80
2014		405		1,990,301		11.9	%		27,079,416		12.3	%	$	13.61
2015		272		1,698,859		10.2	%		22,336,261		10.1	%	$	13.15
2016		276		2,246,064		13.5	%		36,586,943		16.6	%	$	16.29
2017		96		782,456		4.7	%		13,927,595		6.3	%	$	17.80
2018		38		658,177		3.9	%		9,815,140		4.5	%	$	14.91
2019		35		597,287		3.6	%		6,676,133		3.0	%	$	11.18
2020		41		579,315		3.5	%		8,207,411		3.7	%	$	14.17
Thereafter		121		2,308,262		13.8	%		35,835,673		16.2	%	$	15.52
Sub-total/Average		2,293		15,127,511		90.7	%	$	220,712,479		100.0	%	$	14.78
Vacant		642		1,559,428		9.3	%		NA		NA			NA
Total/Average		2,935		16,686,939		100.0	%	$	220,712,479		100.0	%		NA

⁽¹⁾ Annual minimum rent per square foot excludes ground lease at Grand Marche.

24

ANCHOR TENANTS > 10,000 SF

Year	Number of Leases		GLA (square feet)		Percent of Total GLA			Annualized Minimum Rent at Expiration		Percent of Aggregate Annualized Minimum Rent at Expiration			Average Annual Minimum Rent per Square Foot at Expiration (1)
M-T-M		5		76,877		0.7	%	$	1,244,125		1.1	%	$	16.18
2012		41		1,270,179		11.7	%		9,673,371		8.4	%	$	9.01
2013		29		891,535		8.2	%		7,953,807		6.9	%	$	8.92
2014		40		1,207,200		11.2	%		10,281,196		8.9	%	$	8.52
2015		39		1,112,518		10.3	%		9,154,599		7.9	%	$	8.23
2016		45		1,657,160		15.3	%		22,814,182		19.7	%	$	13.77
2017		18		566,495		5.2	%		8,711,875		7.5	%	$	15.38
2018		14		570,405		5.3	%		6,942,615		6.0	%	$	12.17
2019		11		520,779		4.8	%		4,458,285		3.8	%	$	8.56
2020		17		497,551		4.6	%		5,971,483		5.2	%	$	12.00
Thereafter		64		2,136,437		19.7	%		28,494,800		24.6	%	$	13.34
Sub-total/Average		323		10,507,136		97.0	%	$	115,700,338		100.0	%	$	11.22
Vacant		14		321,139		3.0	%		NA		NA			NA
Total/Average		337		10,828,275		100.0	%	$	115,700,338		100.0	%		NA

⁽¹⁾ Annual minimum rent per square foot excludes ground lease at Grand Marche.

SHOP TENANTS < 10,000 SF

Year	Number of Leases		GLA (square feet)		Percent of Total GLA			Annualized Minimum Rent at Expiration		Percent of Aggregate Annualized Minimum Rent at Expiration			Average Annual Minimum Rent per Square Foot at Expiration
M-T-M		139		291,866		5.0	%	$	5,315,643		5.1	%	$	18.21
2012		432		942,461		16.1	%		19,068,478		18.2	%	$	20.23
2013		363		793,872		13.5	%		16,992,483		16.2	%	$	21.40
2014		365		783,101		13.4	%		16,798,220		16.0	%	$	21.45
2015		233		586,341		10.0	%		13,181,662		12.5	%	$	22.48
2016		231		588,904		10.1	%		13,772,761		13.1	%	$	23.39
2017		78		215,961		3.7	%		5,215,720		5.0	%	$	24.15
2018		24		87,772		1.5	%		2,872,525		2.7	%	$	32.73
2019		24		76,508		1.3	%		2,217,848		2.1	%	$	28.99
2020		24		81,764		1.4	%		2,235,928		2.1	%	$	27.35
Thereafter		57		171,825		2.9	%		7,340,873		7.0	%	$	42.72
Sub-total/Average		1,970		4,620,375		78.9	%	$	105,012,141		100.0	%	$	22.73
Vacant		628		1,238,289		21.1	%		NA		NA			NA
Total/Average		2,598		5,858,664		100.0	%	$	105,012,141		100.0	%		NA

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We may incur substantial expenditures in connection with the re-leasing of our retail space, principally in the form of landlord work, tenant improvements and leasing commissions. The amounts of these expenditures can vary significantly, depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the terms of the leases. We also incur expenditures for certain recurring or periodic capital expenses required to keep our properties competitive.

Insurance

Our tenants are generally responsible under their leases for providing adequate insurance on the spaces they lease. We believe that our properties are covered by adequate liability, property, flood and environmental, and where necessary, hurricane and windstorm insurance coverages which are all provided by reputable companies. However, most of our insurance policies contain deductible or self-retention provisions requiring us to share some of any resulting losses. In addition, most of our policies contain limits beyond which we have no coverage. Finally, we do not have insurance covering losses resulting from earthquakes in California.

ITEM 3. 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 effect on our business, financial condition, results of operations, or our cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Dividends

Our common stock began trading on the New York Stock Exchange, or NYSE, on May 18, 1998, under the symbol “EQY.” On February 22, 2012, we had 1,115 stockholders of record representing 11,280 beneficial owners. The following table sets forth for the periods indicated the high and low sales prices as reported by the NYSE and the cash dividends declared by us:

	Price Per Share				Dividends Declared
	High		Low		per share
2011:
First Quarter	$	19.21	$	17.74	$	0.22
Second Quarter	$	20.09	$	17.40	$	0.22
Third Quarter	$	20.27	$	15.03	$	0.22
Fourth Quarter	$	17.75	$	14.57	$	0.22
2010:
First Quarter	$	20.00	$	15.81	$	0.22
Second Quarter	$	19.99	$	15.44	$	0.22
Third Quarter	$	17.61	$	14.58	$	0.22
Fourth Quarter	$	19.27	$	16.66	$	0.22

Dividends paid during 2011 and 2010 totaled $98.8 million and $83.6 million, respectively. Future declarations of dividends will be made at the discretion of our board of directors and will depend upon our earnings, financial condition and such other factors as our board of directors deems relevant. In order to qualify for the beneficial tax treatment accorded to real estate investment trusts under the Code, we are currently required to make distributions to holders of our shares in an amount equal to at least 90% of our “real estate investment trust taxable income,” as defined in Section 857 of the Internal Revenue Code.

Our total annual dividends paid per common share for each of 2011 and 2010 were $0.88 per share. The annual dividend amounts are different from dividends as calculated for federal income tax purposes. Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a stockholder as ordinary dividend income. Distributions in excess of current and accumulated earnings and profits will be treated as a nontaxable reduction of the stockholder’s basis in such stockholder’s shares, to the extent thereof, and thereafter as taxable capital gain. Distributions that are treated as a reduction of the stockholder’s basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the stockholder’s shares. No assurances can be given regarding what portion, if any, of distributions in 2012 or subsequent years will constitute a return of capital for federal income tax purposes. During a year in which a REIT earns a net long-term capital gain, the REIT can elect under Section 857(b)(3) of the Code to designate a portion of dividends paid to stockholders as capital gain dividends. If this election is made, then the capital gain dividends are generally taxable to the stockholder as long-term capital gains.

Under a revenue procedure issued by the Internal Revenue Service, REITs, subject to certain limitations, are permitted to pay the distributions required to qualify as a REIT under the Code in predominantly their own stock, rather than all cash, provided the distributions are declared on or after January 1, 2008 and on or before December 31, 2012, with respect to a taxable year ending on or before December 31, 2011. To date, we have paid all of our dividends solely in cash. If we were to pay a portion of our dividends in stock, there could be an adverse effect on the market price of our stock. If however, market and financial conditions warrant, we may consider paying a portion of our dividends in stock.

Performance Graph

The following graph compares the cumulative total return of our common stock with the Russell 2000 Index, the NAREIT All Equity Index and SNL Shopping Center REITs, an index of approximately 20 publicly-traded REITs that primarily own and operate shopping centers, each as provided by SNL Securities L.C., from December 31, 2006 until December 31, 2011. The SNL Shopping Center REIT index is compiled by SNL Securities L.C. and includes our common stock and securities of many of our competitors. The graph assumes that $100 was invested on December 31, 2006 in our common stock, the Russell 2000 Index, the NAREIT All Equity REIT Index and SNL Shopping Center REITs, and that all dividends were reinvested. The lines represent semi-annual index levels derived from compounded daily returns. The indices are re-weighted daily, using the market capitalization on the previous tracked day. If the semi-annual interval is not a trading day, the preceding trading day is used.

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The performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this annual report into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.

	Period Ending
Index	12/31/06		12/31/07		12/31/08		12/31/09		12/31/10		12/31/11
Equity One, Inc.		100.00		90.57		73.83		72.90		86.27		84.79
Russell 2000		100.00		98.43		65.18		82.89		105.14		100.75
NAREIT All Equity REIT Index		100.00		84.31		52.50		67.20		85.98		93.10
SNL REIT Retail Shopping Ctr		100.00		82.33		49.57		48.93		63.52		61.70

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Issuer Purchases Of Equity Securities

Period	(a) Total Number of Shares of Common Stock Purchased			(b) Average Price Paid per Common Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plan or Program
October 1, 2011-October 31, 2011		—		$	—		N/A		N/A
November 1, 2011-November 30, 2011		—			—		N/A		N/A
December 1, 2011-December 31, 2011		396	(1)		16.44		N/A		N/A
		396		$	16.44		N/A		N/A

⁽¹⁾ Represents shares of common stock surrendered by employees to us to satisfy such employees’ tax withholding obligations in connection with the vesting of restricted comon stock.

Equity Compensation Plan Information

Information regarding equity compensation plans is presented in Item 12 of this annual report and incorporated herein by reference.

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ITEM 6. SELECTED FINANCIAL DATA

The following table includes selected consolidated financial data set forth as of and for each of the five years in the period ended December 31, 2011. The balance sheet data at December 31, 2011 and 2010, and the statement of income data for the years ended December 31, 2011, 2010 and 2009, have been derived from the consolidated financial statements included in this Form 10-K. This selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the related notes included in Items 7 and 8, respectively, of this Form 10-K.

	Year Ended December 31,
	2011			2010			2009			2008			2007
	(in thousands other than per share, percentage and ratio data)
Statement of Income Data: (1)
Total revenue	$	291,925		$	230,402		$	214,043		$	211,824		$	218,491
Property operating expenses		83,149			64,775			63,189			55,023			54,530
Rental property depreciation and amortization		83,361			50,395			43,513			40,569			40,970
General and administrative expenses		51,707			41,986			38,460			31,918			27,879
Total operating expenses		218,217			157,156			145,162			127,510			123,379
Interest expense		(70,152	)		(64,247	)		(56,021	)		(58,738	)		(64,586	)
Amortization of deferred financing fees		(2,224	)		(1,909	)		(1,459	)		(1,609	)		(1,658	)
Gain on bargain purchase		30,561			—			—			—			—
Gain on acquisition of controlling interest in subsidiary		—			—			27,501			—			—
Other income, net		9,575			1,462			11,565			11,293			7,235
Gain on sale of real estate		5,541			254			—			22,142			325
(Loss) gain on extinguishment of debt		(2,391	)		33			12,345			6,473			—
Impairment loss		(21,411	)		(557	)		(369	)		(35,016	)		(430	)
Benefit (provision) for income taxes		5,064			1,724			3,109			(830	)		717
Income from continuing operations	$	28,271		$	10,006		$	65,552		$	28,029		$	36,715
Net income	$	43,218		$	24,419		$	81,375		$	35,008		$	69,385
Basic earnings per share:
Income from continuing operations	$	0.16		$	0.11		$	0.79		$	0.37		$	0.50
Net income	$	0.29		$	0.27		$	1.00		$	0.46		$	0.94
Diluted earnings per share:
Income from continuing operations	$	0.16		$	0.11		$	0.78		$	0.37		$	0.49
Net income	$	0.29		$	0.27		$	0.98		$	0.46		$	0.94
Balance Sheet Data:
Total rental properties, net of accumulated depreciation (1)	$	2,656,499		$	1,868,717		$	1,697,968		$	1,501,724		$	1,680,361
Total assets (1)	$	3,219,342		$	2,680,562		$	2,450,940		$	2,034,703		$	2,172,329
Notes payable (1)	$	1,300,890		$	1,045,515		$	1,049,353		$	1,025,599		$	1,139,078
Total liabilities (1)	$	1,571,336		$	1,386,857		$	1,362,240		$	1,124,215		$	1,255,408
Redeemable noncontrolling interest (2)	$	22,804		$	3,864		$	989		$	989		$	989
Stockholders’ equity (2)	$	1,417,316		$	1,285,907		$	1,064,535		$	909,498		$	915,932
Other Data:
Funds from operations (3)	$	146,768		$	92,025		$	142,983		$	60,377		$	101,374
Cash flows from:
Operating activities (2)	$	102,626		$	71,562		$	96,294		$	86,519		$	106,904
Investing activities	$	(44,615	)	$	(189,243	)	$	(8,287	)	$	51,306		$	(104,602	)
Financing activities (2)	$	(108,793	)	$	108,044		$	(47,249	)	$	(133,783	)	$	(989	)
GLA (square feet) at end of period		17,178			19,925			19,456			16,417			17,548
Occupancy of core shopping center portfolio at end of period		90.7	%		90.3	%		90.3	%		92.1	%		93.2	%
Dividends declared per share	$	0.88		$	0.88		$	1.12		$	1.20		$	1.20

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⁽¹⁾  Reclassified to reflect the reporting of discontinued operations.

⁽²⁾  Amounts have been reclassified to conform to the 2011 presentation.

⁽³⁾  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, or impairment charges related to, depreciable operating properties, 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 clearer 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. In October 2011, NAREIT clarified that FFO should exclude the impact of impairment losses on depreciable operating properties, either wholly owned or in joint ventures. We have calculated FFO for all periods presented in accordance with this clarification.

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.

The following table illustrates the calculation of FFO for each of the five years in the period ended December 31, 2011:

	Year Ended December 31,
	2011			2010		2009		2008			2007
	(In thousands)
Net income attributable to Equity One, Inc.	$	33,621		$	25,112	$	83,817	$	35,008		$	69,385
Adjustments:
Rental property depreciation and amortization, including discontinued operations, net of noncontrolling interest		95,254			65,735		56,057		45,586			47,514
Net adjustment for unvested shares and noncontrolling interest (1)		9,520			—		—		—			—
Pro rata share of real estate depreciation from unconsolidated joint ventures		3,095			1,178		1,436		810			—
Impairments of depreciable real estate, net of tax		9,360			—		—		—			3,360
(Gain) loss on disposal of depreciable assets, net of tax (2)		(4,082	)		—		1,673		(21,027	)		(18,885	)
Funds from operations	$	146,768		$	92,025	$	142,983	$	60,377		$	101,374

⁽¹⁾ Includes net effect of: (a) distributions paid with respect to unissued shares held by a noncontrolling interest which have already been included for purposes of calculating earnings per diluted share; and (b) an adjustment to compensate for the rounding of the individual calculations.

⁽²⁾ Includes pro rata share of unconsolidated joint ventures.

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The following table reflects the reconciliation of FFO per diluted share to earnings per diluted share, the most directly comparable GAAP measure, for the periods presented:

	Year Ended December 31,
	2011			2010		2009		2008			2007
	(In thousands)
Earnings per diluted share attributable to Equity One, Inc.	$	0.29		$	0.27	$	0.98	$	0.46		$	0.94
Adjustments:
Rental property depreciation and amortization, including discontinued operations, net of noncontrolling interest		0.78			0.72		0.67		0.62			0.65
Net adjustment for unvested shares and noncontrolling interest (1)		0.06			—		0.02		—			0.01
Pro rata share of real estate depreciation from unconsolidated joint ventures		0.03			0.01		0.02		0.01			—
Impairments of depreciable real estate, net of tax		0.08			—		—		—			0.05
(Gain) loss on disposal of depreciable assets, net of tax (2)		(0.03	)		—		0.02		(0.28	)		(0.26	)
Funds from operations per diluted share	$	1.21		$	1.00	$	1.71	$	0.81		$	1.39
Weighted average diluted shares (3)		121,474			91,710		83,857		74,098			73,168

(1) Includes net effect of: (a) distributions paid with respect to unissued shares held by a noncontrolling interest which already been included for purposes of calculating earnings per diluted share; (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 the rounding of the individual calculations.

(2) Includes pro rata share of unconsolidated joint ventures.

(3) Weighted average diluted shares for the year ended December 31, 2011 are higher than GAAP diluted weighted average shares as a result of the 11.4 million units held by Liberty International Holdings, Ltd. which are convertible into our common stock. These convertible units are not included in the diluted weighted average share count for GAAP purposes because their inclusion is anti-dilutive.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing in “Item 8. Financial Statements and Supplementary Data” of this annual report.

Overview

We are a real estate investment trust, or REIT, that owns, manages, acquires, develops and redevelops shopping centers primarily located in supply constrained suburban and urban communities. 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 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.

As of December 31, 2011, our consolidated property portfolio comprised 165 properties totaling approximately 17.2 million square feet of gross leasable area, or GLA, and included 144 shopping centers, nine development or redevelopment properties, six non-retail properties and six land parcels. As of December 31, 2011, our core portfolio was 90.7% leased and included national, regional and local tenants. Additionally, we had joint venture interests in 17 shopping centers and two office buildings totaling approximately 2.8 million square feet.

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On January 4, 2011, we closed on the acquisition of C&C (US) No. 1, Inc., which we refer to as CapCo, through a joint venture with Liberty International Holdings Limited, or LIH. At the time of acquisition, CapCo owned a portfolio of 13 properties in California totaling approximately 2.6 million square feet of GLA. A more complete description of this acquisition is provided below in the section entitled “Business Combination” and in Note 5 to the consolidated financial statements included in this annual report.

Since 2008, the economic downturn has affected our business, especially as it relates to leasing space to smaller shop tenants. While most of our shopping centers are anchored by supermarkets, drug stores or other necessity-oriented retailers, which are less susceptible to economic cycles, other tenants in our shopping centers, particularly smaller shop tenants, have been especially vulnerable as they have faced both declining sales and reduced access to capital. As of December 31, 2011, 60.4% of our shopping centers were supermarket-anchored, which we believe is a competitive advantage because supermarket sales have not been as affected as the sales of many other classes of retailers, and our supermarkets continue to draw traffic to these centers.

In 2011, we improved the quality of our portfolio through the disposition of non-retail assets and assets located in secondary markets and the acquisition of assets in target suburban and urban markets with favorable demographics which are more resistant to economic downturns. In addition to the purchase of the CapCo portfolio, we purchased four centers in California, two in Connecticut, two in New York and one in South Florida. We continue to seek opportunities to invest in our primary target markets of South Florida, the northeast and California. We also look for opportunities to develop or redevelop centers in urban markets with high barriers to entry.

Operating Strategies. We derive substantially all of our revenue from tenants under existing leases at our properties. Although economic and leasing conditions in our markets slowly improved in 2011, our efforts to compete for tenants and our strategy to maintain and increase occupancy often resulted in decreased rental rates. In 2011, our leasing strategy resulted in:

• the signing of 228 new leases totaling 684,729 square feet at an average rental rate of $14.35 per square foot as compared to the prior in-place average rent of $15.30 per square foot in 2010, on a same space basis;

• the renewal and extension of 431 leases totaling 1.7 million square feet at an average rental rate of $13.47 per square foot as compared to the prior in-place average rent of $13.72 per square foot, on a same space basis; and

• an increase in our core shopping center portfolio occupancy rate to 90.7% at December 31, 2011 from 90.3% at December 31, 2010.

In the long-term, our operating revenues are dependent on the continued occupancy of our properties, the rents that we are able to charge to our tenants and the ability of these tenants to make their rental payments. The main long-term threat to our business is our dependence on the viability of our anchor and other tenants. We believe, however, that our general operating risks are mitigated by concentrating our portfolio in high-density urban and suburban communities in major metropolitan areas, leasing to strong tenants in the markets in which we own properties and maintaining a diverse tenant mix.

Investment Strategies. Our investment strategy is to deploy capital in assets and projects that generate attractive, risk-adjusted returns and, at the same time, to sell assets that no longer meet our investment criteria. In 2011, this strategy resulted in:

• the sale of 36 shopping centers for a total sale price of $473.1 million to an affiliate of Blackstone Real Estate Partners VII, inclusive of the assumption of mortgages having an aggregate principal balance of approximately $155.7 million (as adjusted for subsequent pay-offs of $9.9 million) as of the date of sale;

• the acquisition of a controlling interest in CapCo;

• the acquisition of eight shopping centers located in New York, California, Connecticut and Florida representing an aggregate of approximately 917,000 square feet of GLA for an aggregate purchase price of $364.2 million and the assumption of related mortgage loans having an aggregate principal balance of approximately $121.2 million;

• the sale of two operating properties held in joint ventures resulting in gross sale proceeds of $161.7 million;

• the acquisition of a fee interest in a retail condominium in New York City with 56,870 square feet of GLA for a purchase price of $55.0 million;

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• the investment in a $45.0 million junior mezzanine loan indirectly secured by seven assets located in California;

• the sale of two operating properties to a newly formed joint venture with New York Common Retirement Fund, or CRF, for aggregate net proceeds of $17.9 million resulting in a gain of approximately $971,000;

• the sale of five operating properties, two operating outparcels and two land outparcels for aggregate net proceeds of approximately $36.7 million resulting in a net gain of $3.0 million; and

• the recognition of a gain of approximately $3.6 million, related to additional consideration earned on the sale of an outparcel to our GRI-EQY I, LLC joint venture.

Capital Strategy. During 2011, we financed our business using our revolving lines of credit, proceeds from the sale of our common stock, proceeds from the sale of properties, the assumption of mortgage debt in place on acquired properties and various other activities throughout the year including:

• the sale of 6.0 million shares of our common stock in an underwritten public offering and concurrent private placement that raised net proceeds of approximately $115.7 million;

• the prepayment and retirement of approximately $146.8 million in mortgages (excluding the Serramonte mortgage that was repaid at the closing of the CapCo transaction); and

• the execution of an expanded $575.0 million line of credit.

At December 31, 2011, the outstanding balance on our lines of credit was $138.0 million and the maximum availability under those facilities was approximately $447.3 million, subject to covenants that may restrict our use of additional borrowings.

2012 Outlook. While we expect to see modest gradual improvement in economic conditions in 2012, we expect continuing challenges in leasing space to our small shop tenants. We believe the continued diversification of our portfolio during 2011, including the reinvestment of proceeds from dispositions into higher quality assets, has made us less susceptible to economic downturns. We anticipate that our core portfolio occupancy and same center net operating income for 2012 will experience a modest increase as compared to 2011.

On February 13, 2012, we closed a $200.0 million unsecured term loan that matures in 2019. Additional financing activities during 2012 could include additional borrowings on our lines of credit, debt and/or equity offerings, creation of joint ventures with institutional partners, and the early repayment of mortgages. We ended 2011 with sufficient cash and availability under our existing unsecured revolving lines of credit to address our near term debt maturities. However, our ability to raise new capital at attractive prices through the issuance of debt and equity securities, the placement of mortgage financings, or the sale of assets will determine our capacity to invest in a manner that provides growing returns for our stockholders. We expect to continue to market outparcels for sale in 2012. We also expect to explore the disposition of other properties located in secondary markets.

In 2012, we expect to selectively expand our portfolio through the acquisition of properties in our target markets of South Florida, the northeast and California. We seek markets with very strong demographic characteristics and with high barriers to entry. We expect to acquire additional assets in our target markets through the use of both joint venture arrangements and our own capital resources.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, which we refer to as GAAP, requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using our best judgment, after considering past and current events and economic conditions. In addition, certain information relied upon by us in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third party experts. Actual results could differ from these estimates. A discussion of possible risks which may affect these estimates is included in “Item 1A. Risk Factors” in this annual report. We consider an accounting estimate to be critical if changes in the estimate or accrual results could have a material impact on our consolidated results of operations or financial condition.

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Our significant accounting policies are more fully described in Note 2 to the consolidated financial statements; however, the most significant accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:

Revenue Recognition and Accounts Receivable. Leases with tenants are classified as operating leases. Revenue includes minimum rents, expense recoveries, percentage rental payments and management and leasing services. Generally, our leases contain fixed escalations which occur at specified times during the term of the lease. Lease revenue recognition commences when the lessee is given possession of the leased space, when the asset is substantially complete in the case of leasehold improvements, and there are no contingencies offsetting the lessee’s obligation to pay rent. 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.

Many of our 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 (“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.

We make estimates of the collectability of our accounts receivable using the specific identification method related to base rents, straight-line rents, expense reimbursements and other revenue or income taking into account our experience in the retail sector, available internal and external tenant credit information, payment history, industry trends, tenant credit-worthiness and remaining lease terms. In some cases, primarily relating to straight-line rents, the collection of these amounts extends beyond one year. The extended collection period for straight-line rents along with our evaluation of tenant credit risk may result in the deferral of a portion of straight-line rental income until the collection of such income is reasonably assured. These estimates have a direct impact on our earnings.

Recognition of Gains from the Sales of Real Estate. We account for profit recognition on sales of real estate in accordance with the Property, Plant and Equipment Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Profits from sales of real estate will not be recognized under the full accrual method by us unless (i) a sale has been consummated; (ii) the buyer’s initial and continuing investment is adequate to demonstrate a commitment to pay for the property; (iii) we have transferred to the buyer the usual risks and rewards of ownership; and (iv) we do not have significant continuing involvement with the property. Recognition of gains from sales to co-investment partnerships is recorded on only that portion of the sales not attributable to our ownership interest.

Real Estate Acquisitions. We allocate the purchase price of acquired properties to land, building, improvements and intangible assets and liabilities 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. Upon acquisition of real estate operating properties, we estimate the fair value of acquired tangible assets (consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships), assumed debt and redeemable units issued at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these estimates, we allocate the estimated fair value to the applicable assets and liabilities. Fair value is determined based on an exit price approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If, up to one year from the acquisition date, information regarding fair value of the assets acquired and liabilities assumed is received and estimates are refined, appropriate adjustments are made to the purchase price allocation on a retrospective basis. There are four categories of intangible assets and liabilities 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, including fixed rate renewal options, 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 estimated remaining term of the respective leases. The value of above-market and below-market in-place leases is amortized to rental revenue over the estimated remaining term of the leases. If a lease terminates prior to its stated expiration, all unamortized amounts relating to that lease are written off.

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In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate renewal options, to be paid pursuant to the leases and management’s estimate of the market lease rates and other lease provision (i.e., expense recapture, base rental changes, etc.) measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market intangible is amortized to rental income over the estimated remaining term of the respective lease, which includes the expected renewal option period.

Real Estate Properties and Development Assets. The nature of our business as an owner, developer and operator of retail shopping centers means that we invest significant amounts of capital into our properties. Depreciation and maintenance costs relating to our properties constitute substantial costs for us as well as the industry as a whole. We capitalize real estate investments and depreciate them based on estimates of the assets’ physical and economic useful lives. The cost of our real estate investments is charged to depreciation expense over the estimated life of the asset using straight-line rates for financial statement purposes. We periodically review the estimated lives of our assets and implement changes, as necessary, to these estimates and, therefore, to our depreciation rates.

Properties and real estate under development are recorded at cost. We compute depreciation using the straight-line method over the estimated useful lives of up to 55 years for buildings and improvements, the minimum lease term or economic useful life for tenant improvements, and five to seven years for furniture and equipment. Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements, which improve or extend the useful life of assets, are capitalized. The useful lives of amortizable intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life.

Properties also include construction in progress and land held for development. These properties are carried at cost and no depreciation is recorded. Properties undergoing significant renovations and improvements are considered under development. All direct and indirect costs related to development activities, except certain demolition costs which are expensed as incurred, are capitalized into properties in construction in progress and land held for development on our consolidated balance sheet. Costs incurred include predevelopment expenditures directly related to a specific project including development and construction costs, interest, insurance and real estate taxes. Indirect development costs include employee salaries and benefits and other related costs that are directly associated with the development of the property. Our method of calculating capitalized interest is based upon applying our weighted average borrowing rate to that portion of actual costs incurred. The capitalization of such expenses ceases when the property is ready for its intended use, but no later than one year from substantial completion of major construction activity. If we determine that a project is no longer probable, all predevelopment project costs are immediately expensed. Similar costs related to properties not under development are expensed as incurred.

We capitalized external and internal costs related to development and redevelopment activities of $45.9 million and $544,000, respectively, in 2011 and $8.5 million and $487,000, respectively, in 2010. We capitalized external and internal costs related to other property improvements of $24.6 million and $173,000, respectively in 2011, and $16.9 million and $174,000, respectively, in 2010. We capitalized external and internal costs related to leasing activities of $4.0 million and $3.2 million, respectively, in 2011 and $2.7 million and $2.0 million, respectively, in 2010.

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. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. For long-lived assets to be held and used, the fair value of fixed (tangible) assets and definite-lived intangible assets is determined primarily using either internal projected cash flows discounted at a rate commensurate with the risk involved or an external appraisal. For long-lived assets to be disposed of by sale or other than by sale, fair value is determined in a similar manner or based on actual sales prices as determined by executed sales contracts, except that fair values are reduced for disposal costs. At December 31, 2011, we reviewed the operating properties and construction in progress for impairment on a property-by-property and project-by-project basis in accordance with the Property, Plant and Equipment Topic of the FASB ASC, as we determined the current economic conditions and the sales prices of recent operating property disposals to be general indicators of impairment.

Each property was assessed individually and as a result, the assumptions used to derive future cash flows varied by property or project. These key assumptions are dependent on property-specific conditions, are inherently uncertain and consider the perspective of a third-party marketplace participant. The factors that may influence the assumptions include:

• historical project performance, including current occupancy, projected capitalization rates and net operating income;

• competitors’ presence and their actions;

• property specific attributes such as location desirability, anchor tenants and demographics;

• current local market economic and demographic conditions; and

• future expected capital expenditures and the period of time before net operating income is stabilized.

After considering these factors, we project future cash flows for each property based on management’s intention for that property (holding period) and, if appropriate, an assumed sale at the final year of the holding period (reversion value) using a projected capitalization rate. If the resulting carrying amount of the property exceeds the estimated undiscounted cash flows (including the projected reversion value) from the property, an impairment charge would be recognized to reduce the carrying value of the property to its fair value.

Investments in Joint Ventures. We strategically invest in entities that own, manage, acquire, develop and redevelop operating properties. Our partners generally are financial or other strategic institutions. 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

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accordance with the Consolidation Topic of the FASB ASC, we are not considered the primary beneficiary of the entities determined to be VIEs, 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. Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling interest in, an entity in which we have a variable interest. Factors considered in determining whether we have the power to direct the activities that most significantly impact the entity’s economic performance include risk and reward sharing, experience and financial condition of the other partners, voting rights, involvement in day-to-day capital and operating decisions and the extent of our involvement in the entity.

We use the equity method of accounting for investments in unconsolidated joint ventures when we own 20% or more 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, we record our investments in and advances to these entities in our consolidated balance sheets and our proportionate share of earnings or losses earned by the joint venture is recognized in equity in income (loss) of unconsolidated joint ventures in our consolidated statements of income. We derive revenue through our involvement with unconsolidated joint ventures in the form of management and leasing services and interest earned on loans and advances. We account for these revenues gross of our ownership interest in each respective joint venture and record our proportionate share of related expenses in equity in income (loss) of unconsolidated joint ventures

The cost method of accounting is used for unconsolidated entities in which we do not have the ability to exercise significant influence and we have virtually no influence over partnership operating and financial policies. Under the cost method, income distributions from the partnership are recognized in investment income. Distributions that exceed our share of earnings are applied to reduce the carrying value of our investment and any capital contributions will increase the carrying value of our investment. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

These joint ventures typically obtain non-recourse third-party financing on their property investments, thus contractually limiting our exposure to losses to the amount of our equity investment, and, due to the lender’s exposure to losses, a lender typically will require a minimum level of equity in order to mitigate its risk. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments.

On a periodic basis, we evaluate our investments in unconsolidated entities for impairment in accordance with the Investments-Equity Method and Joint Ventures Topic of the FASB ASC. 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. We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary. These factors include the age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity and relationships with our partners and banks. If we believe that the decline in the fair value of the investment is temporary, no impairment charge is recorded. 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 that reflects the estimated fair value of the investment.

Goodwill. Goodwill has been recorded to reflect the excess of cost over the fair value of net identifiable assets acquired in various business acquisitions. We perform annual, or more frequently in certain circumstances, impairment tests of our goodwill. We have elected to test for goodwill impairment in November of each year. The goodwill impairment test is a two-step process that requires us to make decisions in determining appropriate assumptions to use in the calculation. The first step consists of estimating the fair value of each reporting unit and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment, if any, by determining an “implied fair value” of goodwill. The determination of each reporting unit’s (each property is considered a reporting unit) implied fair value of goodwill requires us to allocate the estimated fair value of the reporting unit to its assets and liabilities. Any unallocated fair value represents the implied fair value of goodwill which is compared to its corresponding carrying amount.

Share Based Compensation and Incentive Awards. We recognize all share-based awards to employees, including grants of stock options, in our financial statements based on fair values. Because there is no observable market for our options, management must make critical estimates in determining the fair value at the grant date. Variations in the assumptions will have a direct impact on our net income. Critical estimates in determining the fair value of options at the grant date include: expected volatility, expected dividend yield, risk-free interest rate, involuntary conversion due to change in control and expected exercise history of similar grants.

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Income tax. Although we may qualify for REIT status for federal income tax purposes, we may be subject to state income or franchise taxes in certain states in which some of our properties are located. In addition, taxable income from non-REIT activities managed through our taxable REIT subsidiaries, or TRSs, are subject to federal, state and local income taxes. Income taxes attributable to DIM and our TRSs are accounted for under the asset and liability method as required under the Income Taxes Topic of the FASB ASC. Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of the taxable entities’ assets and liabilities and for operating loss and tax credit carry-forwards. The taxable entities estimate income taxes in each of the jurisdictions in which they operate. This process involves estimating our tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. The recording of a net deferred tax asset assumes the realization of such asset in the future. Otherwise a valuation allowance must be recorded to reduce this asset to its net realizable value. We consider future pretax income and ongoing prudent and feasible tax planning strategies in assessing the need for such a valuation allowance. In the event that we determine that we may not be able to realize all or part of the net deferred tax asset in the future, a valuation allowance for the deferred tax asset is charged against income in the period such determination is made. In the case where we determine that the full amount of a tax asset will be realized, a reversal of a valuation is appropriate.

Discontinued Operations. The application of current accounting principles that govern the classification of any of our properties as held-for-sale on our consolidated balance sheets, or the presentation of results of operations and gains on the sale of these properties as discontinued, requires management to make certain significant judgments. In evaluating whether a property meets the criteria set forth by the Property, Plant and Equipment Topic of the FASB ASC, we make a determination as to the point in time that it is probable that a sale will be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other matters critical to the final sale, such as financing arrangements often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period, or may not close at all. Therefore, any properties categorized as held-for-sale represent only those properties that management has determined are probable to close within the requirements set forth in the Property, Plant and Equipment Topic of the FASB ASC. Prior to sale, we evaluate the extent of involvement with, and the significance to us of cash flows from a property subsequent to its sale, in order to determine if the results of operations and gain on sale should be reflected as discontinued. Consistent with the Property, Plant and Equipment Topic of the FASB ASC, any property sold in which we have significant continuing involvement or cash flows (most often sales to co-investment partnerships) is not considered to be discontinued. In addition, any property which we sell to an unrelated third party, but in which we retain a property or asset management function, is not considered discontinued. Therefore, based on our evaluation of the Property, Plant and Equipment Topic of the FASB ASC only properties sold, or to be sold, to unrelated third parties where we will have no significant continuing involvement or significant cash flows are classified as discontinued operations. Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRSs”).” The guidance under ASU 2011-04 amends certain accounting and disclosure requirements related to fair value measurements to ensure that fair value has the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements are the same. This guidance contains certain updates to the measurement guidance as well as enhanced disclosure requirements. The most significant change in disclosures is an expansion of the information required for “Level 3” measurements including enhanced disclosure for: (1) the valuation processes used by the reporting entity and (2) the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any. This guidance is effective for interim and annual periods beginning on or after December 15, 2011, with early adoption prohibited.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” which revises the manner in which companies present comprehensive income. Under ASU No. 2011-05, companies may present comprehensive income, which is net income adjusted for the components of other comprehensive income, either in a single continuous statement of comprehensive income or by using two separate but consecutive statements. Regardless of the alternative chosen, companies must display adjustments for items reclassified from other comprehensive income into net income within the presentation of both net income and other comprehensive income. ASU 2011-05 is effective for interim and annual periods beginning after

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December 15, 2011, on a retrospective basis. In December 2011, the FASB issued ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05.”ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. Reclassifications out of accumulated other comprehensive income are to be presented either on the face of the financial statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. Reclassification adjustments into net income need not be presented during the deferral period. This action does not affect the requirement to present items of net income, other comprehensive income and total comprehensive income in a single continuous or two consecutive statements.

In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment (the revised standard)”. Under ASU No. 2011-08 companies have the option to perform a qualitative assessment that may allow them to skip the annual two-step test and reduce costs. The guidance is effective for fiscal years beginning after December 15, 2011 and earlier adoption is permitted.

In December 2011, the FASB issued ASU No. 2011-10, “Derecognition of in Substance Real Estate”. The amendments in ASU 2011-10 resolve the diversity in practice about whether the guidance in Subtopic 360-20 applies to the derecognition of in substance real estate when the parent ceases to have a controlling financial interest (as described in Subtopic 810-10) in a subsidiary that is in substance real estate because of a default by the subsidiary on its nonrecourse debt. The guidance emphasizes that the accounting for such transactions is based on their substance rather than their form. The amendments in the ASU should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012.

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities”. Under ASU 2011-11 disclosures are required to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the ASU requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013.

We do not believe that the adoption of these new pronouncements listed above will have a material impact on our consolidated results of operation and financial condition at the dates that the new guidance will become effective.

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. In addition, non-cash impairment charges may also affect comparability.

NOI is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income from continuing operations before tax and discontinued operations, plus amortization of deferred financing fees, rental property depreciation and amortization, interest expense, impairment losses, general and administrative expense, less revenues earned from management and leasing services, straight line rent adjustments, accretion of below market lease intangibles(net), gain on sale of real estate, equity in income (loss) of unconsolidated joint ventures, gain on bargain purchase and acquisition of controlling interest in subsidiary, gain on extinguishment of debt and investment income, and other income. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level.

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We review operating and financial data, primarily NOI, for each property on an individual basis; therefore each of our individual properties is a separate operating segment. We have aggregated our operating segments in five reportable segments based primarily upon our method of internal reporting which classifies our operations by geographical area. Our reportable segments by geographical area are as follows: South Florida, North Florida and the Southeast, Northeast, West Coast and Other/Non-Retail. See Part II and Note 20 in the consolidated financial statements of this annual report for more information about our business segments and the geographic diversification of our portfolio of properties, and for a reconciliation of NOI to income from continuing operations before tax and before discontinued operations for the fiscal years 2011, 2010 and 2009.

Our management also uses NOI to evaluate regional property level performance and to make decisions about resource allocations. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from continuing operations before tax and before discontinued operations. NOI excludes certain components from net income attributable to Equity One, Inc. in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations before tax and before discontinued operations as presented in our consolidated financial statements. NOI should not be considered as an alternative to income from continuing operations before tax and before discontinued operations as an indication of our performance or to cash flows as a measure of liquidity or ability to make distributions.

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Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

The following summarizes certain line items from our audited consolidated statements of income which we believe are important in understanding our operations and/or those items which significantly changed in 2011 as compared to the same period in 2010:

	For the year ended December 31,
	2011			2010			% Change
	(in thousands)
Total revenue	$	291,925		$	230,402			26.7	%
Property operating expenses		83,149			64,775			28.4	%
Rental property depreciation and amortization		83,361			50,395			65.4	%
General and administrative expenses		51,707			41,986			23.2	%
Investment income		4,342			930			366.9	%
Equity in income (loss) of unconsolidated joint ventures		4,829			(116	)		4,262.9	%
Other income		404			648			(37.7	)%
Interest expense		70,152			64,247			9.2	%
Amortization of deferred financing fees		2,224			1,909			16.5	%
Gain on bargain purchase		30,561			—			N/M	*
Gain on sale of real estate		5,541			254			2,081.5	%
(Loss) gain on extinguishment of debt		(2,391	)		33			(7,345.5	)%
Impairment loss		21,411			557			3,744.0	%
Income tax benefit of taxable REIT subsidiaries		5,064			1,724			193.7	%
Income from discontinued operations		14,947			14,413			3.7	%
Net income		43,218			24,419			77.0	%
Net income attributable to Equity One, Inc.		33,621			25,112			33.9	%

* N/M = not meaningful

Total revenue increased by $61.5 million, or 26.7%, to $291.9 million in 2011 from $230.4 million in 2010. The increase is primarily attributable to the following:

• an increase of approximately $64.2 million associated with properties acquired in 2010 and 2011; and

• an increase of approximately $730,000 associated with management, leasing and asset management services provided to our joint ventures, including an acquisition fee of approximately $310,000 related to our new joint venture with CRF; offset by

• a net decrease of approximately $2.0 million related to various development and redevelopment projects which were under construction in 2011 or 2010;

• a decrease of $1.1 million in same-property revenue due to lower occupancy and the impact of rent concessions and abatements; and

• a decrease of $380,000 due to properties contributed to our new joint venture with CRF.

Property operating expenses increased by $18.4 million, or 28.4%, to $83.1 million in 2011 from $64.8 million in 2010. The increase primarily consists of the following:

• an increase of approximately $19.1 million associated with properties acquired in 2011 and 2010; and

• an increase of approximately $300,000 related to higher snow removal costs; offset by

• a net decrease of approximately $1.0 million in same-property and land expenses, primarily attributable to lower real estate taxes.

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Rental property depreciation and amortization increased by $33.0 million, or 65.4%, to $83.4 million for 2011 from $50.4 million in 2010. The increase was primarily related to the following:

• an increase of approximately $28.2 million related to depreciation on properties acquired in 2011 and 2010; and

• an increase of approximately $4.8 million related to accelerated depreciation recognized in 2011 related to tenant vacancies.

General and administrative expenses increased by $9.7 million, or 23.2%, to $51.7 million for 2011 from $42.0 million in 2010. The increase in 2011 was primarily related to the following:

• an increase of approximately $3.4 million due to additional personnel related costs, in part, related to the acquisition of CapCo and compensation expense related to a long-term share based incentive plan established in the first quarter of 2011 for certain executives;

• an increase of approximately $2.0 million due to a legal settlement;

• an increase of approximately $1.9 million related to legal, consulting, and other costs associated with our acquisitions and dispositions in 2011 and the exploration of other potential transactions;

• an increase of approximately $1.4 million in office operating expenses primarily due to higher office rent and technical support attributable to our new offices in New York and California; and

• an increase of approximately $1.0 million in severance costs primarily related to former CapCo employees.

We recorded investment income of $4.3 million in 2011 compared to $930,000 in 2010. The increase was primarily related to interest earned on bridge loans made to unconsolidated joint ventures and on the mezzanine loan investment made in 2011.

We recorded equity in income of unconsolidated joint ventures of approximately $4.8 million in 2011 compared to a net loss of $116,000 in 2010. The increase is primarily due to the sale of Pacific Financial Center resulting in a gain of $4.3 million, new unconsolidated joint ventures formed in December 2010, and the unconsolidated joint ventures acquired as part of the CapCo transaction.

Other income decreased by $244,000, or 37.7%, to $404,000 in 2011 from $648,000 in 2010. The decrease is primarily due to a decrease of approximately $400,000 related to legal settlements; partially offset by an increase in insurance proceeds received of approximately $150,000.

Interest expense increased by $5.9 million, or 9.2%, to $70.2 million for 2011 from $64.2 million in 2010. The increase is primarily attributable to the following:

• an increase of approximately $8.3 million primarily associated with mortgage assumptions in 2010 and 2011 related to acquisitions; and

• an increase of approximately $2.3 million associated with higher interest expense due to a higher average balance outstanding under our line of credit and bank fees incurred in connection with the extension and expansion of our line of credit; offset by

• a decrease of approximately $4.7 million associated with lower mortgage interest due to mortgages paid off during 2010 and 2011.

Amortization of deferred financing fees increased by approximately $315,000 to approximately $2.2 million in 2011 compared to $1.9 million in 2010. The increase is mainly due to fees associated with our line of credit as a result of the renewal and amendment of the credit facility on September 30, 2011.

The gain on bargain purchase of approximately $30.6 million recognized in 2011 was generated from our acquisition of a controlling interest in CapCo. No comparable amounts are included in 2010. The gain represents the difference between fair value of the net assets acquired of $310.4 million and the fair value of the consideration paid and noncontrolling interest of $279.8 million. For a more complete description of the fair value measurement see Note 5 to the consolidated financial statements included in this annual report.

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We recorded a gain on sale of real estate of $5.5 million for 2011 compared to $254,000 in 2010. The 2011 gain is attributable to additional consideration earned related to the sale of an outparcel to our GRI-EQY I, LLC joint venture resulting in a gain of approximately $3.6 million, the sale of two operating properties to our joint venture with CRF resulting in a gain of approximately $971,000, and the sale of two outparcels to unrelated third parties resulting in a gain of approximately $967,000. The 2010 gain was primarily related to the disposition of two undeveloped land parcels to unrelated third parties.

During 2011, we prepaid approximately $146.8 million principal amount of our mortgages (excluding the Serramonte mortgage that was repaid at the closing of the CapCo transaction) and recognized a net loss from early extinguishment of debt related to continuing operations of approximately $2.4 million. During 2010, we prepaid approximately $61.2 million principal amount of our mortgages and recognized a net gain from early extinguishment of debt of approximately $33,000.

We recorded impairment losses in continuing operations for 2011 and 2010 of approximately $21.4 million and $557,000, respectively. The 2011 impairment loss consisted of $20.3 million in impairment charges related to land held for development and income producing properties, as well as $1.2 million of impairment loss related to goodwill.

We recorded income tax benefits from continuing operations for 2011 and 2010 of approximately $5.1 million and $1.7 million, respectively. The increase in tax benefit was primarily due to tax benefits resulting from impairment losses recorded by our taxable REIT subsidiaries and an increase in the net operating losses of these subsidiaries.

For 2011, we recorded net income from discontinued operations of $14.9 million compared to net income of $14.4 million for 2010. The increase is primarily attributable to the following:

• an increase of $2.2 million related to net gains from sales of 42 operating properties and 2 operating land outparcels; and

• an increase of $6.6 million in income from sold or held-for-sale properties; offset by

• an increase of $35.8 million in impairment losses for assets held for sale or sold and an increase in tax benefits of $27.5 million primarily attributable to the reversal of a deferred tax liability associated with properties held for sale or sold by our taxable REIT subsidiaries.

As a result of the foregoing, net income increased by $18.8 million, to $43.2 million for 2011 from $24.4 million in 2010. Net income attributable to Equity One, Inc. increased by $8.5 million to $33.6 million for 2011 compared to $25.1 million in 2010.

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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

The following summarizes items from our audited consolidated statements of income that we believe are important in understanding our operations and/or those items which significantly changed in 2010 as compared to the same period in 2009:

	For the year ended December 31,
	2010		2009		% Change
	(in thousands)
Total revenue	$	230,402	$	214,043		7.6	%
Property operating expenses		64,775		63,189		2.5	%
Rental property depreciation and amortization		50,395		43,513		15.8	%
General and administrative expenses		41,986		38,460		9.2	%
Investment income		930		10,150		(90.8	)%
Equity in loss in unconsolidated joint ventures		116		88		31.8	%
Other income		648		1,503		(56.9	)%
Interest expense		64,247		56,021		14.7	%
Amortization of deferred financing fees		1,909		1,459		30.8	%
Gain on acquisition of controlling interest in subsidiary		—		27,501		(100.0	)%
Gain on sale of real estate		254		—		N/M	*
Gain on extinguishment of debt		33		12,345		(99.7	)%
Impairment loss		557		369		50.9	%
Income tax benefit of taxable REIT subsidiaries		1,724		3,109		(44.5	)%
Income from discontinued operations		14,413		15,823		(8.9	)%
Net income		24,419		81,375		(70.0	)%
Net income attributable to Equity One, Inc.		25,112		83,817		(70.0	)%

* N/M = not meaningful

Total revenue increased by $16.4 million, or 7.6%, to $230.4 million in 2010, from $214.0 million in 2009. The increase is primarily attributable to the following:

• an increase of approximately $20.5 million associated with properties acquired in 2009 and 2010; and

• a net increase of $310,000 related to various development and redevelopment projects which were under construction in 2010 or 2009; offset by

• a decrease of approximately $4.4 million in same-property revenue due primarily to lower minimum rent income and decreased small shop occupancy which also had the effect of lowering rental expense recoveries.

Property operating expenses increased by $1.6 million, or 2.5%, to $64.8 million in 2010 from $63.2 million in 2009. The increase primarily consists of the following:

• an increase of approximately $5.5 million associated primarily with properties acquired in 2009 and 2010; offset by

• a decrease of approximately $3.9 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.

Rental property depreciation and amortization increased by $6.9 million, or 15.8%, to $50.4 million for 2010 from $43.5 million in 2009. The increase is primarily attributable to the following:

• an increase of approximately $6.7 million primarily associated with properties acquired in 2009 and 2010; and

• a net increase of $390,000 related to various development and redevelopment projects which were under construction in 2010 or 2009; offset by

• a decrease of approximately $230,000 due to tenant related assets becoming fully amortized.

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General and administrative expenses increased by $3.5 million, or 9.2%, to $42.0 million for 2010 from $38.5 million in 2009. The increase is mainly attributable to:

• an increase of approximately $7.1 million in acquisition costs related to properties acquired during 2010, as well as higher professional fees related to the acquisition of CapCo which closed in 2011 and the exploration of other potential transactions;

• an increase of approximately $2.3 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 $3.3 million related to lower severance costs in 2010;

• a decrease of approximately $1.6 million related to legal, consulting, and other costs associated with our acquisition of DIM in 2009; and

• a decrease of approximately $994,000 due to the decline in the fair value of a liability related to a long term cash incentive plan for which targets were not achieved.

Investment income decreased by $9.2 million, or 90.8%, to $930,000 for 2010 as compared to $10.2 million in 2009. The decrease was primarily related to the following:

• a decrease of approximately $5.7 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 sold prior to 2010; and

• a decrease of approximately $1.0 million related to dividends from several equity investments held during 2009 and disposed of prior to 2010; offset by

• an increase of $130,000 in interest earned related to higher cash balances.

Equity in loss of unconsolidated joint ventures was a net loss of approximately $116,000 in 2010 compared to a net loss of $88,000 in 2009. The net loss represents our pro rata share of our joint ventures’ operating results, which decreased as a result of lower leasing activity.

Other income decreased by $855,000, or 56.9%, to $648,000 in 2010 from $1.5 million in 2009. The decrease is primarily due to a decrease of approximately $600,000 in insurance proceeds received.

Interest expense increased by $8.2 million, or 14.7%, to $64.2 million in 2010 as compared to $56.0 million for 2009. The increase is primarily attributable to the following:

• an increase of approximately $12.9 million primarily associated with our 6.25% unsecured senior notes issued in the fourth quarter of 2009; offset by

• a decrease of approximately $3.3 million of interest expense related to the repayment of certain mortgages in 2009 and 2010;

• a decrease of approximately $814,000 associated with higher capitalized interest in 2010 related to our development projects; and

• a decrease of approximately $626,000 related to lower average balances on our lines of credit.

Amortization of deferred financing fees increased by approximately $450,000 to approximately $1.9 million in 2010 compared to $1.5 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 $27.5 million recognized in 2009 was generated from our acquisition of a controlling interest in DIM. No comparable amounts are included in 2010.

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The $254,000 gain on sale of real estate in 2010 was related to the disposition of two undeveloped land parcels which generated cash proceeds of approximately $1.6 million.

During 2010, we prepaid approximately $61.2 million principal amount of our mortgages and recognized a net gain from early extinguishment of debt of approximately $33,000. During 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 $12.3 million.

We recorded $557,000 of goodwill impairments associated with several of our income producing properties in 2010 as compared to $369,000 in 2009.

We recorded net income tax benefits during 2010 and 2009 of approximately $1.7 million and $3.1 million, respectively. At December 31, 2010, DIM accounted for approximately $971,000 of these tax benefits and approximately $753,000 in tax benefits were from our other TRSs. The decrease in tax benefit was primarily due to the reversal of a valuation allowance in 2009 of $1.6 million.

For 2010, we recorded net income from discontinued operations of $14.4 million compared to net income of $15.8 million in 2009. In 2010, we sold three ground lease outparcels at three of our income producing properties generating a net gain of $2.3 million and recorded $10.2 million in net operating income, and a related tax benefit of $2.0 million, offset by an impairment of $130,000 of goodwill related to discontinued operations. During 2009, we sold ten ground lease outparcels and one income producing property generating a net gain of $7.1 million and recorded $6.8 million in net operating income and a related tax benefit of $1.9 million related to discontinued operations.

As a result of the foregoing, net income decreased by $57.0 million, to $24.4 million for 2010 from $81.4 million in 2009. Net income attributable to Equity One, Inc. decreased by $58.7 million to $25.1 million for 2010 compared to $83.8 million in 2009.

Reportable Segments

The following tables set forth the financial information relating to our operations presented by segments:

	Year Ended December 31,
	2011		2010		2009
	(In thousands)
Revenues:
South Florida	$	86,510	$	87,636	$	87,008
North Florida and Southeast		103,230		102,478		103,286
Northeast		36,012		30,390		15,902
West Coast		48,941		—		—
Non-retail revenues		3,664		1,657		1,880
Total segment revenues	$	278,357	$	222,161	$	208,076
Add:
Straight line rent adjustment		2,357		1,933		765
Accretion of below market lease intangibles, net		8,924		4,751		3,527
Management and leasing services		2,287		1,557		1,675
Total revenues	$	291,925	$	230,402	$	214,043
Net operating income:
South Florida	$	57,034	$	56,894	$	54,353
North Florida and Southeast		71,359		71,465		71,207
Northeast		25,622		21,908		12,682
West Coast		31,979		—		—
Non-retail revenues		1,378		374		541
Total	$	187,372	$	150,641	$	138,783

For a reconciliation of NOI to income from continuing operations before tax and discontinued operations see Note 20 to the consolidated financial statements included in this annual report, which is incorporated herein by reference.

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Fiscal year 2011 compared to Fiscal year 2010- Segments

South Florida: Revenues decreased by 1.3% or $1.1 million to $86.5 million for the year ended December 31, 2011 from $87.6 million for the year ended December 31, 2010. NOI for South Florida increased by 0.2% or $140,000 to $57.0 million for the year ended December 31, 2011 from $56.9 million for the year ended December 31, 2010. Revenues decreased due to higher lease termination fees received in 2010, a slight decrease in occupancy of approximately 0.1% and a decrease in recovery income in 2011 due to a decrease in recoverable expenses; partially offset by an increase in revenues from property acquisitions and a decrease in rent concessions. The slight increase in NOI was as a result of NOI from property acquisitions, a decrease in recoverable expenses, a decrease in bad debt expense and tenant related legal expenses partially offset by a decrease in revenues.

North Florida and Southeast: Revenues increased by 0.7% or $752,000 to $103.2 million for the year ended December 31, 2011 from $102.5 million for the year ended December 31, 2010. NOI decreased by 0.1% or $106,000 to $71.4 million for the year ended December 31, 2011 from $71.5 million for the year ended December 31, 2010. The increase in revenue was due to higher minimum rent as a result of prior year acquisitions offset by a decrease in occupancy of approximately 0.1%. The decrease in NOI was a result of an increase in bad debt expense partially offset by the effect of prior year acquisitions and a decrease in tenant related legal expenses.

Northeast: Revenues increased by 18.5% or $5.6 million to $36.0 million for the year ended December 31, 2011 from $30.4 million for the year ended December 31, 2010. NOI increased by 17.0% or $3.7 million to $25.6 million for the year ended December 31, 2011 from $21.9 million for the year ended December 31, 2010. The increase in both revenues and NOI is primarily a result of contractual rent increases and property acquisitions in both 2010 and 2011.

West Coast: Revenues and NOI were $48.9 million and $32.0 million, respectively for the year ended December 31, 2011. All of our West Coast properties were acquired in 2011.

Non-retail: Revenues increased by 121.1% or $2.0 million to $3.7 million for the year ended December 31, 2011 from $1.7 million for the year ended December 31, 2010. NOI increased by 268.4% or $1.0 million to $1.4 million for the year ended December 31, 2011 from $374,000 for the year ended December 31, 2010. The increases are primarily due to the acquisition of additional non-retail properties in connection with the CapCo acquisition in 2011.

Fiscal year 2010 compared to Fiscal year 2009 – Segments

South Florida: Revenues increased by 0.7% or $628,000 to $87.6 million for the year ended December 31, 2010 from $87.0 million for the year ended December 31, 2009. NOI for South Florida increased by 4.7% or $2.5 million to $56.9 million for the year ended December 31, 2010 from $54.4 million for the year ended December 31, 2009. Revenues increased due to higher lease termination fees received in 2010 and revenues associated with property acquisitions partially offset by a decrease in occupancy of 1.1%, an increase in rent concessions and a decrease in recovery income due to lower recoverable expenses. The increase in NOI was a result of increased revenues, lower bad debt expense and lower recoverable expenses.

North Florida and Southeast: Revenues decreased by 0.8% or $808,000 to $102.5 million for the year ended December 31, 2010 from $103.3 million for the year ended December 31, 2009. NOI increased by 0.4% or $258,000 to $71.5 million for the year ended December 31, 2010 from $71.2 million for the year ended December 31, 2009. Revenues decreased due to increased vacancies during the year and lower recovery income due to lower recoverable real estate taxes, partially offset by revenues associated with property acquisitions. NOI increased as a result of new property acquisitions, lower operating expenses, primarily real estate taxes, and lower bad debt expense; partially offset by the decrease in revenues.

Northeast: Revenues increased by 91.1% or $14.5 million to $30.4 million for the year ended December 31, 2010 from $15.9 million for the year ended December 31, 2009. NOI increased by 72.7% or $9.2 million to $21.9 million for the year ended December 31, 2010 from $12.7 million for the year ended December 31, 2009. The increases are primarily due to acquisitions in the Northeast in 2010 and late 2009, and contractual rent increases.

Non-retail: Revenues decreased by 11.9% or $223,000 to $1.7 million for the year ended December 31, 2010 from $1.9 million for the year ended December 31, 2009. NOI decreased by 30.9% or $167,000 to $374,000 for the year ended December 31, 2010 from $541,000 for the year ended December 31, 2009. The decreases are due to lower minimum rent as a result of a decrease in occupancy of 2.5%.

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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 (excluding net capital gains) each year, as defined in the Code.

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 acquisition expenses) and dividends to common stockholders. We have satisfied these requirements through cash generated from operations and from financing and investing activities.

As of December 31, 2011, we had approximately $11.0 million of cash and cash equivalents available. In addition, we had $970,000 of restricted cash, and $91.6 million in cash held in escrow by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Code. In the third quarter of 2011, we increased the principal amount available under our primary credit facility to $575.0 million and extended its maturity date to September 30, 2015, subject to a one year extension at our option. As of December 31, 2011, we had two revolving credit facilities providing for borrowings of up to $590.0 million of which $447.3 million was available to be drawn, subject to covenants contained in those facilities which may otherwise limit borrowings. As of December 31, 2011, we had drawn $138.0 million under our $575.0 million credit facility, which bore interest at 1.85% at such date, and had no borrowings under our $15.0 million credit facility.

During 2012, we have approximately $47.1 million in debt maturities in addition to normal recurring principal amortization payments. Additionally, we are actively searching for acquisition and joint venture opportunities that may require additional capital and/or liquidity. We currently have approximately $197.5 million in proposed acquisitions that we expect to close in the first half of 2012. These proposed transactions consist of the acquisitions of a shopping center in California for $111 million, three shopping centers in Connecticut for $79.0 million, which includes the assumption of $19.0 million of indebtedness, and a parcel of land in New York for $7.5 million. These acquisitions are past the due diligence periods under the applicable purchase and sale agreements and, as such, aggregate deposits of $5.8 million are non-refundable except as otherwise provided in the contracts. Our available cash (including, with respect to certain of these acquisitions, $91.6 million of cash held in escrow by qualified intermediaries), revolving credit facilities, and cash from property dispositions will be used to fund these and other prospective acquisitions as well as our debt maturities and normal operating expenses. We have also entered into a contract to sell a property in California for $53.8 million, including the assumption of $27.3 million of indebtedness. This pending disposition is past its due diligence period under the applicable purchase and sale agreement and, is expected to close in the first quarter of 2012. In addition, on January 20, 2012 we sold the land underlying a shopping center located in Lafayette Parish, Louisiana, for $750,000. These two properties are classified as held for sale at December 31, 2011.

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.

An important component of our growth strategy is the redevelopment of properties within our portfolio and development of new shopping centers. At December 31, 2011, we had invested approximately $82.2 million in development or redevelopment projects at various stages of completion and anticipate these projects will require an additional $100.7 million to complete, based on our current plans and estimates, which will be expended over the next two years.

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.

The following is a summary of our 2011 financing and investing initiatives completed during the year:

• Equity Offering. We issued and sold 5.0 million shares of our common stock in an underwritten public offering and 1.0 million shares of our common stock in a concurrent private placement to an affiliate of our largest stockholder, Gazit-Globe, Ltd., raising aggregate net proceeds of approximately $115.7 million;

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• Mortgage Debt. We assumed mortgage debt having an aggregate principal balance of approximately $172.0 million and a weighted average interest rate of 6.18% related to the CapCo acquisition. We repaid $146.8 million in secured mortgage debt prior to maturity (excluding the Serramonte mortgage that was repaid at the closing of the CapCo transaction) and we executed a new and expanded $575.0 million line of credit, which had borrowings of $138.0 million outstanding as of December 31, 2011;

• Property Sales. We sold 45 operating properties and four outparcels generating net proceeds of $710.8 million (which includes our pro-rata share of proceeds from the sale of two operating properties held in joint ventures);

• Property Acquisitions. In addition to the CapCo acquisition, we acquired $419.2 million in operating properties, which included approximately $121.2 million in assumed mortgages, with average interest rates between 5.20% and 5.85%;

• Unconsolidated Joint Ventures. In addition to the CapCo acquisition, we acquired $23.2 million in operating properties through our unconsolidated joint venture with CRF and sold two operating properties to the CRF joint venture for gross proceeds of $39.4 million; and

• Mezzanine Loan Receivable. We invested in a $45.0 million junior mezzanine loan (“Mezzanine Loan”) which matures on July 9, 2013 subject to the borrower’s ability to extend the maturity date for three additional one-year periods, and bears interest at 8.46% per annum plus one month LIBOR (subject to a 0.75% per annum LIBOR floor).

The following significant financing and investment activities have taken place subsequent to December 31, 2011: (i) on February 13, 2012, we closed a $200.0 million unsecured term loan which matures in February 2019 and bears interest at a fixed rate of 3.46% per annum based on our current credit ratings, through the utilization of an interest rate swap provided by certain of the lenders; and (ii) on January 26, 2012, we made a $19.3 million mezzanine loan indirectly secured by a shopping center which bears interest at 10.0% and has a maturity of nine years.

We believe that we have access to capital resources necessary to operate, expand and develop our business. As a result, we intend to operate with, and maintain, a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios.

While we believe that cash generated from operations, borrowings under our unsecured revolving credit facilities and our access to other, longer term capital sources will be sufficient to meet our short-term and long-term liquidity requirements, there are risks inherent in our business, including those risks described in Item 1A - “Risk Factors,” that may have a material adverse effect on our cash flow, and, therefore, on our ability to meet these requirements.

Summary of Cash Flows. The following summary discussion of our cash flows is based on the 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.

	For the year ended December 31,
	2011			2010			Increase (Decrease)
	(in thousands)
Net cash provided by operating activities	$	102,626		$	71,562		$	31,064
Net cash used in investing activities	$	(44,615	)	$	(189,243	)	$	144,628
Net cash (used in) provided by financing activities	$	(108,793	)	$	108,044		$	(216,837	)
Cash and cash equivalents, end of year	$	10,963		$	38,333		$	(27,370	)

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 $102.6 million for 2011 compared to approximately $71.6 million in 2010. The increase of $31.1 million is attributable to an increase in cash from operations of properties acquired in 2010 and 2011, and an increase in investment income offset by an increase in interest expense.

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Net cash used in investing activities was approximately $44.6 million for 2011 compared with approximately $189.2 million in 2010. Investing activities during 2011 consisted primarily of: acquisitions of income producing properties for $279.1 million, net of debt assumed; additions to income producing properties and construction in progress of $59.5 million; $45.1 million related to an investment made in a junior mezzanine loan indirectly secured by seven properties; an increase in cash held in escrow of $91.6 million; offset by $399.4 million of proceeds related to the sale of real estate and rental properties and the net cash investment inflow from joint ventures of $38.6 million. Cash used by investing activities for 2010 consisted of: acquisitions of income producing properties for $108.1 million, net of debt assumed; additions to income producing properties, land held for development, and construction in progress of $21.1 million; investments in and advances to unconsolidated joint ventures of $47.0 million; and investments in our consolidated subsidiary, DIM, of $13.4 million.

Net cash used in financing activities totaled approximately $108.8 million for 2011 compared with net cash provided by financing activities of approximately $108.0 million for 2010. The largest cash outflow for 2011 related to prepayments and repayments of $246.9 million in principal amount of mortgage debt, the payment of $98.8 million in dividends and distributions to noncontrolling interests of $11.4 million. This use of cash was partially offset by the net cash proceeds received of approximately $115.4 million from our equity offerings and net borrowings under revolving credit facilities of $138.0 million. In the prior year, cash used by financing activities was mainly attributable to net proceeds from issuance of common stock of $267.4 million, offset by cash used